Texas Gulf Producing Co. v. Griffith

• Decision Date: 08 June 1953
• Docket Number: No. 38712,38712
• Parties: TEXAS GULF PRODUCING CO. v. GRIFFITH et al.
• Court: Mississippi Supreme Court

Page 447

65 So.2d 447

218 Miss. 109

TEXAS GULF PRODUCING CO. v. GRIFFITH et al.

No. 38712.

Supreme Court of Mississippi.

June 8, 1953.

Chill, Landman & Gordon, Jackson, for appellant.

Green, Green & Cheney, Jackson, Robert G. Livingston, Prentiss, Hall & Callender, Columbia, for appellee.

HOLMES, Justice.

On November 16, 1939, Estella Magee and her husband, Houston Magee, executed to J. E. Thrift, Jr., an oil, gas, and mineral lease on land in Jefferson Davis County, Mississippi, describing the same in the lease as follows:

'48 acres more or less. The same land and all of the land described in deed dated September 3, 1938 recorded in Book 43 at page 564 deed records Jefferson Davis County, Mississippi, from Anna Milloy et al to Estella Magee as the NE 1/4 of SE 1/4 Section 33 Township 9 north, range 19 west, and the south 8 acres of that certain 16 acres in the east side of the SE 1/4 of the NW 1/4 section 3, township 8 north, range 19 west, all in Jefferson Davis County, Mississippi.'

The lease was what is known as an 'unless' lease and was for a primary term of ten years, 'and as long thereafter as oil, gas, or other mineral is produced from said land hereunder.' The lease contained neither a pooling agreement nor a force majeure clause. The validity of the lease in its inception is not questioned. On October 7, 1940, J. E. Thrift, Jr. assigned the lease to Fohs Oil Company, which by corporate merger and change of corporate name became Texas Gulf Producing Company, and the latter company succeeded to the ownership of the lease. On the same date that the aforesaid lease was executed, towit, on November 16, 1939, the lessors, Estella Magee and her husband, Houston Magee, conveyed to Geraldine B. Martin, subject to said lease, an undivided one-half interest in the oil, gas and other minerals in the land described in said lease.

On July 1, 1944, Estella Magee and her husband, Houston Magee, conveyed to Charles F. Longino an undivided one-half interest in the oil, gas and other minerals in said land, reserving the right to execute future leases thereon and the right to all bonus money and delay rentals. Thereafter, and subject to like reservations as contained in the aforesaid conveyance to him, Charles, F. Longino conveyed to Dewitt Smith on March 26, 1948, an undivided 1/48 mineral interest in said land, and to H. R. Hays on March 26, 1948, an undivided 1/48 mineral interest in said land, and on July 15, 1949, Dewitt Smith conveyed to W. J. Morris, subject to like reservations, an undivided 1/16 of 1/8 of 4/320 mineral interest in said land.

The land covered by the aforesaid lease is located in the Gwinville Gas Field, which embraces a large area of land in Jefferson Davis and Simpson Counties, Mississippi, and which came into production as a proven gas field in the year 1944.

Pursuant to the authority vested in the State Oil and Gas Board by Chap. 117 of the Laws of 1932 and Chap. 305 of the Laws of 1936, the Board, by its orders of August 30, 1945, August 28, 1946, August 11, 1947, and September 11, 1947, finding it necessary so to do to prevent waste and to protect the correlative rights and opportunities of owners of gas in the common source of supply, adopted rules and regulations applicable to the Gwinville Gas Field, providing that every gas well should be located on a drilling unit consisting of at least 320 contiguous surface acres upon which no other drilling or producible well is located, determining the efficient drainage area of each gas well to be 320 contiguous surface acres, providing for the application for and the granting of permits to drill, providing for the allocation of allowables for each gas well upon filing with the board for approval a plat showing the location of the well and the acreage assignable to it, defining an owner as the person who has the right to drill into and produce from a field or pool and to appropriate the production either for himself or for himself and another, and providing for the filing of well completion reports.

By instrument dated December 12, 1947, the Texas Gulf Producing Company, holder of the lease here involved, and other lessees of contiguous lands, as non-operators, and the Humble Oil and Refining Company, a leaseholder of contiguous lands, as operator, entered into an agreement to pool and combine their leases as to gas rights into a unit of 320 acres known as Unit No. 14, in so far as lands covered by said leases are embraced therein, reciting therein that the Humble Oil and Refining Company had completed a gas well on the pooled unit known as the J. S. Hubbard, et al, No. 1 well, and providing that the operation of said well should be under the exclusive charge, control, and supervision of the Humble Oil and Refining Company.

