Masterson v. Amarillo Oil Co.

• Decision Date: 07 March 1923
• Docket Number: (No. 2078.)
• Citation: 253 S.W. 908
• Parties: MASTERSON v. AMARILLO OIL CO. et al.
• Court: Texas Court of Appeals

253 S.W. 908

MASTERSON v. AMARILLO OIL CO. et al.

(No. 2078.)

Court of Civil Appeals of Texas. Amarillo.

March 7, 1923.

Rehearing Denied June 6, 1923.

Appeal from District Court, Potter County; Reese Tatum, Judge.

Suit by R. B. Masterson against the Amarillo Oil Company and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Madden, Trulove, Ryburn & Pipkin, of Amarillo, for appellant.

Hendricks & Mood, Turner & Dooley, and J. W. Crudgington, all of Amarillo, and Jas. F. Getty, of Kansas City, Kan., for appellees.

HALL, C. J.

Appellant, Masterson, as plaintiff in the court below, filed this suit to cancel an oil and gas lease and a supplemental lease upon 18,500 acres of land belonging to him, in Potter county. The original lease, executed by R. B. Masterson, as lessor, and M. C. Nobles, as lessee, omitting the immaterial parts, is as follows:

"Witnesseth: That the said lessor, for and in consideration of the sum of ten dollars, cash in hand paid, receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the lessee, to be paid, kept and performed, has granted, demised, leased and let, and by these presents does grant, demise, lease and let, unto the said lessee, for the sole and only purpose of mining and operating for oil and gas, and laying pipe lines and building tanks, power stations and structures thereon, to produce, save, and take care of said products, all that certain tract of land situated in the county of Potter and state of Texas, described as follows, to wit: [Here follows the description of the land by section, block, and survey numbers.] It is agreed that this lease shall remain in force for a term of three years from this date, and as long thereafter as oil or gas or either of them is produced from said land by the lessee.

"In consideration of the premises the lessee covenants and agrees:

"First. To deliver to the credit of the lessor, free of cost in the pipe line to which he may connect his wells, the equal of one-eighth part of all oil produced and saved from the leased premises.

"Second. To pay to lessor one hundred dollars each year in advance, or one-eighth of the gas, at the option of lessor, for the gas from each well, where gas only is found and marketed, while the same is being used off the premises, and lessor to have gas free of cost from any such well for all stoves and all inside lights in the principal dwelling house on said land during the same time, by making his own connections with the well, at his own risk and expense.

"Third. To pay lessor for gas produced from any oil well and used off the premises at rate of $50 per year, for each well, for the time during which such gas shall be used, said payments to be made each three months in advance.

"If no well be commenced on said land or on other land leased by the lessee in this prospective oil field, on or before the 22d day of December, 1917, and finished on or before the 22d day of December, 1918, this lease shall terminate as to both parties unless the lessee on or before six months from said last date shall pay to lessor or to his credit in the National Bank of Commerce at Amarillo, Tex., or its successor, the sum of ten dollars, which bank shall continue as the depository, regardless of change in ownership of said land, which shall operate as a rental and cover the privilege of deferring the commencement of a well for six months from said date. In like manner and upon like payment or tenders the commencement of a well may be further deferred for like periods of the same number of months successively, provided that in no event shall this lease run longer than three years unless gas or oil be found in paying quantities.

"If the estate of either party hereto is assigned and the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns.

"In testimony whereof we sign this the 22d day of December, 1916."

On the 12th day of September, 1918, Masterson gave the lessee notice that he had elected to take his royalty of one-eighth of the gas produced in lieu of the well rate stipulated. Thereafter M. C. Nobles conveyed to other parties equal undivided interests with him in the lease, and thereafter he and his associates caused the appellee oil company to be organized, and conveyed to it as part of its assets an undivided one-half of the interest evidenced by the contract. No well was commenced upon any part of the land described in the original contract, and on the 3d day of February, 1919, the appellee, through its representatives, requested an extension of the time for drilling for one year from the expiration of the three-year term. This request was granted, and the supplemental contract was entered into, expressly extending the term of the lease from three to four years upon consideration of $1, and upon condition that the oil company should commence a well for oil or gas on or before the 22d day of December, 1919. The supplemental contract provides that in the event of a failure to drill, the company shall pay rental for the one-year extension, the sum of 25 cents per acre, in advance.

