Dale v. Simon

• Decision Date: 20 December 1924
• Docket Number: (No. 520-3976.)
• Parties: DALE et al. v. SIMON et al.
• Court: Texas Supreme Court

267 S.W. 467

DALE et al. v. SIMON et al.

(No. 520-3976.)

Commission of Appeals of Texas, Section A.

December 20, 1924.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by U. M. Simon and another against J. E. Dale and others. Judgment for plaintiffs was modified and affirmed by the Court of Civil Appeals (248 S. W. 703), and defendants bring error. Affirmed.

Wantland & Dickey and W. T. Allen, all of Henrietta, Lea, McGrady, Thomason & Edwards, of El Paso, and Taylor & Taylor, of Wichita Falls, for plaintiffs in error.

Slay, Simon & Smith and Ocie Speer, all of Fort Worth, for defendants in error.

BISHOP, J.

Defendants in error sued plaintiffs in error to recover back $22,000 alleged to have been paid by defendants in error under duress.

The plaintiffs in error, J. E. Dale, J. T. Dale, and J. B. Dale, now deceased, entered into a lease contract, of date May 29, 1919, with defendants in error, U. M. Simon and Dan Brown, whereby plaintiffs in error granted, demised, released, and let unto the defendants in error, for the purpose of mining and operating for oil and gas 22,000 acres of land with the right of ingress and egress over said premises, for a consideration of $110,000, which was paid. It was in said lease agreed that same should remain in force for 5 years from date, and as long thereafter as oil or gas should be produced; that, however, if no well should be commenced on the land on or before April 30, 1920, the lease should terminate, unless the lessees, on or before that date, should pay or tender to the lessors the sums of $1 per acre per year which should operate as a rental and cover the privilege of deferring commencement of a well for 12 months from said last-named date, and that in like manner, and upon like payments or tenders, the commencement of a well might be deferred for like periods. The privilege of assigning the estate of either party to the lease, in whole or in part, was expressly allowed, and the lessors warranted and agreed to defend the title to the lease.

The lease also contained the following provisions:

"And it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privileges granted to the date when first rental is payable as aforesaid, but also the lessee's option of extending that period as aforesaid, and any and all other rights conferred, but in this connection it is agreed that the completion of a well which produces oil or gas in paying quantities, shall hold only the 640 acres surrounding it, with such well as near the center thereof as may be practicable, without further cash rental, but as to all other acreage, the provisions herein for cash rental, as in this paragraph contained, remains in force.

"Should the first well drilled on the above-described land be a dry hole, then, and in that event, if a second well is not commenced on said land within 12 months from the expiration of the last rental period, which rental has been paid, this lease shall terminate as to both parties, unless the lessee on or before the expiration of said 12 months shall resume payment of rental in the same amount and in the same manner as hereinbefore provided.

"And it is agreed that upon the resumption of the payment of rentals, as above provided, that the last preceding paragraph hereof, governing the payment of rentals and the effect thereof, shall continue in force just as though there had been no interruption in the rental payments."

Defendants in error, before April 30, 1920, entered upon said leased premises and had begun and were drilling wells thereon, and prior to this date plaintiffs in error demanded of defendants in error the payment of $22,000, claiming if same were not paid by April 30, 1920, they would forfeit the lease. Defendant in error, Simon, testified that their purpose in taking the lease from the Dales was more or less a speculation; that they intended to sell or assign the lease, in whole or in part, as they could for a profit; that they also contemplated drilling; that they did not make much progress selling leases until they decided to drill three wells, and that they sold acreage based upon their contract that they would drill and complete these wells; that they sold as much as 6,000 or 8,000 acres to 25 or 30 parties, some of which sales were to large oil companies; that they had contracts where part was paid when they began drilling and the balance to be paid when wells were completed; that they had contracts with others to drill wells; that a few days prior to April 30, 1920, he heard the Dales claimed that he and Brown owed them $22,000 rentals April 30, 1920; that he and his attorney had a conference with J. E. and J. T. Dale; that he told them that wells were being drilled, and under the lease he and Brown would not owe rentals on April 30, 1920; that J. E. Dale told him that he had to pay the rentals anyway, and that they would forfeit the lease if he did not pay; that he explained to Dale that should a forfeit be declared he and Brown would be subjected to lawsuits by those with whom they had contracts; that they would be prevented thereby from selling acreage and that their business would be injured; that his demand was unlawful and unjust, but if he insisted they could not afford not to pay, for their loss would be many times $22,000; that he offered to put $22,000 in Dale's bank, and suggested that they have a suit to determine whether same was payable; that Dale told him that he would notify him at Fort Worth of his final decision; that the next day he received from Dale the following telegram:

"My brother concurs in my position that unless rental for next twelve months paid on date specified in lease that a forfeiture must be declared we are unwilling to make any agreement at time of payment which might contemplate litigation of any kind as we consider this a voluntary payment believing ourselves justified in this position we can now only advise you that unless rental paid forfeiture will be declared and we will not entertain any other proposition if you desire payment may be made at Fort Worth National Bank to our credit which we will consider as payment made in Henrietta. J. E. Dale."

He also testified:

"I received that message on the date specified there, that afternoon. After receiving that message I finally made the payment of the $22,000. I made it to the Fort Worth National Bank as requested to the credit of Dale Brothers, the three Dales, I think. I paid $22,000. I made the payment because I knew I would be subject to a damage suit by the Lucky Jack Oil Company because they would not be permitted, in that event, to carry out the contract that I had made with them to complete that well. I knew that I would be subject to a damage suit by Call & Sines for the entire amount of money that I had agreed to pay them for the drilling of those wells. I knew that I would be subject to suits by the companies that had paid me in part for the leases that I had sold to the individuals because my obligation to them was to actually complete the three wells.

"I feared and believed that I would never be able to sell any of the large oil companies a lease based upon my agreement to drill an oil well because of the fact that I had fallen down in the present undertaking. I had had conversations with quite a few of the representatives of the oil companies, these companies that we sold to, and other oil companies with whom I had come in contact with reference to buying acreage from persons who agreed to drill wells. I want to state that I feared and believed that my general business integrity and reputation would be impaired, if not actually ruined, if I failed to carry out these contracts that I had obligated myself to carry out."

Plaintiffs in error answered by general denial, and that the contract as written was not the contract made between the parties therein named, due to a mutual mistake of said parties in drafting and signing same; that the contract between the parties was that the defendants in error pay the down payment of $110,000 and the further payments of $22,000 per year on or about April 30, 1920, 1921, 1922, and 1923 respectively, and that as to any section of said lands on which defendants in error might make a bona fide test in an effort to produce oil, and conclude after such test that such section was not oil bearing, upon their releasing back to plaintiffs in error, relinquishing all rights therein, plaintiffs in error would release defendants in error from further payments of $1 per year per acre on such sections, and that should oil and gas be found and produced in paying quantities anywhere on said land, then as to 640 acres of such land in which such producing well was as near the center as practicable, the defendants in error should be released from paying $1 per acre per year as to all future payments after such production; and that no producing wells were drilled, nor sections released back. They also in their answer set up a cross-bill against defendants in error for $22,000 alleged to be due April 30, 1921, and prayed for a reformation...