Estate of Grimes v. Dorchester Gas Producing Co., 07-84-0308-CV

• Decision Date: 27 February 1986
• Docket Number: No. 07-84-0308-CV,07-84-0308-CV
• Parties: ESTATE OF Marie E. GRIMES, et al., Appellants, v. DORCHESTER GAS PRODUCING COMPANY, et al., Appellees.
• Court: Texas Court of Appeals

Page 196

707 S.W.2d 196

ESTATE OF Marie E. GRIMES, et al., Appellants, v. DORCHESTER GAS PRODUCING COMPANY, et al., Appellees.

No. 07-84-0308-CV

Court of Appeals of Texas Amarillo.

Feb. 27, 1986.

Rehearing Denied April 1, 1986.

Second Rehearing Denied April 22, 1986.

E.B. Grimes, Robstown, Meredith, Donnell & Abernethy, M.W. Meredith, Jr., Corpus Christi, for appellants.

Strasburger & Price, Leo J. Hoffman, Dallas, Gibson, Ochsner & Adkins, S. Tom Morris, Culton, Morgan, Britain & White, Charles R. Watson, Jr. and William A. Hill, Amarillo, for appellees.

Before REYNOLDS, C.J., and DODSON and BOYD, JJ.

BOYD, Justice.

Appellants E.B. Grimes, Frances Grimes, the Estate of Marie E. Grimes, deceased, acting by E.B. Grimes, Independent Executor, and the Estate of T.M. Grimes, deceased, acting by Frances Grimes, Independent Executrix, bring this appeal from an adverse judgment in favor of appellees Dorchester Gas Producing Company, Northern Natural Gas Company, L.R. Hagy, Frank Aderton, Jr., Elaine Aderton Lisle, Sybil B. Harrington, and the Don and Sybil Harrington Foundation. In their suit, appellants sought a declaration that an oil and gas lease covering their 191.22 acres of land, which had been included in a 640.22 acre "consolidated area," had terminated. At trial and at the conclusion of appellants' presentation of their case-in-chief, the trial court withdrew the case from the jury and rendered the questioned take-nothing judgment. We affirm that judgment.

Appellants attack the judgment in nine points of error. In those points, they assert the trial court erred in rendering its judgment because (1) there was probative evidence that the oil and gas lease here in question had terminated under its provisions; (2) there was probative evidence that there had been no consolidation of the lease with other leases in accordance with the applicable contractual provisions; (3) there was probative evidence that any gas production from the Bednorz No. 4 well, Dorchester Unit No. 9, was not legal production and therefore did not keep in force the Grimes lease; (4) there was probative evidence that appellants' claims were not barred by any statute of limitations, waiver, estoppel, ratification, or adverse possession; (5) there was probative evidence that appellee Dorchester wrongfully refused to release an oil, gas, and mineral lease, resulting in damage to appellants; (6) defendant John Kotara, Jr.'s answer was a disclaimer which asked that judgment be On December 31, 1936, appellants' predecessors-in-title, E.H. Grimes, Marie E. Grimes, and Amanda Busch executed an oil and gas lease in favor of Dorchester's predecessor-in-title, Stanley Marsh. The lease was dated December 31, 1936, and was for an initial term of five years beginning December 13, 1937, and continuing thereafter so long as there was production of oil or gas under the lease. Under the lease, the lessee was required to begin drilling operations on or before the first anniversary date or to pay annual delay rentals of $1.00 per annum until drilling commenced. The lease granted the lessee the right to consolidate the leased lands with "adjacent lands, provided any resulting consolidated estate shall not cover and include more than 640 acres consisting of contiguous tracts or tracts that are adjoined," with drilling or production from any well on any of the consolidated lands being sufficient to satisfy the terms of the lease. The property covered by the lease was described as:

granted to appellants; and (7) no answers had been filed by defendants Erskin Grayson and Tom Marsh, agent for the Ida Marsh heirs, who did not appear at trial and were in default.

That part of the W 1/2 of Sec. 2 and that part of Sec. 3, Blk. 7, I. & G.N. Ry. Co. Survey, which are situated south of the right-of-way of P & SF Ry. Co., containing 131.22 acres, more or less; NW 1/4 of NW 1/4 and W 1/2 of NE 1/4 of NW 1/4 of Sec. 21, Blk. 7, I. & G.N. Ry. Co. Sur., containing 60 acres, more or less; and containing 191.22 acres, more or less.

The railroad right-of-way was obtained by condemnation in 1887 and, admittedly, was an easement for surface use.

