Full opinion text
MEMORANDUM FINDINGS OF FACT AND CONCLUSIONS OF LAW WESLEY E. BROWN, District Judge. NATURE OF ACTIONS These eight consolidated civil actions come before the Court following a protracted trial for findings of fact and conclusions of law with respect to the issues relating to liability. Six of the cases are actions in the nature of inter-pleader. Two of the actions are for conversion and reverse condemnation. All of these actions involve the ownership of helium contained in or extracted from natural gas and produced from wells drilled in the Chase Group of the Permian formation of the Hugoton gas area in Kansas, Oklahoma, and Texas. Helium-bearing natural gas- is produced from these lands by producers operating under leases granted by landowners and other owners of mineral interests in these lands. This helium-bearing natural gas is then sold by these producers to pipeline companies, who, generally speaking, transport this gas for resale for industrial and consumer use throughout the mid-Continental United States. In the early 1960’s pursuant to a helium conservation program approved by the Congress and implemented by the Bureau of Mines and the Department of Interior, four companies contracted to sell helium to the United States. The companies proposed to extract this helium from gas in helium processing plants built on or near large volume pipelines. The United States agreed to purchase from each company all the extracted helium up to a contract dollar maximum ranging from nine to 15 million dollars a year. From these purchases, the United States supplies its current demands, as well as builds a conserved supply in a Texas storage reservoir. The fund involved in each interpleader suit is the money paid and to be paid by the United States to the interpleading plaintiffs for the helium-gas mixture produced and sold by them. The claimants to the fund may be grouped, generally speaking, into three classes, referred to collectively herein as the “landowners,” the “lessee-producers,” and the “helex group,” which includes the helium extraction and their parent pipeline companies. The landowners claim, in brief, that helium did not pass to their lessees under the oil and gas, or merely gas, leases by virtue of which natural gas has been and is being produced from their properties. The lessee-producers oppose this position, assert that helium did in fact pass under those leases, but that it passed no further, i. e., that it did not pass to the pipeline companies under the gas purchase contracts under which lessee-producers deliver natural gas from the lands in question. The helex group, comprising three pipeline companies and their subsidiary or parent companies, and Phillips Petroleum Company each assert that helium did in fact pass under the oil and gas leases to the lessee-producer, that it passed further, under the gas purchase contracts, and that it was theirs to separate out from the natural gas stream in their possession and sell to the United States. The United States concurs in this position. In the course of our preparation of Findings of Fact and Conclusions of Law we have reviewed and disposed of the motions to which the parties have taken exception in the light of the evidence before us. THE PARTIES Identification of the parties to these actions and statement of their positions will clarify our views. The parties in the interpleader suits, KC-1945, KC-1946, KC-1947, KC-1948, KC-1969, and KC-1980 all claim ownership of or an interest in the interpleaded fund in the particular case. KC-1945. Cities Service Gas Company was the original interpleading plaintiff in Cases KC-1945, KC-1948. It was subsequently joined, however, by Cities Service Helex, Inc., and Cities Service Cryogenics, Inc., (formerly Cities Service Helium, Inc.), both wholly owned subsidiaries of Cities Service Company, which holds, also, upwards of 79 per cent of the stock of Cities Service Gas Company. These plaintiff corporations are organized under the laws of the State of Delaware and have principal places of business in Oklahoma. It is necessary to state the contractual relationships between the three parties plaintiff. In brief, Cities Service Gas Company conveyed to Cities Service Helium by contract executed August 17, 1961, “for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable considerations” the right to all helium contained in gas purchased by it and gathered to a central point adjacent to its Grant County, Kansas compressor station, together with the right to extract such helium. Cities Service Helium in turn, by contract dated the following day, August 18, 1961, conveyed these helium rights to Cities Service Helex, Inc., which agreed to pay therefor 1.35 cents for each thousand cubic feet (Mef) of gas delivered to Cities Service Helex for helium processing. Shortly thereafter, on August 22, 1961, Cities Service Helex contracted to sell helium to the United States. Cities Service Helex contracted with the Cities Service Gas Company, on September 11, 1961, for the purchase of gas required for operation of its helium extraction plant, and agreed to sell to the Cities Service Oil Company the crude liquid hydrocarbons recovered in the helium extraction process. Cities Service Gas Company is referred to as “Cities.” The named defendant individuals, O. W. Heger, Almeta Redfield, et al., appear individually and as representatives of a landowner class' consisting of “ * * * the persons, firms and corporations owning a mineral interest in land from which helium has been, is being or will be severed from the ground in connection with or because of production under oil and gas leases, which helium has been, is being or will be taken into the possession by the United States of America in Grant County, Kansas, at the delivery point described in that certain contract between the United States of America and plaintiff in interpleader Cities Service Helex, Inc., dated August 22, 1961.” The named defendant lessee-producer is Mobil Oil Corporation (formerly Socony Mobil Oil Company), a corporation organized under the laws of the State of New York, with its principal place of business there. Mobil appears both individually and as representative of a lessee-producer class, which “ * * * consists of the persons, firms and corporations denominated ‘lessee-producers,’ who are the owners of leasehold interest in * * * oil and gas leases [described in the foregoing paragraph] * * *, and who deliver, have delivered or will deliver helium contained in gaseous streams directly or indirectly to Cities Service Gas Company, which helium has been, is being, and will be removed and delivered by plaintiff in interpleader, Cities Service Helex, Inc., into the possession of the United States of America at the delivery point described in that certain contract between the United States of America and Cities Service Helex, Inc., dated August 22, 1961.” Cities purchases gas from Mobil pursuant to at least four contracts which are filed as rate schedules of Mobil with the Federal Power Commission. Whether gas delivered under all of these contracts is processed