Humble Oil & Refining Co. v. Davis

• Decision Date: 04 June 1927
• Docket Number: (No. 695-4614.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 296 S.W. 285
• Parties: HUMBLE OIL & REFINING CO. v. DAVIS et al.
• Court: Texas Supreme Court

296 S.W. 285

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

(No. 695-4614.)^*

Commission of Appeals of Texas, Section B.

June 4, 1927.

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

Suit by E. R. Davis and another against the Humble Oil & Refining Company and others. Judgment for plaintiffs on appeal of named defendant was affirmed by the Court of Civil Appeals (282 S. W. 930), and named defendant brings error. Judgments of the district court and the Court of Civil Appeals as between named defendant and plaintiffs reversed and rendered; in other respects judgments affirmed.

H. B. Daviss, of Corsicana, and W. M. Cleaves and Hines H. Baker, both of Houston, for plaintiff in error.

Lawrence Treadwell, Callicutt Upchurch & Howell, and Prince & Taylor, all of Corsicana, for defendants in error.

POWELL, P. J.

J. L. Hill and wife, in 1921, owned 130 acres of land near Corsicana. It was their community homestead. On October 4, 1921, for a down payment of $120, they leased 20 acres of their land, for oil and gas purposes, to E. R. Davis and W. W. Bates. The pertinent portions of this lease read as follows:

"It is agreed that this lease shall remain in force for a term of five (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."

"If no well be commenced on said land on or before the 4th day of September, A. D. 1922, this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor, or lessor's credit in the Corsicana National Bank at Corsicana, Tex., or its successors, which shall continue as the depository, regardless of changes in the ownership of said land, the sum of thirty ($30.00) dollars, which shall operate as a rental and cover the privilege of deferring the commencement of a well for twelve 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.

"Should the first well drilled on the above-described land be a dry hole, then, and in that event, if a second well is not commenced on said land within twelve months from the expiration of the last rental period for which rental has been paid, this lease shall terminate as to both parties, unless the lessee, on or before the expiration of said twelve months, shall resume payment of rentals in the same manner as hereinbefore provided. And it is agreed that, upon the resumption of the payment of rentals as above provided, the last preceding paragraph hereof, governing the payment of rentals and the effect thereof, shall continue in force just as though there had been no interruption in the rental payments."

This lease was duly filed for record by the lessees on October 13, 1921, and duly recorded eight days later. After its record, Davis, one of the lessees, kept it in his own possession continuously until the latter part of September, 1923, when preparations for commencing the instant suit were about perfected.

On July 3, 1923, Hill and wife, for a total cash consideration of $39,291, executed a general warranty deed to the plaintiff in error, conveying their entire 130 acres, including the 20 acres covered by aforesaid Davis and Bates lease. With specific reference to oil matters, we quote from that deed as follows:

"The said J. L. Hill and wife, M. A. Hill, hereby specifically reserve to themselves and except from this conveyance one-sixteenth of all oil that may be produced from said above-described premises, which shall be delivered to them on the premises or in the pipe lines with which connections may be made free of cost and as a royalty; it being understood, however, that the grantee herein, its successors and assigns, shall have the right to deduct fuel oil used in the operation of said premises for oil and gas before the royalty herein reserved is calculated. This reservation shall in no sense be taken as imposing upon the grantee any obligation whatever in connection with the development of the above-described premises for oil.

"This conveyance is made subject also to the following oil and gas leases."

Then follows a description of three different mineral leases, one of which is the one now in suit. Then there follows this provision:

"But covers and includes all royalties and rentals provided in said leases to be paid to lessor, save and except one-half of one-eighth oil royalty provided for therein, which is hereby specifically reserved to J. L. Hill and wife, M. A. Hill, the grantees herein, in line with the preceding paragraph hereof."

Before purchasing this property, plaintiff in error had its attorneys examine an abstract of title thereto, which abstract included the lease in suit, just as it was written.

After this purchase, the Humble Company notified the lessees that future payment of rentals should be made to it. In compliance with that notice, the lessees tendered $30 to the said company on September 20, 1923, with a view of deferring the drilling of a well during twelve more months. The company declined the tender on the ground that it came sixteen days too late, at the same time claiming that the lease, by its very terms, had ceased and determined. About thirty days later, Davis and Bates brought this suit against various parties, including the Humble Company, asking that their lease be reformed as against all defendants, so as to have this rental payment date read October 4, 1922, instead of September 4, 1922, and asking also that they be quieted in their title to said lease as so reformed. In its answer to this petition, the Humble Company presented many defenses, as shown by the opinion of the Court of Civil Appeals herein, and wound up as follows:

"Wherefore, this defendant prays that it go hence without a day with its costs, and that this honorable court decree to defendant the fee-simple title to the premises described in plaintiffs' petition in all respects free and clear from any and every claim by or on behalf of plaintiffs in this cause."

The case was tried before the court, without a jury. So far as material to our opinion, the trial court entered the judgment as prayed for by Davis and Bates, reforming the lease as to all defendants, and quieting their lease title to the premises as against the same defendants. Upon appeal to the Court of Civil Appeals, the judgment of the district court was affirmed. See 282 S. W. 930.

The Court of Civil Appeals passes on various questions, all of which are quite interesting. In the view we take of the two questions we shall hereafter discuss, we shall pretermit any views upon the other questions. We adopt this course, for the reason that, even if the Court of Civil Appeals be correct in all these other phases of the case, it would not change the judgment we shall recommend.

The dual nature of the Humble Company's chief contention is gathered from this quotation from the application:

"The discussion above, we think, demonstrates that there was no mutual mistake in the Davis and Bates lease and therefore no right of reformation as against Hill and wife. If there is no ground for...