Railroad Commission v. Magnolia Petroleum Co.

• Citation: 109 S.W.2d 967
• Decision Date: 03 November 1937
• Docket Number: No. 7294.,7294.
• Parties: RAILROAD COMMISSION OF TEXAS et al. v. MAGNOLIA PETROLEUM CO.
• Court: Supreme Court of Texas

109 S.W.2d 967

RAILROAD COMMISSION OF TEXAS et al. v. MAGNOLIA PETROLEUM CO.

No. 7294.

Supreme Court of Texas.

November 3, 1937.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Suit by the Magnolia Petroleum Company against the Railroad Commission of Texas and another. Judgment denying plaintiff relief was reversed by the Court of Civil Appeals [105 S.W.(2d) 787], and defendants bring error.

Judgment of Court of Civil Appeals reversed and judgment of trial court affirmed.

William McCraw, Atty. Gen., and Harry S. Pollard, Asst. Atty. Gen., Truman Warren, of Tyler, and Upchurch & Hooper and Willis E. Gresham, all of Austin, for plaintiffs in error.

W. H. Francis and Walace Hawkins, both of Dallas, and Greenwood, Moody & Robertson, of Austin, for defendant in error.

Ben H. Powell, J. A. Rauhut, and Smith, Goldsmith, Adams & Bagby, all of Austin, J. W. Hassell, Chas. B. Ellerd, George W. Hutchison, Hamilton, Harrell, Hamilton & Turner, Turner, Rodgers & Winn, and F. J. Scurlock, all of Dallas, Saye & Saye, Wynne & Wynne, Hurst, Leake & Burke, Taylor & Storey, Carl W. Wade, H. P. Smead, Clyde H. Hall, Harrington & Harrington, and Bramlette & Levy, all of Longview, Robert E. Hardwicke, of Fort Worth, Jones & Jones, of Marshall, and Lasseter, Simpson, Spruiell & Lowry, of Tyler, as amici curiæ.

MARTIN, Commissioner.

The Century Refining Company obtained a permit from the Railroad Commission of Texas to drill an oil well on a 1.6-acre tract of land as an exception to rule 37. The Magnolia Petroleum Company brought suit in the district court of Travis county to set aside such permit, and for an injunction. Judgment was entered denying it any relief. That judgment was reversed by the Court of Civil Appeals. See Magnolia Petroleum Co. v. Railroad Commission et al., 105 S.W.(2d) 787, 790, where the facts are fully stated.

W. B. Giles was the owner of a fee-simple title to 41.7 acres of land leased to the Ward Oil Corporation at the time of this trial. He acquired title by limitation to an additional narrow strip of land aggregating 5.56 acres along the south and east boundaries of this 41.7-acre tract, which included the 1.6 acres involved here, and which is that part of said strip located along and adjacent to the south boundary line of the 41.7 acres above mentioned. This strip is fully shown by plat, in opinion of Court of Civil Appeals, supra. Giles was twice married. Seven children were born of the first, and four children of the second, marriage. The eleven children became the owners of the entire acreage above described, and by partition the limitation strip passed to the eleven Giles children, who executed an oil lease to the Century Refining Company upon the 1.6-acre strip along the south boundary line. These events transpired subsequent to the enactment of rule 37. Considering the 41.7 acres and the limitation strip of 5.56 acres as it was before the partition, it is apparently conceded that such consolidated tract was entitled to more wells in order to give its owners a fair opportunity to secure the recoverable oil in place beneath it. It was shown that the density of drilling in said two tracts considered as one, was one well to 5.25 acres, while the Magnolia immediately to the south of it had a density of one well to 2.86 acres. Two sharply contested legal issues are presented by this record, viz.: (1) Could and did the trial court consider the situation of the parties as it was before the partition of this land by the Giles heirs, in determining the respective rights of the parties hereto; and (2) upon whom did the burden of proof rest in the trial court? An answer to these questions will determine the controlling and major points presented, though these are expressed in a number of propositions, together with a multitude of other ancillary questions, many of which relate to a mythical case not before us.

A number of able amici curiæ briefs are on file, and we acknowledge our indebtedness to the respective authors of these for much valuable assistance.

Without cataloguing the many contentions pressed upon us, we turn aside briefly to make a general reply to many of these, which we believe sufficiently indicates our views.

Three methods of enforcing our conservation laws with respect to oil by the Railroad Commission are noted in some of the briefs before us. They are: (1) Spacing of wells, (2) pooling agreements; and (3) proration as between adjoining owners. Assuming, without deciding, that full legal authority exists in such commission to enforce either or all of such three methods, it seems plain that this court would clearly usurp an administrative function to direct the use of either by that body. There is an obvious distinction between a holding that such body may perform a certain function, and one that it must do so. The former, as in Brown v. Humble Oil & Refining Co., 126 Tex. 296, 83 S.W.(2d) 935, 87 S.W.(2d) 1069, 99 A.L.R. 1107, 101 A.L.R. 1393, amounts only to a judicial interpretation of its authority to act, while the latter amounts to a choice by this court for that body, of the use of a particular method, when clearly, in the ordinary case, an administrative discretion has been lodged with that agency of government respecting such matter. The language of Judge Brown in Railroad Commission v. Galveston Chamber of Commerce, 105 Tex. 101, 145 S.W. 573, 580, aptly states our view: "It is not within the language nor the spirit of the law, which authorizes the courts to review the action of the Railroad Commission, that any court should investigate the methods adopted by the Commission in fixing its rates, nor the motives or purposes which prompted such action. The result and its effect upon the rights of railroads and shippers mark the limit of judicial inquiry."

Just here it is not inappropriate we think to make note of the fact that the increasingly frequent entrance and intrusion of governmental agencies into the field of private endeavor has produced an irritating problem for business and a complex and difficult one for modern courts. These agencies have not yet been completely assimilated into our system of government, and many theoretical rules are found by experience to be impractical, so that it has become progressively more difficult to lay down an unbending rule. Constitutional lines have been anciently and plainly marked, for a simple commercial world, but the complexity of modern business, constantly under the shadow of government supervision, frequently presents a case within a twilight zone where these "ancient landmarks" of the law appear dimly. It would be an unenviable if not an impossible task to judicially delineate the precise boundary lines of the public's right to conserve and preserve its natural resources, and the private individual's right to own and enjoy the use of property. These difficult problems will be solved in the light of the facts of each case, rather than in terms of a general rule. That all the above have contributed to produce some confusion in the authorities is not surprising. We shall not attempt here to explain or harmonize these. Suffice it to say that if the exact point for decision in each case is kept separated...