Allison v. Smith

• Decision Date: 08 April 1955
• Docket Number: No. 3163,3163
• Citation: Allison v. Smith, 278 S.W.2d 940 (Tex. Ct. App. 1955)
• Parties: H. P. ALLISON et al., Appellants, v. R. E. SMITH et al., Appellees.
• Court: Texas Civil Court of Appeals

Page 940

278 S.W.2d 940

H. P. ALLISON et al., Appellants, v. R. E. SMITH et al., Appellees.

No. 3163.

Court of Civil Appeals of Texas, Eastland.

April 8, 1955.

Rehearing Denied May 13, 1955.

Neill, Blanks, Lewis & Logan, San Angelo, Snodgrass & Smith, San Angelo, for appellants.

Bryan, Suhr & Bering, W. N. Finnegan, III, Houston, Sentell, Rosser & Willbern, Park & Hemphill, Snyder, Bill L. Holland, San Angelo, David W. Stephens, Ft. Worth, Pat S. Moore, Lubbock, for appellees.

LONG, Justice.

On March 27, 1941, Bertha B. Clark conveyed to Nedra Neely an undivided one-half interest in the oil, gas and other minerals in the Northwest 1/4th and Southeast 1/4th of Section 124, Block 25, H. & T. C. Ry. Co. Land in Scurry County, Texas, retaining the exclusive right to execute mineral leases but the grantee being entitled to one-half the bonuses, rentals and royalty accruing under such leases, the reservation being as follows:

'Grantor, her heirs and assigns, hereby reserve the exclusive right to make and execute any and all future oil and gas leases covering the herein conveyed property, or any part thereof, without being joined therein, by the Grantee, her heirs and assigns, but the Grantee, her heirs and assigns shall be entitled to participate in one-half of all bonuses, rentals, royalties and other benefits accruing or to accrue under any future leases.'

On January 28, 1944, Bertha B. Clark conveyed to Marvin Key the North one-half of said Section 124, subject to the outstanding mineral interests. At the time of the trial Marvin Key owned the surface and one-half the minerals and the title to the other one-half of the minerals was vested as follows:

1/16 in the Estate of R. H. Hawn

1/32 in S. F. Hurlburt

1/32 in Bruce Baxter

1/8 in Sam G. Dunn

1/4 in Appellants.

On June 30, 1948, Marvin Key, assignee of Bertha B. Clark, acting under the power reserved in the deed from Clark to Neely, executed an oil and gas lease to R. E. Smith covering the North 1/2 of said Section 124 for a term of ten years. The lease provided that rentals due under the lease should be deposited to the credit of lessors in the Snyder National Bank in Snyder, Texas. The lessee, Smith, timely paid the rentals to all of the mineral owners except appellants. The rentals accruing to them were deposited in the despository bank to the credit of Nedra Neely.

On December 9, 1950, Hon. Scott Snodgrass, an attorney of San Angelo, Texas, acting is behalf of the appellants, sent to Marvin Key the following letter:

'Mr. Marvin Key

'Knapp, Texas

'Dear Mr. Key:

'Mr. H. P. Allison, whose address is 401 West Twohig Avenue, San Angelo, Texas, represents and has a power of attorney from six of his brothers and sisters and a nephew and niece. Mr. Allison and the persons for whom he acts together own one-fourth of the minerals under the NW/4 of Survey No. 124, Block 25, H & T. C. Ry. Co. lands in Scurry County, Texas, and they understand that you own the surface and some interest in the minerals under this land.

'I write you on behalf of the Allisons to advise you for them that if their interest in the minerals in the NW/4 of Survey 124, ever has been leased they have not received either any part of the bonus or any part of any delay rentals and if their interest has been leased under a lease which has required the payment of delay rentals in order to keep it in effect they no longer consider the lease to be in effect on their interest.

'Please understand that the Allisons know of nothing which would cause any dispute to exist between you and them and this letter deals solely and only with the mineral interest owned by the Allisons.

'Since the Allisons understand that the NW/4 of Survey 124 now has a substantial value from a mineral standpoint they consider the lease rights upon their interest in the minerals to be of substantial value and if you have the right to execute a lease or any other instrument binding their mineral interest they do not consent for you to do so unless they are paid the full value as the same now exists.

'The Allisons would like very much for you to communicate with them in the event anyone approaches you in an attempt to get you to execute any character of instrument affecting their mineral interest and if you either will write to me or call me on the telephone collect, Office 'Phone 5028, Home 'Phone 6290, San Angelo, I will see that they do get in touch with you immediately.

