Pabst v. Roxana Petroleum Corporation

• Decision Date: 08 March 1932
• Docket Number: No. 9668.,9668.
• Citation: 51 S.W.2d 802
• Parties: PABST et al. v. ROXANA PETROLEUM CORPORATION et al.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

51 S.W.2d 802

PABST et al. v. ROXANA PETROLEUM CORPORATION et al.^*

No. 9668.

Court of Civil Appeals of Texas. Galveston.

March 8, 1932.

Dissenting Opinion March 16, 1932.

Rehearing Denied June 7, 1932.

Appeal from District Court, Galveston County; C. G. Dibrell, Judge.

Suit by Fred C. Pabst and others against the Roxana Petroleum Corporation and another. From decree dismissing suit on demurrer, plaintiffs appeal.

Affirmed.

Stewart & DeLange, of Houston, and Stewarts, Harris & Watkins, and Jules Damiani, all of Galveston, for appellants.

Thompson, Mitchell, Thompson & Young, Truman Post Young, and Claude P. Berry, all of St. Louis, Mo., for appellee Roxana Petroleum Corporation.

John M. Corbett, of Bay City, and Lewis Jeffrey and Terry, Cavin & Mills, all of Galveston, for appellee Texas Gulf Sulphur Co.

LANE, J.

On the 21st day of September, 1925, Fred C. Pabst entered into a written contract with Roxana Petroleum Corporation, which later changed its name to Shell Petroleum Corporation, by the terms of which it was agreed between Pabst and said corporation that, in consideration of the payment by the corporation to Pabst of the sum of $1,250, and in consideration of certain covenants and agreements set out in such contract, Pabst leased to said corporation for the purpose only of exploring, prospecting, mining, and operating for oil, gas and sulphur, a certain tract of land situated in Brazoria county, Tex.; it being the north half of a strip of land containing 50 acres, and which was about 400 feet in width. By the terms of the contract of lease, the lessee is permitted to lay pipe lines, build tanks, power stations, and such other constructions as were necessary to take care of any minerals as might be produced from said land.

Other parts of the contract pertinent to the controversy between the parties to the suit hereinafter mentioned are as follows:

"It is agreed that this lease shall remain in force for a term of One (1) year from and after the 21st day of September, 1925, and as long thereafter as oil, gas or sulphur, or either or any of them, is produced from said land by the lessee. It is, however, expressly agreed that if, at the expiration of said one (1) year from and after said 21st day of September, 1925, the lessee shall be conducting drilling operations on said land this lease shall remain in force so long as such operations are prosecuted with reasonable diligence, it being provided as to such thus continuing operations that a period of sixty (60) days only shall be allowed to elapse between the completion of one well and the commencement of another, and if any well or wells thus drilled prove to be productive of oil, gas or sulphur, or either or any of them, the completion of such well or wells shall take effect by relation as if said well or wells had been completed before the expiration of said one (1) year period, and the lessee, shall thereupon become vested with a leasehold estate in the said land so long as oil, gas or sulphur, or either or any of them, shall be produced thereon, subject to the payment of royalties as hereinafter provided.

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

"First: To deliver to the credit of lessor, free of cost, in the pipe line to which he may connect his wells, the equal one-eighth (1/8) part of all oil produced and saved from the leased premises.

"Second: To pay the lessor a royalty equal to the value of one-eighth (1/8) where gas only is found, while the same is being used off the premises. Lessor to have gas free of cost from any such well for all inside stoves and all inside lights in the principal dwelling house on said land during the same time by making his own connections with the wells at his own risk and expense.

"Third: To pay lessor for gas produced from any oil well and used off the premises, or if used for the manufacture of gasoline or any other product, a royalty equal to the value of one-eighth (1/8) of the raw gas, payable monthly at the prevailing rate.

"Fourth: To pay lessor for all sulphur mined and marketed from said land a royalty of $1.00 per ton.

"If during the term of this lease, and prior to the production of oil, gas or sulphur in paying quantities on the land hereby leased, there shall be drilled on adjoining land, and within two hundred (200) feet of any boundary line of said leased land a well which shall produce oil in paying quantities for thirty (30) consecutive days, lessee, within ninety (90) days thereafter, shall begin and prosecute the drilling of an offset well on said leased land in a faithful effort to find and produce oil therefrom.

