Bettes v. Mid-Texas Petroleum Co.

• Decision Date: 01 June 1922
• Docket Number: (No. 1349.)
• Parties: BETTES v. MID-TEXAS PETROLEUM CO.
• Court: Texas Court of Appeals

Page 753

243 S.W. 753

BETTES v. MID-TEXAS PETROLEUM CO.

(No. 1349.)

Court of Civil Appeals of Texas. El Paso.

June 1, 1922.

Rehearing Denied June 28, 1922.

Appeal from District Court, Stephens County; W. R. Ely, Judge.

Suit by the Mid-Texas Petroleum Company against J. W. Bettes, in which McCleary Bros. and others were made parties defendant, and parties not impleaded intervened. From a judgment for plaintiff, defendants McCleary, and certain interveners, defendant Bettes appeals. Reversed and remanded.

B. B. Chappell, of Breckenridge, J. R. Stubblefield, of Eastland, and McLean, Scott & McLean, of Fort Worth, for appellant.

Jno. W. Woods, of Abilene, Goggans, Bateman & Leaverton, of Breckenridge and W. C. Jackson, of Abilene, for appellee.

WALTHALL, J.

The Mid-Texas Petroleum Company, of Fort Worth, Texas (a trust estate), brought this suit against J. W. Bettes to cancel and forfeit an oil well drilling contract and lease on 40 acres of land in Stephens county, and to remove cloud from title, and to forfeit to the said company $1,000 posted with the company by Bettes as a guaranty for a performance, on his part, of the provisions of the contract, and for the appointment of a receiver to take charge of the lease and equipment and operate same under order of the court, alleging that Bettes had failed to comply with the terms of the lease and drilling contract.

After reciting that the Mid-Texas Petroleum Company is the owner of the oil and gas lease to the 40 acres, describing it, and its desire to develop same for oil or gas, the lease and drilling contract recites that the company, in consideration that Bettes agrees and binds himself, his heirs and assigns, to pay to the company three-eighths of all oil and gas produced from the 40 acres of land, and delivered as stated, the company grants, sells, conveys, and assigns to Bettes the leasehold interest in and to said property upon the conditions following: Bettes agrees to drill four wells upon the 40 acres upon the following conditions:

The rig for well No. 1 to be erected within 20 days from the date of the contract, the well to be spudded in within 40 days from the date of the contract. The rig for well No. 2 to be erected within 40 days from the date of the contract, and the well spudded in within 60 days from the date of the contract, provided, if Bettes at the end of 60 days has not progressed in drilling well No. 1 sufficiently to pull his heavy casing to be used in spudding in well No. 2. Either or both of wells Nos. 1 and 2 may be offset wells to wells drilled or to begin drilling on adjacent property. Should there be additional offset wells to this track other than the two offset wells mentioned, then Bettes shall immediately begin and drill offset well or wells thereto. Then follow certain provisions as to wells 3 and 4 which we need not state. The contract then provides that when each of said wells shall have been spudded in drilling thereof shall be diligently prosecuted until said wells are completed to the oil-bearing sand, known as the sand in the Lyddon pool, unless oil shall be found in paying quantities at a lesser depth.

It is further agreed that Bettes shall use all modern means and equipment in drilling and completing each of said wells so as to make the paying oil sand encountered produce the maximum production of oil. It is agreed that Bettes shall provide at his own expense and cost all necessary storage to care for all oil produced, and other provisions as to separators, pumps, power plants, etc., not necessary to here state. It is agreed that time and efficiency are essence of the contract. It is agreed that as a guaranty for carrying out the full provisions of the contract Bettes has deposited with the company $1,000, which shall be forfeited to the company on failure of Bettes to fully comply with the terms of the contract, and that in addition to the forfeiture of the $1,000 as above, failure to fully carry out the contract in its entirety shall work a forfeiture to the company of the contract and the leasehold interest conveyed with the equipment thereon. It is agreed that the things to be done are contingent upon strikes, damage by floods, fire, or storm, and that reasonable extension shall be agreed upon to offset any such contingency.

The contract is dated the 4th day of February, 1921, and signed by both parties. The company alleged a performance on its part, and that Bettes had wholly failed to carry out the provisions of the contract, or any part thereof, and that by reason of said breach of the contract by Bettes in its entirety he has forfeited all rights thereunder, together with the $1,000 and all equipment placed on the leased premises; that Bettes caused the contract to be recorded in the office of the clerk of the county court, and by reason thereof same is a cloud upon the leasehold interest in said property.