The pleadings of the parties are voluminous, and will not be set out except in so far as may be necessary to consider the propositions urged, and especially propositions based upon certain exceptions to the answer of the oil company, which were overruled. The original lessee, M. C. Nobles, has assigned a one-half interest in the lease to the Amarillo Oil Company, the other half being vested in A. R. and Frank E. Jones and E. W. Goebel. The case was tried to the court without a jury. The trial judge filed 41 different findings of fact, which will be hereinafter set out in considering the several propositions attacking such findings, and concluded as a matter of the law that the lease did not lapse at the end of the expiration period of four years, that the appellees had not abandoned the lease, and that it was not subject to forfeiture.

Appellant urges 15 propositions, based upon 180 assignments of error.

The first proposition is that the court erred in each and all of his holdings and rulings to the effect that the defendant had a right to allege, prove, and have considered as a defense to plaintiff's cause of action the various matters set up in their special answer, and in holding that such matters constituted a good and sufficient defense to plaintiff's cause of action, because they are extrinsic matters, and foreign to the contract set up by plaintiff, and to allow the same as a defense is to vary the terms and provisions of such contract by parol, and make for the parties a contract differing from the one in fact entered into. The rulings complained of are specifically stated as follows:

(a) The overruling of each and all of plaintiff's general and special demurrers to defendant's special answers, complained of in assignments 1 to 56, inclusive.

(b) The admission of testimony, over plaintiff's objections, that the same was irrelevant, incompetent, and proof of extraneous facts to vary the written contract in support of and tending to prove the allegations made in such special answers complained of in assignments 59 to 82, inclusive.

(c) The findings of fact in accordance with and sustaining the truth of the extrinsic matter alleged in such special answers complained of in assignments 88 to 139, inclusive.

(d) Refusing to find, at the request of plaintiff, facts supporting and responsive to the issues made by plaintiff's allegations without reference to the extrinsic matters alleged in defendant's answers, complained of in assignments 140 to 168, inclusive.

(e) The holdings of such extrinsic facts and transactions as alleged and proven sufficient to constitute a defense of the cause of action as alleged by plaintiff, complained of in assignments 1 to 158, inclusive.

In order to understand the force of these contentions, it is necessary to set out portions of the defendants' answer, which we do in substance as follows:

That about the 13th day of December, 1916, Lee Bivins leased to M. C. Nobles by written contract containing substantially the same stipulations as are contained in the lease in question, and embracing 18,000 acres of land, situated on the south side of and across the Canadian river from the lands described in the contract under consideration. That on the 24th day of April, 1917, on the 1st day of June, 1917, and on the 18th day of February, 1918, respectively, the plaintiff executed and delivered two other contracts to the said Nobles and one to said oil company, leasing for a period of three years about 37,000 acres of land, which subsequent leases were similar in their provisions to the lease in question. That when the lease in question was executed, December 22, 1916, Masterson knew of the prior execution and delivery of the Bivins lease, both leases being under negotiation at the same time. That plaintiff would not execute his lease until after the execution and delivery of the Bivins lease. That in securing such contracts Nobles was acting for himself and 13 other persons, with the purpose of obtaining the lease and prospecting and developing the lands for minerals. That plaintiff knew that fact, and that it was contemplated that a corporation would thereafter be formed to which said leases would be transferred, and that the corporation would continue to carry out the purposes of the prior association, and that Masterson was a member of the preliminary organization. That the defendant oil company was thereafter chartered on the 24th day of April, 1918, with the plaintiff participating in its organization as a promoter, and stockholder to the extent of 70 shares of its capital stock, and that he became an officer and director in the company which had been organized with a capital stock of $10,000. That during the...