for helium does not clearly appear. Representative lease forms under which Mobil produces gas for sale to Cities are in evidence. KC-1946. The plaintiffs are identical with those in the preceding case. The named individual defendants, Vivian W. Schuett, R. J. Stuckey, et al., appear both individually and as representatives of the class of landowners and owners of mineral interests as defined in the preceding case. The named defendant lessee-producer is the Ashland Oil and Gas Company, a corporation organized and existing under the laws of the Commonwealth of Kentucky, with its principal place of business in that state. Ashland appears both individually and as representative of the same class of leasehold interest owners as defined in the preceding case, KC-1945. Ashland produces gas from a block of 119 wells located principally in Grant and Haskell counties, Kansas, and delivers it through an approximately 150-mile gathering system to Cities at a point near the helium extraction plant operated by Cities Service Helex, Inc., in Grant County, Kansas. Representative forms of these leases under which gas is produced for this sale are compiled in Ashland Exhibit 1. These leases were acquired by Ashland on March 1, 1963, from the United Carbon Company, parent of United Producing Company, a previous owner thereof. The contract under which Ashland delivers gas to Cities was executed originally on March 12, 1948, by United Producing Company, which agreed therein to deliver natural gas to Cities so long as it could be produced from the subject leaseholds in commercial quantities. On October 1, 1954, this contract was filed with the Federal Power Commission as United’s FPC Rate Schedule No. Ill, and upon acquisition of the leaseholds by Ashland, and FPC approval of the transfer, it became Ashland’s FPC Rate Schedule No. 111. Ashland also succeeded to a second gas purchase contract with Cities executed August, 1953, by United now being Ashland’s FPC Rate Schedule No. 112. Gas delivered under this contract is not processed for the separation of helium, however. KC-19U7. The plaintiffs are identical with those in each of the preceding cases. The named defendant individuals, Katherine R. Adams, J. H. McMorran, et al., appear individually and as representatives of the class of landowners and owners of mineral interests as defined in the first case, KC-1945. The named lessee-producer is Columbian Fuel Corporation organized under the laws of the State of Delaware, with its principal place of business in the State of New York. Columbian appears individually and as representative of the class of leasehold interest owners defined in the first case, KC-1945. Columbian sells natural gas to Cities Service Gas under two contracts, executed November 18, 1949, and June 16, 1949. These contracts are filed with the Federal Power Commission, and are included in Columbian’s FPC Rate Schedule Nos. 7 and 37. Columbian delivers gas to Cities under a third contract, its FPC Rate Schedule No. 10, but gas delivered thereunder apparently is not processed for helium extraction. Columbian delivers gas to Cities at the tailgate of Mobil’s Hickok Plant in Grant County, Kansas. KC-1948. The plaintiffs are identical with those in each of the preceding cases. The named defendant individuals, Bloyd Burgess, John J. Cecil, et al., appear individually and as representatives of the class of landowners and owners of mineral interests as defined in the first case, KC-1945. The named defendant lessee-producer is the Pan American Petroleum Corporation, organized under the laws of the State of Delaware, with its principal place of business in the State of Oklahoma. Pan American appears individually and as representative of the class of leasehold interest holders as defined for the first case, KC-1945. Pan American sells gas to Cities under a single contract executed June 23, 1950, by Stanolind Oil and Gas Company, Pan American’s predecessor, the contract covering gas produced from approximately 400,000 to 600,000 acres in Kansas Hugoton Field so long as it can be had in commercial quantities. This contract as amended is included in Pan American’s FPC Rate Schedule No. 84. Copies of representative lease forms under which this gas is produced are in evidence. Since execution of this contract in 1950, Pan American has executed approximately 168 “farmout” agreements, by which it agreed to assign various leases covering areas dedicated under that contract, these agreements providing specifically that any production therefrom is subject to the Pan American-Cities contract. Under the standard farmout agreement, the farmout operator drills at his own expense, and upon completion of a commercial well, he becomes owner of the working interest and usually operates the well or arranges for its operation, the assignor retaining a royalty. These operators are independent producers who were required to obtain certificates of public convenience and necessity covering their sales to the Cities Service Gas Company. None of these operators was made a party to this action. By court order they fall within the class of owners of leasehold interests represented by Pan American as a lessee-producer. KC-1969. Plaintiffs in this interpleader action are Northern Natural Gas Company (Northern), an interstate pipeline company, and two wholly-owned subsidiaries, Northern Helex Corporation (formerly Helex, Inc.) and Northern Natural Gas Products Company, all corporations organized under the laws of the State of Delaware, with their principal places of business in the State of Nebraska. The named defendant individuals, Ralph Grounds, Henry Hitch, and approximately five hundred other named individuals, appear individually and as representatives of a class defined by the court as comprising “ * * * the persons, firms and corporations owning a mineral interest in land from which helium has been, is being or will be severed from the ground in connection with or because of production under oil and gas leases, which helium * * * is being or will be taken into the possession by the United States of America in Ellsworth County, Kansas at the delivery point described in that certain contract between the United States of America and plaintiff in interpleader Northern Helex, Inc., (formerly Helex Company) dated August 15, 1961.” Eight named lessee-producer companies are defendants in this action. Ashland delivers natural gas to Northern under two contracts, executed August 25, 1943, and June 28, 1954, these are included in Ashland’s FPC Rate Schedule Nos. 116 and 122, respectively. Cities Service Oil, a Delaware corporation with its principal place of business in the State of Oklahoma, delivers natural gas to Northern under eleven contracts, these being Cities Service Oil FPC Rate Schedule Nos. 53, 70, 89, 166-171, 190, and 191. Gulf Oil Corporation, a Pennsylvania corporation with its principal place of business there, delivers natural gas to Northern under a single contract, found in Gulf’s FPC Rate Schedule No. 117 Representative forms of leases under which this gas is produced are in evidence. Helmerich & Payne, Inc., is