Smith v. Abernathy

• Decision Date: 25 February 1928
• Docket Number: (No. 11925.)
• Citation: 6 S.W.2d 147
• Parties: SMITH et al. v. ABERNATHY.
• Court: Texas Court of Appeals

6 S.W.2d 147

SMITH et al. v. ABERNATHY.

(No. 11925.)

Court of Civil Appeals of Texas. Fort Worth.

February 25, 1928.

Rehearing Denied April 21, 1928.

Appeal from District Court, Cooke County; Alvin C. Owsley, Judge.

Suit by J. R. Abernathy against R. Y. Smith and others, as partners doing business under the firm name of Smith & McDanald Drilling Company. From an order overruling a plea of privilege, the defendants appeal. Affirmed.

Carrigan, Britain, Morgan & King, H. R. Wilson, and E. R. Surles, all of Wichita Falls, for appellants.

W. O. Davis and Murphy & Murphy, all of Gainesville, for appellee.

DUNKLIN, J.

J. R. Abernathy instituted this suit in the district court of Cooke county against R. Y. Smith, A. T. McDanald, and L. McMillian, as partners doing business under the firm name of Smith & McDanald Drilling Company. It was alleged that the defendant L. McMillian resided in Cooke county, and the residences of the other two defendants were alleged to be in Wichita county.

In plaintiff's petition it was alleged that on August 25, 1926, he was the owner of some mineral leases on land situated in Cooke county which he desired to have tested for oil and gas. In order to procure an oil and gas lease the defendants represented to plaintiff that they were skilled in the business of developing land for the production of oil and gas, and as a result of negotiations between the parties a contract was entered into between them, by the terms of which the defendants agreed to drill an oil well upon 96.1 acres of the land upon which plaintiff held a mineral lease; the well to be drilled to a depth of 3,000 feet unless oil should be found at a lesser depth, or unless what is known as the "Ellenberger lime" should be reached at a lesser depth, and, in the latter event, to sink such well in that lime to a depth of at least 100 feet. In consideration of that agreement by the defendants, the plaintiff agreed to pay, and did pay, to them the sum of $12,000 and agreed to assign, and did assign, to the defendants a one-fourth interest in the lease then held by the plaintiff upon the above-mentioned 96.1 acres, and agreed to assign, and did assign, to the defendants oil leases held by the plaintiff on three other tracts, aggregating approximately 147 acres, all of said lands being situated in Cooke county.

According to further allegations, it was agreed between the parties to the contract that in the event casing should be used in the well to be drilled by the defendants, plaintiff should pay three-fourths of the cost of the same and the defendants one-fourth. Plaintiff was also to pay for the gas used in drilling operations, and the defendants were to pay for and maintain the necessary connections for such use. The petition contained these further allegations:

"It was further agreed that in case said well should not be drilled to the depth of 3,000 feet, the defendants should pay and refund to the plaintiff the costs of the difference between 3,000 feet and the depth actually drilled. It was further agreed that each oil sand reached in the drilling of said well should be fairly and thoroughly tested by the defendants, in such manner as to determine whether oil in paying quantity was reached.

"The defendants did not enter into said contract in good faith or with any purpose to comply with its provisions in reference to testing the various oil sands reached, but, to the contrary, the defendants fraudulently intended at the expense of the plaintiff to ascertain whether oil in paying quantities existed in that vicinity and to fraudulently conceal the fact that oil did so exist and create impression that it did not exist and thereby depress the value of leases and royalties and to purchase and acquire the same at nominal prices by reason of such depression. In the sinking of said well six oil-bearing sands were reached, at least two of which contained oil in paying quantities; but the defendants failed to have such sands fairly and properly tested, and willfully and fraudulently concealed the fact that pay sand had been reached, and give it out to the public and to those interested in oil lands in that vicinity that pay sand had not been reached and that the well was a failure. In the meantime the defendants were busily acquiring leases and royalties in that vicinity, intending to drill thereon for themselves as soon as such leases were acquired. It was a part of the contract between the plaintiff and defendants that if Ellenberger lime should be reached before oil in paying quantities at a lesser depth than 3,000 feet, the defendants should sink the well to a depth of at least 100 feet after reaching such lime, or at least a total depth of 3,000 feet. The defendants claimed that they reached the Ellenberger lime at the depth of 1,942 feet and willfully and fraudulently failed to sink said well to the further distance of 100 feet, and then wrongfully and fraudulently refused to drill further and abandoned the well. The above wrongs and frauds were perpetrated in Cooke county, Tex. The money spent by the plaintiff for the drilling of said well has been by reason of said frauds a total loss to him. The plaintiff prays for judgment against the defendants for the sum of $12,000 paid by him to them for the drilling of said well, and that said transfer from plaintiff to defendants for the one-fourth interest in the lease upon the 96.1 acres of land upon which said well was drilled be canceled, set aside, and held for naught, and that the other assignments by the plaintiff to the defendants mentioned in the second paragraph of this petition be also canceled and held for naught. The plaintiff also prays for judgment against the defendants for the sum of $4,112, being the cost of the difference between the drilling of said well to the distance of 3,000 feet and 1,972 feet, at which said well was stopped."

Plaintiff further claimed damages in the sum of $685 for the waste of gas by the defendants in their drilling operations, which resulted from the act of defendants in permitting the drilling bit to rotate far above the bottom of the well in order to show a pretense of drilling while the defendants were engaged in acquiring other leases in the same vicinity.

It was further alleged that assignments of leases had been placed of record in the deed of records of Cooke county, creating a cloud upon plaintiff's title to the leases thereon, and that by reason thereof, together with the false and fraudulent claims of the defendants publicly and...