Seagraves v. Green

• Decision Date: 01 December 1926
• Docket Number: (No. 844-4560.)
• Citation: 288 S.W. 417
• Parties: SEAGRAVES v. GREEN, District Judge.
• Court: Texas Supreme Court

288 S.W. 417

SEAGRAVES v. GREEN, District Judge.

(No. 844-4560.)

Commission of Appeals of Texas, Section A.

December 1, 1926.

Original proceeding in mandamus, on the relation of O. R. Seagraves, against John M. Green, District Judge. Respondent ordered to cause P. A. Murray, receiver, to refrain from exercising authority previously given with respect to destroying and drilling oil wells.

James R. Dougherty, of Beeville, Marshall Eskridge, of San Antonio, Campbell, Myer & Simmons, of Houston, Fly & Rogsdale, of Victoria, and Vinson, Elkins, Sweeton & Weems, of Houston, for relator.

V. B. Proctor, of Victoria, and Jno. M. Green, of Cuero, for respondent.

Statement of the Case.

NICKELS, J.

Heard owned, and, subject to mineral leases, still owns, certain lands in Refugio county. Some years ago he executed in favor of Pratt a mineral lease in respect to the lands. Pratt then made a contract and assignment whereunder Seagraves apparently acquired an undivided interest in the mineral leasehold and the right to purchase and dispose of Pratt's portion of whatever gas might be produced from the lands. Pratt brought suit against Seagraves wherein he sought cancellation of the assignment and contract, etc. Heard brought suit against Pratt and assigns in which cancellation of the mineral lease, etc., was sought. Both suits are now pending in the district court, Refugio county, of which Hon. John M. Green is the judge.

In the case first mentioned, and on November 18, 1925, an order was entered, in chambers and without notice or hearing, wherein Murray was appointed receiver to take charge of the property in controversy. Murray duly qualified. A like order, under like conditions, was made in the other cause on December 14, 1925, and thereunder Murray qualified. No appeal was taken in either case, nor was motion to vacate or modify the receivership orders, or either of them, made.

On December 14, 1925, the receiver presented to Judge Green a report in writing in which it was stated that the receiver "has ascertained and determined that the potential producing capacity of said gas well on said land is estimated to approximate 72,000,000 cubic feet of gas per day; that the well at this time is closed and no provisions have been made for the marketing and sale of gas therefrom"; that the condition of the well was bad and gas from the land was being drained into neighboring lands and produced and marketed from these lands; that in order to protect the land involved from drainage, etc., it was necessary to drill upon it one or two or three other wells. It was further shown in the report that there was in the vicinity but one available pipe line through which the gas could be marketed, and that the operators of the pipe line would not receive gas from the old well because that gas was surcharged with water and sand as a result of the defective condition of the well. The operators of the pipe line would take the gas, it was said, if the old well should be reconditioned, etc. In the report it was stated that parties at interest claimed that the original well was then in proper condition for the marketing of gas therefrom. The report contained a prayer for hearing and consequent directions.

Thereupon Judge Green entered an order setting the matters presented by the receiver for hearing at Victoria, Victoria county, on December 21, 1925, and caused notice of the order to be served upon relator et al. The order was signed, in vacation, at Victoria and caused to be entered in each of the cases. On December 21, 1925, at Victoria, all of the parties in the two cases appeared and announced ready for the hearing, and the hearing was then and there begun. After some evidence had been introduced, relator and others of the defendants asked a postponement of the hearing until December 28, 1925. Other parties objected, but Judge Green signed an order that the hearing be resumed at Cuero, De Witt county, on December 28, 1925. This order was entered in each of the cases, and therein it is recited that "counsel for defendants" (i. e., relator and others) "expressly acquiesced in said ruling of the court."

On December 28, 1925, all parties appeared at Cuero and announced ready and the hearing was resumed. Upon conclusion of the testimony Judge Green took the matter under advisement. Thereafter he suggested to counsel for the various parties that they meet him at Cuero on January 6, 1926, for discussion, etc., of the character of order to be entered, and the meeting was held. Counsel for Seagraves participated in the discussion.

