Sun Oil Co. v. Whitaker
| Decision Date | 26 June 1970 |
| Docket Number | No. 4363,4363 |
| Parties | SUN OIL COMPANY, Appellant, v. Earnest WHITAKER, Appellee. |
| Court | Texas Court of Appeals |
Stubbeman, McRae, Sealy & Laughlin, W. B. Browder, Jr. and James G. Noland, Midland, James K. Walker, Morton, Charles F. Heidrick and E. M. Cage, Dallas, for appellant.
Nelson, McCleskey & Harriger, George W. McCleskey, Lubbock, Earl R . Allison, Morgan Mill, Dwight R. Mann, Levelland, for appellee.
Sun Oil Company brought this suit seeking a permanent injunction against Earnest Whitaker and his tenant son-in-law, Doyle Henderson, enjoining them from interfering with plaintiff's production of not more than 100,000 gallons of fresh water per day from Whitaker's 267 .7 acres of land to use in waterflooding plaintiff's oil and gas lease thereon. Sun contends that the lease gave it this right as a matter of law. Whitaker filed an answer and cross action seeking to enjoin Sun from producing fresh water from his land for waterflood purposes. He contends that the parties to the lease did not intend to grant Sun the right to use amounts of water which would materially affect the supply of water available for irrigation farming. He sought to recover actual and exemplary damages. The case was tried before a jury and based upon the verdict, judgment was rendered denying Sun its requested injuction against Whitaker and Henderson. The court also granted Whitaker a permanent injunction, enjoining Sun from producing fresh subterranean water from the land in question and decreed that Whitaker recovered from Sun actual and exemplary damages in the sum of $12,598.03 for fresh water already produced therefrom with six percent interest from the date of the judgment. Sun Oil Company has appealed.
This case is sequel to an earlier appeal in which Sun was denied a temporary injunction. See 412 S.W.2d 680 (Amarillo CCA, 1967, affirmed 424 S.W.2d 216.)
The record shows that Whitaker is the owner of the surface of the land by virtue of a deed to him from L. D. Gann in 1948. The conveyance to Whitaker was by its terms subject to a 1946 oil, gas and mineral lease from Gann to Sun Oil Company. Appellant contends that the rights of the parties hereto are determined by the provisions of the above mentioned deed and oil gas lease, and in support of its contention particularly relies upon the following language in the 1946 oil and gas lease:
'Lessee shall have free use of oil, gas, coal, wood, and water from said land except water from Lessor's wells for all operations hereunder, and the royalty on oil, gas and coal shall be computed after deducting any so used.'
In 1966, Sun drilled a water well into the Ogallala water formation on appellee's land and, after obtaining approval of the Railroad Commission of Texas, began injecting water produced therefrom into the underlying San Andres oil formation to increase production of oil from such land. The evidence indicates that the water is produced from the only available source of water on the land and that such water is used exclusively for the benefit of the leased premises, the so-called Gann-Whitaker tract. The waterflood operation results in the production of additional oil. Sun contends that it has the right under its lease to use as much of the surface estate, including fresh water, as is reasonably necessary for the conduct of all operations authorized by the lease. The evidence shows that the Sun water supply well is equipped so that it cannot produce in excess of $100,000 gallons of water per day and that 966,703 barrels of water have been produced from the well. It has been stipulated by the parties that the secondary recovery of oil by the waterflood process is a reasonable and proper operation for the production of oil from the San Andres reservoir under the land in question; that it is a reasonable and proper operation by Sun to use Ogallala water as the extraneous or makeup water for injection into the San Andres reservoir under the land in conducting secondary recovery of oil by waterflood process, and that the location of the injection wells and the rates of water injection as conducted by Sun Oil Company on the land constitute reasonable and proper operations for the production of oil.
Special issue number 1 which inquired of the jury whether the use of water by Sun Oil Company for secondary recovery purposes was taking water from existing wells of appellee Whitaker, was not answered. The answers to special issues upon which the judgment was based were: (2) that the parties to the Gann-Sun Oil Company lease did not mutually intend for the lessee to use such quantities of water as would materially affect the supply which the surface owner could produce by wells, (3) that the use of fresh water by Sun for secondary recovery purposes from the wells which it had drilled on said tract would materially affect the supply which the surface owner could produce by wells, (4) that it was not reasonably necessary for Sun to use water from the Ogallala formation underlying the Whitaker farm to waterflood the Gann lease, (5) that at the time the lease in question was executed there existed a custom in Hockley County for oil companies to use fresh water only in substantially smaller amounts than those needed for waterflood purposes, (6) that both parties to the lease knew of such custom prior to the time the lease was executed, (7) that the proposed use of fresh water by Sun for waterflood purposes will substantially reduce the value of the farm owned by Whitaker, (8) that the installation of waterflood facilities on the land by Sun destroyed a portion of Whitaker's growing crops, (9) that the reasonable cash market value of Whitaker's crops so destroyed was 431.00, (10) that the reasonable cash market value in Hockley County of the fresh water that Sun has produced from the Whitaker farm for waterflood purposes from the beginning of such waterflood to the date of trial was $9,667.03, (11) that Sun acted willfully and maliciously in producing fresh water from the Whitaker farm and using it for waterflood purposes and (12) that $2,500.00 was the amount of exemplary damages which should be adjudged against Sun.
Appellant presents numerous points contending that under the undisputed facts the Court erred as a matter of law in submitting any issue to the jury; erred in rendering judgment against it and in favor of appellee Whitaker; erred in admitting into evidence and considering for any purpose extrinsic evidence to vary, contradict or explain the intention of the lessor Gann and the lessee Sun as expressed in the language of their 1946 oil and gas lease and particularly erred in admitting into evidence testimony concerning the custom in regard to the amount of water used in oil operations in and prior to 1946; erred in admitting evidence which tended to show that Sun's use of water from its supply wells on the leased premises 'will materially affect' the amount of water which Whitaker could produce from his wells, evidence that Sun could obtain water for its waterflooding operations from some source beyond the boundaries of the leased permises, or testimony concerning the value of the Whitaker farm either before or after the commencement of Sun's waterflooding operation on the premises. Appellant further urged that there was no evidence or in the alternative insufficient evidence, to support the submission of any of this issues presented to the jury.
The principal question presented is whether the provision of the lease granting Sun the right to 'free use of oil, gas, coal, wood and water from said lease except water from lessor's wells for all operations hereunder' includes the right to use such water for waterflood purposes. Both parties to this appeal agree that in construing an oil and gas lease the intention of the parties is controlling. The general rule of law is that a court in construing a contract will ascertain the intention of the...
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Sun Oil Co. v. Whitaker, B--2300
...Sun be permanently enjoined from producing and using the fresh water for its waterflood program. The court of civil appeals affirmed. 457 S.W.2d 96. Judgments of the courts below are reversed and judgment is rendered that the permanent injunction prayed for by Sun is granted, and all relief......