Fike v. Riddle, s. 12-83-0113-C

• Decision Date: 30 August 1984
• Docket Number: 12-83-0114-CV,Nos. 12-83-0113-C,s. 12-83-0113-C
• Citation: 677 S.W.2d 722
• Parties: Robert C. FIKE, Trustee, et al., Appellants, v. Viola RIDDLE, et al., Appellees. Robert C. FIKE, Trustee, et al., Appellants, v. E.C. ALEXANDER, et al., Appellees.
• Court: Texas Court of Appeals

Page 722

677 S.W.2d 722

Robert C. FIKE, Trustee, et al., Appellants, v. Viola RIDDLE, et al., Appellees.

Robert C. FIKE, Trustee, et al., Appellants, v. E.C. ALEXANDER, et al., Appellees.

Nos. 12-83-0113-CV, 12-83-0114-CV.

Court of Appeals of Texas Tyler.

Aug. 30, 1984.

Mark How, Rohde, Chapman, Ford & How, Dallas, for appellants.

William K. Knolle, Hearne, Knolle, Lewallen, Livingston & Holcomb, Austin, for appellees.

COLLEY, Justice.

The above causes were consolidated for trial, and although separate judgments were rendered below, the issues of fact and law material to our disposition of the two appeals are virtually identical so we shall dispose of both cases with this opinion.

In a bench trial judgments were rendered below in each case, declaring that certain oil and gas leases acquired by defendants/appellants through execution sales terminated because of temporary cessation of production and failure of appellants to resume and continuously prosecute drilling or reworking operations. The judgments awarded appellants compensation for the market value of casing in the wells capable of producing oil in paying quantities. We reform the judgments by striking the orders awarding appellants compensation for the casing, and, as reformed, affirm.

The record reflects that on June 9, 1932, C.L. Riddle and wife, Fannie Riddle, as lessors, executed and delivered to R.R. Odgen, lessee, an oil and gas lease covering 94 1/2 acres of land on the William Leech and Joshua Gray surveys; and on February 1, 1966, such lands were conveyed by the Riddles to E.C. Alexander, plaintiff/appellee in our cause no. 12-83-0114-CV; that on August 11, 1937, Viola Riddle, plaintiff/appellee in our cause no. 12-83-0113-CV, and her husband Wm. M. Riddle, as lessor, likewise executed and delivered an oil and gas lease covering a different 94 1/2-acre tract on the Leech and Gray surveys to Ralph R. Odgen. William M. Riddle died prior to July 6, 1964, leaving his real property to his wife, Viola Riddle.

To avoid confusion, we shall refer to the leases above mentioned as the C.L. Riddle 1932 lease and the Wm. M. Riddle 1937 lease. The record shows without dispute that production of oil was obtained on both leases and continued to mid-November or late November 1978. At the time of the last production, the leases were owned and operated by Oil, Gas and Minerals Development Corporation (hereafter Development Corp.).

In January 1975 appellants ¹ obtained a federal court money judgment against Development Corp. for more than four million dollars. On September 27, 1978, writs of execution were issued to enforce said judgment and were levied by a United States Marshal on the C.L. Riddle 1932 and the Wm. M. Riddle 1937 leasehold estates owned by Development Corp.; and on December 5, 1978, the marshal sold the leasehold estates to appellants. It appears from the record that in November 1978 Development Corp., the judgment debtor and owner of the leasehold estates, removed the rods, tubing and pumping units from producing oil wells on the leases. It is undisputed that no oil was produced from the wells from late November 1978 until sometime after March 8, 1979.

On February 6, 1979, some two months after appellants acquired the leases, appellant, Judgment Oil & Gas Company, Inc. (hereafter Judgment), acting by and through its chief operating officer, Donald Raymond, and its field supervisor, Wesley Ball, made an on-site inspection of both Riddle leases for the purposes of determining whether the leases were accessible and what machinery and equipment was required to restore production of oil therefrom. No equipment or machinery was ever taken to the lease sites by Judgment, and after February 6, 1979, Judgment made no entry upon the leases.

On March 8 and 9, 1979, appellees, Viola Riddle and E.C. Alexander and his wife, Ruth, as lessors, signed and delivered to plaintiffs/appellees, W.C. Riddle and Morton Shefts, as lessees, oil, gas and mineral leases covering the lands involved. These new leases were filed for record on March 16, 1979. The record discloses that these leases were prepared by an attorney employed by appellees, W.C. Riddle and Morton Shefts, following negotiations conducted during the month of January 1979 between them and appellees, Viola Riddle and E.C. Alexander. The record is devoid of any evidence demonstrating, or even suggesting, that the officers or representatives of appellant Judgment had actual notice that appellees, Viola Riddle and E.C. Alexander, had agreed to execute the new leases, or that such new leases had in fact been executed on March 8 and 9, 1979.

In briefing the cases, appellants present five identical points of error in each case. Under points 1 and 2 appellants contend that the evidence is legally and factually insufficient to support the trial court's express findings that production from the leases ceased on November 15, 1978, and that appellants did not resume drilling operations on the leases within ninety days after cessation of production.

Under identical points (point 6 in cause no. 12-83-0113-CV and point 5 in cause no. 12-83-0114-CV), appellants argue that the evidence is legally and factually insufficient to support the trial court's express finding that Development Corp. abandoned the leases on November 14, 1978.

Appellants argue under point 3, in the alternative, that oral statements made by Alexander to Judgment's agents on February 6, 1979, constituted a repudiation of appellants' title to the leasehold estates, and therefore under equitable considerations appellants were justified in suspending drilling and reworking operations on the leases thereafter until the title questions were judicially determined.

Appellants maintain under point 4 that the trial court erred, in all events, in cancelling the leases as to 20 acres in the form of a square around each producing well on each lease.

The C.L. Riddle 1932 lease contained, among other clauses, the following: ²

1.

It is agreed that this lease shall remain in force for a term of 5 years from this date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee.

2.

It is specially agreed that in the event that oil or gas is produced from said premises and said production shall for any reason cease or terminate, lessee shall have the right at any time within ninety (90) days from the cessation of such production to resume drilling operations in the effort to make said leased premises again produce oil or gas, in which event this lease shall remain in force so long as such operations are continuously prosecuted, as defined in the preceding paragraph, and if they result in production of oil or gas, so long thereafter as oil or gas is produced in paying quantities from the premises.

3.

In case of cancellation or termination of this lease for any cause, lessee shall have the right to retain under the terms hereof twenty (20) acres of land around each oil or gas well producing, being worked on, or drilling hereunder (as long as such operations are continued in good faith) such tract to be designated by lessee in as near a square form as practicable.

The W.M. Riddle 1937 lease contained, among other clauses, the following:

1.

"It is agreed that this lease shall remain in force for a term of 1 year from this date, said term being hereinafter called 'Primary Term' and as long thereafter as oil or gas or either of them is produced from said land by the lessee."

2.

It is specially agreed that in the event that oil or gas is being produced or is obtained from said premises after the expiration of the primary term hereof and said production shall for any reason cease or terminate, lessee shall have the right at any time within ninety (90) days from the cessation of such production to resume drilling operations in the effort to make said leased premises again produce oil or gas in which event this lease shall remain in force so long as such operations are continuously prosecuted, as defined in the preceding paragraph, and if they result in production of oil or...