128 F.2d 334 (5th Cir. 1942), 9729, Selby Oil & Gas Co. v. Railroad Commission of Texas

Docket Nº:9729.
Citation:128 F.2d 334
Party Name:SELBY OIL & GAS CO. et al. v. RAILROAD COMMISSION OF TEXAS et al.
Case Date:May 13, 1942
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 334

128 F.2d 334 (5th Cir. 1942)

SELBY OIL & GAS CO. et al.

v.

RAILROAD COMMISSION OF TEXAS et al.

No. 9729.

United States Court of Appeals, Fifth Circuit.

May 13, 1942

Rehearing Denied June 30, 1942.

Page 335

Dan Moody, of Austin, Tex., and E. R. Hastings, of Tulsa, Okl., for appellants.

Gerald C. Mann, Geo. W. Barcus, James P. Hart, James D. Smullen, and Ed Roy Simmons, all of Austin, Tex., and W. Edward Lee, of Tyler, Tex., for appellees.

Before FOSTER, HUTCHESON, and McCORD, Circuit Judges.

HUTCHESON, Circuit Judge.

Exhibiting the requisite diversity, and brought in the appropriate court, the United States District Court of Travis County, Texas, to hold invalid and cancel an order granting a drilling permit and to enjoin all action under it, the suit presented two claims for relief each resting on a distinct jurisdictional basis. In one of these, a claim that the order deprived plaintiffs of their property without due process of law, in violation of the Fourteenth Amendment to the Federal Constitution, the jurisdiction was rested on the existence of a federal question. In the other, a statutory suit, under Section 8, Art. 6049c, Vernon's Texas Annotated Civil Statutes, the jurisdiction was rested on diversity of citizenship. 1 In the constitutional suit, it was claimed that the order 2 of the commission was invalid and the result of its granting would be to deprive plaintiffs of their property without due process of law. In the statutory suit, the claim was that the conclusion that the granting of the exception was necessary to prevent confiscation of permittee's property, and was not supported by substantial evidence 3 and the order was therefore invalid under the statute. The defenses were, a denial as to the constitutional claim that the grant of the permit was violative of the due process clause, and as to the statutory claim that it was invalid under the statute, and an affirmative plea that the order granting a permit for a second well on the tract, as necessary to prevent the confiscation of property, was supported by substantial evidence

Plaintiff's evidence included testimony upon the constitutional claim that permittee, by the drilling of the second well allowed under the permit would have a production and drainage advantage over each and every lease surrounding it, and upon the statutory claim that permittee was not suffering any drainage or damage which would prevent it from recovering all the oil then under the lease and therefore the grant of the permit was not necessary to prevent confiscation of permittee's property. At tis conclusion defendants offered no evidence but moved for judgment and the colloquy following ensued. The Court: 'My understanding is that the State Court have, in many instances, granted injunctions of this character. However, what are you going to do with the decision of the Supreme Court in this Rowan & Nichols case in which they practically tell this Court not to substitute its judgment for that of the Commission any more? ' Mr. Moody for plaintiff:

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'I am going to try to get them to reverse that on a motion for rehearing, your Honor. ' The Court: 'Here is a matter that is confined to the discretion of the commission; they are supposed to conserve the natural resources of the state, and they have the discretion under the law as to the granting of permits for the drilling of oil wells. They conclude that this tract should have another well on it. I don't see how I can, under that decision, substitute my judgment and discretion for theirs and restrain them by injunction. I think the order...

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