Leopard v. Stanolind Oil & Gas Co.
| Decision Date | 08 April 1949 |
| Docket Number | No. 14004.,14004. |
| Parties | LEOPARD et ux. v. STANOLIND OIL & GAS CO. et al. |
| Court | Texas Court of Appeals |
Appeal from District Court, Henderson County; V. M. Johnston, Judge.
Action by W. F. Leopard and wife against the Stanolind Oil & Gas Company and others to cancel a lease and for other relief. Judgment for defendants, and plaintiffs appeal.
Affirmed.
John D. Glass, of Tyler, for appellants.
Carlton R. Winn and Lon Sailers, both of Dallas, and John Dowdy, of Athens, for appellees.
Appellants, plaintiffs below, sought a judgment decreeing null and void, for nonpayment of delay rentals and nondevelopment, a lease covering oil, gas and all other minerals, and to recover, free of such lease, a tract of 70 acres of land in the S. Sylvester Survey in Henderson County, Texas, plus damages for failure to release; and adversely claiming under said lease.
It was admitted that appellants own the surface rights and a fractional part of the royalty, and that appellees hold only such rights, if any, as they may now possess under an oil, gas and all other minerals lease dated September 30, 1943. Appellants asserted that the lease, expressly and without ambiguity, provided that no unit or pool thereof should exceed 40 acres in area, and that, since appellees paid no delay rentals for the year beginning February 16, 1946, and no well had been commenced on said land, nor on any unit or pool thereof not exceeding 40 acres in area, the lease became null and void on February 16, 1946.
Appellees asserted that the lease was in force by reason of (1) its having been unitized with other leases as provided for in the lease; (2) the existence of a producing well on said unit; (3) appellees' delivery, and appellants' acceptance of, checks covering appellants' portion of the royalty in said unit, the acceptance of said checks constituting a ratification of the lease and its unitization; (4) and appellants' ratification of the lease and its unitization, by the execution of a royalty deed (after the unitization of said lease and the acceptance of royalty checks thereunder) reciting that it was subject to an oil and gas lease.
The trial was to a jury and at the conclusion of plaintiffs' testimony, appellees' motion for an instructed verdict was sustained and judgment rendered accordingly.
It is undisputed that on September 30, 1943, Stanolind Oil & Gas Company and John R. Black held and owned, by assignment through the original grantee therein, J. W. Lindley, a valid oil and gas lease, without a unitization clause therein, on the 70-acre tract involved herein, which lease ran for a primary term of 10 years and 4 months. On September 30, 1943 this lease had 4 months and 16 days to run before its expiration date; and, under other provisions, by drilling thereon, would have continued in force so long as oil, gas or other minerals were produced from said land. At that time this Country was at War. Materials were scarce. The R. F. Holland No. 1 gas well had already been drilled and was producing gas. W. F. Leopard testified he knew it was producing gas (S. F. p. 109). He further testified that it was about 410 (3 ft.) steps (less than a quarter of a mile) from his home (S. F. p. 81). The new lease in question was executed September 30, 1943, and a $3,500 consideration paid to appellants. The material points of the lease are paragraphs 1-a and 4, thereof, which have to do with the right of appellees to unitize such lease with other leases. On the first page of the lease, all in typewriting, is paragraph 1-a which reads as follows:
On page 2 of the lease, in printing (except for the figure 40, indicated here by underscoring, which was inserted by typewriter), is paragraph 4, as follows:
It was undisputed that the pool or unit appellees created exceeded 40 acres, and that the $70 covering the February 16, 1946 rental was not paid. The lease, among other usual provisions, recited the primary term to be five years from February 16, 1944. On October 26, 1943, Stanolind, as Operator, filed its first notice of unitization to cover "Unit B." On February 29, 1944, it filed its amended notice of unitization covering "Unit B." The first notice did not include the Leopard tract. The second notice did include the Leopard tract. The amended notice was filed for record March 3rd, 1944, and recorded March 28, 1944, in Vol. 274 at page 423 of the Deed Records of Henderson County, Texas. (Defendants' exhibit No. 114.) On March 30, 1944, appellee, Stanolind, wrote appellant and wife a form letter headed "Tri-Cities Unit B" to which was attached a printed unitization agreement, an amended lease form and a division order. The division order specified the R. F. Holland, Floyd Goodgame, Carl Werneking, R. C. Roberts and W. F. Leopard farms or tracts. The attached multigraphed list covered both sides of two legal-size sheets, and listed the ownership and division of proceeds of oil between the parties. The last farm listed is that of appellants, and is at the bottom of the back of the second sheet, being page 4, and reads as follows:
"Effective March 1, 1944, the Following Farm Will
Become a Part of Unit `B' #14735 — W. F. Leopard Farm
Stanolind Oil & Gas Company 5/70 of .1126770 of 1/8 R.I
Carl Short 1/4 of .1126770 of 1/8 R.I
W. D. Puterbaugh 28.75/70 of .1126770 of 1/8 R.I
W. F. Leopard and wife 18.75/70 of .1126770 of 1/8 R.I."
After a follow-up letter from appellees, appellants wrote appellees (by typing on the bottom of appellants' letter) on May 11, 1944, as follows:
The record shows that on March 3, 1944, appellants had transferred to Carl Short 1/4 of their 1/8 royalty, for a period of time expiring September 3rd, 1944. On September 14, 1944, appellants wrote appellees as follows:
"In reply to Your letter just received, This is to advise You that we do not care to sign the division order that was submitted to us as of Aug. 30th, 1944, for the following reason, Carl Short interest in this division order expired the 3rd day of March of this year, and had 6 Mo. grace, We will sign division order, if You will include the interest you have set up in the division order, for Carl Short for Our credit."
Fifty-three royalty checks, dated from March 27, 1945, to July 25, 1947, were sent to and cashed by appellants, in total amount of $673.87. The correspondence shows that appellants knew the checks were from the Holland Well from which "Unit B" royalty checks were paid. On November 5, 1947, Stanolind wrote Leopard as follows:
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