McCoy v. Texon Royalty Co.

• Decision Date: 04 January 1939
• Docket Number: No. 10297.,10297.
• Parties: McCOY et al. v. TEXON ROYALTY CO. et al.
• Court: Texas Court of Appeals

Page 877

124 S.W.2d 877

McCOY et al. v. TEXON ROYALTY CO. et al.

No. 10297.

Court of Civil Appeals of Texas. San Antonio.

January 4, 1939.

Rehearing Denied February 15, 1939.

Appeal from District Court, Nueces County; W. B. Hopkins, Judge.

Action by Zula McCoy and husband against the Texon Royalty Company and others, for damages caused by the drilling of a well which was declared a "dry hole" and allegedly resulted in giving land the reputation of being nonproductive of oil and gas. From an adverse judgment, plaintiffs appeal.

Affirmed.

Sidney P. Chandler, of Corpus Christi, for appellants.

Johns, McCampbell & Snyder, of Corpus Christi, and Vinson, Elkins, Weems & Francis and Lawler, Wood & Childress, all of Houston, for appellees.

SLATTON, Justice.

Zula McCoy, joined pro forma by her husband, Elmer McCoy, instituted this suit against Texon Royalty Company, United Production Corporation, McElreath & Suggett Oil Corporation and Ford Bradish, for title and possession of 951.55 acres of land situated in Nueces County, Texas, and for damages by reason of the drilling upon said land of a well to a depth of 6000 feet, which, on account of the well being declared a dry hole, resulted in giving said land the reputation of being nonproductive of oil and gas and thereby rendered valueless for oil and gas leasing. She alleged that such drilling was without her authority or consent and her damage was averred to be $190,310.

The averments to show trespass were as follows: That the oil and gas lease upon which the entry was made was void because the property belonged to the separate estate of Zula McCoy and that she had never appeared before a notary public and acknowledged the execution of the lease. That the assignment to Texon Royalty Company was invalid for the same reason. That if such lease was ever valid it had expired September 12, 1935, on account of failure to pay the rental due upon such date. That the Gas Company cooperated with Texon Royalty Company in the trespass and in the drilling of the well, and such persons acted jointly and severally in committing the trespass and resulting damage.

Texon Royalty Company answered by general denial and pleaded that on September 12, 1931, the McCoys executed to McElreath & Suggett an oil and gas lease covering said land for a period of five years and that such lease was assigned to it July 26, 1933. That prior to the assignment, the Insurance Company had filed suit in Bexar County against the McCoys to foreclose vendor's and deed of trust liens which secured some $50,000 indebtedness of the McCoys to the Insurance Company. That prior to the assignment, it was agreed between the Insurance Company, McElreath & Suggett, Texon Royalty Company and the McCoys, or if the McCoys did not agree, then with their knowledge and consent that if the rentals would be paid, as provided by said lease or drilling operations in lieu thereof be conducted, the lease would continue through its term, notwithstanding the foreclosure suit and in the event of foreclosure and purchase by the Insurance Company, the lessor's rights would be protected through a new lease covering the unexpired term of the old lease. In reliance upon such agreement, Texon Royalty Company accepted an assignment of an oil and gas lease to a part of said land and expended a large sum of money in drilling during the year 1933. That when the next rental payment became due September 12, 1934, a dispute arose as to whom the rentals should be paid, that is, to the Insurance Company or the McCoys. That in furtherance of the agreement, the rentals were deposited in the registry of the court, by order dated September 10, 1934, and by order dated October 30, 1934, such rentals were paid to the McCoys. Such rentals so paid and accepted covered the period from September 12, 1934, to September 12, 1935. Subsequently a judgment of foreclosure was entered and said property was sold to the Insurance Company January 1, 1935. That afterwards the McCoys initiated negotiations with the agent of the Insurance Company for a repurchase of said land, which resulted in the sale to the McCoys of the land for a consideration of $2500 cash and vendor's lien note for $41,100, and the further consideration of the McCoys in recognition and performance of the agreement aforesaid should execute and deliver to Texon Royalty Company and McElreath & Suggett Oil Corporation an oil, gas and mineral lease for a term of two years from and after September 12, 1934. That in performance of said agreements, the McCoys signed the lease to Texon Royalty Company, dated September 12, 1934, and delivered it to the agent of the Insurance Company to be delivered to the Company upon consummation of the repurchase agreement. That the Insurance Company relied upon the acknowledgment as shown by the certificate, which was regular upon its face, in accepting the lease and in delivering the deed to the McCoys. The Insurance Company was induced to deliver its deed in reliance upon the McCoys' agreement with regard to the lease and in reliance upon its validity. That the Insurance Company would not have delivered its deed to them if it had known that Mrs. Zula McCoy had not actually appeared before a notary and acknowledged the lease. That by reason of such facts the Texon Royalty Company was the legal and equitable owner of the oil and gas lease. That with the delivery of all instruments in performance of the repurchase, the McCoys legally executed, acknowledged and delivered to the Insurance Company an assignment of rents, royalties, which was intended to and did cover all rents and royalties accruing under the terms of said lease of September 12, 1934. That Texon Royalty Company paid the annual rental due under the lease September 12, 1935, and the McCoys received, accepted and retained such rental with full knowledge of the time and manner of payment by which the lease was continued in effect to September 12, 1936. That prior to September 12, 1936, Texon Royalty Company entered upon said land with the consent of the McCoys, drilled a well, all within the period of the lease. Texon Royalty Company pleaded in the alternative that if for any reason its new lease was ineffectual, then that the agreed order by which the rentals were paid into court and accepted by the fee owners of the land constituted an agreement to continue the lease.

The United Production Corporation adopted the allegations of the Texon Royalty Company insofar as they related to it and denied generally the averment of the McCoys. By supplemental petition the McCoys pleaded general demurrer and denial and special exceptions, and specially averred that the judgment of foreclosure was res adjudicata of all rights claimed by Texon Royalty Company. That prior to September 10, 1934, McElreath & Suggett Oil Corporation had paid to and for the benefit of Elmer McCoy all delayed rentals for the full term of the original lease, and that if McElreath & Suggett Oil Corporation or Texon Royalty Company paid anything into the registry of the court, such was a voluntary payment.

The cause was tried to a jury. The trial court at the close of the evidence granted the motion of United Production Corporation for a directed verdict. A similar motion of Texon Royalty Company was overruled. The jury answered special issues submitted by the court upon which a judgment was rendered denying to Zula McCoy any damages. She brings the case here by appeal, and alleges 217 assignments of error through 61 propositions of law. The transcript and statement of facts contain 1221 typewritten pages and original exhibits. The "briefs" contain 450 typewritten and printed pages, and cite 191 authorities. The jury made the following findings between Zula McCoy and Texon Royalty Company:

1. That Zula McCoy did not appear before the notary for the purpose of having her acknowledgment taken to the lease dated September 12, 1934.

2. That Zula McCoy did not submit herself to the notary for the purpose of his taking her acknowledgment to such instrument.

3. That drilling operations were not commenced on the land in question on or before one year from September 12, 1934.

4. That the sum of $951.55 was not paid or tendered to plaintiff Zula McCoy or to her credit with Martindale Mortgage Company, the rental repository, as delay rental on or before September 12, 1935.

5. That plaintiffs did not notify Texon on or about September 8, 1936, not to...