Ehlinger v. Clark

• Citation: 8 S.W.2d 666
• Decision Date: 25 June 1928
• Docket Number: (No. 4670.)
• Parties: EHLINGER, County Judge, et al. v. CLARK.<SMALL><SUP>*</SUP></SMALL>
• Court: Supreme Court of Texas

8 S.W.2d 666

EHLINGER, County Judge, et al. v. CLARK.^*

(No. 4670.)

Supreme Court of Texas.

June 25, 1928.

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

Suit by John P. Ehlinger, County Judge, in behalf of Fayette County, and others, against I. E. Clark. Judgment for defendant was affirmed by the Court of Civil Appeals (284 S. W. 974), and plaintiffs bring error. Judgments of district court and Court of Civil Appeals reversed and rendered, in so far as they denied recovery under plaintiffs' amended petition.

John P. Ehlinger, of La Grange, for plaintiffs in error.

H. R. Clark, of La Grange, and H. W. Wallace, of Cuero, for defendant in error.

Chas. L. Black, E. F. Smith, Smith & Gibson, and J. T. Robison, all of Austin, Nelson Phillips, of Dallas, and S. C. Padelford, of Fort Worth, amici curiæ.

CURETON, C. J.

This suit was instituted by Fayette county, through its county judge, against I. E. Clark, to recover the amount due upon two notes, each for the sum of $2,000, executed by the defendant in error in favor of John P. Ehlinger, county judge of Fayette county. The defense was that the commissioners' court of Fayette county was forbidden by law to enter into the contract and agreement out of which the notes arose, and that the notes were therefore illegal and void. Upon trial before the court without a jury, the defense was sustained, and recovery on the notes denied. The county appealed the case to the Court of Civil Appeals, and the judgment was affirmed. 284 S. W. 974.

The notes were part of the consideration for the execution of an oil lease on the school lands of Fayette county. The contract was in the form of two written instruments, each containing many stipulations, some of which are not material. We shall, however, as a matter of convenience and accuracy, copy the material portions of the contract. The contract was entered into on the 4th day of April, 1920, between the commissioners' court of Fayette county and I. E. Clark. By the terms of the contract an oil lease was made on the school land belonging to Fayette county, located in Baylor county. The land is definitely described in the contract, and contains some 4,000 acres. Those portions of the contract which we deem material read as follows:

"That the lessor, for and in consideration of $5.00, cash in hand paid by I. E. Clark, the receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained of the part of the lessee, to be paid, kept and performed, and the further consideration of two (2) notes, of even date herewith, each for the sum of two thousand ($2,000.00) dollars, bearing 5 per cent. interest per annum from date hereof due, respectively, December 14, 1920, and December 14, 1921, signed by I. E. Clark, and payable to J. P. Ehlinger, county judge of Fayette county, Texas, and his successors in office, for the use and benefit of the Fayette county permanent school fund, has granted, demised, leased and let unto the said lessee, for the sole and only purpose of mining and operating for oil and gas, laying pipe lines, and building tanks, power stations and structures thereon to produce, save and take care of said productions, all that certain tract of land, situated in the county of Baylor and state of Texas, described as follows, to wit: [Here follows a description of the land.]

"It is agreed that this lease shall remain in force for a term of five (5) years from this date, and as long thereafter as active drilling operations are carried on thereon by lessee, or as oil or gas or either of them is produced from said land by lessee.

"In consideration of the premises, the said lessee covenants and agrees:

"(1) To deliver to the credit of lessor, free of cost in the pipe line to which it may connect its wells, the equal one-eighth (1/8) part of all oil produced and saved from the leased premises.

"(2) To pay the lessor the rate prevailing in said field at and during the period of production, for the gas from each well where gas only is found while the same is being used off the premises, and lessor to have gas free of cost from any such well for all stoves and all the inside lights in the principal dwelling house on said land during the same time by making his own connections with the well at his own risk.

