Crane v. Sun Oil Co.

233 So. 2d 919, 255 La. 1017, 35 Oil & Gas Rep. 292, 1970 La. LEXIS 3768
CourtSupreme Court of Louisiana
DecidedMarch 30, 1970
DocketNo. 49946
StatusPublished
Cited by3 cases

This text of 233 So. 2d 919 (Crane v. Sun Oil Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crane v. Sun Oil Co., 233 So. 2d 919, 255 La. 1017, 35 Oil & Gas Rep. 292, 1970 La. LEXIS 3768 (La. 1970).

Opinion

LEVY, Justice Ad Hoc.

This suit originated as one to cancel from the public records an oil, gas and mineral lease executed by the plaintiff, Mrs. Bevelle Nabers Crane, in her capacity as curatrix ■for Mrs. Nannie.Sue Nabers. Additionally she sought attorney fees and damages in accordance with the provisions of LRS 30:102. Named as defendants were the owners of the lease, Sun Oil Company and Marine Properties, Inc.

The district court ordered the lease can-celled, awarded attorney fees in the sum of $4500, but denied damages.

Defendants appealed. Plaintiff answered the appeal seeking an increase in the attorney fees and recovery of damages denied by the district court.

The Court of Appeal affirmed the judgment insofar as it ordered the lease can-celled. However, it amended the judgment by increasing the attorney fees to $5500, and awarding plaintiff $65,000 for damages which it held had been incurred as the result of defendants’ failure to cancel the lease. 223 So.2d 14. The Court of Appeal cited the case of Fite v. Miller, 192 La. 229, 187 So. 650 as its authority for so holding.

Defendants applied for certiorari, which we granted but limited our consideration of the case to assignment of error No. 5 which was that the Court of Appeal erred in awarding damages for the defendants’ refusal to cancel the lease. 254 La. 755, 226 So.2d 520.

LRS 30:102 provides:

“Whenever an optional oil or gas lease shall lapse because of the termination of the full period within which it may be kept alive by the payment of rentals, or because of failure on the part of the lessee to comply with the condition for the prevention of forfeiture, the lessee shall within ten days after written demand on the part of the lessor furnish the lessor with an acknowledged instrument, directing the cancellation of the lease on the records.
“If a lessee, having been given written notice demanding cancellation of the lease, [1022]*1022fails or refuses to comply within ten days, he shall be liable to the lessor for a reasonable attorney’s fee incurred by the lessor in bringing suit to have the cancellation adjudged. He shall also be liable to the lessor for damages suffered by him by reason of his inability to make a lease because of the non-cancellation.”

The sole issue before us now is whether or not the plaintiff has shown that she was damaged by reason of her inability to enter into another lease because of the non-cancellation of the lease involved in this litigation. In this situation, as in all others involving a claim for damages, the burden is on plaintiff to establish with reasonable certainty, or by a preponderance of the evidence, that such damage occurred, as well as the extent thereof.

The lease herein was entered into on May 19, 1965 for a primary term of two years, and so long thereafter as oil, gas or other minerals were being produced. In that part of the Court of Appeal decision which is now final, it was held that the lease had lapsed at the end of the primary term which was May 20, 1967. The lessor’s demand for an instrument directing its cancellation was received by Sun Oil Company on June 26* 1967, and by Marine Properties, Inc. on August 3, 1967.

Plaintiff’s claim for damages is based principally on a letter dated July 1, 1967 addressed to her attorney and signed by six gentlemen who are residents of Mississippi. It is here quoted in its entirety, except for the signatures which are immaterial to this, discussion.

“We, the undersigneds, Nelson Gibson,, Chester Clark, Joe Scroggins, • Paul Lacoste, W. D. Mounger, and Wallace Harrison, wish to acquire an oil, gas, and mineral lease on the one-half. mineral interest in the above described lands from Mrs. Nabors, subject to a i/¿ royalty reservation and,'for a term of two-yearsr after Sun Oil Company has delivered a release to you of the lease granted' to them which expired May 19th, 1967.
“If granted this lease we will agree and bind ourselves to begin drilling a well thereon to test the Sparta formation and to a depth of 11,70.0 feet, unless conditions beyond our control prevent us from drilling to this depth, or of oil and/or gas is found in commercial quantities at a shallower depth, within .ninety days from the effective date of the lease, and will drill and complete the well as rapidly as possible.
“We make this offer with the full knowledge that Sun Oil Company owns a lease on the other half of the mineral interest in these lands and that it is entirely possible they may decide to refrain from joining us in this drilling venture and we may have to advance their half of the [1024]*1024cost of the well and recoup this cost only from production from the well.
“If we are successful in completing a commercial oil or gas well we will proceed with dispatch to develop the entire lease interest.
“If this letter sets out generally acceptable terms to you we will enter into a formal agreement setting out these terms in more detail" (italics ours)

As we understand plaintiff’s contention it is that this letter constituted a binding offer to enter into a lease containing an unconditional obligation on the part of the offeror-lessees to drill a well on the plaintiff’s property; that she was unable to enter into the lease because the defendants refused to execute an instrument which would permit cancellation of their lease; that consequently, she was damaged by not having been able to have a well drilled on her property in accordance with the offer, and that the measure of such damage is the cost of drilling the well, which, according to the evidence, would be $65,000.00.

We agree — and defendant’s counsel conceded — that the offer was an unconditional offer to drill, provided that the offer was acceptable to plaintiff. The letter cannot be considered as a binding agreement of •lease for the reason that it was subject to ■the execution of a formal agreement (a lease) “setting out” the terms in “more detail”. In Woodville v. Kantrowitz, 115 La. 810, 40 So. 174 this court said:

“Whether, as in this case* the intention of the parties to reduce their contract to writing is itself expressed in writing, or is expressed verbally, is immaterial. The point is that something more is to be done before the contemplated contract is to be considered completed”.

The record does not show that plaintiff ever accepted the offer to lease. It may be that plaintiff, in her fiduciary capacity, could not have accepted the offer without Court approval and authorization, but the record does not disclose that any effort on her part was made to secure such authority. Nor did she — as she could have done — accept the proposal subject to the securing of such court authority as may be needed.

If the letter-agreement is to be considered as a binding agreement on the part of the offeror-lessees, subject only to its acceptance and formal execution of a lease, then it was not, in any way, affected by the failure of Sun Oil Company to have given plaintiff a release of its lease, as of the expiration date, i. e. May 20, 1967. The lettter-agreement (offering to lease the land and drill thereon) was dated after the lease with Sun Oil Company had expired by its terms and the letter took cognizance of the fact that the lessees had not given the land owner a release of the lease.

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Related

Chesapeake Operating, Inc. v. Richardson
884 So. 2d 1263 (Louisiana Court of Appeal, 2004)
Wilson v. Sun Oil Company
290 So. 2d 844 (Supreme Court of Louisiana, 1974)
Wilson v. Sun Oil Co.
265 So. 2d 344 (Louisiana Court of Appeal, 1972)

Cite This Page — Counsel Stack

Bluebook (online)
233 So. 2d 919, 255 La. 1017, 35 Oil & Gas Rep. 292, 1970 La. LEXIS 3768, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crane-v-sun-oil-co-la-1970.