On June 18, 1937, an instrument denominated as a "Gas Division Order and Operating Agreement" was executed by appellants' predecessors-in-title which covered 108.95 acres of the leased property. That portion of the leased property was described as "situated" south of the railroad right-of-way. In the instrument, other lands were specifically described and were consolidated with the 108.95 acre tract in a 637.95 acre tract designated as the "consolidated area." The owners of the other tracts of land also executed the agreement. In the agreement, it was provided that the completion of a well producing gas in paying quantities within the "consolidated area" would perpetuate lessee's rights under all the leases in the entire area. Moreover, in the instrument, appellants' predecessors-in-title ratified and affirmed the December 31, 1936 lease "as hereby modified."

Drilling of a well designated as the Bednorz No. 4 well commenced on October 14, 1937. Although the well was not located upon any part of the property here in controversy, it was located upon other property included in the "consolidated area" described in the 1937 operating agreement. The well was completed as a gas well on November 12, 1937, and production commenced on November 15, 1937. Physical production from the well in paying quantities has continued since that time. Monthly royalty checks were paid to appellants continuously until November 1979, when appellants refused any further payments. Subsequent to November 1979, the payments have been placed in a suspense account.

Delay rentals on the 82.27 acres not included in the 1937 operating agreement were paid to appellants' predecessors-in-title in November of 1938 and 1939. On June 1, 1940, appellants' predecessors-in-title executed a "Gas Order and Operating Agreement" which was in substitution for and superseded the June 18, 1937 agreement. In this instrument all of the property in the original oil and gas lease was included with other property in a 640.22 acre tract collectively designated as a "consolidated area." Parenthetically, we note that, in describing property covered by the agreement, reference was made to the Grimes lease and the 191.22 acre tract was described exactly as it was in the original lease. In this instrument, payment of the royalty due thereunder was calculated and set out and it was again agreed that any

                production within the "consolidated area" would continue the included leases in force.  It also provided that the underlying leases, including the one here in question, were, "as hereby modified," ratified and affirmed.  Again, we note the Bednorz No. 4 well, although not located upon the property of appellants' predecessors-in-title, was located upon lands included within the property included in the 1940 "consolidated area."   The property in question and the railroad right-of-way dividing the lands are shown on the plat below
                

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Initially, appellants argue that their testimony that there was no production upon the specific tract covered by the Grimes oil and gas lease was sufficient to establish a prima facie case that the lease had terminated. At that point, they reason, appellees had the burden to present evidence on their own which would justify a continuation of the lease. Then, they say appellants would have had the opportunity to "offer rebutting evidence and exhibits to those affirmative defenses." By rendering judgment when it did, they say that "[t]he trial court failed to determine correctly the point at which Plaintiffs' [appellants'] burden ended, and Defendants' [appellees'] burden began." The thrust of this argument is that appellees' claims of legal consolidation and legal production from the consolidated unit were "affirmative defenses" which must have been established by evidence produced by appellees other than that introduced by appellants. We disagree.

When, under the evidence produced at trial before the jury, a party is entitled to a verdict as a matter of law, the trial court, on its own motion or that of a party, may instruct the jury as to the verdict it may return, or it may withdraw the case from the jury and render judgment. Welch v. Mathews, 642 S.W.2d 829, 833 (Tex.App.--Tyler 1982, no writ); 3 R. McDonald, Texas Civil Practice in District and County Courts § 11.25 (rev.1983). In determining whether such action of the court was proper, we must view the evidence in the light most favorable to appellants, the losing party. We must indulge against the court's action every inference that may properly be drawn from the evidence, and, if the record reflects any testimony of probative value in favor of the losing party, we must hold the court's action improper. The instant judgment was properly rendered only if the evidence in the record at the time of that rendition was such that no other judgment could be rendered and appellees were entitled to judgment as a matter of law. White v. White, 141 Tex. 328, 172 S.W.2d 295, 296 (1943); Welch v. Mathews, 642 S.W.2d at 833; Santos v. Guerra, 570 S.W.2d 437, 438 (Tex.Civ.App.--San Antonio 1978, writ ref'd n.r.e.); Lee v. Chumley Lumber Company, 465 S.W.2d 414, 416-17 (Tex.Civ.App.--Houston [14th Dist.] 1971, writ ref'd n.r.e.).

Since the instant suit was brought by appellants, the trial court was entitled to make its assessment of the evidence at the time appellants chose to cease producing evidence. In making that assessment it not only could, but was required, to consider all the legally admissible evidence in the record at that time, whether produced by direct or cross-examination.

The execution of the December 31, 1936 lease is undisputed. Paragraph 9 of the lease expressly granted the lessee "the right ... to consolidate the leasehold estate...