an Oklahoma corporation with its principal place of business in that state. It delivers natural gas to Northern under eight contracts, these being its FPC Rate Schedule Nos. 1, 2, 4-8. Representative forms of leases under which gas is produced for delivery thereunder are also in evidence. Mapco Production Company, a Delaware corporation with its principal place of business in Oklahoma, delivers gas to Northern under one contract, dated September, 1949, and is Mapco FPC Rate Schedule No. 1, formerly Hugoton Plains FPC Schedule No. 1. Representative forms of leases under which gas is produced for delivery under this contract are in evidence. Mobil delivers gas to Northern under nine contracts, included in its FPC Rate Schedule Nos. 32, 71, 85,- 158, 179, 281, 232, 284, and 326. Representative forms of leases are in evidence. Texaco, a Delaware corporation with its principal place of business in states other than Kansas and Nebraska, delivers gas to Northern under fourteen contracts, these are included in Texaco FPC Rate Schedule Nos. 10, 11, 12, 71, 106-112, 129, 147 and 317. Representative lease forms under which gas is produced for these sales are in evidence. These named lessee-producers appear individually and as representatives of a class defined by the court as consisting of: “ * * * the persons, firms and corporations denominated ‘lessee-producers’ who are the owners of leasehold interests in the oil and gas leases * * * [from which gas is produced for delivery to Northern Natural Gas Company] and who deliver, have delivered or will deliver helium contained in gaseous streams directly or indirectly to Northern Natural Gas Company, which helium has been, is being or will be removed and delivered by plaintiff in interpleader [Northern Helex, Inc.], into the possession of the United States of America at the delivery point described in that certain contract between the United States and [Northern Helex, Inc.], (formerly Helex Company), dated August 15, 1961.” Phillips Petroleum Company, a Delaware corporation with its principal place of business in the State of Delaware, was named as an original defendant lessee-producer of gas. Phillips, however, makes no claim to the interpleaded fund, and urges that having disclaimed any interest in the subject matter of the action upon which the court’s jurisdiction depends, it should be dismissed therefrom. Counsel for landowners and Phillips disagree whether the landowners assert cross-claims against Phillips in KC-1969. After examination of the pleadings and pre-trial order, we find that landowners have asserted two cross-claims against Phillips; first, a denial that Phillips has any interest in the fund (which Phillips concedes) and secondly, on the premise that leases do cover helium, landowners seek damages from Phillips on the ground that as a lessee-producer, it has failed to market the helium portion of natural gas with reasonable diligence. KC — 1980. The plaintiff in this interpleader action is National Helium Corporation, organized and existing under the laws of the State of Delaware, with its principal place of business in the State of Kansas. The Panhandle Eastern Pipe Line Company, a Delaware corporation with its principal place of business in the State of Missouri, was made a party defendant by National Helium. Panhandle owns fifty per cent of the stock of National Helium, with National Chemical and Distillers Company owning the remaining fifty per cent. No lessee-producer was named as an original defendant in this case. Eight named lessee-producers were first introduced into this case by a third-party complaint filed by defendant Panhandle, wherein Panhandle sought judgment against the named third-party defendants “for all sums that may be adjudged against Panhandle in favor of National Helium * * * or the landowners with respect to gas purchased by Panhandle from, and delivered to Panhandle by such third-party defendants * * * ” Prior to that time, landowners had filed counterclaims and cross-claims against National Helium and Panhandle respectively, seeking judgment for alleged conversion of helium. National Helium had never asserted any liability against Panhandle, however, so as to authorize a third-party complaint under Rule 14, F.R.Civ.P., which provides that a “defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to him for all or part of the plaintiff’s claim against him.” [Emphasis supplied.] The lessee-producers answered without-objecting to improper joinder under Rule 14. They have tendered precisely the same issues for decision in KC-1980 as in the other interpleader eases where they were properly joined, and they have taken precisely the same positions in each of the interpleader cases. Had lessee-producers not asserted their claims to the fund in KC-1980, notwithstanding their third-party status, it would have been incumbent upon the court to join them as defendants under Rule 19, F.R.Civ.P. which provides, in pertinent part, that “A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if * * (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may * * * (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.” It is clear that as a group, their presence was necessary to a full and complete adjudication of rights to the interpleaded fund. Failure to join them would have left a critical gap in the group of claimants necessary to a complete determination of the ownership of helium, and the right to participate in the fund consisting of the proceeds from its sale. We hold that the lessee-producers named in the third-party complaint are properly defendants, individually and as representatives of the class, and we deem them to have been joined under Rule 19. The named lessee-producer defendants are twelve in number. Ashland delivers gas to Panhandle under eleven contracts, included in Ash-land’s FPC Rate Schedule Nos. 108, 109, 120, 121, 125, 135, 141, 142, 145, 148 and 177. Cabot Corporation, a Delaware corporation with its principal place of business in Massachusetts, delivers natural gas to Panhandle under eleven contracts, included in its FPC Rate Schedule Nos. 28, 35, 47, 69, 71, 41, 62, 75, 89, 33, and 6 6. Columbian delivers gas to Panhandle under seven contracts, these included in Columbian’s FPC Rate Schedule Nos. 2, 31, 33, 36, 40, 75, and 136. The Shamrock Oil and Gas Corporation, since the commencement of this litigation, has become, as result of a merger, the Diamond Shamrock Corporation, and has been substituted therefor. It is a Delaware corporation, with its principal place of business in the State of Ohio. It delivers gas to Panhandle under four contracts, these included in Shamrock’s FPC Rate Schedule Nos. 4, 24, 30, and 32. The Dorchester Gas Producing Company, a Delaware corporation with its principal place of business in the State of Texas, delivers gas to Panhandle under three agreements, two of which are gas exchange agreements, included in Dorchester’s FPC Rate Schedule Nos. 4, 1 and 2. Gulf delivers gas to Panhandle under eight contracts, being Gulf’s FPC Rate Schedule Nos. 51, 68, 100, 167, 171, 200, 237, and 293. Helmerich & Payne, Inc. delivers gas to Panhandle under two gas purchase contracts, being Helmerich & Payne’s FPC Rate Schedule Nos. 28 and 29. Mobile delivers gas to Panhandle under eleven contracts, being its FPC Rate Schedule Nos. 246, 223, 248, 299, 303, 11, 54, 385, 369, 301, and 245. Pan American delivers gas to Panhandle under eight contracts, being its FPC Rate Schedule Nos. 134, 194, 196, 221, 223, 276, 365, and 425. Texaco, Inc., delivers gas to Panhandle under twenty-two contracts, being its FPC Rate Schedule Nos. 142, 136, 152, 164, 171-173, 224, 230, 242, 244, 256, 289, 303, 304, 309, 315, 318, 344, 352, 353, and 367. Superior Oil Company is a Nevada corporation with its principal place of business in the State of Texas. Superior delivers gas to Panhandle under three contracts, included in its FPC Rate Schedule Nos. 110, 1, and 43. These named lessee-producer defendant appear individually and as representatives of a class defined by the court as comprising “ * * * the persons, firms and corporations denominated ‘lessee-producers,’ who are the owners of leasehold interests in the oil and gas leases [from which gas is produced for delivery to Panhandle Eastern Pipe Line Company] and who deliver, have delivered or will deliver helium contained in gaseous streams directly or indirectly to Panhandle Eastern Pipe Line Company, which helium has been, is being or will be removed and delivered by plaintiff in interpleader National Helium Corporation into the possession of the United States of America at the delivery point described in that certain contract between the United States and National Helium Corporation dated October 13,1961.” The named defendant individuals, Ralph Grounds, Henry Hitch, and approximately five hundred other individuals appear individually and as representatives of a class defined as comprising « -x- -x- * the persons, firms and corporations owning [a] mineral interest in land from which helium has been, or is being, or will be severed from the ground in connection with or because of production under oil and gas leases, which helium has been, is being or will be taken into possession by the United States of America in Seward County, Kansas at the delivery point described in that certain contract between the United States of America and plaintiff in interpleader National Helium Corporation dated October 13, 1961.” Phillips was introduced into this case as a third-party defendant by landowners, alleging underpayment of royalties on gas produced in Moore and Hansford Counties, Texas. This claim has been withdrawn. The remaining counts of that third-party complaint were never addressed to Phillips, and it may not be required to respond to those claims for the first time after trial. Phillips’ request for findings of fact and conclusions of law demonstrating the lack of independent jurisdictional grounds for the claim is therefore moot. We conclude in KC-1980 that lessee-producers are proper parties both individually and as representatives of a class; that Phillip's must be dismissed on the ground that no claim is asserted against it. W-3009. The original plaintiffs in this case are Oliver S. Brown, Harry Lightcap, T. A. Dudley, Dan C. Sullivan, Jr., L. F. Roderick, Stanley Julian, the E. W. Campbell Estate, Ruth C. Rice, Executrix, Herbert and Norma Foster, Fred Shore and Hazel Shore, Gerald G. Finley, A. W. Klassen, John Alford, Robert Larrabee, Robert Larrabee as Executor of the Estate of Lee Larrabee, Deceased, Emil Schnellbacker, Wylie R. Gore, George H. Anderson, Ora V. Martin and Lela Z. Martin, and Gene Cyr. The intervening plaintiffs are Alfred Akers (Akin), Chester C. Clark, Dorothy M. Cox, Della M. Drake, John R. Jones, Bertha E. Kells, C. A. Kells, a/k/a Chester A. Kells, W. L. Lacey, L. G. Moore, Warden L. Noe, Bernard J. Nordling, Homer Leroy Par-shall, Leone L. Parshall, Lillie Snare (Snarl), June Stegman as Guardian of Patricia A. Stegman, June Stegman as Guardian of Victor J. Stegman, and Edith Thompson. These parties appear individually and as representatives of a class defined by the court as consisting of: “ * * * the persons, firms and corporations owning mineral interests in land from which helium has been, or is being severed from the ground in connection with or because of production under oil and gas leases, which helium has been, or is being taken into the possession of the defendant United States of America at points in Seward, Ellsworth or Grant Counties, Kansas, or Hansford or Moore Counties, Texas, described in the four following contracts : (a) Contract between United States of America and Helex Company, ■now Northern Helex Company, dated August 15, 1961. (b) Contract between United States of America and Cities Helex dated August 22, 1961. (c) Contract between United States of America and National Helium dated October 13, 1961. (d) Contract between United States of America and Phillips dated November 13, 1961.” The United States is the sole defendant in this case. It has joined as third party defendants National Helium, Cities Service Helex, Inc., Northern Helex Company (formerly Helex Company) and Phillips, the parties to the four contracts recited in the foregoing paragraph. W-3159. The named original plaintiffs in this action are Ralph Grounds and Henry Hitch, Jr. Intervening plaintiffs are Robert Adams, C. Dale Duer, Hubert R. Elrod, Ruth F. Fischer, Zuba D. Jefferis, Alonzo C. Robinson, the John A. Spohn Estate, W. D. Ross and Herb Williams. These parties appear individually and as representatives of the class of plaintiff as defined in the preceding case, W-3009. Again, the United States is the sole defendant, and it has impleaded as third-party defendants the same four corporations impleaded in the preceding case, W-3009. CLASS ACTIONS The Court has, in the light of the evidence and recent decisions, reconsidered its rulings designating certain named representatives of described classes for the prosecution and defense of certain claims in each of the consolidated cases. The basic prerequisites for maintenance of a class action are stated in Rule 23(a), F.R.Civ.P.: “(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.” In addition, the action must satisfy one or more of four prerequisites stated in Rule 23(b). By order filed January 16, 1967, the Court defined the classes of landowners and lessee-producers in each interpleader case as set out supra under the heading, “Parties.” In addition, we defined the class of plaintiff landowners in W-3009 and W-3159. As to each class, we found that the class was so numerous that joinder of all members was impracticable, that there were questions of law or fact common to each class, that the claims and defenses of the representative parties in each class were typical of the claims and defenses of the class, that the representative parties would fairly and adequately protect the interests of the class. We found further as to each class that the further prerequisites of Rule 23(b) (1) (A) and (B) were met, in that prosecution of separate actions by or against individual members of the class would create a risk of: “(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing, the class, [and] “(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; tt * * ff A separate finding was made as to the class of lessee-producers in KC-1980, on the ground that claims by and against members of that class met the prerequisite of Rule 23(b) (3), in that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” We adopt these findings herein. In our view, these actions are eminently suited to class proceedings. There are estimated to be approximately 30,000 persons who receive income from the production of helium-bearing natural gas from which helium is extracted, by virtue of ownership of land, mineral interest, and/or royalty or other interests. These cases have required lengthy, extensive and costly discovery proceedings, the expenditure of many hours in legal research, assembly and preparation of exhibits, numerous pretrial appearances, in addition to the conduct of a forty-three day trial. [Counsel for landowners state that their expenditures to date exceed $90,000.] To require thousands of individual landowners to present their claims to the fund individually would encumber these interpleader actions with procedural and other complexities of perhaps unmanageable proportions. Likewise, in cases W-3009 and W-3159, the class proceeding permits the economical and expeditious resolution of many claims in one proceeding. As stated in Eisen v. Carlisle & Jacquelin, 391 F.2d 555 (2nd Cir. 1968): “Class actions serve an important function in our judicial system. By establishing a technique whereby the claims of many individuals can be resolved at the same time, the class suit both eliminates the possibility of repetitious litigation and provides small claimants with a method of obtaining redress for claims which would otherwise be too small to warrant individual litigation.” 391 F.2d at 560. Likewise, the lessee-producers are very numerous. Each interpleading pipeline it is estimated has several hundred gas purchase contracts in the area. Joinder of vendors under all these contracts would be impracticable and unnecessary. Cities takes the position that the landowner representatives cannot adequately represent the entire class of landowners, because of alleged conflicting and antagonistic interests between two subgroups of the class, those whose recovery depends entirely upon a determination that helium is “gas” within the terms of mineral conveyances, oil and gas leases, unitization agreements and like documents, and those whose recovery would be enhanced by a determination that helium is not “gas” within the terms of such documents. Certain lessee-producers argue that the landowner class cannot sue or be sued as a class unless they are divided into seven sub-classes as authorized by Rule 23(c) (4). Of the recited sub-classes, five claim in common that leases do not cover helium. Within those five sub-classes, there is no antagonism or conflict of interest between those who may claim all or only a proportionate share of helium or the proceeds from its sale. Lessee-producers envision two sub-classes as claiming that leases do cover helium, and claiming in addition that lessee-producer gas purchase contracts provide no payment for helium contained in natural gas delivered thereunder. We would point out that these two sub-classes would also recover if leases were found not to cover helium. We fail to perceive any antagonism or conflict of interest among the sub-classes with respect to the issues here involved. Landowners in pleading and presenting their case have sought recovery on alternative propositions: One, that the leases do not convey helium; the other, that they do, but that landowners have not been paid therefor. The Court remains convinced that there is no occasion to create'seven sub-classes among landowners to present separately, two alternative and mutually exclusive theories, which have both been most ably investigated, pleaded and tried by counsel in behalf of the landowner class. In Cases W-3009 and W-3159, the United States denies that “all owners of lands or mineral interests from which helium-bearing natural gas is produced which is the subject matter of this action comprise a class which can be represented by the named plaintiffs (Landowners) in this action.” The United States does not specify in what particular respects the representative parties, or their counsel, fail to represent adequately the absent members of the class, or in what respect their claims and defenses are not typical of those absent persons. For the reasons stated supra in this section, we remain of the view that the claims of representative landowners are typical of those of absent members, that they raise questions of fact and law common to the class, and that the representative parties have fully represented and protected the interests of the entire class. Lessee-producers have renewed objections to orders of the court, all entered prior to July 1, 1966, finding that landowners constituted a “true” class in each of the interpleader cases. Rule 23 as amended became effective July 1,1966, and was applied to all pending cases in subsequent class rulings. However, the order of January 16, 1967, in which the classes were defined, provided that “classes previously defined by the court in regard to claims of * * * Northern Natural Gas Company and Northern Helex Company in KC-1969 and claims of third-party plaintiff Panhandle Eastern Pipe Line Company in KC-1980 are not affected by this order.” The class of landowner defendants in KC-1980 was previously denominated a “true” class. This categorization was important under the old rule principally for identifying persons bound by the judgment, and helping in turn to determine the res judicata effect of the judgment if questioned in a later action. See Notes of Advisory Committee on Rule 23. We determine that the extent of the judgment in this case is to be governed under Rule 23 as amended. These objections are thus mooted. Lessee-producers object to the court’s order that Panhandle’s third-party complaint in KC-1980 be maintained against them both individually and as representatives of a class of approximately 540 producers who sell natural gas to Panhandle which is processed for helium extraction. Maintenance of this complaint against the third-party defendants as a class was ordered under Rule 23(b) (3), for which the court made the requisite finding that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Accordingly, the court directed notice be given to absent members of the class. Rule 23(b) (3) recites four “non-exhaustive factors” to be considered in authorizing a class proceeding under that subsection: “(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.” At no time prior to trial did it appear that any individual member of the class had any interest in exercising separate control over the prosecution or defense of any claim, that any prior litigation existed between Panhandle and any member of the lessee-producer class respecting the issues raised in the third-party complaint, that it was not desirable and in the interest of