Hester v. Roberts

104 So. 2d 158, 235 La. 426, 9 Oil & Gas Rep. 1011, 1958 La. LEXIS 1218
CourtSupreme Court of Louisiana
DecidedJune 27, 1958
DocketNo. 43525
StatusPublished

This text of 104 So. 2d 158 (Hester v. Roberts) 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
Hester v. Roberts, 104 So. 2d 158, 235 La. 426, 9 Oil & Gas Rep. 1011, 1958 La. LEXIS 1218 (La. 1958).

Opinion

HAWTHORNE, Justice.

Plaintiffs in this action seek to recover judgment for $14,000 against the defendant Robert F. Roberts as liquidated damages for failure of a sublessee, Waytex Oil. Corporation, to drill four wells under the-provisions of two subleases, one of which' we shall designate as the Mixon lease and' the other as the Maxwell lease. After trial on the merits there was judgment dismissing the suit, and plaintiffs have appealed.

The two subleases were acquired by Waytex Oil Corporation from plaintiffs, the effective date of the acquisitions being January 1, 1951. Each of these leases covered. 40 acres of property in LaSalle Parish,. Louisiana. According to these instruments, on the Mixon lease there were three producing wells and on the Maxwell lease two.

The Mixon lease recites:

“ ⅜ * * Grantors do reserve unto themselves and the said Grantee does grant and convey unto them as part of the consideration of this assignment of said oil, gas and mineral lease, a ¾⅛ of ⅞⅛ oil payment interest until $30,000 has been, paid to the Grantors herein, free of all costs except severance taxes, * * * then a permanent %4ths of J-lth of %hs overriding royalty interest * * *.

“That said Grantors herein reserve the privilege of a first mortgage on the leasehold estate and equipment now situated oni said lease hereinabove described until the total sum of $30,000 has been paid out o£ the described ¼⅛ of %ths of all the oil, gas or other production from said lease, * * * and that this mortgage shall, carry no interest but is payable from the described oil interest,”

[160]*160The consideration in the Maxwell lease was likewise an oil payment interest until the sum of $12,000 had been paid to the grantors and thereafter a permanent overriding royalty interest; and the grantors in this lease likewise reserved the privilege of a first mortgage on the leasehold estate and the equipment situated on the leased premises until the total sum stipulated as oil payments had been paid.

Immediately after stating the consideration for the sublease as quoted above, the Mixon lease provides:

“That said Grantee [Waytex Oil Corporation], and Robert F. Roberts, individually, shall execute this instrument, evidencing personal responsibility on this indebtedness.”

The Maxwell lease provides:

“Said Grantee [Waytex Oil Corporation] and Robert F. Roberts, individually, shall execute this instrument evidencing responsibility of the indebtedness of the lease herein created.”

Immediately following the above quoted provision the Mixon lease provides in paragraph 3:

“That should Grantee elect to abandon this lease in its entirety, then and in that event said Grantee shall have the right to pay a cash sum being the difference in the amount owing on this indebtedness, and obtain the full right and privilege to all equipment situated on said lease, or may elect to allow the Grantors to resume possession of the lease and apply the salvage value of the equipment on said lease towards the existing indebtedness and pay the cash difference. * * * ”

A similar provision is found in the Maxwell lease.

Thereafter each sublease stipulates that the grantee agrees to commence the drilling of two wells on or before January 1, 1953, and that upon the failure of Waytex to commence this drilling or tests on or .before January 1, 1953, Waytex shall pay to grantors liquidated damages in the sum of $7,000. It is conceded that Waytex never drilled the wells, and plaintiffs here seek to recover from defendant Roberts the $14,000 as liquidated damages.

Sometime before August 22, 1952, the sublessee Waytex Oil Corporation was placed in bankruptcy, and on that date plaintiffs filed a proof of claim in the bankruptcy proceeding, contending that the subleases here involved were null and void in toto for failure of consideration and because the subleases had not been operated in a workmanlike manner pursuant to their provisions. This proof of claim then contended that in the event the subleases were found to be valid, the bankruptcy court should recognize claimants' vendor’s lien and mortgage on each of the described leases as secured claims for the original indebtedness less credits for payments made. As to the Mixon lease these plaintiffs contended in the proof of claim filed by them that the indebtedness evidenced by the sublease, mortgage, and vendor’s lien was $30,000 (the amount of the oil payments) less certain credits, or a balance in excess of $25,000; that to this balance must be added the obligation to drill two wells, and should the trustee elect not to drill these wells, there must be added liquidated damages in the amount of $7,000, making the total indebtedness in excess of $32,000. The proof of claim with reference to the Maxwell lease was identical except the amount claimed to be due thereunder was $12,000 (the amount of the oil payments) less certain credits, or a balance in excess of $11,000, and they claimed that to this sum there must be added $7,000 as liquidated damages, making the total indebtedness a sum in excess of $18,000.

After certain proceedings in the bankruptcy court the referee in bankruptcy ordered that the leases in question, together with certain property situated on the leased premises, be adjudicated to plaintiffs in recognition of their vendor’s liens, privi[161]*161leges, and mortgages, and that this adjudication was “to operate as satisfaction of adjudicatees’ secured claims against the bankrupt’s estate’’. Pursuant to this order the trustee in bankruptcy by instrument dated November 10, 1952, effective November 1, 1952, transferred to the plaintiffs (together with other properties) all right, title and interest of the bankrupt estate, Waytex, in the Mixon lease and the Maxwell lease and the derrick, drilling equipment, and other property situated on the leased premises. This instrument recites: “ * * * this adjudication and sale is made in full satisfaction of the mortgages and secured claims referred to above and filed in these proceedings.”

After plaintiffs became vested with all of the title previously vested in the bankrupt to the leases here in question together with the drilling equipment used in the operation of the leases, they subleased both the Mixon lease and the Maxwell lease, together with other property, to one Bert R. Arbogast. According to this instrument Arbogast paid the plaintiffs $7,000 in cash, agreed to make oil payments for a large sum, and also obligated himself to drill four wells on the premises subleased. Although this instrument was not executed until after January 1, 1953, the last date on which Waytex was to commence the drilling of the wells in question, according to its provisions it was to be effective November 1, 1952, the same date on which the transfer from the trustee to these plaintiffs became effective.

Plaintiffs take the position that the defendant in his answer has admitted that he guaranteed the performance of the drilling obligations or the payment of the liquidated damages. We do not so view his answer. It is true that he admits the execution of the instrument and its terms and provisions, but he specifically denies plaintiffs’ legal conclusions. Plaintiffs alleged in Paragraph 12 of their petition:

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Bluebook (online)
104 So. 2d 158, 235 La. 426, 9 Oil & Gas Rep. 1011, 1958 La. LEXIS 1218, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hester-v-roberts-la-1958.