"If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided shall be paid the lessor only in the proportion which his interest bears to the whole and undivided fee.

"In the case of the surrender of this lease or the forfeiture thereof, or the expiration of the rights of lessee, for any reason, either at the end of said period of one (1) year or otherwise, the lessee, its successors and assigns, shall have a reasonable time after the expiration, surrender or forfeiture thereof in which to remove all machinery, pipe lines, casing, pumps, tanks, telegraph poles and telegraph lines and all other property whatsoever which the lessee, its successors or assigns, may have placed upon said lands. * * *

"It is agreed that the estate of either party hereto may be assigned in whole or in part. The covenants, obligations and considerations of the within lease shall extend to and be binding upon the parties hereto, their heirs, executors, administrators, successors and/or assigns, but no change in the ownership of said land or assignment of rentals or royalties or any part thereof, shall be binding on the lessee until after the lessee has been furnished with a written transfer or assignment or a true copy thereof; and it is hereby agreed in the event this lease shall be assigned as to a part or parts of the above described lands and the assignee or assignees of such part or parts shall fail to make default in the payment of the proportionate part of the rent due from him or them, such default shall not operate to defeat or affect this lease insofar as it covers a part or parts of said lands as to which the said lessee or any assignee thereof shall make due payment of said rental."

After the execution of the contract above mentioned, Fred C. Pabst sold and conveyed to W. F. Pabst and wife, Viola C. Pabst, George Murphy and wife, Nina Pabst Murphy, certain interests in and to the property described in said contract.

On the 22d day of August, 1928, Fred C. Pabst and the parties to whom he made sales, as above stated, brought this suit against Roxana Petroleum Corporation, hereinafter called Roxana Company, and Texas Gulf Sulphur Company, hereinafter called Sulphur Company. The plaintiffs went to trial on their third amended original petition to which the court sustained a general demurrer addressed to it, and, upon refusal by plaintiffs to amend, the court dismissed the suit. From the action of the court in sustaining the demurrer and dismissing the suit, plaintiffs have appealed. Appellants for reversal of the judgment contend that the court erred in sustaining the general demurrer to their petition.

We overrule such contention.

After alleging the execution of the contract between Fred C. Pabst and the Roxana Company, it is by the petition alleged that Pabst was induced to enter into such contract by reason of certain misrepresentations made to him by Roxana Company. By paragraph 3 of the petition it is alleged that the Roxana Company did discover sulphur in paying quantities, and informed Pabst that it had done so, and that it had transferred and assigned said lease and all its rights as to sulphur under his land to the Sulphur Company.

By the sixth paragraph it is alleged as follows: "That defendants suppressed and hid the information they had obtained from drilling on said land from said plaintiffs herein, and refused to disclose their discovery to plaintiffs."

By paragraph 4 it is alleged that: "Said Texas Gulf Sulphur Company thereupon entered on said land and discovered sulphur thereunder as had said Roxana Petroleum Corporation. That four wells were drilled on said land by said Roxana Petroleum Corporation and said Texas Gulf Sulphur Company, each being productive of sulphur, and discovering a stratum of sulphur more than 30 feet thick underlying the entire tract of land, and containing sulphur to the extent of ten million tons. Both said corporations had drilled numerous wells on surrounding properties and discovered sulphur in paying quantities over the entire area known as Clemens Dome."

By the seventh paragraph they allege that the Roxana Company and Sulphur Company became jointly and severally interested by some contract between them, the exact terms of which were unknown to the plaintiffs, "whereby said defendants having discovered sulphur on the property of said Pabst and on adjoining property on said Clemens Dome, did conspire between themselves to defraud plaintiffs, and set about as a result of the conspiracy * * * to prevent plaintiffs from ever receiving any royalties on, or recovering the sulphur under plaintiffs' land and have succeeded in so doing."

Proceeding to show the acts done in furtherance of the alleged conspiracy, they alleged that the Sulphur Company, through its agent, represented to Fred Pabst that defendants believed that sulphur might be found in paying quantities on the Clemens Dome; while they well knew that such sulphur had, in fact, been found under said land; that they alleged that defendants represented to Fred Pabst that, for the purpose of developing sulphur under his land and adjoining lands, it was desired that all lands on the dome be combined into one consolidated tract; that it was...