Butler v. Jenkins Oil Corporation

68 S.W.2d 248
CourtCourt of Appeals of Texas
DecidedJanuary 4, 1934
DocketNo. 2911.
StatusPublished
Cited by12 cases

This text of 68 S.W.2d 248 (Butler v. Jenkins Oil Corporation) 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
Butler v. Jenkins Oil Corporation, 68 S.W.2d 248 (Tex. Ct. App. 1934).

Opinions

WALTHALL, Justice.

Plaintiffs, Jenkins Oil Corporation and W. B. Hamilton, brought this suit against the Crown Central Petroleum Corporation to recover the sum of $1,983.80 alleged to be due for ⅝2 °£ ⅞ of the gross production of oil produced from a thirty-acre lease, between the dates of September 21, 1931, and August 31, 1932, inclusive. Plaintiffs operated the lease during said period of time and delivered all the oil produced therefrom to defendant Crown Central Petroleum Corporation, and defendant corporation had withheld accounting to plaintiffs for the ⅛2 of the ⅞ of the or: produced, the value of which was the sum of $1,983.80. In the suit plaintiffs made R. G. (Bob) Butler a party to the suit, alleging that Butler was claiming the right to be paid said *249 sum of money under the terms of a certain contract or assignment from Roy Jenkins to him (Butler) as to said ⅛2 ®í % interest in said oil production, of date' December 22, ] £>00, covering said thirty-acre lease. At the time of this suit plaintiffs had acquired the Roy Jenkins interest in said lease.

The defendant Crown Central Petroleum Corporation in its answer admitted that it had purchased the oil from the lease in question during said period of time and had withheld payment for said ⅜2 °i % of said oil produced from said lease amounting to said sum of $1,983.80, for the reason that plaintiffs and said Butler were each contending that they were entitled to payment for said interest, admitted that it held the money as debtor and was ready and willing to pay it as the court might determine to be entitled to receive it, and in its pleading tendered said sum of money to the court to 'be paid as the court may direct; it alleged the employment of attorneys to represent it and file its answer, and prayed that it be allowed a reasonable charge for such services, stating said sum, and that it go hence without day and recover its costs.

The real contention in the suit was between the plaintiffs on the one hand, and defendant Butler on the other. The undisputed facts show the following: On December 22, 1930, defendant Butler owned an undivided ¾ interest in the oil and gas lease on said thirty-acre tract of land. On that date he executed and delivered to Roy Jenkins an assignment covering said undivided ⅛ interest, and contemporaneously therewith, and as a part of the consideration therefor, Roy Jenkins executed and delivered back to defendant Butler an assignment containing the following provision:

“The undersigned Roy Jenkins, the present owner of said lease and all rights thereunder incident thereto, does hereby bargain, sell, transfer, assign and convey all rights, titles and interest of the original lessee and present owner in and to said lease and rights thereunder, insofar as it covers a one-sixteenth overriding royalty out of the leaseholder’s seven-eighths, said one-sixteenth overriding royalty to cover the oil, gas and other minerals in and under all of the above described thirty acre tract of land, more or less, to be paid on such basis as long as each well upon said lease produces one hundred ninety barrels, or more per day, to be based upon an average of fifteen days.
“In the event said well or wells produce less than one hundred ninety barrels per day each to be based upon an average of fifteen days then said overriding royalty shall be one thirty-second interest, the above royalty interest to be computed on each well separately.”

The assignment then provides that oil, gas, and other minerals, equivalent to overriding interest to be delivered to the pipe lines at the well or wells to which said Jenkins, his heirs and assigns, may connect such wells, free of costs to Butler.

The contention in the suit seems to grow out of the construction to be given the words used in the assignment ‘produces” and “produce” ; that is, if under the assignment Butler was entitled to receive a full ¾9 of % of the production from said lease during the period of time in controversy, then Butler was entitled to be paid for the ½2 of the money withheld by the defendant Crown Central Petroleum Corporation. If Butler was to receive ⅝2 of ⅞ of the oil and gas produced during said period of time, the plaintiffs were entitled to be paid for the ½2 of ⅞ of the money withheld and put in controversy to the suit.

Plaintiffs’ contention was that from September 21, 1931, to August 31, 1932, none of the four wells on the thirty-acre lease had produced as much as 199 barrels per day, and that under orders issued by the commanding officer of the military in charge of said field, acting under the orders of the Governor of Texas, and under the regulations of the Railroad Commission of Texas, none of sdid wells had been permitted to produce as much as 190 barrels of oil per day.

The respective parties, by lengthy supplemental pleadings, pleaded the meaning that should be given the words “produces” and “produce”; Butler contending that at the time the assignment was executed the parties discussed orally and had in mind and intended to use the word “produces” as meaning the amount the well could or had the capacity to produce.

Appellees contend, in brief, that the terms used in the assignment are definite, unambiguous, and properly construed and, in the absence of fraud, accident, or mistake, provides that the royalty interest is determined by the amount of oil and gas actually produced from each well computed separately and not by what the well could produce or had the capacity to produce.

The trial court, in sustaining plaintiffs’ exceptions, eliminated the facts and circumstances pleaded attending the execution of the assignment, and to that portion pleading ambiguity in the use of the terms “produces” and “produce”; the court sustained defendant *250 Butler’s exception to tlie portions of plaintiffs’ pleading setting up tlie orders of tlie Railroad Commission and the orders issued under martial law, thus limiting the production of oil to less than 190 barrels per day per well.

The case was tried without a jury. The court found, as stated in the judgment, that during the two periods stated the wells each produced 190 barrels or more per day based on an average of fifteen days, and Butler was entitled to receive a royalty of ¾6 of ⅞ of the production during the said periods, and to be paid ½2 °f % of said royalty; that he has received and was paid, of said royalty, ⅛ of ⅞, and is entitled to recover the additional ⅛2 of % royalty for said period the amount aggregating the sum of $149.57.

The court further found that with the two exceptions stated each and all of said wells, during the period referred to produced less than 190 barrels per day on the basis fixed by the assignment, and that Butler was entitled to receive only ⅞2 of % royalty covering said production, already paid him, and that plaintiff's are entitled to recover the respective amounts withheld and unpaid by the Crown • Central Petroleum Corporation said amounts covering ⅝2 of ⅞ of said production and aggregating the sum of $1834.23. The court entered judgment for plaintiffs and defendant in said proportions, against defendant Crown Central Petroleum Corporation.

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Bluebook (online)
68 S.W.2d 248, Counsel Stack Legal Research, https://law.counselstack.com/opinion/butler-v-jenkins-oil-corporation-texapp-1934.