Jackson v. Hunt Oil Co.
| Decision Date | 05 June 1945 |
| Docket Number | 37588. |
| Citation | 23 So.2d 31,208 La. 156 |
| Court | Louisiana Supreme Court |
| Parties | JACKSON et al. v. HUNT OIL CO. |
Rehearing Denied June 29, 1945.
Appeal from First District Court, Parish of Caddo James U. Galloway, judge.
Jackson & Mayer, Melvin F. Johnson and Edward S. Robertson, all of Shreveport, for plaintiffs-appellants, petitioners.
Blanchard Goldstein, Walker & O'Quin, of Shreveport, for defendant and appellee.
O'NIELL Chief Justice.
The plaintiffs are appealing from a judgment dismissing their suit on an exception of no cause or right of action. The purpose of the suit is to annul certain oil and gas leases of the defendant, so far as they affect one of two 40-acre subdivisions embraced in the leases. The tract in question is the NW 1/4 of NE 1/4 of Section 31, T. 21 N R. 10 W., in Webster Parish.
For the purpose of this decision the allegations of the plaintiffs' petition are accepted as the facts of the case.
The plaintiffs own a fractional interest, that is, 499/924 interest, in the mineral rights in the two 40-acre tracts being the NW 1/4 of NE 1/4 and the SE 1/4 of NW 1/4 of Section 31. As that section is a regular section, the two 40-acre subdivisions are not contiguous, of course, but have a common corner, the northeast corner of the SE 1/4 of NW 1/4 of the section being at the southwest corner of the NW 1/4 of NE 1/4 of the section.
The defendant, Hunt Oil Company, owns in fee simple the 40 acres described as NE 1/4 of NW 1/4 of Section 31 which 40-acre tract, of course, is immediately west of and adjoining one of the 40-acre tracts in which the plaintiffs have their mineral interest, and is immediately north of and adjoining the other 40-acre tract in which the plaintiffs have their mineral interest.
The Hunt Oil Company owns oil and gas leases covering both of these 40-acre tracts, in which the plaintiffs have their mineral interest, and owns leases covering also four adjacent 40-acre subdivisions of the same section, namely, the E 1/2 of NE 1/4 and SW 1/4 of NE 1/4 and NW 1/4 of SE 1/4 of Section 31.
On March 20, 1940, the plaintiffs and all other co-owners of the mineral rights in the NW 1/4 of NE 1/4 of Section 31, together with the owner of the mineral rights in the NE 1/4 of NE 1/4 of the section, and the Hunt Oil Company, as owner of the leases affecting the two 40-acre tracts, entered into a drilling contract and unitization agreement, by which the Hunt Oil Company was given the right to drill on and develop the 80-acre drilling unit composed of the two 40-acre tracts, for the production of oil and gas, under the terms of the leases held by the Hunt Oil Company.
No development or drilling was done under the unitization agreement dated March 20, 1940. But, on July 23, 1940, another unitization agreement was entered into, by which the agreement dated March 20, 1940, was abrogated; and by this new unitization agreement the Hunt Oil Company was given the option to unitize its NE 1/4 of NW 1/4 of Section 31 with either of the two 40-acre tracts in which the plaintiffs have their mineral interests, that is, either the NW 1/4 of NE 1/4 or the SE 1/4 of NW 1/4 of Section 31.
The Hunt Oil Company elected to unitize and did unitize its NE 1/4 of NW 1/4 of Section 31 with the 40-acre tract immediately south of it, that is, the SW 1/4 of NW 1/4 of the section. The agreement dated July 23, 1940, gave the Hunt Oil Company the right to drill for oil or gas either on its NE 1/4 of NW 1/4 of Section 31, or on whichever 40-acre tract would be unitized with it. Accordingly, the Hunt Oil Company drilled a well near the center of its NE 1/4 of NW 1/4 of the section. The well was drilled within the time stipulated in the unitization agreement and within the primary term of the leases held by the Hunt Oil Company. The well produced oil in paying quantities, and the Hunt Oil Company paid to the plaintiffs regularly their share of 1/2 of the 1/8 royalty stipulated in the leases.
The plaintiffs contend in this suit that the Hunt Oil Company forfeited its leases on the NW 1/4 of NE 1/4 of Section 31 by failing to drill on that 40-acre tract within the primary term of its oldest lease, and by failing to pay the annual rentals due on the three other leases affecting the 40-acre tract.
The plaintiffs argue that the effect of the unitization agreement was to divide each of the leases covering the two 40-acre tracts, in which the plaintiffs have their mineral interests into two separate leases, one lease affecting the SE 1/4 of NW 1/4, which was unitized with...
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