Caprito v. Grisham-Hunter Corporation

• Decision Date: 31 March 1939
• Docket Number: No. 1885.,1885.
• Citation: Caprito v. Grisham-Hunter Corporation, 128 S.W.2d 149 (Tex. App. 1939)
• Parties: CAPRITO v. GRISHAM-HUNTER CORPORATION et al.
• Court: Texas Court of Appeals

128 S.W.2d 149

CAPRITO v. GRISHAM-HUNTER CORPORATION et al.

No. 1885.

Court of Civil Appeals of Texas. Eastland.

March 31, 1939.

Rehearing Denied May 19, 1939.

Appeal from District Court, Stephens County; B. H. Atchison, Judge.

Suit by the Grisham-Hunter Corporation and others against S. Caprito to recover the purchase price of oil and gas leases and to compel the defendant to specifically perform his contract to purchase the leases, wherein the defendant filed a cross-action seeking to rescind and to recover the amount paid at the time of the execution of the contract. Judgment for the plaintiffs, and the defendant appeals.

Judgment affirmed.

Lyndsay D. Hawkins and Jno. F. Evans, both of Breckenridge, for appellant.

Grisham & King, of Abilene, and Harrell & Bowers, of Breckenridge, for appellees.

GRISSOM, Justice.

April 20, 1937, plaintiffs and defendant entered into the following written contract:

              "Post, Texas
                              April 20, 1937
                

"Mr. S. Caprito, Breckenridge, Texas.

Dear Sir: Confirming our verbal understanding of this date we agree to sell and deliver to you and you agree to purchase from us certain oil and gas leases covering seven-eighths working interest in the following described land in Garza County, Texas. [Here follows descriptions of an 80 and a 22 acre tract of land]

"There are situated on this tract of land two producing oil wells known as our No. 1 and No. 2, Sullivan. Assignment to the last above described tract of land shall be made subject to former assignment to Humble Oil & Refining Company covering the oil and gas rights therein below the depth of 3500 feet.

"The assignment of the above described twenty-two acre tract shall convey the two wells thereon together with all storage tanks now located thereon approximately thirty-two hundred barrels capacity, also oil now in storage in said tanks subject to the one-eighth due the royalty owners. Also all flow lines from said two wells now in use for connection to said tanks. The assignment shall not include any material on said lease not now in use for the operation of same.

"There is now in process of drilling a well on the eighty acre tract hereinabove described, and we agree to complete the drilling of said well to a depth of 2900 feet at our expense, and under your direction. The only material and equipment to be covered by the assignment to this eighty acre tract shall consist of the approximately 2450 feet of eight inch pipe now in the well and the lease house on the premises.

"We acknowledge receipt of your check for five thousand dollars to be applied as part payment for said property, the balance to be paid upon delivery by us to you or your order of assignments conveying said property, said balance being twenty-five thousand dollars.

"If this meets with your approval, please so indicate by signing in the space provided below.

    "Yours very truly
                            "Grisham-Hunter Corporation
                            "By T. F. Grisham
                "Accepted
                  and       "Gregg Oil Company
                 approved:  "By J. C. Hunter
                "S. Caprito
                            "Brown Eagle Oil Company
                            "By J. C. Hunter."
                

The discussion between Mr. Caprito and representatives of the named corporations that led to making said contract commenced in the afternoon of April 20, when Caprito and others came to the place where Judge Hunter and Mr. M. A. and Mr. T. F. Grisham were watching the drilling of a well on a lease owned by said corporations in Garza County. Caprito and his associates were the owners of an adjoining lease on which there was some production. Caprito proposed to the Grishams and Hunter that since the production on his leases and that on plaintiffs' leases was not sufficient to justify the time and attention of several persons in their operations, Caprito would sell his leases and production to plaintiffs. This being declined, Caprito then offered to buy the leases belonging to said corporations and on which the well was being drilled. The well was then drilling at a critical stage. In making the trade Caprito was insistent that he be permitted immediately to take charge of the leased premises and drilling well. Immediately after the execution of the contract, Caprito was, on the night of April 20, 1937, placed in possession and control of the leases, the property on the leases and the drilling well. M. A. Grisham went with Caprito to the derrick floor where the well was being drilled at a critical stage and the driller was informed of the change in ownership and instructed to take his orders thereafter from Caprito. Immediately thereafter, Caprito made changes in the orders to the driller with reference to drilling the well. He testified: "I told them not to stop every six inches, as they were stopping; they were drilling about a foot an hour maybe a half a foot an hour, and hadn't made any headway, as I remember it. I says, `You make a little longer runs.' He says, `Well, I have got water.' I says, `I know it. Matt told me you had water.' We measured five gallons per hour. He says, `I have a lot more now.' I says, `I can't help that, go ahead and drill. I don't want to give up until we get "21." I says, `I will be back here.'"

