Texas Pacific Coal & Oil Co. v. Barker

• Decision Date: 23 May 1928
• Docket Number: (No. 4031.)
• Citation: 6 S.W.2d 1031
• Parties: TEXAS PACIFIC COAL & OIL CO. v. BARKER et al.
• Court: Texas Supreme Court

Page 1031

6 S.W.2d 1031

TEXAS PACIFIC COAL & OIL CO. v. BARKER et al.

(No. 4031.)

Supreme Court of Texas.

May 23, 1928.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Action by Mrs. Suda Barker and others against the Texas Pacific Coal & Oil Company. Judgment for plaintiffs was affirmed as reformed by Court of Civil Appeals (252 S. W. 809), and defendant brings error. Reversed and remanded for new trial.

John Hancock, C. C. Wightman, and W. B. Powell, all of Fort Worth, for plaintiff in error.

W. H. Francis and A. S. Hardwicke, both of Dallas, for Magnolia Petroleum Co., amici curiæ.

Robert A. John, of Houston, and H. S. Garrett, of Fort Worth, for Texas Co., amicus curiæ.

Burkett, Orr & McCarty, of Eastland, for defendants in error.

GREENWOOD, J.

Defendants in error Mrs. Suda Barker, M. H. Pickering, and W. M. Pickering sued plaintiffs in error Texas Pacific Coal & Oil Company and 31 others to recover from the Coal & Oil Company $100,000 in damages, and for specific performance of a contract for the mineral development of a tract of 112 acres of land. The petition on which the judgment was sought is so vague that a full statement thereof is necessary. The petition alleged, that, since December 31, 1919, the defendants in error Mrs. Suda Barker, M. H. Pickering, and W. M. Pickering, together with Bascom Morton, Leona Morton, H. B. Lane, L. C. Harlow, R. L. Gattis, Mary Boland, F. S. Boland, W. T. Gattis, Earl Gattis, B. P. Cozart, J. H. D. Fleming, W. P. Ledbetter, J. F. Ledbetter, C. A. Gattis, Will Slatton, W. T. Rutherford, J. M. Slatton, J. C. Galloway, Mrs. M. C. Jobe, Marvin Brown, L. G. Haslip, Mrs. Maggie C. Foat, A. L. Styles, R. H. Clem, W. L. Mansfield, J. B. Reed, C. A. Donovan, Mattie Hodges, Dallas Hodges, C. E. Cooper, and the Four Square Investment Company were "joint owners in fee simple of the mineral right of" a described 112-acre tract of land; that on December 31, 1919, all parties to the suit, except plaintiff in error, "did make, execute, and deliver a certain contract to the defendant Texas Pacific Coal & Oil Company with reference to the operation and development of said above 112-acre tract of land for oil and gas purposes — the said defendant Texas Pacific Coal & Oil Company having a lease upon said 112 acres of land, together with a lease upon 16 acres" off the south half of three certain tracts of land, which embraced said 112 acres as their north half, "said 16 acres being a strip of land 37 varas wide and 2,324 varas long, running the long way east and west off of the north side of the south half of the hereinbefore described three tracts of land"; that the plaintiff in error "agreed that, if both tracts of land should be thrown together, and be treated as constituting only one tract of land consisting of 128 acres, the said Texas Pacific Coal & Oil Company would agree immediately to test and develop said 128 acres of land for oil and gas purposes"; and thereupon the parties to the suit other than the Texas Pacific Coal & Oil Company did enter into a contract with said company on December 31, 1919, to that end, one of the provisions of such contract being:

"As a further consideration for the execution of this merger agreement, the Texas Pacific Coal & Oil Company hereby agrees that within 30 days from the date of the delivery of this merger agreement to W. J. Oxford, General Attorney for the Texas Pacific Coal & Oil Company, duly executed by all parties hereto that it will begin actual drilling of a well for oil and gas on some portion of said merged premises and will prosecute said drilling with reasonable diligence until oil or gas is obtained in paying quantities or until such depth has been reach as should obtain oil or gas in the Ranger field, taking into consideration the depth of other producing wells in said section of the county. And it further agrees that it will give due protection to said merged tracts of land against all offset wells drilled on adjacent property near enough to require an offset on these merged tracts, and it further agrees that it will dedicate at least one string of tools to the development of said merged tracts, and will keep the same operating until the said tract of land is developed, or until sufficient proofs have been made on said tract of land as to convince the said lessee that other portions of it are dry and unworthy of further tests."

