Burford v. Sun Oil Co.

• Decision Date: 22 November 1944
• Docket Number: No. 9447.,9447.
• Citation: 186 S.W.2d 306
• Parties: BURFORD et al. v. SUN OIL CO. et al.
• Court: Texas Court of Appeals

186 S.W.2d 306

BURFORD et al. v. SUN OIL CO. et al.

No. 9447.

Court of Civil Appeals of Texas. Austin.

November 22, 1944.

Rehearing Denied February 14, 1945.

Appeal from District Court, Travis County; Roy C. Archer, Judge.

Action by the Sun Oil Company and another against G. E. Burford and others, for cancellation of orders of the Railroad Commission of Texas granting drilling permits. From a judgment for plaintiffs, defendants appeal, and two plaintiffs cross-assign error.

Judgment modified, and, as modified, affirmed.

R. T. Thornton, of Ft. Worth, Hart & Brown and James P. Hart, all of Austin, for appellants G. E. Burford and others.

Grover Sellers, Atty. Gen., and E. R. Simmons, and W. P. Watts, Asst. Attys. Gen., for appellant Railroad Commission of Texas.

Walace Hawkins, of Dallas, and Dan Moody and J. B. Robertson, both of Austin, for appellee Magnolia Petroleum Co.

J. W. Timmins and Martin A. Row, both of Dallas, and Powell, Wirtz, Rauhut, & Gideon, and J. A. Rauhut, all of Austin, for appellee Sun Oil Co.

McCLENDON, Chief Justice.

Rule 37 case. The appeal is from a final judgment cancelling two orders of the Commission granting permits to drill four wells on a long (about 2131 feet, north-south), narrow (about 49 feet, eastwest) tract of 2.33 acres in the East Texas Oil Field, as exceptions to the spacing rule; but providing, however, that the judgment was "without prejudice to a new application" to the Commission to drill one well on tract. The suit was by the oil companies, Sun (Sun Oil Company) and Magnolia (Magnolia Petroleum Company), owners of leases located respectively west and east of the 2.33-acre strip, against Burford et al. (the permittees) and the Commission (Railroad Commission of Texas). All defendants have appealed. The oil companies have cross-assigned error upon that portion of the judgment authorizing a new application to the Commission for one well on the strip; and seek reformation of the judgment by elimination of that portion.

The two orders involved were dated respectively March 25 and June 2, 1939, the first authorizing one well and the second three additional wells.

The following general statement is quoted from appellants' brief:

"This litigation has had a varied course through the state and federal courts. After the first permit, which is attacked in this suit, was granted, the oil companies filed a suit in the state courts to cancel the permit. This cause remained on the docket of the state court until after the second permit was issued and the motion for rehearing was overruled by the Railroad Commission on July 10, 1939. Ten days later, on July 20, 1939, the oil companies dismissed their suit in the state court and refiled their case in the federal court. This case was tried in the Federal District Court and later appealed to the United States Circuit Court of Appeals and to the United States Supreme Court. See Sun Oil Co. v. Burford, 5 Cir., 124 F.2d 467; 5 Cir., 130 F.2d 10; 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424. Judgment was finally entered on the mandate of the United States Supreme Court on July 21, 1943, and on the next day the oil companies filed this their second suit in the state court.

"The principal questions which are raised by this appeal are (1) whether the appellees were not barred from maintaining their second suit in the state courts by reason of limitations, laches, or election of remedies, since their second suit in the state court was filed more than four years after their right of action accrued; (2) whether the validity of the present permit is not made res judicata by reason of a former judgment of the District Court of Travis County, Texas, relating to a permit issued in October, 1934, to Burford's predecessor in title; (3) whether the Railroad Commission had jurisdiction to consider granting the present permit because of the pendency of a suit to set aside another permit, granted in February, 1934, to Burford's predecessor in title; (4) whether the strip is entitled to be considered as a separate strip in granting an exception to Rule 37 to prevent confiscation; (5) whether the Railroad Commission abused its discretion in granting permits to drill four wells, instead of only one well; and (6) whether the court erred in admitting certain testimony of the witness for the Sun Oil Company as to what a report by a firm of engineers showed."

