Empire Gas & Fuel Co. v. Pendar

• Decision Date: 29 June 1922
• Docket Number: (No. 8107.)
• Parties: EMPIRE GAS & FUEL CO. v. PENDAR.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

Page 184

244 S.W. 184

EMPIRE GAS & FUEL CO. v. PENDAR.^*

(No. 8107.)

Court of Civil Appeals of Texas. Galveston.

June 29, 1922.

Rehearing Denied October 5, 1922.

Appeal from District Court, Harris County; Ewing Boyd, Judge.

Action by Oliver S. Pendar against the Empire Gas & Fuel Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Robt. D. Garver, of Bartlesville, Okl., T. F. Garver, of Fort Worth, and Hutcheson, Bryan & Dyess, of Houston, for appellant.

Andrews, Streetman, Logue & Mobley and Sam Streetman, all of Houston, for appellee.

LANE, J.

Appellee, Oliver S. Pendar, brought this suit against appellant, Empire Gas & Fuel Company, March 18, 1919, to recover upon a contract, the essential parts of which are set out below.

The cause was tried upon the plaintiff's first amended petition, filed June 3, 1920, together with his supplemental petition filed two days later.

The contract sued upon, omitting nonessential paragraphs, is as follows:

"The State of Texas, County of Harris.

"Know all men by these presents that Oliver S. Pendar, Minnehaha county, state of South Dakota, hereinafter called lessor, for and in consideration of the sum of sixty thousand ($60,000.00) dollars, paid and secured to be paid by the Empire Gas & Fuel Company, a private corporation, duly incorporated under the laws of the state of Maine, and having an office at Houston, Tex., and the further covenants and conditions hereinafter stipulated to be kept and performed by the said Empire Gas & Fuel Company, does hereby lease and let unto the said Empire Gas & Fuel Company, hereinafter called lessee, the following described tract of land, to wit:

"The southwest one-quarter of the northeast one-quarter, and the north one-half of the south one-half, and the northwest one-quarter of section 11, township 20 north, range 15 west, in Caddo parish, state of Louisiana, consisting of 397.26 acres of land.

"And does hereby grant unto the said lessee the exclusive right of easement to drill and prospect for oil and gas on said tracts of land for a period of five years from the date hereof, and so long thereafter as oil or gas are produced in paying quantities therefrom, under the terms and conditions herein contained, together with the right of ingress and egress in and upon said tracts of land and the right to construct and maintain thereon and remove therefrom all such machinery, appliances, buildings, pipe lines, and storage facilities and other structures necessary and proper in the prospecting, development and production of oil or gas from the leased premises.

"(2) The lessee binds and obligates itself that it will, within a period of sixty (60) days from the date hereof, begin the actual drilling and boring of a well on some portion of the premises hereby leased, for the purpose of producing oil, gas, or other minerals therefrom, and will thereafter prosecute the drilling and boring of such well in good faith diligently and in workmanlike manner, using all proper tools and appliances until such time as such well shall have been completed as a producing one or abandoned as a dry hole, and thereafter the lessee shall continue such drilling operations upon said premises in the same manner as is hereinabove provided for in the case of the first well, and operations hereunder shall be successive in the sense that not more than ninety (90) days shall elapse between the date of completion of one well as a producing well, or its abandonment as a dry hole, and the commencement of another well, until such time as the leased premises shall have been thoroughly developed for oil and gas. If oil or gas is found in one or more wells upon the leased premises the lessee agrees thereafter to operate the same with due diligence. And as a part of the consideration for the execution of this lease the lessor shall have and receive:

"(a) A one-sixth (1/6) part of all oil saved from that produced from each well drilled, so long as the average daily production from such well shall be above two hundred (200) barrels of forty-two (42) gallons each, per day of 24 hours for 30 consecutive days, and one-eighth (1/8) part of all oil saved from that produced from each well drilled, so long as the average daily production shall be two hundred (200) barrels or less, which royalty to the lessor shall be delivered to him free of cost to any pipe line connected with the wells.

"(b) The lessor shall have and receive a one-eighth (1/8) part of the market value of all natural gas sold, used, or marketed by the lessee off of the leased premises, settlement therefor to be made quarterly. Meters for measuring said gas to be furnished and set at the expense of lessor, the manufacture of meters and setting of same to have approval of lessee; basis of calculation to be 16-ounce pressure.