It was further alleged that plaintiff in error drilled a paying well on said merged tract of land which has produced 3,000,000 cubic feet of gas per day since the ____ day of ____, in the year 1920; that after drilling said well, plaintiff in error moved away its drilling equipment and tools, and since failed and refused to further drill or test the land, or to permit any other person to drill or test the land, notwithstanding the oil and gas in the land was being drained away by numerous, specified wells within short distances of the land — all in violation of the express and implied covenants of the lease binding plaintiff in error to fully develop the oil and gas in said premises and to protect the minerals on said premises from drainage from nearby wells on adjacent lands — that all other parties sued, save plaintiff in error, "were made parties hereto because of said defendants owning some royalty interest in said merged tract of land, but in this connection plaintiffs say that their interests and the interests of defendants are divisible and separated, and these plaintiffs are not suing for damages on behalf of said other defendants, but merely made said defendants parties in order that delay might not be had in the trial of this suit by the defendants claiming that they are necessary parties, and in this connection plaintiffs say that this is a suit merely for damages for and on behalf of the plaintiffs as to their particular interests in said merged tracts of land and for failure to properly develop and protect same"; that "the plaintiff Mrs. Suda Barker owns an undivided ____ interest in and to the minerals lying in and under said merged tracts of land; that the plaintiff W. M. Pickering is the owner of an undivided ____ interest in and to the minerals lying in and under said merged tracts of land; that the plaintiff M. H. Pickering is the owner of an undivided ____ interest in and to the minerals lying in and under said merged tracts of land, all of said interests being subject to the oil and gas lease owned and held by the Texas Pacific Coal & Oil Company."

The prayer of the petition was for judgment against plaintiff in error for "the sum of $100,000 as damages because of said defendant Texas Pacific Coal & Oil Company's failure to develop and operate said premises for oil and gas purposes and for failure to prevent the drainage of plaintiffs' land as aforesaid up to the trial of this cause; and plaintiffs further pray that, upon final hearing hereof, said defendant be decreed and required to specifically perform its covenant, contract, and agreement to drill offset wells upon plaintiffs' premises; that it be required by order and decrees of this court to at once begin drilling of such wells offsetting the well on the T. E. Davis tract; the two wells on the Gates Oil Company 25-acre tract; and one well on the Tex-Rickard Oil Company 22½-acre tract; and one well on the W. W. Crab tract, and for the drilling of such other and further wells as the court in its discretion may adjudge that said defendant should be in equity and good conscience bound to drill in order to perform its obligations to diligently develop said tract of land, and for general and special relief at law or in equity."

Plaintiff in error specially excepted to this petition upon the ground that it failed to state a cause of action for damages for failure to properly develop the oil and gas on the 112 acres, in that the petition "fails, with any degree of certainty to allege the extent and nature of the development required," and in that the petition "fails to allege with any particularity the drainage of oil and gas from said premises, or the amount thereof and its value."

Further answering, plaintiff in error filed a general denial, a plea of not guilty, and a special plea averring that on March 13, 1917, one W. T. Barker and wife, Suda Barker, executed and delivered to plaintiff in error an oil and gas lease on the 112 acres of land for a period of seven years from its date, which lease provided for an annual rental of $1 per acre per annum, less royalties, and an oil royalty of one-eighth of the oil produced and saved, and a gas royalty of 10 per cent. of the market price at the wells of gas sold; that in September, 1918, Leona Martin and Bascom Martin executed and delivered to plaintiff in error an oil and gas lease on an adjacent 16 acres of land, which lease provided for an annual rental of $4.50 per acre per annum, less royalties, and an oil royalty of one-eighth of the oil produced, and a gas royalty of 10 per cent. of the market price of gas sold; that on April 12, 1920, there was delivered to plaintiff in error by W. T. Barker, Suda Barker, Leona Martin, and Bascom Martin and other interested parties a contract of merger of said two tracts of land, and of said lease, whereby the tracts were merged for development and royalty purposes, and whereby it was provided, among other things, that plaintiff in error would, within 30 days, commence the drilling of a well on said merged premises, and would diligently prosecute such drilling until the well was completed, and that it would dedicate to said merged premises one string of standard tools until the land was fully developed or until sufficient proof had been made on said tracts of land as to convince plaintiff in error that the other portions were dry and unworthy of tests; that plaintiff in error had drilled a well and discovered gas, and that from its own drilling and from other drilling on adjacent territory plaintiff in error ...