Agey v. Barnard

123 S.W.2d 484
CourtCourt of Appeals of Texas
DecidedNovember 28, 1938
DocketNo. 4946.
StatusPublished
Cited by3 cases

This text of 123 S.W.2d 484 (Agey v. Barnard) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Agey v. Barnard, 123 S.W.2d 484 (Tex. Ct. App. 1938).

Opinion

STOKES, Justice.

On the 13th of August, 1930, appellee, C. B. Barnard, and his wife, Elton V. Barnard, executed and delivered to Stewart L. Crebs, trustee, two oil and gas leases, one covering the south-half and the 'other the north-half of the northwest quarter of Section No. 24, Block No. 4, of the I. & G. N. Ry. Co. Surveys in Carson County. The leases contained the usual provisions for the development of the land, including a reservation to the lessors of ⅛⅛ of the oil or gas that may be produced. The leases also contained a provision that they wfere furnished in accordance with the terms and conditions of a contract between the parties, a copy of which was attached to the leases and made a part thereof. The contract contained a provision to the effect that in the event the well to be drilled should produce oil or gas in paying quantities, the lessors were to be paid an additional sum of $5000 as consideration for the lease, this sum to be paid out of %ths of the %ths of the oil and gas conveyed to the lessee by the leases. It was further, provided in the contract that if at the end of six months after completion the well should be producing or was capable of producing as much as fifty barrels of oil per day, then the lessors were to be paid the further sum of $2500, this latter sum likewise to be paid to them out of %ths of the %ths conveyed to the lessee by the leases.

The lessee Crebs began drilling a well on the south-half of the quarter section in 1930 and it was completed as a producing oil well on the 13th of March, 1931. The well was drilled by appellant, W. M. Agey, under a contract with the lessee, who was a resident of California, and in prosecuting the drilling operations, he incurred on behalf of the lessee a number of bills and accounts for material and supplies which had not been paid when the well was completed. After its completion appellant operated the well for some time during which, the oil market being unsatisfactory, he erected a small refining plant, which he operated in connection with the well, and, being unable to adjust the claims for material and supplies, or to induce the lessee Crebs to adjust them, appellant, sometime in 1932, turned the entire property over to appellee Barnard and went to California where he remained for several months. During appellant’s absence, appellee continued to operate the well -and refinery until the holders of the claims for materials and supplies became insistent upon payment of *486 their claims and caused the Texas Company, who was purchasing the oil, to cease paying to appellee the %ths of the proceeds of production to which the lessee was entitled under the provisions of the lease. Being unable to operate th$ lease without the proceeds from the %ths of the production, appellee, on the 3rd of January, 1933, filed in the district court of Carson County a suit, No. 670, against the lessee Crebs, appellant Agey, and a large number of other persons and corporations who held claims against Crebs for material and supplies furnished in the drilling operations, in which it was alleged that the lessee Crebs and the other defendants owning or claiming an interest in the lease; including appellant Agey, had abandoned the well and leased premises and refused further to operate the same. He further alleged, in effect, that by virtue of the' abandonment, the lease and well had reverted to him and he was the owner of the entire premises. He alleged that the well was capable of producing and was producing under the proration rules in force at that time, approximately forty barrels of oil per day, and that by virtue of the clouds cast upon the title to the lease, he could not obtain from the purchasers of the oil the proceeds of the sale thereof, but The Texas Company, to whom the same was being sold, was holding up and refusing to pay to him the proceeds of the %ths of the oil to which the lessee and those interested with him in the lease were entitled after deducting the %th royalty interest and the ¾ths of the remaining %ths, and that they were paying to him only the %ths of such proceeds to which he was entitled as the lessor and owner of the property under the terms of the leases, free and clear of the expenses of operating the well. He further alleged that he was without funds with which to operate the well pending the litigation, and prayed that a receiver be appointed by the court with power to collect the proceeds of the sale of the %ths interest and to operate the well and pay to him his royalty interest and also the %ths of %ths to which he was entitled as consideration for the lease until he had been paid an additional sum of $5000 as provided in the contract attached to the leases, which amount he alleged he was entitled to, free and clear of any expense of operation of the well .and to which amount he would be entitled regardless of the termination of the litigation. He prayed for judgment, decreeing the leases and liens fixed thereon by the claimants under the bills and accounts that had been incurred by the lessee and appellant to be null and void; for removal of the clouds cast upon his title by the claims of all of the defendants, and decreeing the title to him, free and clear of all such clouds and claims. He further prayed that all such sums of money as may be collected by the receiver be paid over to him, and for general relief.

On the 28th of December, 1932, the petition in Cause No. 670 was presented to the district judge who heard the same in Chambers and appointed B. O. Lilley receiver as prayed for in the petition. The order provided that the receiver take immediate possession of the leases and the well; that he should operate the well and produce therefrom the amount of oil the well was allowed to produce under the proration rules of the Railroad Commission; that he should sell the oil to the Texas Company or the Texas Pipe Line Company at the market price, collect the proceeds and pay to the plaintiff ⅜⅛ of such amount. The order further provided that out of the balance, the receiver should pay the expenses of operating the lease, not to exceed $100 per month, including salary to one man to pump the well, but that he was to incur no other expenses without the further order of the court. The receiver was directed to return into court a full report of the condition of the property within fifteen days and to collect all amounts for oil runs since October 1, 1932, that were held by any purchasers of the oil.

On the 13th of June, 1933, some five and a half months after appellee Barnard filed his petition in Cause No. 670; appellant Agey filed in the same court another suit, being Cause No. 687, against the Texas Company, appellee Barnard and his wife, B. O. Lilley, receiver of the First National Bank of Pampa, and a large number of other defendants who were owners and holders of the accounts and claims against the property, which accounts had been incurred by Agey on behalf of Crebs in the drilling of the well and operation of the lease. His petition in this latter suit alleged the execution of the leases to Crebs, the drilling of the well and production of oil therefrom, and alleged that on April 4, 1933, the lease and all personal property *487 in connection therewith had been assigned to him by Stewart L. Crehs, the original lessee, and that the Texas Company had been taking the oil runs from the well “but has failed and refused to pay for ^ths of said oil, being the working interest therein, which is free and clear of any claim of the defendant, C. B.

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123 S.W.2d 484, Counsel Stack Legal Research, https://law.counselstack.com/opinion/agey-v-barnard-texapp-1938.