"(3) To pay lessor for gas produced from any oil well and used off the premises at the rate prevailing in said field at and during the period of production, for the time during which gas shall be used, said payments to be made, each three months in advance.

"Also to pay lessor one-eighth (1/8) of the net proceeds derived from the sale on casing head gas, utilized in the making of gasoline.

"If no well be commenced on said land, on or before the 14th day of April, 1921, this lease shall terminate as to above parties, unless the lessee, on or before that date shall pay or tender to the lessor, or to J. P. Ehlinger, the said county judge of Fayette county, Texas, or his successor in office, at office in La Grange, Texas, the sum of two hundred ($200.00) dollars, which shall operate as a renewal, and gives the privilege of deferring the commencement of a well for twelve (12) months from said date. In like manner and upon like payments or tenders, the commencement of the well may be further deferred for like period of the same number of months successively.

"And it is understood and agreed that the conditions first recited herein, the down payment covers not only the privilege granted to the date when said first rental was payable as aforesaid, but also the lessee's option of extending that period as aforesaid, and any and all other rights conferred.

"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 twelve months from the expiration of the last rental period for which rental has been paid, this lease shall terminate as to both parties, unless the lessee on or before the expiration of said twelve months shall resume the payment of rentals 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.

"If said lessor owns a less interest in the above-described land than the entire and undivided fee-simple estate herein, then the royalties and rentals herein provided for shall be paid the said lessor only in the proportion which its interest bears to the whole and undivided fee.

"Lessee shall have the right to use, free of cost, gas, oil and water produced on said land for his operations thereon, except water from tanks or wells of lessor.

"When requested by lessor, lessee shall bury his pipe line below plow depth.

"No well shall be drilled nearer than 200 feet to the house or barn now on said premises, without the written consent of lessor.

"Lessee shall pay for damages caused by his operations to growing crops on said land.

"Lessee shall have the right at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove casing.

"If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns."

On the same day the foregoing agreement was entered into, a supplemental agreement, made a part of the preceding, was also executed. The material portion of this supplemental agreement read as follows:

"First: That this contract is supplemental to that oil and gas lease contract for and upon 4,000 acres of Fayette county school land, situated in Baylor county, Texas, made and entered into by the parties hereto on the 14th day of April, 1920, and as evidenced by the written agreement signed by the parties, and duly preserved in the records of said commissioners' court, to which reference is here made, and the same is made part hereof for all purposes.

"Second: That the two notes, each for the sum of $2,000.00, dated April 14, 1920, due, respectively, December 14, 1920, and December 14, 1921, bearing 5 per cent. interest per annum from April 14, 1920, shall be paid and discharged without reference to whether said lands are developed and are proven productive of oil or not; but in the event that said land is developed and proves productive of oil, or is subleased, or such leases transferred and assigned, then out of any and all proceeds, arising from the sale or sublease, transfer and assignment of the oil and gas lease, hereinafter referred to, or any bonus or royalty that may be received thereon one-fourth (1/4) of all such proceeds shall be held, used and part over to the said I. E. Clark, until said one-fourth (1/4) of all such proceeds shall equal an amount to the principal amount of said two notes, aggregating $4,000.00, together with all interests paid thereon; and after said one-fourth (1/4) shall equal the amount of such principal and interest paid thereon, then the remaining one-fourth (1/4) of all such proceeds shall belong to and be paid over to, as received, J. P. Ehlinger, county judge of Fayette county, Texas, or his successor in office, at office, in La Grange, Texas, for the benefit of the Fayette county public school fund."

The county school land here involved was acquired by Fayette county and held by it by virtue of section 6 of article 7 of the Constitution, which, in part, reads:

"All lands heretofore or hereafter granted to the several counties of this state for educational purposes, are of right the property of said counties respectively, to which they were granted, and title thereto is vested in said counties; and no adverse possession or limitation shall ever be...