Davis v. Zapata Petroleum Corporation

351 S.W.2d 916, 15 Oil & Gas Rep. 507, 1961 Tex. App. LEXIS 2579
CourtCourt of Appeals of Texas
DecidedOctober 25, 1961
Docket5475
StatusPublished
Cited by26 cases

This text of 351 S.W.2d 916 (Davis v. Zapata Petroleum 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
Davis v. Zapata Petroleum Corporation, 351 S.W.2d 916, 15 Oil & Gas Rep. 507, 1961 Tex. App. LEXIS 2579 (Tex. Ct. App. 1961).

Opinion

LANGDON, Chief Justice.

This is a suit brought by appellant, Jefferson Davis, against Zapata Petroleum Corporation, appellee, for damages resulting from the loss of an oil, gas and mineral lease by reason of the alleged breach of a letter agreement dated January 7, 1958, between appellee, Zapata Petroleum Corporation, and Plarry Adams, acting therein for himself and his three associates, L. H. Tyson, Dr. G. T. Hall, and the appellant, Davis.

Appellant and his three associates were the owners of an oil, gas and mineral lease covering 3840 acres of land in Martin County.- By the terms of a “farmout” letter dated January 7, 1958, appellant and his associates agreed to assign a portion of such lease to Zapata, and Zapata agreed to commence drilling operations on the assigned premises with either a cable tool or a rotary rig, on or before February 1, 1958, and thereafter, with due diligence and in a workmanlike manner, continue its development operations upon the assigned premises until: (a) such operations resulted in production; or (b), 30 days after giving notice of its intention to abandon such operations. Pursuant to the terms of the farmout letter, the assignment was placed in escrow, and Zapata timely commenced drilling operations on the assigned premises with the use of a cable tool rig; but later gave notice, as provided by paragraph II — (b) of the farmout letter, that it desired to abandon operations on the lease.

The oil and gas lease involved in this controversy was executed and delivered on February 4, 1948. It provided for a primary term of ten years, which expired on February 4, 1958; however, the lease contained a provision (paragraph 5 thereof) for extending the lease beyond the primary term. The pertinent part of paragraph 5 is set out as follows:

“ * * * If at the expiration of the primary term oil, gas or other mineral is not being produced on said land, but Lessee is then engaged in drilling or reworking operations thereon, the lease shall remain in force so long as operations are prosecuted with no cessation of more than thirty (30) consecutive days, * *

Zapata commenced its operations on the lease under the farmout agreement just three days before the expiration of the primary term of the lease. Notice of its intention to cease such operations was communicated to appellant Davis and his associates by letter dated March 14, 1958. Following receipt of such notice, appellant Davis and his associates drew down the assignment previously placed in escrow, and made a new trade with Mr. J. C. Barnes to take over the operations on the lease.' Pursuant to the new agreement, Barnes moved on the lease with a big rotary rig, preparatory to re-entering and attempting to complete an old well identified in the record as the Callcry & Hurt Well, previously drilled to a depth of 11,500 feet by others (not parties to this suit) and abandoned as a dry hole. Appellant Davis contends that,' after having made the trade with Barnes, and after Barnes had moved on the lease with the big rotary rig for the purpose of continuing operations thereon, they were compelled to mqve off the lease and terminate all operations by reason of the prior termination of the lease due to the failure of Zapata *919 to commence its operations on the assigned premises in good faith, and its failure thereafter to continue its operations in good faith and with due diligence as it was obligated to do under the terms and conditions of the farmout agreement, causing appellant Davis to suffer the damages complained.

Prior to the institution of this suit, appellant Davis filed a suit in the district court of Martin County against E. T. Strain, Waddell Strain, Louisiana Land and Exploration Company, and Earl B. Powell and wife, Jane B. Powell, as owners of the minerals in the land covered by the oil and gas lease which was the subject of the farmout agreement involved here. The suit was No. 2124 on the docket of the District Court of Martin County, styled Jefferson Davis, Plaintiff, vs. E. T. Strain, et al, Defendants. By such suit Davis sought to obtain a decree in the nature of a declaratory judgment, decreeing the lease in question to be a valid, subsisting lease in full force and effect, or, in the alternative, damages for his wrongful eviction from the lease. The case was submitted to the jury on special issues, which resulted in jury findings adverse to Davis. The jury found that E. T. Strain and Louisiana Land & Exploration Company repudiated the title of Davis to the lease in question on or about March 30, 1958; that Waddell Strain concurred in and adopted, by his acts and conduct, the repudiation of Davis’ title by E. T. Strain to the oil and gas lease; that the drilling operations of Zapata were commenced in good faith, but were not continued in good faith until March 14, 1958; and that Zapata ceased to conduct good faith operations on the lease on February 18, 1958. Based on the jury verdict, the trial court entered a take-nothing judgment against Davis as plaintiff in that suit.

Following the adverse judgment in cause No. 2124, Davis instituted the present proceedings against Zapata. In the trial court, appellant Davis attempted to introduce evidence of the words, acts and conduct of E. T. Strain, representatives of Louisiana Land and Exploration Company, and of Waddell Strain in their dealings with Davis and Barnes, for the purpose of showing that these people had repudiated the lease and had evicted Barnes and the appellant Davis from the leased premises by reason of Zapata’s alleged failure to conduct good faith drilling operations on the leased premises. The admission of such evidence was objected to on the grounds that it was hearsay as to Zapata, and was res inter alios acta in that it constituted an attempt to introduce into evidence acts and declarations of strangers to the proceedings, or of one of the parties to the action in his dealings with strangers. The trial court excluded the testimony, the error, if any, being preserved for our consideration by a proper bill of exception. Appellant Davis also offered and attempted to introduce to the jury, for the purpose of showing that the lease had been judicially terminated, the entire judgment, including the jury findings which were set out in the judgment entered in Cause No. 2124 (plaintiff’s Exhibit 15). Zapata objected to the introduction of the judgment in the former cause on the ground that it was not a party to the proceedings; that the findings of the jury in that case were not binding on it; that it was prejudicial to the rights of Zapata; and, further, that it was also res inter alios acta. Based on such objections, the trial court excluded the judgment from consideration of' the jury, but admitted it for the court’s consideration alone. The trial court’s error, if any, in excluding the judgment from consideration of the jury has likewise' been-preserved, - and is one of the points upon which this appeal is predicated.

In addition to certain special exceptions and denials contained in its answer to appellant’s pleadings, Zapata, by way of affirmative defenses, plead: (1) that it had fully performed and discharged all of the covenants, obligations, etc. imposed on it by any agreement with plaintiff; (2) that plaintiff, having joined in and become a part of the operations and performance of defendant (in its operations on the lease), is now estopped to prosecute this action *920

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Bluebook (online)
351 S.W.2d 916, 15 Oil & Gas Rep. 507, 1961 Tex. App. LEXIS 2579, Counsel Stack Legal Research, https://law.counselstack.com/opinion/davis-v-zapata-petroleum-corporation-texapp-1961.