On April 27, 1937, Caprito had his attorney send the following telegram to plaintiffs: "Account misrepresentations inducing his signature S. Caprito refuses to be bound on contract of April twentieth relating to Garza County property Stop Polite request and formal demand is hereby made for the return to him immediately of Five Thousand Dollars paid together with One Hundred Dollars reasonable cost of pulling rods installation of engine blocks et cetera Stop You and your associates own this property so take charge Stop Communicate contents hereof to your associates."

On June 10, 1937, plaintiffs filed this suit against Caprito alleging the sale of said leases and other property by said corporations to Caprito; the situation with reference to the drilling well; that plaintiffs had performed their part of the contract; that defendant had repudiated his contract and had refused to pay the $25,000 provided for in said contract, for which sum they asked judgment and that defendant be compelled to specifically perform his contract. Thereafter, on December 10, 1937, plaintiffs amended their petition. They alleged that on the 20th day of April, 1937, plaintiffs were the owners of the oil and gas leases covering a 7/8 ths working interest on the land referred to in said contract, that they owned the oil and gas lease covering the 22 acre tract described in the contract "insofar as the same covered the oil, gas and other minerals in and under" (said 22 acre tract) "down to a depth of 3500 feet below the surface." Plaintiffs alleged that it was stipulated and agreed between the parties that the sale of said leases would include two producing oil wells, known as the Sullivan wells Nos. 1 and 2 on the 22 acre tract; storage tanks of approximately 3200 barrels capacity; oil then in storage in said tanks, subject to the 1/8 th thereof due the royalty owners; certain flow lines from the two wells used as connections to the tanks; that in the property included in said sale to Caprito was also approximately 2450 feet of 8 inch pipe in the well, and the lease house on the premises. That there was excepted from the sale all material on the lease not then in use for its operation; that it was agreed that the drilling on the 80 acre lease "was to be completed to a depth of 2900 feet at plaintiffs' expense, but under the direction of the defendant." Plaintiffs alleged that, in accordance with the agreement and instructions received by plaintiffs from defendant, plaintiffs duly and properly executed assignments conveying the said oil and gas leases and personal property thereon to defendant and about April 24, 1937, mailed the same to a bank at Post, Texas, with draft attached for the sum of $25,000; that payment of the draft was refused by defendant, and defendant had failed and refused to pay the balance of the purchase price. In addition to alleging that plaintiffs were the owners of said leases and personal property and that they did tender at said time and have maintained tender to defendant of proper instruments of conveyance assigning and conveying to defendant said leasehold and property, they further alleged that "they are now ready, willing and able to deliver the said property to the defendant, and do tender into court for defendant the said assignments and conveyances covering the property mentioned in said contract, with a good and marketable title to said property."

Plaintiffs further alleged the making between the parties, at the time of the writing and execution of said written contract, of a contemporaneous collateral parol agreement that, in consideration of defendant being permitted to take immediate possession of said leases and drilling well and assuming control thereof, pending a period of approximately one week, which it was contemplated would be required for the execution by plaintiffs of assignments of the oil and gas leases, defendant would waive all title requirements and accept whatever title plaintiffs had to said property.

Plaintiffs alleged that in accordance with said parol agreement defendant did immediately upon the execution of the contract, to-wit, on the night of April 20, take possession and control of said leases and drilling well; that defendant continued drilling the well until it reached the depth of 2920 feet "and then shot the well with a large charge of nitroglycerine all before the expiration of the time agreed upon for the delivery of the assignments; that following said shot, which was exploded at the extreme bottom of the hole and below a showing of oil encountered at a higher level, large quantities of salt water broke into the well * * *." Plaintiffs further alleged in this connection that relying upon said agreement that defendant would take the title "as is", they permitted d...