Rogers v. Winn

• Decision Date: 14 October 1959
• Docket Number: No. 13503,13503
• Citation: 329 S.W.2d 319
• Parties: Albert M. ROGERS et al., Appellants, v. C. C. WINN et al., Appellees.
• Court: Texas Court of Appeals

Page 319

329 S.W.2d 319

Albert M. ROGERS et al., Appellants, v. C. C. WINN et al., Appellees.

No. 13503.

Court of Civil Appeals of Texas, San Antonio.

Oct. 14, 1959.

Carl Wright Johnson, San Antonio, Nat L. Hardy, San Antonio, Fischer, Wood, Burney & Nesbitt, Corpus Christi, for appellant, C. C. Winn.

Dean B. Kirkham and Pichinson, Utter & Chase, for appellants, Albert M. Rogers et al.

Al J. Klein, San Antonio, for William H. Forney.

MURRAY, Chief Justice.

This is a suit to impose a constructive trust upon an oil and gas lease and for money damages for that portion of the lease now beyond plaintiffs' reach, and for an accounting. It was brought by Albert M. Rogers and ten other plaintiffs against C. C. Winn, C. A. Winn, William H. Forney, Heath Renfro and the Alamo National Bank of San Antonio. The defendants C. A. Winn, Heath Renfro and the Bank, were given instructed verdicts in their favor, and no complaint is made by any of the parties to this action and it will not be necessary to hereinafter refer to these defendants. Plaintiffs' causes, and that of the cross-plaintiff William H. Forney, were submitted to a jury on special issues, all of which were answered in favor of plaintiffs and cross-plaintiff Forney.

Judgment was entered in favor of plaintiffs, impressing a constructive trust upon a fractional part of the working interest of an oil and gas lease on 120 acres of land owned by W. F. L. Lehman, located in what is known as the London Gin Area of Nueces County, Texas, adn denying any recovery to Forney.

Rogers and eight of the other plaintiffs have appealed, contending that they should have recovered more; C. C. Winn has appealed contending that there should have been no recovery against him; and Forney has appealed contending that he should have recovered against Winn on his cross-action. In order to avoid confusion we will refer to the parties by their respective names, except the eleven original plaintiffs who will sometimes be referred to as plaintiffs.

The chronological order of the events involved in this lawsuit will now be set out.

(1) Forney and Winn, a partnership composed of William H. Forney and C. C. Winn, was engaged in acquiring, selling and developing oil and gas leases. On October 9, 1952, the partnership acquired an oil and gas lease on a 120-acre Lehman Tract located in the London Gin Area of Nueces County. This lease was for a primary term of sixty days and would expire in sixty days unless drilling was commenced.

(2) Forney and Winn sold various fractional interests in this lease to each of the plaintiffs, based upon a written contract in the form of a letter, each letter containing the same provisions. We here set out one of these letters:

'November 15, 1952

'Dr. C. L. Concklin

2205 16th Street

Corpus Christi, Texas

'Dear Dr. Concklin:

'This letter evidences an agreement between you and Forney & Winn, hereinafter referred to as Operators.

'You have purchased from us as Operators, and we have sold to you, one-sixteenth of the working interest, subject to one-eighth of eight-eighths overriding royalty, in a lease consisting of 120 acres, being the East 22 1/2 acres of the North one-half of the West 195 acres of the North one-half of Section 26, and the South one-half of the West 195 acres of the North Half of Section 26, Laureles Farm Tracts, Nueces County, Texas, subject to the terms of said lease.

'For this one-sixteenth interest you have paid to us the sum of $3,500.00 cash, receipt of which we hereby acknowledge. For this consideration paid to us, we as Operators, agree to drill the first well on this lease, to be known as the Forney & Winn No. 1 Lehman, to a depth of 4560 feet; and in the process of drilling to said depth, we will core the 4500 foot 'field' sand and drill stem test it if, in our opinion, the same is necessary or advisable. It is understood, however, that should we encounter production at a lesser depth, we will be under no obligation to go any deeper than the sand encountered.

'The $3,500.00 paid to us represents your total cost toward the drilling of said well to the point of starting the completion attempt. This will include the coring program we have heretofore set out, Schlumberger, drill stem tests, and all other miscellaneous items that could be encountered prior to the actual completion attempt. When the completion attempt is started, you will share pro-rata in all costs from that time on.

