Crichton v. Lee

25 So. 2d 229, 209 La. 561, 1946 La. LEXIS 713
CourtSupreme Court of Louisiana
DecidedJanuary 7, 1946
DocketNo. 37988.
StatusPublished
Cited by35 cases

This text of 25 So. 2d 229 (Crichton v. Lee) 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
Crichton v. Lee, 25 So. 2d 229, 209 La. 561, 1946 La. LEXIS 713 (La. 1946).

Opinion

HAWTHORNE, Justice.

This is a suit to annul and cancel an oil, gas, and mineral lease on the ground that the five-year primary term of said lease had terminated, and that the lease was no longer in effect because no well had been drilled on the leased premises, nor had any oil or gas been produced therefrom.

The lease was executed on January 23, 1937, for a primary term of five years and covers 40 acres described as the NW% of the SEJ4 of Section 19, Township 21 North, Range 9 West, in Webster Parish, Louisiana.

The plaintiffs, Thomas Crichton, Jr., Mrs. Kate Jackson Crichton, Mrs. Kate Crichton Gredler, and Powell Crichton, are the owners of an undivided one-half interest in and to the minerals underlying the property covered by the lease, the remaining one-half interest being owned by A. D. Turner, Frank B. Treat, Gilbert S. Johnson, Jr., and P. F. Childs.

On the date of the lease, that is, January 23,1937, Thomas Crichton, Jr., Trustee, and P. F. Childs, the then owners of an undi *565 vided one-half interest each in and to the minerals underlying the property, executed an oil, gas, and mineral lease in favor of Bert Kouns. Kouns assigned to F. H. Brown an undivided one-half interest in this lease on February 15, 1937. Kouns and Brown on July 26, 1939, assigned the lease to Hassie Hunt, reserving an overriding royalty. Hunt in turn assigned all of his interest in and to said lease to Roy Lee, Trustee, on November 30, 1941.

. The defendants are F. H. Brown, Bert Kouns, and Roy Lee,' Trustee, a non-resident represented by David W. Thomas, curator ad hoc. P. F. Childs and his vendees, the owners of the other undivided one-half interest in and to the minerals in the property, did not join plaintiffs in the suit to cancel this lease, but were made defendants herein in order to have all parties in interest before the court.

Defendants excepted to plaintiffs’ petition on the ground that it set forth no cause or right of action, and filed also exceptions of non-joinder, which exceptions were overruled by the lower court. The case was submitted on an agreed statement of facts, and the trial judge rendered judgment in favor of defendants, rejecting plaintiffs’ demands and fixing the fee of David W. Thomas, curator ad hoc for Roy Lee, Trustee, in the sum of $250 and taxing it as costs. From this judgment plaintiffs have appealed to this court

The agreed statement of facts, which sets forth the .execution of the lease and the assignments thereof to the various parties named hereinabove, and the exhibits mentioned therein, shows the following facts:

(1) No wells were drilled within the primary term of the lease on the NW% of the SEJ4> Section 19, Township 21 North, Range 9 West, Webster Parish, Louisiana, the land covered by the lease, and plaintiffs made written demand for release or cancellation of said lease insofar as it affects the mineral interest owned by them, which demand was not complied with.

(2) Prior to July 2, 1940, all parties interested in production, except the plaintiffs herein, ratified the Cotton Valley Unitization and Pressure Maintenance Agreement, and thereafter, on January 28, 1941, the Commissioner of Conservation issued Order No. 10-C, wherein the “D” sand pool and the Bodcaw sand pool in the Cotton Valley Field, which included the property covered by the lease sought to be cancelled, were pooled and unitized for the purpose of recycling of gas and extraction of liquid hydrocarbons. On February 1, 1941, the date on which this order became effective, there were many producing wells upon the lands included in the order, which were then producing in paying quantities and have ever since been producing in paying quantities.

(3) In Order No. 10-C, the Cotton Valley Operators Committee was designated as the operator of said unitized and pooled area. This committee, at an expense in excess of $3,000,000, constructed a repressuring system and plant for the extraction of liquid hydrocarbons from the gas produced from the Cotton Valley unit. This system and plant were placed in operation on July 15, 1941, and, since said plant was placed in operation, the royalties of all parties in said unit, including those upon whose lands *567 wells were producing prior to the execution of the Cotton Valley Unitization and Pressure Maintenance Agreement and the issuance of Order No. 10-C, have been increased. Plaintiffs have been tendered their proportionate part of royalties from the Cotton Valley unit under the provisions of Order No. 10-C since the effective date of that order, that is, February 1, 1941, but have refused to accept royalty payment.

Order No. 10-C was issued by the Commissioner of Conservation under the authority of Act 157 of 1940, after publication of notice of a hearing and after said hearing, and became effective at 7:00 a.m. on February 1, 1941. This order, filed in evidence, after defining the “D” sand area and the Bodcaw sand area in the Cotton Valley Field, in which plaintiffs land is located, provides in Section 2:

“That in order to prevent waste, to avoid the drilling of unnecessary wells, to reasonably maintain reservoir energy and to obtain the greatest ultimate recovery, it is advisable, expedient and necessary that there be a unit plan of operation for development and production purposes, and accordingly, said areas shall be treated as one lease, one property and one tract, and all oil, gas and other hydrocarbons within said areas, as the same may now be fixed or subsequently enlarged, are as to each of said areas hereby unitized, and the lands, royalties and lease interests containing same are hereby pooled and communized; and, after the separation or extraction of liquid hydrocarbons, all gas produced therefrom in excess of the market demand shall be returned to the formations from which produced, less that amount thereof as is utilized or unavoidably lost in recycling operations, and the extraction of distillate, gasoline or other liquid hydrocarbons; the Cotton Valley Operators Committee, as established by that certain agreement executed by The Ohio Oil Company et al, as Operators, with and to E. L. Stewart et al, as Royalty Owners, and filed under Register No. 75063, Conveyance Records of Webster Parish, Louisiana, being hereby designated as the Operator of said unitized and pooled areas.” (Italics ours.)

The lease in question was executed on January 23, 1937, for a primary term of five years, which primary term expired on January 23, 1942, and the clause therein on which plaintiffs rely for cancellation thereof reads as follows:

“Subject to the other provisions herein contained, this lease shall be for a term of Five years from this date (called ‘primary term’) and as long thereafter as oil, gas or other mineral is produced from said land hereunder.”

Plaintiffs are demanding the cancellation of the lease on the ground that the primary term has expired and there has been no drilling or production on the leased premises. Defendants, on the other hand, contend that plaintiffs’ land is a part of the unitized area, and that, under the unitization agreement and Order No. 10-C, which pooled and unitized plaintiffs’ land with other lands in the field, the lease executed by Thomas Crichton, Jr., Trustee, and P. F.

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Bluebook (online)
25 So. 2d 229, 209 La. 561, 1946 La. LEXIS 713, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crichton-v-lee-la-1946.