Connellee v. Magnolia Petroleum Co.

279 S.W. 597
CourtCourt of Appeals of Texas
DecidedDecember 18, 1925
DocketNo. 70. [fn*]
StatusPublished
Cited by2 cases

This text of 279 S.W. 597 (Connellee v. Magnolia Petroleum Co.) 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
Connellee v. Magnolia Petroleum Co., 279 S.W. 597 (Tex. Ct. App. 1925).

Opinion

RIDGELL, J.

The nature and result of suit as stated in appellants’ brief is as follows :

“This suit was instituted in the Ninety-First district court of Eastland county by appellants Earn T. Connellee et al., plaintiffs below, suing Magnolia Petroleum Company, defendant below, for the recovery of a large amount of gasoline alleged to have been taken by defendant from plaintiffs’ premises under a lease contract executed by T. W. Connellee and wife, Tiny S. Connellee, Earn T. Connellee, Dixie Williamson, and Jack Williamson, as lessors, in favor of Magnolia Petroleum Company, lessee, on October 29, 1917; plaintiffs alleging that defendant took all of said gasoline without making payment for any part thereof.”

The portion of the lease contract in controversy in this case reads as follows:

“Royalties herein agreed upon and specified, viz. one-eighth of all oil produced and saved, to be delivered free of charge into the tanks or pipe lines to the grantors’ credit, for each well producing gas only sold or used off the premises, $200 per year; for casinghead gas, when sold or used off the premises, $25 per year for each well, the payment for gas to be made quarterly in advance, for all other minerals one-eighth of the net profits thereof.”

Plaintiffs’ petition is composed of five grounds for recovery and is in the form of one principal allegation and four alternatives. The first allegation sets forth the above-mentioned oil and gas lease, and the terms thereof, and states that the defendant has taken from said prefnises a large amount of gasoline, the exact amount of which }s unknown to them, but, upon information and belief, allege said amount to be 17,000,000 gallons, and worth, at the time it was taken, $2,210,000. They further allege that said oil and gas lease contract did not contemplate the manufacture of gasoline and did not cover such substance, and therefore that plaintiffs are entitled to the full value thereof.

*598 In the first alternative they allege that defendant did not “use or sell casinghead gas from said land off the premises,” but that it converted same to its own use and benefit on the premises, and that the reasonable market value of the casinghead gas at the time it was made into gasoline and at the time of the conversion was the value above set forth, which was the value of the gasoline less the cost of separation, which they allege was $40,000. They then pray for a recovery of the full value of the gasoline, less the cost of separating same from the casinghead gas.

In the second alternative they say that it was not in contemplation of the parties to said oil and gas lease that casinghead gas which might be found or taken from said land should or would be made into gasoline, and that the contract did not cover such use of the casinghead gas; that plaintiffs were wholly ignorant of the great value of the same for such purposes; and that, by reason of such ignorance, there was no meeting of the minds of the parties, and hence no valid and binding contract was entered into relative to said casinghead gas for gasoline purposes. They further allege in this connection that they did not know at the time of executing said léase that casinghead gas was oil, and that it constituted the constituents of oil, and that, had they known this, they would not have signed the contract with the words “casinghead gas” used in the manner and in the connection in which it was used therein. They further say in this connection that, if the payment provided for each well producing casinghead gas should have been meant to cover rentals and royalties from casinghead gas used for the manufacture of gasoline, then that said sums so provided were wholly inadequate, inequitable, unjust, and unconscionable as a consideration, and that the consideration thereof wholly failed, and that a just and reasonable consideration would be one-fourth of the value of. the cas-inghead gas, which amount they prayed for.

In the third alternative they allege that gasoline is a form of and a necessarily component part of oil and is oil, as that term is used in said lease contract, and that gasoline such as was produced from plaintiffs’ premises is petroleum and oil under that term as used in said lease contract, and that said lease contract provided for the payment of one-eighth of the oil produced from said premises, and that, therefore, plaintiffs are entitled to one-eighth of all the gasoline produced and sold from said premises.

In the fourth alternative they allege that by the terms of' said oil and gas lease, which provides for royalties as follows:

“One-eighth of all oil produced and saved to be delivered free of charge into tanks or pipe lines to the grantors’ credit; for each well producing gas only sold or used off the premises, $200 per year; for casinghead gas, when sold or used off the premises, $25 per year for each well, the payments for gas to be made quarterly in advance, for all other minerals one-eighth of the net profits thereof,” •

—they would be entitled to one-eighth of the gasoline by reason of the provision in said contract “for all other minerals one-eighth of the net profits thereof,” since gasoline is neither oil nor gas.

Plaintiffs further allege that the defendant had constructed its gasoline plant on plaintiffs’ premises without permission and without ever having made any payments for the use of plaintiffs’ land for such purpose, and sued for the rental value of the plant site.

The defendant answered by general demurrer and general denial, and, by way of special answer, alleged that it had paid a valuable consideration for said lease, and that upon the purchase thereof the legal title vested in defendant in and to all of the materials ; that when said minerals were brought to the surface they ceased to be a part of the realty from which they were taken, and became personal property, and that having so acquired the legal title to said minerals and having performed all the precedent acts necessary to acquire title thereto, after they were brought to the surface, it owned a twofold title to said minerals, and owed the plaintiffs no duty with reference thereto oth,er than the payment of the royalties stipulated, and that after the discovery of said minerals this obligation became and was nothing more than an obligation to pay debts.

Said answer further alleges that defendant had paid all the rentals and royalties provided in said contract, viz. one-eighth of all the oil produced and saved, $200 per year for each well where gas only was found, and $25 per year for each well producing casinghead gas, and further states that the grant is plain, explicit, and unambiguous, and not subject to the construction sought to be placed thereon by plaintiffs; that by the terms of such grant it became the owner of all of the gas of whatever kind or character and of all the oil and all of the elements or parts thereof, including gasoline, etc., which might be derived therefrom by process of manufacture.

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Bluebook (online)
279 S.W. 597, Counsel Stack Legal Research, https://law.counselstack.com/opinion/connellee-v-magnolia-petroleum-co-texapp-1925.