'Please consider this letter notice that in view of the present situation the Allisons do not consent to the execution of any lease or other instrument affecting their title without their first being consulted about it and in no event will they consent to the execution of any such instrument in the absence of a full and adequate payment being made to them therefor.

'I again repeat that this letter deals only with the mineral interest owned by the Allisons.

'It will be apreciated very much if you will acknowledge receipt of this letter and at the same time give me assurance for the Allisons that you will not execute any instrument affecting their minerals without first submitting the matter to them.

'Thanking you for your cooperation,

'Yours very truly,

'(s) Scott Snodgrass

'Scott Snodgrass.'

Mr. Key received the letter and delivered it to appellee, R. E. Smith. After this letter was received, Mr. Smith went to San Angelo and there conferred with Mr. Snodgrass and one of the appellants, H. P. Allison, in an effort to secure a ratification of the lease executed in 1948. The parties failed to agree upon the terms of ratification. Thereafter, Mr. Snodgrass wrote Mr. Key the following letter:

'January 6, 1951

'Mr. Marvin Key

'Knapp, Texas

'Dear Mr. Key:

'I wrote you on December 9 about the interest of Mr. H. P. Allison and those he represents in the minerals under the NW/4 of Survey 124, Block 25, H. & T. C. Ry. Co. lands in Scurry County, Texas.

'I am writing again to advise you that Mr. R. E. Smith of Houston, Texas, who owns some interest in the lease which you executed in 1949 on the N/2 of Survey 124, has been to San Angelo seeking to reach some sort of agreement with the Allisons in respect to their one-fourth of the minerals in the NW/4.

'Mr. Smith and the Allisons have not reached an agreement and this letter is to re-affirm everything said to you in my letter of December 9, 1950, and to add to the statements therein contained the advice to you that since all your interest in the minerals in the NW/4 of Survey 124 now is subject to lease and since the lease has been allowed to lapse by its own terms in so far as it may have covered the Allison minerals interest the Allisons at this time do not recognize your right to execute any character of lease or other contract or instrument which will affect their minerals title. Any attempt by you to do so under the present circumstances might cloud the Allison title and might cause the Allisons to suffer substantial damages and if you should cause the Allisons damage by executing any instrument which might affect or cloud their mineral interest they would expect you to make good to them all such damages.

'In 1949 you did everything you agreed to do for the bonus which was paid to you at that time and the fact that the lease on the Allison interest may have been allowed to terminate is not a fact for which you are responsible. Nor does this fact excuse the lessee from doing such drilling on the property as he may be obligated to do under this lease.

'The Allisons will appreciate very much your respecting their wishes in the matter and their positon that under the present circumstances you do not have a right to execute any instrument affecting their minerals. If you doubt the soundness of their position it will be appreciated if you will consult a disinterested attorney of your own choosing and present the facts to him.

'Yours very truly,

'Scott Snodgrass.'

A copy of this letter was sent to and received by appellee Smith. Thereafter, on March 15, 1951, Marvin Key, acting again under the power granted in the deed from Clark to Neely, executed an oil and gas lease in favor of R. E. Smith covering the Northwest 1/4th of said Section 124 and containing, among other things, an unconditional obligation by Smith to commence the drilling of a well thereon on or before April 14, 1951. Smith began the drilling of a well on the land before said date, which was completed on April 29, 1951 as a producer, at a cost in excess of $90,000. Three additional producing wells were drilled thereafter at a similar cost.

This is a suit by appellants to cancel as to their undivided one-fourth interest in the minerals the two oil and gas leases, one dated June 30, 1948 and the other March 15, 1951. Appellants allege, among other things, that no operations for drilling a well were commenced on the lands covered thereby within one year from the date of the lease and that no delay rentals were paid to appellants in lieu thereof. They further alleged that Marvin Key had no authority to bind them by the execution of the lease dated March 15, 1951 for the reason that he was purportedly acting under the authority given him in the deed from Clark to Neely and that such power was revoked by them prior to the execution of said lease; that if the power given him under said reservation was not revoked that he had no authority to make a drilling contract on the land but only had the authority to execute an oil and gas lease for a cash bonus.

The case was tried before the court with the aid of a jury. The special issues submitted to the jury and its answers thereto are as follows:

'Special Issue No. 1. Do you find from a preponderance of the evidence that the defendant R. E. Smith would have proceeded to drill the wells on the NW/4 of Section 124 without unreasonable delay if the lease received by him on March 15, 1951, had been a lease of the plaintiff's one-fourth interest with royalty and other provisions like the lease he received but...