We have reached the conclusions that appellees are not barred from maintaining this suit (question 1) and that the strip is not entitled to be considered as a separate tract (question 4). These conclusions are decisive of the appeal, and render unnecessary a consideration of questions (2), (3), (5) and (6). We will, however, make a brief statement regarding questions (2) and (3).

As to these questions: February 1, 1934, permit was granted to drill one well on the strip. May 30, 1934, suit was filed to cancel this permit on the ground (inter alia) that it was granted without notice and hearing. The same day an order was made temporarily (until hearing on application for temporary injunction, set for July 17, 1934) restraining drilling under the permit. No other action was taken in the case until November 29, 1939, when final judgment was rendered decreeing the permit void for want of notice and hearing and cancelling it on that ground; but "without prejudice" to apply for another permit. Meantime (July 30, 1934) verified application was made to the Commission for a hearing on the original application, it being recited therein that the former order had been set aside because of lack of notice and hearing. Attached to this application was an alleged copy of a judgment decreeing the permit invalid for want of notice and hearing, temporarily enjoining drilling under the permit, and authorizing application to the Commission for a hearing upon the application. Judgment, according to this copy, does not appear to have been entered. It was dated July 17, 1934, the date the application for temporary injunction was set for hearing and the restraining order expired. Appellants contend (and we think correctly) that this action showed abandonment of the original permit, and reinvested the Commission with jurisdiction over the application; the original order being (concededly by all parties) void for want of notice and hearing. October 11, 1934, a new permit was granted after notice and hearing. This permit was cancelled by court decree January 31, 1935. Appellees contend that this judgment was res judicata of the right to drill on the strip. Appellants' contention to the contrary is predicated upon assertions that the issues and parties were different in the prior suit, and further that there had been a change of conditions. We shall not burden this opinion with a detailed statement of these issues. If appellees' contention were sustained, the same result would be reached as that under our above holdings. We are assuming (arguendo) that the plea of res judicata was not good.

Considering question (1) we will first state the several contentions of the parties. Appellants contend that appellees' suit is barred under the doctrine of election of remedies by their first filing suit in the state court and thereafter dismissing that suit and filing suit in the federal court. Clearly this was merely a change in choice of courts, in each of which the same remedies were sought, and since the former suit was dismissed and not prosecuted to judgment there was no election of remedies. Railroad Commission v. Shell Oil Co., Tex.Civ.App., 170 S.W.2d 568. See also 15 Tex.Jur., pp. 830-832, § 8.

Nor does the doctrine of laches apply. The delay in filing the instant suit was occasioned by the pendency of the federal court suit. It may be conceded that appellees had the right to prosecute suits simultaneously in both courts. But they were not required to do so; and their failure to do so, conceding their good faith in bringing the federal court suit (which is not questioned), did not operate prejudicially upon their rights. Moreover there was no showing of prejudice to appellants by reason of delay. Railroad Commission v. Shell Oil Co., Tex. Civ.App., 165 S.W.2d 502, error refused. We should add this further comment in this connection. Federal court jurisdiction was predicated upon both infringement of the due process clause of the Federal Constitution and diversity of citizenship. Federal jurisdiction in these regards is conferred by the Congress. The rights of litigants thus conferred are valuable rights; and this regardless of whether ultimately there eventuate from the federal court choice an advantage to the one making the choice. If, in the exercise of good faith, the choice be in favor of federal jurisdiction no penalty should attach to the mere making of the choice, and the exercise of an honest judgment that one is availing himself of rights to which he is entitled and which (supposedly at least) will work to his advantage.

Upon the issue of limitations: Appellees contend that since this is a special statutory proceeding the general statutes of limitations do not apply. They further contend that if the statutes do apply, limitation was tolled under Art. 5539a, Vernon's Ann.Civ.St. Appellants contend that this article does not apply because (they assert) the federal court case was not dismissed "because of a want of jurisdiction."

As to appellees' first contention: it is true that this "is a special statutory action to enforce a right which exists only by statute, and not under the Constitution, or at common law." Alpha Petroleum Co. v. Terrell, 122 Tex. 257, 59 S.W.2d 364. It is also true that the courts generally hold that where there is unreasonable delay, which works to the prejudice of the affected party, the right to maintain the suit is barred under the principles governing laches. See Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73; Midas Oil Co. v. Stanolind Oil & Gas Co., Tex.Sup....