expedition and economy of litigation to concentrate litigation of Panhandle’s claims against all its gas vendors in one particular forum, or that a class proceeding would occasion any special difficulties. Moreover, it was clear that questions of law and fact common to members of that class predominated over questions affecting only individual members, and that permitting maintenance of the claims of Panhandle’s gas vendors to the fund in the interpleader action was superior to any other available method for the fair and efficient adjudication of the lessee-producers’ claims to that fund in KC-1980. After trial, with the benefit of hindsight, the court remains convinced of the correctness of the order regarding the class of lessee-producers in KC-1980, and we decline to disturb it. We find that the representation of the interests of both classes is fully adequate, on at least two grounds. First the representation by counsel for both the landowner and lessee-producer classes has been of the highest quality. Their presentation reflected diligent, careful, and incisive attention to the interests of the class. In addition to the most careful investigation by deposition, interrogatories and other discovery of facts, they have explored fully, in evidence, briefs and arguments, what must surely be every conceivable theory which the facts could possibly support. Secondly, the very number of representative parties is substantial. There are over 200 named landowner claimants in KC-1945; seven in KC-1946; six in KC-1947; 45 in KC-1948; over 500 in KC-1969, and over 300 in KC-1980, in addition to those named in W-3009 and W-3159, some of whom appear in the inter-pleader eases, also. Thus, in toto, over one thousand landowners advanced claims in their own behalf and that of others similarly situated in all these consolidated cases. Lastly, we turn to the question of notice to the members of the landowners and lessee-producer classes to whom the court has not yet directed notice to be given, which includes all except the lessee-producer class in KC-1980. In our order filed January 16, 1967, the court found that the claims of all the classes met the requirements of Rule 23(b) (1) (A) and (B), and that accordingly notice to absent members of those classes was not required at that stage of the case, prior to trial on the issues of liability alone. This holding was based on the view that notice to absent members was required only when the class proceeding was founded upon Rule 23(b) (3). Subsection (c) (2) provides as follows: “In any class action maintained under subdivision (b) (3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice shall advise each member that (A) the court will exclude him from the class if he so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion, may, if he desires, enter an appearance through his counsel.” Absent requirement of notice in class proceedings under Rule 23(b) (1) and (2) , we regarded notice as mandatory only for class proceedings under 23(b) (3) . The Court of Appeals for the Second Circuit in May, 1968, addressed itself to this point, thus: “We must also note that plaintiff’s effort to qualify the action under 23 (b) (1) and 23(b) (2) was induced by his erroneous theory that notice is not ‘mandatory’ under these sections. This theory is based on the assumption that 23(c) (2) provides the only ‘mandatory’ notice required by the new rule. Since this particular section refers exclusively to actions brought under 23 (b) (3), other suits cognizable under either 23(b) (1) or 23(b) (2) would only be subject to ‘discretionary’ notice under 23(d) (2). Nevertheless, we hold that notice is required as a matter of due process in all representative actions, and 23(c) (2) merely requires a particularized form of notice in 23(b) (3) actions. * * * ” Eisen v. Carlisle & Jacquelin, 391 F.2d 555, at 564-565 (2nd Cir. 1968) [Footnotes and citations omitted.] We think that the essential requisite/xf ^due process as to absent members of the class is not notice, but the adequacy of representation of their interests by named parties. As stated in Dolgow v. Anderson, 43 F.R.D. 472 (E.D.N.Y.1968): “The Supreme Court has indicated that adequacy of representation, not form of notice, is the crucial consideration. See Hansberry v. Lee, 311 U.S. 32, 42, 61 S.Ct. 115, 118, 85 L.Ed. 22 (1940) (‘this Court is justified in saying that there has been a failure of due process only in those cases where it cannot be said that the procedure adopted, fairly insures the protection of the interests of absent parties who are to be bound by it.’)” [Emphasis by the court.] 43 F.R.D. at 500. We cannot, of course, determine the res judicata effect of the judgment entered herein, but we deem in the public interest that the extent of the judgment be as broad as constitutionally permissible. We think this interest will be best served by directing that “the best notice practicable under the circumstances” be given all members of the class of landowners and lessee-producers, prior to entry of judgment, apprising them of the extent of the proposed judgment and providing any member thereof adequate time to signify his dissatisfaction with the adequacy of representation of his interest, and to advance any new claim to the interpleader fund, or against the United States which arises out of his status as a member of the described class and which has not been adjudicated herein. The present view of the Court, is that the best notice practicable includes individual notice to all members of each class, and that this can be accomplished with “reasonable effort.” JURISDICTION The basic jurisdiction of the Court is premised upon 28 U.S.C. Section 1335; 1397 and 2361. Jurisdiction of the six inter-pleader cases is founded upon 28 U.S.C. Section 1335, which provides as follows: “(a) The district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader filed by any person, firm, or corporation * * * having in * * * its custody or possession money or property of the value of $500 or more, * * * or being under any obligation written or unwritten to the amount of $500 or more, if (1) Two or more adverse claimants, of diverse citizenship as defined in section 1332 of this title, are claiming or may claim to be entitled to such money or property, or to any one or more of the benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by virtue of any such obligation; and if (2) the plaintiff has deposited such money or property or has paid the amount of or the loan or other value of such instrument or the amount due under such obligation into the registry of the court, there to abide the judgment of the court, or has given bond payable to the clerk of the court in such amount and with such surety as the court or judge may deem proper, conditioned upon the compliance by the plaintiff with the future order or judgment of the court with respect to the subject matter of the controversy. (b) Such an action may be entertained although the titles or claims of the conflicting claimants do not have a common origin, or are not identical, but are adverse to and independent of one