Gulf Production Co. v. Kishi

105 S.W.2d 733, 1934 Tex. App. LEXIS 1527
CourtCourt of Appeals of Texas
DecidedJune 7, 1934
DocketNo. 2506.
StatusPublished
Cited by3 cases

This text of 105 S.W.2d 733 (Gulf Production Co. v. Kishi) 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
Gulf Production Co. v. Kishi, 105 S.W.2d 733, 1934 Tex. App. LEXIS 1527 (Tex. Ct. App. 1934).

Opinion

WALKER, Chief Justice.

On the 23d day of December, 1919, K. Kishi and Isaac Lang leased to the Gulf Production Company a tract of about 160 acres of land, out of the southeast corner of the Jas. Dyson ieague in Orange county, excepting therefrom a small tract of 25 acres out of the extreme southeast corner *735 of the 160 acres. The following quotation is from this lease:

“First. For the right herein granted, to-wit: said Company pays to the Lessors, the sum of Two Thousand-($2,000.00) Dollars, (to said K. Kishi $1,500.00) and to said Isaac Lang $500.00 cash with the signing and delivery of this instrument, the receipt of which is acknowledged, and further obligates and binds itself, its successors and assigns, that it will within Ninety (90) days from the date hereof in good faith commence operations in the drilling of a well for oil on said premises and will continue such operations in good faith continuously until said well has been finally completed, going to such depth as the experience in this locality indicates as necessary to discover oil and make a producing well.
“Second. If oil in paying quantities should not be found in the first well sunk on said premises, then the Company shall have the right within Sixty (60) days from the completion of said first well to commence and complete in a like manner a second well on said premises, and this right shall continue to additional wells, as long as said Company may desire, it commencing one of such additional wells at all times within 60 days after the completion of the preceding well, and this lease shall remain in force during all such operations. Failure to commence said second or additional wells within said 60 days shall automatically operate as a forfeiture of this lease.
“Third. If oil shall be found on said premises in paying quantities, then unless lessee shall within 60 days from such finding of oil in paying quantities, begin the drilling of another well and unless lessee shall thereafter continue to drill other wells (beginning each additional well within 60 days from the completion of the last prior well), until a total of 12 wells, shall have been drilled on said premises, this lease shall on such failure at any time cease to be effective except as to, and the lessee shall on such failure lose its rights hereunder, except as to an area equal to five (5) acres, for each producing well, which total area may be selected by lessee, both as to location and shape, and as to which this lease and lessee’s rights hereunder, shall remain effective so long as production or explorations are continued by lessee on such retained area in accordance with the other terms of this lease; Lessee having expressly the right to drill as many additional wells, as it pleases on such retained area. It is expressly stated that such alternative right to drill 12 wells or to forfeit the lease with the exception of the retained area at any time during the drilling of such 12 wells, is at lessee’s election.”

This lease was referred to in the lower court as “Kishi-Lang 'A’ Lease.” On the 12th day of March, A. D. 1920, the same lessors leased to the same lessee the 25 acres excepted from the “A” lease, except 5 acres off the west end of the 25 acres. This lease was referred to in the lower court as “Kishi-Lang ‘B’ Lease.” The following quotation is from the “B” lease:

“If no well or shaft is commenced on the premises on or before the 12th day of March, A. D. 1921, this lease shall terminate as to both parties, unless lessee on or before said date shall pay or tender to lessors, in the manner hereinafter provided, the sum of Two Thousand ($2000.00) dollars, which payment or tender shall operate as a renewal to cover the privilege of deferring the commencement of a well, or shaft, for twelve months (12) from said date. But in the absence of drilling or mining operations, this lease cannot be kept in force by such payments or tender for a longer total period than two (2) years from the date of this lease, and if lessee shall fail to make any such payments or tender when due, this lease shall terminate and both parties be released from all obligations hereunder.
“Fifth. Lessor agrees that the cash payment or bonus received by him for this lease, and the other obligations of lessee to offset as expressed in the next succeeding paragraph, constitutes a valid and sufficient consideration to support each and every right and privilege conferred on the lessee by this instrument, including the option to the lessee to extend this lease from time to time, within the limitations and upon the terms hereinbefore stated. But, except as stated in the next succeeding paragraph hereof, the lessee shall not be obligated against its will to drill or otherwise conduct operations hereundey. .
“Sixth. If during the existence of this lease there shall be drilled on adjacent land within 200 feet of any line of the premises, a well producing daily as much as 200 barrels of oil for 30 consecutive days, the lessee will, with reasonable diligence, begin and prosecute the drilling of *736 an offset well on the leased premises, and will under like conditions offset all other oilwells drilled on. adjacent land. Likewise, lessee agrees with reasonable diligence to offset all paying gas wells drilled within 200 feet of any line of the premises and from which the gas is marketed, provided the lessee may, at its option, pay the lessor the royalty herein specified for wells producing gas only, in lieu of drilling such •offset gas well or wells.”
“Fourteenth. Should oil in paying quantities be found on the leased premises, then additional wells shall be drilled thereon until as many as four producing wells are •drilled and such additional wells shall be drilled within not more than 90 days interval between the completion or abandonment of one and commencement of work on another and a failure to drill such additional wells shall terminate this lease as to all land "except 5 acres in a square around each producing well, with the well in the center.”

On January 20, 1931, K. Kishi instituted this suit against Gulf Production Company, alleging that under the two leases Gulf Production Company assumed a covenant, implied by law, to use reasonable diligence to develop adequately the leased premises for oil, and that it breached this duty, thereby causing him to suffer the damages sued for. By his second amended original petition, Kishi, in addition to the original defendant, made the following parties defendant: W. D. Gordon, Geo. E. Holland, E. L. Reid, and the independent executors of the will and estate of Isaac Lang, deceased, to wit: Gilbert Lang, Sylvan Lang, and Mrs. Henrietta Lang, alleging that they claimed an interest in the leased premises. All the new defendants, except the independent executors, without objection by any one, were subsequently eliminated from the case. On January 1, 1931, the Lang executors filed their original answer, pleading a specific interest in the leased premises, and, as ground of recovery against Gulf Production Company, adopted the allegations of the plaintiff K. Kishi. Trial was had on Kishi’s fifth amended original petition and the fourth amended original answer and cross-action of the Lang executors, which, in substance, adopted the allegations of the Kishi petition.

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Bluebook (online)
105 S.W.2d 733, 1934 Tex. App. LEXIS 1527, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gulf-production-co-v-kishi-texapp-1934.