Clear Creek Oil & Gas Co. v. Brunk

• Decision Date: 05 November 1923
• Docket Number: 215
• Citation: 255 S.W. 7,160 Ark. 574
• Parties: CLEAR CREEK OIL & GAS COMPANY v. BRUNK
• Court: Arkansas Supreme Court

255 S.W. 7

160 Ark. 574

CLEAR CREEK OIL & GAS COMPANY v. BRUNK

No. 215

Supreme Court of Arkansas

November 5, 1923

Appeal from Crawford Circuit Court; James Cochran, Judge; reversed and affirmed.

Judgment affirmed in part; and reversed in part.

E. L Matlock and Hill & Fitzhugh, for appellant.

1. Appellant was not liable to suit in Crawford County. Its articles of incorporation name Fort Smith as its domicile there it has at all times maintained its principal office and its chief officer does not reside in Crawford County. Moreover, the summons was directed to the sheriff of Sebastian County, and was there served. This is not an injury to real estate within the 4th paragraph of C. & M. Digest, § 1164. 95 Ark. 421; 232 S.W. 858; 26 L. R. A. (N. S.) 940, note. The action is transitory. C. & M. Dig, § 1176; see Id., § 1171; 77 Ark. 412; 61 S.E. 202; 69 Ark. 429; Id. 396; 84 Ark. 573; 14-A, Corpus Juris, 800, § 2899 and cases cited in notes; 106 Ark. 552; 14 Corpus Juris, 338, § 416 and notes; 59 Ark. 593.

2. The protection well was waived. See authorities cited in the Bushmiaer case, No. 7853.

3. The action is barred by limitation. 157 Ark. 446, and cases cited in Bushmiaer brief.

4. There is no duty resting on the lessee to drill a protection well for oil and gas, unless the same may be extracted with benefit or profit to both the lessor and lessee. 140 F. 801; 177 P. 104.

J. E. London, for appellees.

1. Appellant appeared and answered, thereby accepting and choosing the forum in which to interpose its defense. It is bound by that choice. 77 Ark. 497; 95 Ark. 302; 56 Ark. 45. Oil and gas is a part of the realty and is governed by the statute directing where jurisdiction of actions affecting real estate or any interest therein shall be brought. 204 F. 955; 97 Am. St. Rep. 1027; 28 Id. 790; 75 Id. 695; 45 W.Va. 27; Bryan on Petroleum and Gas, 174; 25 A. 732; 51 W.Va. 583.

2. There was no waiver of the protection well. 148 Ark. 301; 130 S.W. 286; 48 Tex. Civ. App. 555; 107 S.W. 609; 87 N.E. 381; 35 A. 109; 125 P. 81; 48 N.E. 502; 49 N.E. 399; 126 F. 630; Thornton on Oil and Gas, 3d ed., 109, par. 882.

3. Under the implied covenant contained in the lease the appellant was under the duty, within a reasonable time after drilling a producing well on adjacent property, to drill offset wells on the leased property to protect the gas under appellees' land. 148 Ark. 301.

4. The amount of damages which the plaintiff should recover was a question for the jury under the evidence, and not for the court. Art. 7, § 23, Const. Ark.; 37 Ark. 164; Id. 580; 35 Ark. 146; 33 Ark. 350; 49 Ark. 439; 58 Ark. 108.

OPINION

MCCULLOCH, C. J.

There are two cases involved in this appeal--one instituted by appellee N. H. Brunk for himself, and the other by N. H. Brunk as guardian of Charles Brunk, a person of unsound mind--both against appellant Clear Creek Oil & Gas Company, a domestic corporation, and both actions are based on alleged breaches of lease contracts for the production of oil and gas. The cases were consolidated and tried together. There was a verdict for the recovery of damages by N. H. Brunk in his individual suit, but the court directed a verdict against the plaintiff in the Charles Brunk case, and an appeal has been prosecuted from the judgment in that case.

The lease in each of the cases covered forty acres of land, and the contract in each instance was, in form and substance, the same, except as to the amount of annual rentals to be paid by the lessee during the periods of delay in drilling on the leased lands. In the N. H. Brunk lease it was provided that the annual rental should be $ 15, which was subsequently increased to forty dollars by oral agreement. In the Charles Brunk lease it was provided that two hundred dollars should be the amount of the annual rental. The contracts were made in January, 1916; they were in customary form and provided, in substance, for a consideration of one dollar, paid in cash, and the agreement to drill for gas and oil; that the lease should run for a term of ten years, and as long thereafter as oil or gas should be produced; that, in the event a gas well or wells should be brought in, the lessee should pay to the lessor the stipulated sum per annum for each well from which gas was marketed; that if no well should be drilled for one year after the date of the lease within two and a half miles of the premises, all rights of the lessee should cease, unless the lessee should elect to continue the lease by paying the stipulated annual rentals; and that the lessee should have the right at any time to surrender and terminate the lease by giving written notice to the lessor.

Appellant, Clear Creek Oil & Gas Company, had been operating in the Kibler field, in Crawford County, where the leased lands in controversy were situated, and brought in a gas well during the year 1915.

After the execution of the contracts involved in these controversies, appellant drilled for gas and brought in several wells on adjoining lands in close proximity to the lands herein involved, and the evidence tends to show that those wells drained gas from beneath the land of each of the plaintiffs. No drilling operations have been conducted by appellant on the lands of either of the plaintiffs, though demand was made on appellant that the same be done. According to the undisputed evidence, appellant paid the annual rentals regularly for three years after the wells on the adjoining lands were brought in and until the leases were canceled and surrendered by the lessee under the terms of the contract. Appellee N. H. Brunk testified that when he made demand on appellant the first time in 1916 for the drilling of protection wells on the leased lands, appellant's representative assured him that "he would get to him pretty soon" and offered to increase the rental to thirty-five dollars "until he could drill a well," and that he accepted the rental each year thereafter until the lease was surrendered by appellant. Undisputed evidence adduced by appellant showed that the rent was increased to forty dollars for each year and that it was paid and accepted until the surrender of the lease. The present actions for damages are based on the failure of appellant to drill wells on the leased land to prevent drainage of gas through the wells on adjoining land.

In Blair v. Clear Creek Oil & Gas...