another.” In State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967), the Court established the principle that in interpleader actions under § 1335, only “minimal diversity” is required, that is, diversity of citizenship between any two adverse claimants. Such diversity exists in these cases. By the terms of the above statute, jurisdiction is dependent upon deposit of the money or property in court by the interpleading party, or else the giving of bond “with such surety as the court or judge may deem proper.” Farmers Elevator Mutual Insurance Company v. Jewett, 394 F.2d 896 (10th Cir. 1968). In KC-1945, Cities Service Gas has given bond in the sum of $16,000, with proper surety, and Cities Service Helex gave like bond upon entry into the case. Cities Service Helium (now Cryogenics), joined as an involuntary plaintiff, filed no bond, so far as appears. In KC-1946, -1947, -1948, Cities Service Gas and Cities Service Helex each filed the following respective bonds: $15,000; $12,000; $32,000. In KC-1969, Northern Natural Gas and Northern Helex jointly filed a bond, with surety, of $100,000. In KC-1980, National Helium filed bond with surety of $100,000. Ashland Oil & Refining Company moved December 15, 1966, to enlarge the bonds in cases KC-1947, -1969, and -1980, to not less than $75,000,000, $75,000,000, and $110,000,000, respectively, these sums based on movant’s estimates that during a period of six years projected to elapse from the commencement of helium extraction operations and sales by the interpleading plaintiffs in those cases until judgment herein, proceeds by the plaintiffs would total approximately $64,000,-000, $67,000,000, and $107,000,000, respectively. After argument, the motion was withdrawn. Shortly thereafter, counsel for Cities Service Gas Company filed an order reciting a statement and agreement made in open court that “Cities Service Gas Company would be responsible for and would pay and satisfy any final money judgment against Cities Service Helex, Inc., or Cities Service Cryogenics, Inc., in this action which is not otherwise paid or satisfied,” the captioned case being KC-1946 only. The Interpleaded Funds. It has been generally agreed since the commencement of these cases that the funds involved consisted of the proceeds from the sale of helium. The interpleading plaintiffs have been and presently are making sales of helium only to the United States. The Court finds that in cases KC-1945 through KC-1948, the fund consists of all proceeds received and to be received by Cities Service Helex, Inc., from the United States as payment for helium contained in a helium-gas mixture delivered to the United States pursuant to that contract between the United States and Cities Service Helex, Inc., executed August 22,1961. Stated otherwise, the subject matter of these four cases consists of the obligation of Cities Service Helex, Inc., to pay the proceeds received by it from the sale of helium to the United States or to any other purchaser, to any person found to be the owner of such helium, or to be otherwise entitled to participate in such proceeds. The Court further finds that the fund interpleaded in KC-1969 consists of all proceeds received or to be received by Northern Helex, Inc. (formerly Helex, Inc.) as payment for helium contained in a helium-gas mixture delivered to the United States under that contract between the United States and Helex, Inc., dated August 15,1961. Stated otherwise, the subject matter of the action consists of the obligation of Northern Helex, Inc., to pay the proceeds received by it from the sale of helium to the United States, or to any other purchaser, to any person found to be the owner of such helium, or to be otherwise entitled to participate in such proceeds. The Court further finds that the fund interpleaded in KC-1980 consists of all proceeds received and to be received by National Helium Corporation from the United States as payment for helium contained in a helium-gas mixture delivered to the United States under a contract executed October 18, 1961. Again, stated more broadly, the subject matter of the action consists of the obligation of National Helium to pay the proceeds received by it as payment for helium sold to the United States or to any other purchaser, to any person found to be the owner of such helium, or to be otherwise entitled to share in the proceeds of its sale. The foregoing funds were not those initially interpleaded by plaintiffs in the Cities cases and in KC-1980. The landowners moved to dismiss all six inter-pleader actions for want of jurisdiction, arguing, inter alia, that the funds before the Court did' not include the amounts received by the interpleading plaintiffs from the sale of helium to the United States. The Court overruled this motion, stating that the “subject matter in controversy as contemplated by the inter-pleader statute is the claim of ownership under the mineral leases of the helium produced and marketed.” This ruling was affirmed in Grounds v. Northern Natural Gas Co., 327 F.2d 1003 (10th Cir. 1964) (per curiam). Subsequent to this ruling, the subject fund was more precisely defined and enlarged. By order filed January 10, 1967, the fund in the Cities eases (KC-1945, -1948) was defined thus: “Counsel for plaintiffs [the Cities group] states that the interpleaded fund involved in such four law suits, is the proceeds from the sale of all the helium which has been or is being ex-traeted by Cities Service Helex, Inc.” In KC-1980, plaintiff National Helium interpleaded at the outset only its obligation to pay to Panhandle $2.06 per Mcf for helium extracted from the gas stream belonging to Panhandle. It did not interplead the monies received for its sale to the United States. In the commencement of that action, however, National Helium sought and obtained an injunction against further prosecution of a declaratory judgment action in an Oklahoma state court, in which plaintiffs sought a determination that they were the owners of and entitled to the net value of all helium sold by National Helium to the United States, thus putting in issue in that state court case the right to entire payments for helium received by National Helium for helium sales to the United States. The discrepancy between the scope of the two cases was raised at a hearing April 20, 1964, after the Tenth Circuit ruling supra. Counsel for National Helium then stated that “if the pleading (in KC-1980) is not as broad as the pleading in the State Court so that the issues are not the same, that we will make them the same.” Counsel stated further at that hearing: “Your Honor, what I have been trying to say was that in the National Helium case, at least, we look upon the liability of National Helium as the value of the helium, whatever it may be, more or less. I mean it might be more than eleven dollars. It might be less. We accept the liability of National Helium for the value of the helium and that ought to clear the air as far as National Helium goes.” Although examination of the files discloses no amendment of the pleadings, we cannot but conclude from the foregoing