It is alleged that Bettes failed and refused to spud in well No. 1 within the time provided in the contract; that he failed to erect the rig for well No. 2 as provided in the contract; that due notice was given Bettes of the forfeiture of the contract; that prior to and since said forfeiture of said contract divers persons with whom Bettes had contracted for drilling said wells, and for furnishing casing and tankage and digging slush pits, have gone in upon said premises and performed work and furnished material, and Bettes has failed and refused to pay for same; that the drillers on said wells and persons who agreed to and furnished a portion of the casing and tankage had contracted with Bettes to accept as consideration for their services and material an interest in the production from said wells, and said persons are interested to said extent in said lease. The company alleged the existence of other wells in close proximity to said land which drain the oil therefrom and materially damage said lease; that one of the Bettes wells had been drilled to a depth of about 800 feet, and that for the past 15 or 20 days has been shut down by reason of Bettes not complying with his contract with the drillers to furnish casing and other equipment.

The company prayed for a cancellation and forfeiture of the lease and drilling contract, a removal of the cloud from the leasehold interest, judgment for the equipment placed on the premises, the $1,000 deposited, and the appointment of a receiver with orders to operate the lease.

Bettes answered by general denial, and by cross-action to the effect that on or about February 4, 1921, the plaintiff company entered into the contract as set out in the petition; that thereafter, on or about the 18th day of February, 1921, the plaintiff company, acting by and through its president, John W. Wood, agreed with him that —

he (defendant) "should have an extension of 10 days in which to erect and spud in said well; that though the contract was dated February 4, 1921, the contract was not in truth and in fact executed until February 19, 1921, after the plaintiff had agreed with the defendant that he could have 10 days' extension as above mentioned, and upon the promise of the plaintiff to make a supplemental agreement or contract allowing such extension of 10 days to erect rigs and spud in said wells."

Defendant alleged that he relied upon the promise of defendant to extend the time as above; that instead of executing the supplemental contract as agreed, defendant pleads the following letter:

                                         "February 19, 1921
                

"Mr. J. W. Bettes, City — Dear Sir: Referring to contract made with you February 9th, for the development of the north 40 acres [describing same] beg to advise that you are hereby given an extension of ten days in which to have rig erected and completed on well No. 1 named in said contract. No other extension or variation of said contract is given other than an additional 10 days to the 20 days given for the erection of rig for Well No. 1. Very truly, Mid-Texas Petroleum Company, [Signed] By John W. Woods, President."

Defendant alleged that he caused to be erected and completed rig No. 1 on or about March 14, 1921, and completed rig No. 2 on or about March 20, 1921; that he spudded in well No. 1 on or about March 19, 1921. Defendant further alleged that the plaintiff through its conduct and misrepresentations caused defendant's contractors and workmen to remove tools and boiler from well No. 2, and that but for same well No. 2 would have been spudded in about same time No. 1 was spudded in, and prior to the date he was required to spud in No. 2, under the contract. Defendant alleges that on or about March 18, 1921, his agent, Mrs. Talmadge, was led to believe by John W. Woods, plaintiff's president, that it would be all right and agreeable for the work to be done, and there would be no forfeiture, and that, acting upon said representations, defendant, on or about March 19, 1921, commenced the drilling of well No. 1, and drilled same to the depth of 860 feet; that, relying upon the representations of plaintiff, he executed certain contracts with parties, naming them, and setting out the contracts, to do the work of erecting the derricks, furnish material, and do the drilling as required by the contract, and stating what was done and furnished under said contracts, and that the parties were willing, ready, and able to do the drilling, until hindered by plaintiff, as pleaded. Defendant alleged that plaintiff permitted the drilling of well No. 1 as above, though plaintiff knew that well No. 1 was not spudded in within the time mentioned in the original contract and in the extension mentioned.

Defendant Bettes pleaded that by reason of the extension of the time of erecting rig No. 1 and spudding in wells Nos. 1 and 2, and by reason of plaintiff's acquiescence in permitting defendant to spud in well No. 1 and the drilling of well No. 1, as alleged, plaintiff is estopped from canceling this contract.

Defendant alleged the value of his...