"(c) The lessor shall have and receive a one-eighth (1/8) part of the market price of all gas produced from wells upon the leased premises where such gas is used for the manufacture of gasoline, the same to be metered at lessor's expense and as indicated in above clause, at the gasoline plant where used. But it is understood and agreed that the lessee shall have the free use of oil and gas as shall be necessary and proper for the purpose of carrying on drilling and development operations upon the leased premises, and likewise the free use of water from streams and wells drilled thereon by lessee. * * *

"(3) As hereinabove stated, the consideration to be paid by the lessee for the execution of this lease on the part of the lessor, is the sum of sixty thousand ($60,000.00) dollars, which consideration is payable in the following manner:

"Five thousand dollars ($5,000.00) in cash when the title to the property herein described has been examined and approved by the attorneys of the lessee. Lessor agrees to at once have prepared and to furnish lessee with a full and complete abstract of title to the property herein described, and it is agreed that attorneys for lessee shall have fifteen (15) days from and after delivery of such abstract of title within which to examine the title to said property and report their findings relative thereto. Should said attorneys of lessee find objections to said title which in their opinion demanded correction and could be corrected then lessor shall have fifteen (15) days within which to correct and meet such objections as shall have been urged to said title. When all objections urged by attorneys for lessee have been met and the title has been approved by said attorneys, then the lessee agrees to pay the consideration of sixty thousand ($60,000.00) dollars, above named, in the following manner: Five thousand ($5,000.00) dollars cash upon the examination and approval of title by attorneys of lessee, as above provided for, and twenty-five thousand ($25,000.00) dollars in the form of certain promissory notes of even date herewith executed by the lessee and payable to the order of the lessor, each for the principal sum of sixty-two hundred and fifty ($6,250.00) dollars, said notes being numbered from one to four, inclusive, and maturing in their numerical order in 6 months, 12 months, 18 months, and 24 months, respectively after date, each providing for interest from date until maturity at the rate of 8 per cent. per annum, interest payable semiannually, both principal and interest payable at the Hanover National Bank, of New York City, N. Y. Also as part of the above-mentioned consideration, the lessee agrees and obligates itself to pay to the lessor the sum of thirty thousand ($30,000.00) dollars in oil to be produced from the leased premises by lessee if the same is so produced, which thirty thousand ($30,000.00) dollars will be payable in the following manner: The lessee will deliver to the lessor, in the same manner as is hereinabove provided, one-half of all the oil belonging to said lessee from the oil produced upon said leased premises, until such time as the lessor shall have received a sufficient quantity of oil at the then market price of same as will equal the sum of thirty thousand ($30,000.00) dollars.

* * * * * * *

"(8) If the lessee shall fail or neglect to keep and perform each and all of the obligations incumbent upon it as hereinabove provided, this lease shall become null and void. If the estate of either party hereto is assigned, and the privileges of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to the assigns and successive assigns.

Executed in triplicate originals, at Houston, Tex., in the presence of the undersigned competent witnesses and before the undersigned notary public, this 26th day of November, 1918. Oliver S. Pendar, Lessor. Empire Gas & Fuel Company, By J. W. Jolly, Local Manager, Lessee. Witnesses: A. D. Dyess, M. Hall.

                       "[Seal]     H. F. Montgomery
                       "Notary Public, Harris County, Tex."
                

After setting out material portions of the contract and attaching a copy of same to his petition as an exhibit, plaintiff, Pendar, alleged as follows:

"(4) That in accordance with the terms of said contract hereinbefore set out, plaintiff, in the manner and within the time prescribed by said contract, did furnish lessee with a full and complete abstract of title to the property therein described, and plaintiff's said title to said land was on, to wit, the 19th day of December, 1918, approved as provided in said contract by the attorneys for the lessee, whereby and whereupon said contract became and has ever since been and still is completely executed and performed by and on the part of the plaintiff, and thereupon and thereby said defendant promised, agreed, and became bound and liable to pay to plaintiff the said consideration of sixty thousand dollars ($60,000.00) as provided by said contract; that is to say: The said defendant thereupon became and still is bound and liable to pay to plaintiff said sum of five thousand dollars ($5,000.00) in cash, with legal...