Lippincott v. Atlantic Refining Co.

• Decision Date: 28 November 1941
• Docket Number: No. 3928.,3928.
• Citation: 156 S.W.2d 998
• Parties: LIPPINCOTT et al. v. ATLANTIC REFINING CO. et al.
• Court: Texas Court of Appeals

156 S.W.2d 998

LIPPINCOTT et al. v. ATLANTIC REFINING CO. et al.

No. 3928.

Court of Civil Appeals of Texas. Beaumont.

November 28, 1941.

Rehearing Denied December 10, 1941.

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

Suit by the Atlantic Refining Company and another against Ben Lippincott and others to cancel a permit, granted as an exception to Spacing Rule 37 of the Railroad Commission, to drill and operate an oil well. From a judgment for plaintiffs canceling the permit and enjoining named defendant from drilling and operating the well, named defendant appealed to the Austin Court of Civil Appeals, and the case was transferred by the Supreme Court.

Affirmed.

H. P. Smead and Earl Roberts, both of Longview, Gerald C. Mann, Atty. Gen., and Henry D. Lauderdale, Edgar W. Cale Tom D. Rowell, Jr., James D. Smullen, and E. R. Simmons, Asst. Attys. Gen., for appellants.

R. H. Whilden, of Houston, Greenwood, Moody & Robertson, of Austin, C. B. Ellard, of Dallas, and Black, Graves & Stayton, of Austin, for appellees.

O'QUINN, Justice.

This is a Rule 37 case; see Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73, for a statement of the rule.

On the 4th day of June, 1940, to prevent confiscation of property and physical waste, appellant, Ben Lippincott, was granted a permit as an exception to Rule 37 to drill and operate well No. 2 on the S. K. Andrews 1½-acre lease in the William F. Hyde survey in Rusk County. Appellees, Atlantic Refining Company and Shell Oil Company, appeared before the Commission and contested the granting of the permit, and on the 19th day of July, 1940, filed their original petition to cancel the permit and to enjoin the drilling and operation of the well. On trial to the court without a jury, judgment was entered in favor of appellees, cancelling the permit and enjoining appellant from drilling and operating the well, from which he prosecuted his appeal to the Austin Court of Civil Appeals; the case is on our docket by order of transfer by the Supreme Court.

Appellants contend that the findings of the Commission on both issues, confiscation and waste, had reasonable support in the evidence, and therefore under the doctrine of Gulf Land Co. v. Atlantic Refining Co., supra, were binding on the trial court, and on this court.

The Lippincott lease contains 1.27 acres, and is a voluntary subdivision of a larger lease containing 21.27 acres; therefore, its right to the permit in issue must be measured by the need to protect the larger tract of 21.27 acres—including the Lippincott lease of 1.27 acres—from confiscation and waste. Buckley v. Atlantic Refining Co., Tex.Civ.App., 146 S.W.2d 1082.

Appellants cannot support the permit in issue on the ground of waste, because in prior litigation in federal court, Eastern District of Texas, at Tyler, involving a permit on this ground, the court denied the permit on the following fact conclusion: "The evidence also showed that the creation of such densely drilled areas with unequal pressures tends to create actual physical underground waste of the oil." Railroad Commission v. Humble Oil & Refining Co., Tex.Civ.App., 119 S.W.2d 728. In the federal court case, one Brannon, Lippincott's immediate predecessor in title, by his suit had appealed from an order of the Commission denying him a permit, and by his appeal had the right to contend, as in fact he did contend, for his permit on the issue of waste. That issue being in litigation was adjudicated against him, and there being no change of conditions on that issue, the federal court judgment, as a matter of law, supported appellees' plea of res judicata. The fact that there was a change in "the allowables," adverse to the Lippincott lease, did not create a change of condition of a nature to support the permit on the issue of waste. On this issue, Lippincott's witness Griffin testified that in so far as the question of waste was concerned it was immaterial whether the allowables of the wells in the area are all the same or slightly different.

Again, in the federal court the Railroad Commission contested the permit on the Lippincott lease on the issue of waste, and being successful in its contest it is now estopped to make the contention that the permit has support on that ground. Railroad Commission v. Arkansas Fuel Oil Co., Tex.Civ.App., 148 S.W.2d 895. Again, as we understand the testimony, the issue of waste has support only on the theory of more wells more oil. There was no showing of unusual conditions in, on, under and around the Lippincott lease taking it out of the spacing provisions of Rule 37 on the issue of waste. On this statement, that issue was not raised. Stanolind Oil & Gas Co. v. Midas Oil Co., Tex.Civ. App., 123 S.W.2d 911, 915. In the Midas case, the court said: "If an exception be necessary to prevent waste, the necessary implication is that facts exist which make inapplicable the general spacing rule. That is, that underground conditions, e. g., sand thickness, saturation, porosity, permeability, well potentials, bottom hole pressure, and drainage in the area of the particular well, differ from those obtaining generally, and on which the rule itself is predicated."

See, also, Railroad Commission v. Marathon Oil Co., Tex.Civ.App., 89 S.W.2d 517; Murphy v. Turman Oil Co., Tex.Civ.App., 97 S.W.2d 485; Atlantic Oil Production Co. v. Railroad Commission, Tex.Civ.App., 85 S.W.2d 655; Arkansas Fuel Oil Co. v. Reprimo

Oil Co., Tex.Civ.App., 91 S.W.2d 381; Magnolia Petroleum Co. v. Railroad Commission, Tex.Civ.App., 93 S.W.2d 587, writ refused; Magnolia Petroleum Co. v. Railroad Commission, Tex.Civ.App., 105 S. W.2d 787, reversed on other grounds, 130 Tex. 484, 109 S.W.2d 967; Railroad Commission v. Gulf Production Co., Tex.Civ. App., 115 S.W.2d 505, affirmed 134 Tex. 122, 132 S.W.2d 254; Magnolia Petroleum Co. v. Railroad Commission, Tex.Civ.App., 120 S.W.2d 548. Gulf Land Co. v. Atlantic Refining Co., supra, clearly does not support the finding of the Commission on the theory of more wells more oil, where there is no showing of changed...