On January 6, 1926, Judge Green signed an order which (except for preliminary recitals) reads as follows:

"And the court after having heard all the evidence, and after mature consideration of same, and after hearing of counsel for all parties, deems fit to make and enter the following order upon said hearing:

"That said receiver, P. A. Murray, shall continue to possess and have control of all of said 250-acre tract of land, constituting the subject-matter of the lease from A. W. J. Heard to Thos. H. Pratt and the subject-matter of the assignment and contract between Thos. N. Pratt and O. R. Seagraves, and the assignment to Gaines, trustee, and Mrs. Smith, respectively, said possession and control of said receiver to be in so far as it may be necessary and proper by said receiver to explore and develop, or cause to be explored and developed, said tract of land as to the gas or other minerals thereunder, such possession to be exclusive of all parties to either of said causes, and said receiver is hereby instructed, directed, and authorized to perform any and all of the following:

"First: That the receiver shall forthwith, or as soon as reasonably possible, drill, through employees of receiver, or have drilled under contract with other person, two offset wells on said 250 acres of land, these offset wells to be so located as, in the opinion of the receiver, will best protect the lease and offset the drainage from the two producing wells located near the property line of said 250 acres, and known as the W. J. J. Heard, or Fannie V. Heard, wells Nos. one (1) and two (2). The receiver is given fullest latitude as to whether or not to put down these wells by employees of the receiver, or under contract with some person, wholly independent of any litigant to this cause, or to contract with any person, whether or not a litigant, to put down said wells, and is further given fullest discretion as to the terms and provisions of said contract or contracts and method and times of payment under said contract or contracts, but the receiver is instructed to make all of such contracts in writing, and to submit same to the court for the court's approval, but no hearing need be had thereon. Also, in making said contracts, the receiver has latitude and discretion to contract with such person or persons whom he deems the lowest, best, and safest person with whom to contract for the drilling of said offset wells, and in making said contracts it is directed that the receiver try to arrange, if possible, for the marketing of the gas from said offset wells as soon as possible in order that a revenue may be produced from this property and gas may be utilized and used from said wells.

"Second: That the receiver shall forthwith, or as soon as reasonably possible, cause to be tested in his presence, and in the presence of any expert or experts by him selected, the present well upon said 250-acre lease, now known as the A. W. Heard well No. 1, and sometimes called the Smith well, said test to be for such time, and under such conditions, as the receiver deems proper in order to determine whether or not the gas from said present well is of merchantable quality and quantity, and also determine whether or not the taking of said gas from said well in reasonable quantities would or would not injuriously affect the gas or mineral rights in said 250 acres, or in any portion of the same, and also determine whether or not the gas is of such purity that it would or would not, as said test determines, injuriously affect any pipe line into which said gas might be turned. In the event that said test determines, in the opinion and discretion of receiver, that said gas is merchantable, and the taking and drawing of gas from said well would not injuriously affect any portion of the lease, or any pipe line into which said gas would be turned, then the receiver is hereby authorized and empowered to contract for such length of time as he deems proper for the sale of said gas to any litigant, or other person not a litigant in either of these causes, and to receive pay for said gas and to immediately pay over to the said A. W. J. Heard, original lessor, one-eighth of the gross proceeds arising from such sales, whenever said proceeds are received by him. The receiver is instructed to give permission to any interested person, who so requests, to be present at said test, and this permission, of course, extends to and includes any representative of the railroad commission, but the receiver need not delay such test on account of the absence of any such parties. Notice to be given by telegram, if necessary.

"Third: If it should be determined by said receiver, upon said test above indicated of said present well, that the taking of gas from this well in merchantable quantities might likely prove of injury to the leased premises, or any portion of the same, or might likely prove an injury to any pipe line into which said gas might be turned, then said receiver is authorized and directed to employ such method and means he may deem best to kill said well, and in such event he is further authorized and instructed to drill, or cause to be drilled, another well in the near vicinity of this present well, and again he is given fullest latitude and discretion as to location and method or terms or provisions of any contract he may enter into, in such regard, and as to...