'In the event a well is completed as a producing well, or in the event a hole is dug and thereafter abandoned as a dry hole, and a new location is made by us as Operators, you will have ten days' time after receipt of written notice from us that we are to commence drilling operations on another well to advise us that you do not care to so participate, if at this time you have an interest in a producing well or wells on this lease, a 20 acre unit will be cut out in as nearly the form of a square as possible around each producing well and the balance of the lease must be re-assigned to us as Operators. If you do not wish to participate in any such well or you do not then have an interest in a producing well on this lease, you must then re-assign all of your interest, with no acreage reserved, to us as Operators.

'As Operators, we agree to hold you free and clear of all other charges or expenses that might be incurred relative to the actual drilling of the first well down to the point of the completion attempt, over and above the $3,500.00 consideration heretofore paid.

'It is understood and agreed that Forney and Winn are the Operators of this acreage and any wells drilling thereon and that all decisions with reference to locations, completing and operating will be made by Forney & Winn.

'In the event a dry hole is dug on this tract and we specify a new location scheduled for a certain month, we agree to give all parties interested in the working interest ten days' written notice specifying the location, proposed depth, and estimated approximate cost of such well.

'We believe the above accurately reflects our understanding of our agreement, and if you concur, please sign and return one copy of this letter to us, which will indicate your acceptance of the terms and conditions herein set out.

'Very truly yours,

Forney & Winn

Charles C. Winn

'RP:nc

Accepted and approved this

___ day of November, 1952.

_____

C. L. Concklin.'

(3) Forney and Winn drilled the well called for in the written (letter) contracts and completed it as a dry hole on December 17, 1952.

(4) After the completion of the dry hole the lease would expire unless the drilling of a new well was commenced within 90 days thereafter. The right to determine whether a new well would be commenced within the 90-day period was to be determined by Forney and Winn, under the provisions of the written contract.

(5) The plaintiffs contend, and the jury found, that Forney and Winn represented to plaintiffs that it was advisable to await further development in the area, and if a second well was not drilled before the expiration of the first lease, another lease could be acquired on the 120-acre tract and plaintiffs would have the right and opportunity of participating in such lease and the drilling of a second well thereon. The first lease expired under its own terms on March 17, 1953.

(6) On March 27, 1953, a second lease was obtained from the landowner, Lehman, carrying the same terms as the first lease. It was taken in the names of William H. Forney and Charles C. Winn. There was no drilling under this lease, and it expired by its own terms in 60 days.

(7) The partnership of Forney & Winn was dissolved on November 1, 1953, which was confirmed in writing on December 1, 1953. The effect of this dissolution will be discussed when we take up the appeal of Forney.

(8) On April 8, 1954, C. C. Winn obtained a third lease on the same 120-acre Lehman Tract. This lease was similar to the first two leases, with the exception that it had a 45-day instead of 60-day primary term. On June 6, 1954, Winn completed a producing well on this lease. He did not give the plaintiffs on apportunity to participate in the drilling of the well.

(9) The following three issues were submitted to the jury as to each of the plaintiffs, and answered favorably to all of them except Cerf Ross and Jean Ross, who had not paid the money they had agreed to pay in their letter contracts:

'Special Issue No. 1:

'Do you find from a preponderance of the evidence that before the expiration of the first lease on March 17, 1953, that William H. Forney and C. C. Winn or one of them represented to the Plaintiff, Dr. C. L. Concklin, that it was advisable to await further development in the area and if a second well was not drilled before the expiration of the first lease, another lease could be acquired on such 120 acre tract and he would have the right and opportunity of participating in such lease and the drilling of a second well thereunder?

'Answer 'Yes' or 'No.'

'Answer: Yes.

'If you have answered the above Special Issue 'Yes', then answer the following Special Issue; otherwise, you need not answer the same.

'Special Issue No. 2:

'Do you find from a preponderance of the evidence that the Plaintiff, Dr. C. L. Concklin, relied upon such representation?

'Answer 'Yes' or 'No.'

'Answer: Yes.

'If you have answered the above Special Issue 'Yes', then answer the following Special Issue; otherwise you need not answer the same.

'Special Issue No. 3:

'Do you find from a preponderance of the evidence that when C. C. Winn acquired the third lease on such 120 acre tract under date of April 8, 1954, that the Plaintiff, Dr. C. L. Concklin, would have been ready, willing and able to participate in the drilling and development of such tract had the opportunity been extended to him?

'Answer 'Yes' or 'No.'

'Answer: Yes.'

We will first discuss the appeal taken by C. C. Winn. The plaintiffs based their cause of action to impress a...