On November 21, 1947, the Humble Oil and Refining Company had applied for, and on November 22, 1947, was granted, a permit to drill a gas well, stating the exact location thereof in the NE 1/4 of Section 33, Township 9 north, Range 19 west, Jefferson Davis County.

On January 10, 1948, there was filed with and approved by the Board a plat of Unit No. 14, containing 320 contiguous acres and embracing the NE 1/4 of the SE 1/4 of Section 33, Township 9 north, Range 19 west, or 40 acres of the land covered by the aforesaid lease dated November 16, 1939, and originally executed by Estella Magee and her husband, Houston Magee, to J. E. Thrift, Jr., but not embracing the other eight acres covered by said lease.

A well completion report dated January 16, 1948 was filed with and received by the Board on January 23, 1948, showing the completion on January 10, 1948 of the well drilled on said unit pursuant to said permit. Thereafter, allowables applicable to said well were set by the Board beginning January 26, 1948.

All the foregoing transpired during the primary term of the aforesaid lease dated November 16, 1939, and prior to the effective date of Chap. 256 of the Laws of 1948. Thereafter, on June 23, 1950, on the application of Superior Oil Company, one of the interested lessees, and after a hearing pursuant to notice, the Board entered an order adjudging that the aforesaid drilling Unit No. 14 had been theretofore legally established and ordering the integration of the interests embraced therein.

The said Geraldine B. Martin declined to enter into a voluntary pooling agreement as to the lands in which she owned a 1/2 mineral interest, and has declined to accept the tender of royalty payments under the lease of November 16, 1939. The unit well is located on land other than that covered by the lease of November 16, 1939.

On November 26, 1949, Estella Magee and her husband, Houston Magee, executed to Roy E. Watson an oil, gas, and mineral lease on an undivided 1/2 interest in the same lands covered by the aforesaid lease originally executed to J. E. Thrift, Jr., which lease so executed to Roy E. Watson was assigned by him on December 17, 1949 to B. C. Griffith to the extent of a 1/2 interest therein.

After the expiration of ten years from November 16, 1939, the date of the Thrift lease, and after the appellees Roy E. Watson and B. C. Griffith acquired from Estella Magee and her husband, Houston Magee, the aforesaid lease dated November 26, 1949, the appellees filed their bill in chancery praying an adjudication that the said Thrift lease had terminated by its terms, and asking to have the same cancelled as a cloud upon their asserted title to a leasehold estate under the aforesaid lease of November 26, 1949. In the original bill and subsequent pleadings, the Texas Gulf Producing Company and numerous other parties were named as defendants to the action, among them Geraldine B. Martin. Through disclaimers filed, the suit resolved itself into a controversy between the Texas Gulf Producing Company on the one hand, and Roy E. Watson, B. C. Griffith, and Geraldine B. Martin on the other hand. Upon hearing the case, the chancellor granted the relief prayed for by Roy E. Watson and B. C. Griffith, and by Geraldine B. Martin in her cross-bill, and from this decree the Texas Gulf Producing Company prosecutes this appeal. During the pendency of this appeal, the appellee Roy E. Watson died and this cause as to the said Roy E. Watson has been revived in the name of Mrs. Lorraine B. Watson, executrix of the last will and testament of Roy E. Watson, deceased.

The appellant contends on this appeal (1) that the trial court was without jurisdiction of this cause because of the absence of necessary parties, and (2) that the deed from Estella Magee and her husband to Charles F. Longino was a mineral deed and not a royalty deed and that, therefore, the execution by Longino and his assignees of the pooling amendment to the Thrift lease was a valid exercise of their rights as the owners of the fee in the minerals, and the purported oil, gas, and mineral lease executed by Estella Magee and her husband to Roy E. Watson was of no effect, and (3) that the Thrift lease dated November 16, 1939 did not terminate at the expiration of its primary term on November 16, 1949, for the reason that land covered thereby had been previously included in an established drilling unit, towit, Unit No. 14, and that since January 10, 1948 gas was being produced therefrom, and that such production was from the land covered by the lease and continued the lease in force.

We think that the contention that the trial court was without jurisdiction of this cause because of the...