Bolton v. Coats
| Decision Date | 26 November 1975 |
| Docket Number | No. B--4951,B--4951 |
| Citation | 533 S.W.2d 914 |
| Parties | W. Thomas BOLTON, Petitioner, v. Alton COATS et al., Respondents. |
| Court | Texas Supreme Court |
Bankhead & Davis, Carthage, Powers & Rose, John E. Powers, Austin, Joseph P. Witherspoon, Austin, for petitioner.
Shank, Irwin, Conant, Williamson & Grevelle, Ralph Shank, Dallas, Cantey, Hanger, Gooch, Cravens & Munn, M. H. Carter Burdette, Fort Worth, Long, Strong, Jackson & Parker, Crawford Parker, Jr., Carthage, Baker & Botts, William C. Slusser, Houston, LaSalle & Baker, K. Baker, Carthage, Jack B. Strong, Longview, Clyde Brown, Monroe, La., for respondents.
This is an appeal from a summary judgment against the plaintiff, W. Thomas Bolton, the assignor of certain oil and gas leases, in a suit which he filed for breach of contract and damages against his assignees. Bolton, who had reserved an overriding royalty on the assigned leases, alleged that the defendant assignee, Alton Coats, and others holding under Coats, were liable in damages for failure to perform express and implied covenants of the assignment. The defendant respondents will be referred to as 'Coats' or 'assignees' unless otherwise noted.
On one of the leases Coats drilled a well known as the No. 1 Cornelius Evans, which was classified by the Texas Railroad Commission as a gas well. This lease and the other Bolton leases relevant to this controversy were unitized, as permitted by Bolton's assignment to Coats, to form a gas production unit of 673.70 acres known as the Coats et al. 'F' Unit (Mitchell) in what is referred to by Coats as the Bethany Field and by Bolton as the Bethany and the Carthage Fields in Panola County. Bolton alleges that the Evans well penetrated three separate productive sands: (1) the Lower Petit, (2) Upper Travis Peak (Sabine sand), and (3) the Lower Travis Peak (Burnett sand).
Bolton's pleadings attack the Railroad Commission's classification of the Evans well as a gas well in the Burnett sand, alleging that in addition to the gas produced from the Lower Petit and Sabine sands, the well was capable of and had actually produced oil in paying quantities from the Burnett sand; that Coats wrongfully concealed this oil production from Bolton and the Commission; that he fraudulently caused the Railroad Commission to classify the Evans well as a gas well in the Travis Peak formation rather than as a dual reservoir of gas in the Sabine sand and crude oil in the Burnett sand; and that because of such wrongful conduct Bolton suffered a loss of income which he would have received from a proper classification and production of oil from the Evans well.
The court of civil appeals affirmed the trial court's summary judgment against Bolton on the grounds that, after seeking and failing to obtain reclassification of the Evans well by the Railroad Commission, he did not appeal the Commission's decision in Travis County as provided by law, and that the present action constitutes an impermissible collateral attack on the Railroad Commission's order. Tex.Civ.App., 514 S.W.2d 482. If the allegations summarized above were all of Bolton's pleaded cause of action we would agree with the conclusion reached by the court of civil appeals. In addition, however, Bolton had other pleadings for damages which are separate from his attack upon the Railroad Commission's order and on which the defendants did not show the absence of a genuine issue as to material facts or that they were otherwise entitled to summary judgment as a matter of law. Therefore, we reverse the judgments of the courts below and remand the cause for trial on the allegations hereinafter discussed.
Among such other pleadings are allegations by Bolton that Coats actually produced from the Evans well large quantities of crude oil (at least 25,532 barrels up to 1960) and distillate on which Bolton has not been paid the overriding royalty to which he is entitled under his assignment. In this connection he also seeks an accounting. A lessee or assignee who produces oil contrary to law or commission order is liable to the royalty owner for his share of what is actually, although illegally, produced. Ortiz Oil Co. v. Geyer, 138 Tex. 373, 159 S.W.2d 494 (1942). The Railroad Commission's classification of the well as a gas well in the Travis Peak formation (including the Burnett sand) means that crude oil in excess of one barrel per 100,000 cubic feet of gas Should not be produced therefrom. 1 It does not conclusively establish that a greater amount of oil Was not in fact produced. Therefore, the order is not a bar to Bolton's cause of action for his share of any oil which actually was produced and for which he has not been paid, nor to his plea for an accounting.
By other allegations Bolton asserted that much of the Burnett sand under the 673 acres was an oil bearing formation and that the oil was being drained therefrom by oil wells on adjacent lands, some of which wells were being operated by Coats and other assignees holding under Coats, thus depriving Bolton of the value of his overriding royalty on the oil being drained away; that in addition to field rules for gas wells limiting the drilling of one gas well on each 640 acres (plus 10% Tolerance), there are separate field rules applicable to oil wells which permit the drilling of one well for oil on each 80 acres (plus 10% Tolerance); that a prudent operator would have sought a permit and profitably drilled at least five oil wells to the Burnett oil sand on the 673 acres; and that Coats breached his implied covenant to protect the leasehold from drainage.
Unless the assignment provides to the contrary, the...
To continue reading
Request your trial
-
Tidelands Royalty B Corp. v. Gulf Oil Corp., CA 3-79-0244-R.
...covenants that apply to protect royalty interests under leases.16 Jackson v. Texas Co., 75 F.2d 549 (10th Cir.1935); Bolton v. Coats, 533 S.W.2d 914 (Tex.1975). Obviously, an assigned overriding royalty interest—just like a royalty reserved under a lease—can be realized only if an implied c......
-
Abraham v. WPX Prod. Prods., LLC
...royalty owner. Id. at [2 Howard R. Williams & Charles J. Meyers, Oil and Gas Law] § 420.1 [ (1981) ]. See also Bolton v. Coats , 533 S.W.2d 914, 916 (Tex.1975) (implied covenant to protect against drainage extended to overriding royalty owners). The commentators note an alternative covenant......
-
Trahan v. Superior Oil Co., 81-3081
...119 So.2d 759, 765-65 (1960). For application of the collateral attack doctrine in a somewhat different context, see Bolton v. Coats, 533 S.W.2d 914, 915-16 (Tex.1975), rev'g, 514 S.W.2d 482 (Tex.Civ.App.--Tyler 1974); Zimmerman v. Texaco, Inc., 409 S.W.2d 607, 613 (Tex.Civ.App.--El Paso 19......
-
Tidelands Royalty B Corp. v. Gulf Oil Corp.
...Price, 402 U.S. 934, 91 S.Ct. 1526, 28 L.Ed.2d 868 (1971).7 611 F.Supp. at 769.8 Id. at 804-05.9 228 La. 254, 82 So.2d 1 (1955).10 533 S.W.2d 914 (Tex.1975).11 116 F.2d 994 (5th Cir.1941) (applying Texas law).12 Tidelands, 611 F.Supp. at 804, 805.13 See Wier, 228 La. at 263, 82 So.2d at 4; ......
-
CHAPTER 1 ROYALTY INTERESTS IN THE UNITED STATES: NOT CUT FROM THE SAME CLOTH
...generally, Maurice Merrill, Implied Covenants Between Others Than Lessors and Lessees, 27 Wash. U.L.Q. 155 (1942). [41] Bolton v. Coats, 533 S.W.2d 914, 53 O.&G.R. 379 (Tex. 1975). [42] 533 S.W.2d at 916-917. [43] Cook v. El Paso Natural Gas Co., 560 F.2d 978, 58 O.&G.R. 206 (10th Cir. 1977......