Munsey v. Marnet Oil & Gas Co.

• Decision Date: 20 October 1917
• Docket Number: (No. 7704.)
• Citation: 199 S.W. 686
• Parties: MUNSEY et al. v. MARNET OIL & GAS CO. et al.
• Court: Texas Court of Appeals

199 S.W. 686

MUNSEY et al. v. MARNET OIL & GAS CO. et al.

(No. 7704.)

Court of Civil Appeals of Texas. Dallas.

October 20, 1917.

Rehearing Denied December 22, 1917.

Appeal from District Court, Navarro County; H. B. Daviss, Judge.

Suit by E. W. Munsey and others against the Marnet Oil & Gas Company and others. From judgment for plaintiffs, they appeal. Judgment reversed, and cause remanded.

Dexter Hamilton and Callicutt & Johnson, all of Corsicana, for appellants. W. J. McKie and Richard Mays, both of Corsicana, for appellees.

RASBURY, J.

This suit was instituted by appellants for the purpose of canceling certain oil leases and for damages. Upon trial by jury, verdict was against cancellation of the leases, but for damages, followed by similar judgment, from which this appeal is taken.

The following facts are not disputed: In the year 1898 the owners of adjoining tracts of land in Navarro county comprising approximately 158 acres entered into written agreements, one with W. H. Staley and one with Carmody and Davis, in reference to any minerals beneath the land. The agreements are similar. By the terms thereof all of the oil, gas, coal, and other minerals beneath the land were sold and conveyed to the grantees, who were to have and hold same on condition that drilling for oil, etc., was begun and diligently prosecuted within 30 days from the grant. If oil or other mineral was discovered within the said period, such grant was to continue in force for 20 years, or so long as oil could be produced in paying quantities, in which event the grantees were to bore not less than six additional wells within one year from the grant, and six in the second year, should the paying wells justify the expenditure. For the purposes indicated, grantees were given the right of ingress and egress upon the said lands for the purpose of laying pipe, for drilling, and for transporting oil. The grant declared it evidenced a conveyance of property and not a mere franchise, and that the "conditions" thereof should extend to the heirs, executors, and administrators of the parties thereto. The consideration of the grant was the free delivery in a local pipe line to the credit of the grantors of one-eighth of the oil produced and saved from said premises. There are other provisions in the leases, which are omitted because immaterial to any issue presented in the case. Development of the mineral resources of the land under the provisions of the leases and to the apparent satisfaction of the grantors therein and their successors were had for a period of years. Mutations in the ownership of the leases, unnecessary to detail, placed such ownership on February 11, 1911, three-fourths in appellee Marnet Oil & Gas Company, and one-fourth in W. H. Staley, who was in charge thereof for himself and said Marnet Oil & Gas Company. The development of the minerals and the ownership of the leases so stood when appellants in July, 1912, acquired the fee to the land and the one-eighth portion of the minerals produced and reserved by the original lessors.

In May, 1913, thereafter, appellants commenced the present suit for the purposes already detailed. The case was tried October 11, 1915, and the evidence adduced by appellants upon trial tended to show that appellees had abandoned the operation of the wells upon the land about October, 1911, and were by reason thereof permitting the oil beneath appellants' land to be drained by other wells on land adjacent thereto and derived from the same strata, and that appellants had after their purchase promptly and repeatedly demanded that the wells be operated, which demand appellees declined to comply with, and that had the wells been operated during the period they were idle appellants would have received therefrom approximately $200 per annum. Appellees' evidence tended to show that from the incipiency of the leases numerous wells were sunk on the lands and profitably operated to the satisfaction of those owning the lands, but that when appellants acquired the lands and the oil interests of former owners the supply had naturally decreased and the machinery or equipment considerably run down, and that when appellants within a short time after their purchase demanded that the wells be pumped they agreed to do so as soon as certain necessary machinery which had been ordered should arrive, but that before the machinery arrived and on January 10, 1913, W. H. Staley became a voluntary bankrupt, whereupon his trustee not only assumed possession and control of Staley's interest in the oil leases, but of the entire property, and refused to operate same until in November, 1913, at which time appellees made the necessary improvements, cleaned out the wells, and commenced operation, after which time appellants' interest in the oil produced was delivered to the local pipe line in accordance with the leases.

Due to the fact that we have reached the conclusion that it is our duty to reverse the case, we have for obvious reasons of propriety stated only in a general way the facts which the evidence tendered by the respective parties tended to prove. Any further reference to the facts necessary to a disposition of the issues will be had in considering such issues, and issues as such will be discussed without reference to the assignments of error.

The jury was told by the court:

"That the law looks with disfavor upon and discourages the forfeiture of the rights of parties, and declares that before a forfeiture will be declared the evidence on which such forfeiture is predicated and sought must preponderate in favor of the forfeiture."

Appellants contend that the charge was error, since forfeiture is a salutary remedy and is not, when the facts warrant it, without favor before and discouraged by law, and that the language used was prejudicial and upon the weight of the testimony. That forfeitures arising as matter of law upon statutes and contracts between private persons are not regarded with favor, and that equity will, when it is equitable to do so, relieve against them, is a rule declared so often by text-writers and decisions as not to require the citation of authority. Whether, when forfeitures is a fact issue, as distinguished from one arising upon statute or contract upon fixed contingencies, the jury should be told that such remedy is looked upon with disfavor, is, it seems to us, a rule of doubtful expediency. That equity abhors forfeitures is not because forfeitures in every case would be inequitable, but because equity prefers, when it is equitable to do so, to preserve to parties valuable property rights against loss in such manner, if the loss caused the particular default, as can be compensated for in other ways. The pleading and proof in the case at bar fairly presented and raised the issue of forfeiture based upon abandonment of the rights granted by the leases. While the language used by the able trial judge cannot correctly be said to be on the weight of the evidence, it was, we believe, calculated to prejudice the right asserted to forfeit by conveying to the jury the suggestion that, unlike all other proceedings, the one being tried was regarded in an unfavorable light. Incidentally, it is ruled by some authorities, in reference to grants similar to the one involved in the instant case, that, where the grant is in the hope and expectation of pecuniary profit from mineral development, the same reasons do not exist for the application of the rule that equity abhors forfeitures for the reason that forfeiture when the grantee is guilty of laches in that respect is but equity. 12 R. C. L. 873.

Appellees, while maintaining that the charge was correct, assert the counter proposition that the rights acquired by appellees by the leases detailed are in no event subject to forfeiture, for the reason that the grants evidenced in law an absolute sale of all minerals beneath the surface of the land. We agree that the leases did by their terms evidence an absolute sale of all minerals beneath the land, subject to the condition subsequent contained therein in relation to locating and bringing oil to the surface, which we have shown was complied with, and whereupon the grants became absolute for the purposes contemplated by the parties for a period of 20 years, or as long as oil in paying quantity could be produced. Benavides v. Hunt, 79 Tex. 383, 15 S. W. 396; Southern Oil Co. v. Colquitt, 28 Tex. Civ. App. 292, 69 S. W. 169; Texas Company v. Daugherty, 107 Tex. 226, 176 S. W. 717; Fisher v. Crescent Oil Co., 178 S. W. 905.

We do not agree, however, after the condition subsequent in reference to the development of paying wells upon the property had been complied with, that all obligation on...