that the interpleaded fund in KC-1980 is as we have determined it to be. Jurisdiction of Landowners’ Cross-Claims. The landowners’ claim to the fund rests on one of two theories; first, that oil and gas leases in which they hold interests and under which natural gas is produced do not convey helium as a constituent of the “gas” leased thereunder, and secondly, that the helex companies are unjustly enriched by monies received by them from the sale of helium. In addition to their claims against the fund, however, landowners have asserted cross-claims against the lessee-producers, the assertion of which is contingent upon a finding that landowners have no interest in the interpleaded funds themselves. Landowners urge that if the leases do cover helium, first that they have not been paid the proper royalties therefor under the fractional royalty provisions of the leases, and are entitled to recover royalties based upon the fair and reasonable value of helium as attained by reason of its severance from the stream and subsequent marketing; alternatively, landowners urge that the lessee-producers have failed to market helium produced under such leases with reasonable diligence, and seek cancellation of the leases as to the helium portion of the gas stream. Rule 13(g) F.R.Civ.P. provides thus: “A pleading may state as a cross-claim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action. Such cross-claim may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant.” Lessee-producers urge that these cross-claims do not relate to the “property that is the subject matter of the action,” the proceeds received by the plaintiffs from the sale of helium, that these claims are not ancillary to the interpleader subject matter, that in fact, they are alternative claims not against the fund nor the holders thereof, but against co-claimants founded upon independent contracts, the leases, recovery upon which claims would leave the interpleaded funds intact, and would further require, the granting of in personam judgments against the lessee-producers, which is beyond the jurisdiction of the court in statutory interpleader actions. In Knoll v. Socony Mobil Oil Company, 369 F.2d 425 (10th Cir. 1966), cert. denied, 386 U.S. 977, 87 S.Ct. 1173, 18 L.Ed.2d 138 (1967), the Court stated thus: “A related jurisdictional issue is whether the trial court erred in enjoining appellants from asserting any title in or to the ‘above described property’ in any manner inconsistent with the terms of its order and judgment. This was an in personam exercise of jurisdiction. In an interpleader action, however, in personam jurisdiction extends only to the fund deposited with the court. Since the trial court was limited to disposition of the res, we must hold that the court lacked jurisdiction to enter this order.” 369 F.2d at 429. The fund before the Court in that case was the money held by Mobil and owing to the true owners of certain property and lease-hold rights therein, from which it had produced oil. The injunction extended beyond the res, precluding claimants from asserting any title in the realty itself. In Erie Bank v. United States District Court for the District of Colorado, 362 F.2d 539 (10th Cir. 1966), the Court held that in an interpleader action in which the plaintiff asserted no claim to the deposited fund, it lacked jurisdiction over a counterclaim by a claimant against the disinterested stakeholder on the ground that the latter was not an “opposing party” within Rule 13. It would appear to follow that when the stakeholder was himself an interested party, a counterclaim would be not only permissible under Rule 13, but compulsory thereunder, and the Court would be empowered to enter judgment on such counterclaim. As to landowners’ cross-claims, however, for additional royalties on helium or on the value of natural gas as allegedly enhanced by the presence of helium, and for cancellation of leases as to helium for failure to market same, we must agree with the lessee-producers that those claims do not relate to the subject matter of the action. It is true that landowners’ claims are founded upon the identical leases upon which lessee-producers base, in important part, their claims to the fund. In interpleader actions, however, the “subject matter of the action” is not a set of facts, a transaction or other occurrence which gives rise to litigation, but a specific identified fund or property. Claims must not only “relate” to that property, but be asserted against it, as we view the present law of this Circuit. This is a type of case of which the Supreme Court spoke in State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 87 S. Ct.1199, 18 L.Ed.2d 270 (1967), “where a stakeholder, faced with rival claims to the fund itself, acknowledges — or denies— his liability to one or the other of the claimants. In this situation, the fund itself is the target of the claimants. It marks the outer limits of the controversy.” 386 U.S. at 534, 87 S.Ct. at 1205, 18 L.Ed.2d at 277. [Emphasis supplied.] [Footnote omitted.] We therefore lack jurisdiction over the landowners’ cross-claims against their lessee-producers. Jurisdiction of Pipeline Counterclaims. The lessee-producers claim the fund on the ground that helium, a noncombustible and non-hydrocarbon component of the gas stream, did not pass to the pipeline companies under the gas purchase contracts between the parties. Accordingly, the pipeline companies, Cities Service Gas, Northern Natural and Panhandle have asserted counterclaims against the lessee-producers on their warranties of title in contracts with pipeline companies contingent upon the recovery by the producers of the funds. These claims are twofold: First, it is asserted that warranties of title in the parties’ gas purchase contracts extend to the full gas stream, and that if only the hydrocarbon portion passed thereunder, the lessee-producers must respond to the purchasers for breach of warranty respecting the balance of the stream. Alternatively, pipeline companies seek recovery from each of the lessee-producers of that percentage of all payments made under the gas purchase contracts which the volume of non-combustible constituents including helium bears to the volume of the total stream. These counterclaims are founded upon the identical gas purchase contracts under which the lessee-producers claim the fund. They arise out of the “transaction * * * that is the subject matter of the opposing party’s claim,” or they relate to property that is the subject matter of the original action. We conclude that these counterclaims are permissible under Rule 13, insofar as they affect the rights of the parties to participate in the fund. Jurisdiction of Claims Asserted Against the United States. An additional jurisdictional problem is raised in the actions by landowners against the United States. The United States denies first that the landowners constitute a class, a question we have heretofore disposed of, and contends further that the United States is not subject to suit by a class. In each of these cases, the landowners assert two separate claims against t