Humble Oil & Refining Co. v. Trapp

• Decision Date: 27 February 1946
• Docket Number: No. 9535.,9535.
• Parties: HUMBLE OIL & REFINING CO. v. TRAPP et al.
• Court: Texas Court of Appeals

194 S.W.2d 781

HUMBLE OIL & REFINING CO. v. TRAPP et al.

No. 9535.

Court of Civil Appeals of Texas. Austin.

February 27, 1946.

Rehearing Denied May 1, 1946.

Second Motion for Rehearing Denied May 22, 1946.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Travis County; Roy C. Archer, Judge.

Suit by the Humble Oil & Refining Company against M. E. Trapp and another to cancel a permit granted by the Railroad Commission to G. T. Blankenship to drill a second well on a 2.08-acre tract of realty located in the west edge of the fairway of the East Texas oil field in Gregg County and to enjoin production from a well which had been drilled under the permit. From a judgment that the plaintiff take nothing by the suit, the plaintiff appeals.

Judgment reversed and cause remanded with instructions.

Rex G. Baker and Nelson Jones, both of Houston, and Powell, Wirtz, Rauhut & Gideon, J. A. Rauhut, and W. S. Gideon, all of Austin, for appellant.

Polk Shelton, Looney & Clark, Everett L. Looney, and Chas. F. Herring, all of Austin, for appellees Trapp and Blankenship.

Grover Sellers, Atty. Gen., and James L. Noel and Harris Toler, Asst. Attys. Gen., for appellee Railroad Commission and others.

BAUGH, Justice.

This is a Rule 37 case. Suit was by the Humble to cancel a permit granted by the Railroad Commission to G. T. Blankenship to drill a second well on a 2.08-acre tract of land located in the west edge of the fairway of the East Texas oil field in Gregg County; and to enjoin production from said well which had been drilled thereunder. The permit, dated February 28, 1941, was granted by Commissioners Thompson and Sadler, Culberson dissenting, on the recited grounds to prevent confiscation and waste. Trapp was made a party to the suit as owner of a half interest in the lease. The defendants, Trapp and Blankenship, pleaded in defense, among other things, an unreasonable delay by Humble amounting to laches, in filing and prosecuting its suit to cancel the permit; and a prior agreement by Humble's attorney with Trapp not to sue, on which he relied to his prejudice. The case was submitted to a jury on special issues in response to which the jury found:

1. That Humble delayed for an unreasonable time in bringing suit to cancel said permit;

2. That by reason of such delay Trapp and Blankenship incurred heavy expense which they otherwise would not have incurred;

3. That in May, 1937, the attorney for the Humble, in consideration of the dismissal by Trapp of his cross-action against the Humble in a suit by Humble then pending involving a permit on another tract of land in the East Texas field, agreed that Humble "would not thereafter interfere by suits or otherwise with M. E. Trapp in his drilling and producing oil from such leases in East Texas in which he was an owner"; and

4. That Trapp drilled the well in question relying in good faith on such agreement.

The trial court thereupon rendered judgment that the Humble take nothing by its suit; hence this appeal.

The issues as to whether the well was necessary, as an exception to Rule 37, to prevent either confiscation or waste were not submitted to the jury nor requested by appellant, whose duty it was, of course, to make such proof. And it is the contention of appellees that there was evidence to sustain the permit on these grounds; and appellant not having requested that such issues be submitted, it waived them under Rule 279, T.R.C.P., and that the trial court's judgment should therefore be sustained, regardless of the special issues submitted.

