Gulf Production Co. v. Continental Oil Co.

• Decision Date: 01 November 1939
• Docket Number: No. 6641.,6641.
• Citation: 132 S.W.2d 553
• Parties: GULF PRODUCTION CO. et al. v. CONTINENTAL OIL CO. et al.
• Court: Texas Supreme Court

Page 553

132 S.W.2d 553

GULF PRODUCTION CO. et al. v. CONTINENTAL OIL CO. et al.

No. 6641.

Supreme Court of Texas.

November 1, 1939.

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Error to Court of Civil Appeals, Sixth Supreme Judicial District.

Suit by the Continental Oil Company and others against the Gulf Production Company and others to recover the oil and gas leasehold estate in certain land. Judgment for plaintiffs was affirmed by the Court of Civil Appeals, 61 S.W.2d 185, and defendants bring error.

Judgments of the District Court and of the Court of Civil Appeals reversed in part, and rendered, and in other respects affirmed.

Black, Graves & Stayton and C. L. Black, all of Austin, Williams, Neethe & Williams and F. A. Williams, all of Galveston, John E. Green, Jr., of Houston, Wm. L. Wise and Peveril O. Settle, both of Fort Worth, C. L. Stone, of Henderson, and H. L. Stone, of Pittsburg, Pa. (Claude McCaleb, of Houston, and R. L. Batts, of Austin, for plaintiff in error Gulf Production Co.

Brachfield & Wolfe, of Henderson, McKinney & Berry, of Cooper, Hiner & Pannill, of Fort Worth, Wm. Pannill, of Houston, and Ben H. Powell, of Austin, for Turner and Wife.

Phillips & Phillips, W. H. Francis, and Walace Hawkins, all of Dallas, Lloyd Price, Burney Braly, G. R. Pate Phillips, Trammell, Chizum, Price & Estes, T. S. Christopher, Clayton L. Orn, Joe E. Estes, and John A. Braly, all of Fort Worth, McEntire, James & Clower, of Tyler, Dan Moody and G. B. Smedley, both of Austin, and Eugene Lary, of Dallas, for defendants in error Continental Oil Co., and others.

CURETON, Chief Justice.

This case is before the Court by writ of error from the Court of Civil Appeals for the Sixth District. The opinion of that court may be found in 61 S.W.2d 185, and is here referred to for a general statement of the case. The Continental Oil Company, East Texas Refining Company, H. L. Hunt, and P. G. Lake, as plaintiffs in the trial Court (defendants in error here), filed this suit against G. G. Turner and wife, Sina A. Turner, and the Gulf Production Company (plaintiffs in error here) to recover the oil and gas leasehold estate in a certain 311.72 acres of land, more or less, in Rusk County, Texas. The defendants in error claim title under an oil and gas lease from G. G. Turner and wife, Sina A. Turner, to C. M. Joiner, Trustee, dated April 7, 1927. The Gulf Production Company title is through and under a similar lease executed by the said G. G. Turner and wife, Sina A. Turner, to J. W. Pevey, dated July 25, 1930. At the time of the trial below the Gulf Production Company was in possession under its lease, had brought in seven producing wells, and was then drilling another, all at a cost to the company up to that time of $149,725. The suit was brought by defendants in error in the form of an action in trespass to try title, but they specially pleaded the Turner lease of April 7, 1927, and compliance with its terms as the source of their title. The primary question is: Which lease is to be given effect? The lease of defendants in error is in the usual form of oil and gas leases. G. G. Turner and wife, Sina A. Turner, are named as lessors, and C. M. Joiner, Trustee, as lessee.

The lease sets out the field notes of the land, was to run five years, and as long thereafter as oil or gas might be produced.

Both G. G. Turner and his wife first acknowledged this lease in statutory form on the 7th day of April, 1927, before G. P. Birdwell, Notary Public for Rusk County, Texas. More than three years thereafter, viz., on the 18th day of October, 1930, both G. G. Turner and his wife, S. A. Turner, again acknowledged the execution of this instrument, in statutory form, before James A. Copeland, Notary Public for Harris County, Texas. The lease was twice filed for record in Rusk County; first on the 15th day of April, 1927, and again on February 17, 1931.

