Gregg v. Caldwell-Guadalupe Pick-up Stations

• Decision Date: 14 October 1926
• Docket Number: (No. 641-4503.)
• Citation: 286 S.W. 1083
• Parties: GREGG et al. v. CALDWELL-GUADALUPE PICK-UP STATIONS et al.
• Court: Texas Supreme Court

286 S.W. 1083

GREGG et al. v. CALDWELL-GUADALUPE PICK-UP STATIONS et al.

(No. 641-4503.)

Commission of Appeals of Texas, Section B.

October 14, 1926.

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

Action by D. A. Gregg and others against the Caldwell-Guadalupe Pick-Up Stations and others. Judgment for plaintiffs was reversed by the Court of Civil Appeals (276 S. W. 342), and they bring error. Affirmed in part, and in part reversed and remanded to the district court.

W. K. Hopkins, of Gonzales, C. F. Richards, of Lockhart, and Leon Green, of Austin, for plaintiffs in error.

White, Wilcox, Graves & Taylor, of Austin, R. B. Ellis and Nelson Puett, both of Luling, and Dibrell & Mosheim and A. J. Wirtz, all of Seguin, for defendants in error.

SPEER, J.

A statement of this case, as presented in the Court of Civil Appeals (276 S. W. 342), is thus made in the opinion of that court, reversing the judgment of the trial court:

"One of the appellants, the United North & South Oil Company, herein designated as the Oil Company, was the owner of an oil and gas lease executed in the year 1919 by J. E. Allen and wife. The lease was in the usual form of such contracts, and originally covered two tracts of land in Guadalupe county, embracing 140 acres and 200 acres, respectively. Prior to the transactions now in controversy, however, the lease was assigned in parts to others, so that C. C. Cannon became the lessee of the west 35 acres of the 140-acre tract, and the Grayburg Oil Company, the Texas Company, and the J. K. Hughes Company became the lessees of separate tracts embracing the north 65 acres of the 200-acre tract. This left under the original lease the east 105 acres of the 140-acre tract, and the south 135 acres of the 200-acre tract.

"The 200-acre tract and the 140-acre tract are oblong in form, extending east and west, and lying parallel to and adjoining each other. The 140-acre tract lies north of the larger tract; both tracts slope downward to the north, and drain through natural `draws,' or ravines, into Brushy creek, which forms the north boundary line of the 140-acre tract. The 65-acre strip, covered by the leases of the Grayburg, Texas, and Hughes Companies, is only 600 feet wide, and lies between and completely segregates the residue of the two larger tracts, although both the latter are covered by the one lease, now owned by the Oil Company.

"Appellant Oil Company drilled a string of wells near the upper edge of its lower or 140-acre tract, and other wells at various points on its upper tract of 200 acres. The lessees of the narrow strip between these two tracts also brought in producing wells, as did other adjacent owners. All the tracts lay upon the same hillside, and waste oil from many of the wells flowed naturally with the slope, and down upon appellant's lower or 140-acre tract. In order to rescue and save the waste oil from its own wells on both tracts, the Oil Company constructed pits and ditches upon its lower tract, and in this way impounded the waste oil, not only from its own wells, but from those of adjacent tracts owned by third parties.

"In the early stages of these activities, on April 7, 1924, Allen, the lessor and owner of the soil of the tracts in controversy, executed to O. Lackey and another a license or grant of the exclusive right to `build, operate, and maintain on the land therein described a plant for the purpose of picking up and conserving the waste oil that flows down the creeks, ravines, and across the land.' This grant purported to cover the original 140-acre tract embraced in the first lease, and was subsequently assigned by Lackey to Gregg and others, appellees herein. At the time this grant was made the grantees and their assignees, who are appellees herein, had both constructive and actual notice of appellants' prior lease and its terms and conditions. Upon obtaining this grant appellees sought to construct pits and ditches of their own upon the 140-acre tract covered by both grants for the purpose of intercepting and impounding waste oil flowing thereon from adjacent leases.

"Appellees claim, however, that when they undertook to proceed with this operation they were ejected from the premises by appellant, and because of that ejectment made no further effort towards capturing and impounding the fugitive oil. All of this waste oil was appropriated by appellant, and appellees, of course, got none of it. If under their grant appellees had been permitted to carry out their plans, they claim they would have constructed pits, so as to capture this waste oil, which they would have appropriated to their own use; their contention being that all waste oil flowing from other premises than the 140-acre tract had been abandoned by its original owners, and that as the first takers they would have become the owners of it. They contend that, because appellant ejected them from its lease premises, they were deprived of a right given them under their grant to use those premises for the purpose of capturing and appropriating all waste oil flowing thereon from other premises, including the 200-acre tract covered by appellant's lease.

"The trial court adopted appellees' theory and contentions, and, upon findings of the jury, rendered judgment for appellees for the value of all waste oil flowing upon appellant's lower tract from other leases, including that originating from appellant's own wells in its upper, or 200-acre tract. The Caldwell-Guadalupe Pick-Up Company, one of the appellants, was employed by the Oil Company as its agent in constructing and operating its pits, and the judgment obtained by appellees was against both companies, who have appealed. For convenience in statement we have referred in this opinion to the Oil Company, only, as the appellant, and will continue to do so.

"The basic question in the whole case is that of the relative rights of the parties under their respective grants to the use of the surface of that part of the 140-acre tract covered by both grants."

In rendering judgment for the appellants, the Court of Civil Appeals reasoned that:

"Each party required the same drainage channels for the purpose of its grant; neither could use those channels to the exclusion of the other, although each claimed and under its grant was given such exclusive use. In such case the grants were inconsistent and repugnant, and appellant's grant, being prior and exclusive, and for a greatly preponderating purpose as well, must prevail. * * * The practical...