However, an examination of the uncontroverted evidence in the light of prior decisions discloses, we think, that as a matter of law the permit cannot be sustained on either of the grounds on which it was granted. The tract in question is located in one of the best producing areas in the field. It is rectangular in shape, approximately 246 feet wide, north-south, and approximately 347 feet long, east-west. Well No. 1 thereon, drilled in 1931, is located in the center thereof, 126 feet from its south boundary. Well No. 2, the one here involved, is located 80 feet south of well No. 1. Without well No. 2, there was no uncompensated drainage from said tract. The eight times surrounding area delineated by a rectangle superimposed on said tract, and including well No. 1, contains 8 wells. The eight times surrounding area delineated by a circle with well No. 1 as the center contains 7 wells. The underground conditions, i. e. sand thickness, porosity, permeability, bottom hole pressure, well potentials, and daily allowable production per well—were substantially uniform for such areas; as was the daily production per acre therefrom. The testimony of geologists was that one well on said tract would produce the recoverable oil in place beneath said tract and such oil as would naturally migrate to it. While the witnesses did testify that there was a theory advanced that on the issue of waste of "more wells, more oil" production; and that there were other wells than those in the eight times area within 660 feet (the spacings established by Rule 37) of said tract; such wells did not cause uncompensated drainage from such 2.08-acre tract; and the "more wells, more oil" theory as a waste prevention measure has already been adjudicated adversely to such contention. Without further discussion, under the uncontroverted facts as stated above, and the adjudicated cases, said permit cannot as a matter of law be sustained on the grounds on which it was granted; and that failure to submit such issues to the jury will not support the judgment on the grounds of waiver under Rule 279, T.C.R. P. See Railroad Comm. v. Magnolia Pet. Co., Tex.Civ.App., 169 S.W.2d 253; Trapp v. Atlantic Ref. Co., Tex.Civ.App., 169 S. W.2d 797, writ refused; Gulf Land Co. v. Atlantic Ref. Co., 134 Tex. 59, 131 S.W.2d 73; Railroad Comm. v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1022; Holcomb v. Atlantic Ref. Co., Tex.Civ.App., 172 S.W. 2d 523. We think it is also clear that the case was tried on the theory of laches and estoppel as submitted to the jury.

Considering next the efficacy of the agreement pleaded by appellees, testified to by Trapp and found by the jury to have been made in May, 1937, as barring Humble's right to set aside the permit here involved; we have concluded that not only is it void and unenforcible because too uncertain and indefinite; but even if valid, it did not, under Trapp's own testimony, apply to the tract of land here involved. That purported agreement grew out of a suit filed by the Humble against Trapp on May 31, 1935, being cause No. 55,598, in the District Court of Travis County, Texas, to set aside and cancel a permit theretofore granted to Trapp to drill a second well on a one acre tract in said field in Gregg County. By supplemental answer and cross-action filed in that suit on March 12, 1937, Trapp alleged that the Humble had been running excess oil from its offset wells on its adjoining tract to the injury of his wells on the one acre tract, causing low pressure conditions in that immediate area, and prayed that further production from Humble's wells be enjoined until such lowered bottom hole pressure could be equalized in the surrounding area.

After negotiations with reference to that suit, both the plaintiff's (Humble) suit and Trapp's cross-action were dismissed "with prejudice" to their being refiled; and the order of dismissal was approved in writing by the attorney for Humble and the attorney for Trapp. The order of dismissal in nowise refers to nor indicates any agreement. The purported agreement, denied by Rauhut, attorney for Humble, and asserted by Trapp, was oral and made by long distance telephone between them as a part of the negotiations for dismissal of cause No. 55,598. Trapp's testimony with reference to the matter was as follows:

"Mr. Rauhut insisted upon dismissing it and wanted to know what I wanted him to do. He said, `We don't want to try the law suit, and we will do anything you want us to do; that we can not win the law suit and want to have it dismissed and disposed of, and what do you want us to do.' I was somewhat of the opinion that the cross action ought to have been tried, but he was very nice about it and said if we would dismiss it they would pay the costs in the matter and hold me harmless from any expense by reason of it, and he agreed then not to bring any more actions against me or interfere with my operations in the field. That if they had any grievance they would see me personally about it and thrash it out personally without jumping into court on each occasion that occurred; and under those circumstances I told him to tell Mr. Pollard I would agree to dismiss it on those terms. Later I called Mr. Pollard and told him I had talked to Mr. Rauhut about it and Mr. Rauhut had agreed that they would not annoy me or interfere with my operations in the East Texas Field any further, and that we would get along.

"Q. Now Governor, does that correctly state the agreement you had with Mr. Rauhut? A. Yes, sir.

* * * * * *

"Q. Now following that dismissal of your cross action, did you secure any additional permits in East Texas? A. Yes, sir, that was part of the agreement at that time. I called his attention to the fact that I was preparing to apply for additional permits, and that he agreed not to oppose those permits—or at least he agreed not to go into court."

On cross-examination Trapp further testified that in his conversation with Rauhut "There was not anything said necessarily about the confining it" (the agreement) to East Texas. He later limited the scope of the agreement to the East Texas field.

Further: "Q. First it was limited to the East Texas oil fields and second it was limited to the leases you owned or had an interest in? A. In the East Texas oil field yes." Again: "It was a telephone conversation and it was brief and I do not recall of anything being said about that (after...