The "drilling clause" of the lease reads: "If no well be commenced on said land on or before the 7 day of April 1928 this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor, or to the lessor's credit in the First State Bank at Overton, Texas, or its successors, which shall continue as the depository, regardless of changes in the ownership of said land, the sum of Seventy Seven and 25/100 Dollars, which shall operate as rental and cover the privilege of deferring the commencement of a well for Six (6) months from said date. In like manner and upon like payments or tenders the commencement of a well may be further deferred for like periods of the same number of months successively. And it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid, but also the lessee's option of extending that period as aforesaid, and any and all other rights conferred." (Italics ours.)

The plaintiffs in error say that the above "unless" clause was never complied with, and that the lease terminated by its own limitations on April 7, 1928, long before Pevey, through whom the Gulf Production Company claims, obtained his lease from the Turners. Defendants in error say in their pleadings that they claim "through and under said lease, and subject to the terms of said lease." and "upon which all delay rental obligations had been fully satisfied and discharged."

Although Mr. and Mrs. Turner denied that anything of the sort ever took place, the jury, answering special issues, found that G. G. Turner and wife, Sina A. Turner, prior to April 7, 1928, accepted from Dan Cameron syndicate interest certificates purporting to cover the 80-acres Joiner discovery well tract (on the Daisy Bradford land), in satisfaction of the rentals payable under the lease for the three succeeding years, commencing April 7, 1928. The syndicate interest certificate transaction took place between G. G. Turner, alone, and Dan Cameron, a representative of C. M. Joiner, Trustee,—Mrs. Turner not being present. Concerning the transaction, Cameron in part testified:

"I called on Mr. Turner at least a week and possibly two weeks prior to the date on which the rental was due to talk to him about the rental money and Mr. Turner was up on his barn or car shed and I went out there and went up there and told him that Mr. Joiner was having work and a hard time in keeping the work up and well drilling and to pay the rentals and if he did have to continue to pay the rentals on the land down there that it would be impossible for him to continue to drill the well, because it was very difficult for him to get the money-and that the only thing he could do to keep the work going on down there was to get the folks that owned—that he had the land leased from, to accept in lieu of their rentals and in payment of their rentals the syndicate interest.

* * * * *

"That was the syndicate interest in the well he was then drilling and Mr. Turner told me that he thought a good deal of Mr. Joiner and would do anything on earth to help him come out and he expressed himself that he had a very high regard for Mr. Joiner and also he knew that Mr. Joiner had been having an awful hard time to keep this well going * * * Mr. Turner told me he was willing to accept the syndicate interest in the well for his rental and he said that there would not be any rentals anyhow if Mr. Joiner was not drilling and the rentals didn't amount to anything to him and he was glad to accept in lieu of the rentals the syndicate interest in this well down there.

* * * * *

"I made out Mr. Turner a syndicate interest for his rentals and delivered it to him.

* * * * *

"I had a pad of those forms like that, the original and the duplicate, and I had a carbon in between them and I made out this certificate and then I gave one copy to Mr. Turner and I kept one copy for Mr. Joiner's records.

* * * * *

"At the time I gave him the certificate I made out a rental receipt and got Mr. Turner to sign it.

* * * * *

"At the time of the transaction with Mr. Turner he agreed to settle with me for three years rentals, from April 7, 1928.

* * * * *

"Mr. Turner signed the rental receipt for the three years."

The above transaction is the only basis for the claim that Joiner, Trustee, complied with the terms of the lease, and the Court of Civil Appeals held it was sufficient for that purpose.

The homestead of Turner and his wife was located on the land, and had been for more than fifty years. The Court of Civil Appeals held that after the execution of the lease by the Turners they had no homestead rights whatever in or to the property, in part saying [61 S.W.2d 188: "So the conveyance of the determinable fee by G. G. Turner and wife carried with it the exclusive right of possession, and that remaining in the Turners after the conveyance being only a right of reverter, not carrying with it a right of possession, until after the happening of the event that would terminate the estate, then no right of homestead could attach in favor of the Turners, a present right of possession being necessary for homestead rights to attach."

This holding is the basis of the court's conclusion that the syndicate interest certificate transaction was valid.

In our opinion, the terms of the lease negative any purpose to grant or to abandon the homestead or the possession of the premises, or any interest therein not necessary for carrying into effect the lease itself. The lease expressly states that Joiner, Trustee, and his vendees, could not use the "water wells of the lessor"; that "when requested by lessor, lessee shall bury all pipe line below plow depth"; that "no well shall be drilled nearer than 200 feet to the house or barn on said premises, without the written consent of the lessor"; and "Lessee shall pay for damages caused by all...