Humble Oil & Refining Co. v. Potter

143 S.W.2d 135, 1940 Tex. App. LEXIS 667
CourtCourt of Appeals of Texas
DecidedJune 26, 1940
DocketNo. 9006
StatusPublished
Cited by17 cases

This text of 143 S.W.2d 135 (Humble Oil & Refining Co. v. Potter) 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
Humble Oil & Refining Co. v. Potter, 143 S.W.2d 135, 1940 Tex. App. LEXIS 667 (Tex. Ct. App. 1940).

Opinion

BAUGH, Justice.

This is a Rule 37 case. The land involved consists of 8.97 acres in Gregg County. It is L-shaped with an overall length of approximately 3,500 feet and a mean width of approximately 100 feet. The Humble Oil Company owns the lease on the lands adjoining its entire length on the west; and the Sun Oil Company a lease on the adjoining lands to the east. The Smith heirs owned title to this strip by limitation prior to the discovei'y of oil in this field. After such discovery, these heirs in July, 1934, by consent decree, or agreed judgment, in the District Court of Gregg County, partitioned said strip into nine tracts, vesting title to the separate tracts in these heirs severally. Meantime the Sun brought suit against them claiming that this land was included in its prior lease on the lands to the east. This suit was not finally disposed of until December, 1937. Thereafter two wells were drilled, under permits duly granted, on the 8.97 acres; one in September, 1938, on tract No. 8 of the subdivision thereof, and one in November, 1938, on tract No. 6. Thereafter the separate owners of Tracts Nos. 1, 3, 4, 5, 7 and 9 each filed separate applications for one well on each of said subdivisions on the ground that each subdivision was entitled to a separate development,. and to prevent confiscation. These applications were all heard together, were protested by the Humble and the Sun; and all six of said applications granted by the Railroad Commission on May 5, 1939. Confiscation was the • only ground considered by the Commission, and the Commission manifestly, in view of the drilling density and location of wells on adjacent tracts, based its permit orders on the conclusion that their rule against subdivisions, promulgated on May 29, 1934, did not apply; and that each of the owners of the separate tracts was entitled as a matter of right to develop his own tract separately.

The Sun and the Humble brought .statutory suits to set aside all of said six permits and to enjoin production from any wells drilled thereunder. Trial was to the court without a jury and after hearing the trial court sustained the permits for wells on tracts 3 and 9; and cancelled the other four. Only the Sun and the Humble have appealed.

We shall not undertake to discuss all of the contentions made by appellants; but have concluded that the trial court’s judgment must be reversed for the reasons hereinafter stated.

It is not controverted that the Smith heirs owned fee simple title to this 8.97-acre tract as far back as 1926. It was not subdivided from the adjacent larger tracts for oil development purposes. No question is raised but that they were entitled to development of the 8.97-acre strip as a whole, separate and apart from the adjacent leaseholds. But it is manifest that the subdivision of this tract in July, 1934, into nine tracts long after the discovery of oil in this immediate area, and after Rule 37 had become applicable thereto, no one of which tracts could be drilled without an exception to the Rule, gave the separate owners of such separate subdivisions no vested right to an exception to the Rule for development purposes. This under the holdings originally made by us in Sun Oil Company v. R. R. Comm., Tex.Civ.App., 68 S.W.2d 609, repeatedly adhered to, approved by the Supreme Court, and promulgated as a rule by the Commission itself, on May 29, 1934.

The partition of the tract by decree of the District Court, agreed to by the parties, was but a voluntary subdivision and gave, rise to no new rights thereunder. Humble O. & R. Co. v. Lasseter, Tex.Civ.App., 120 S.W.2d 541. The permits here involved clearly, therefore, cannot be sustained on the grounds upon which the Commission granted them.

The only issue considered by the Commission was that of confiscation. A review here, therefore, is confined to that question. Gulf Land Co. v. Atlantic Ref. Co., 134 Tex. 59, 131 S.W.2d 73. Since the subdivisions, as above indicated, cannot be considered separately; the question of whether confiscation would result without other wells than the two already drilled thereon, must depend upon a consideration of the 8.97-acre tract as a unit, that is, as it existed before the subdivisions were made; and its relationship as a unit to the surrounding tracts.

It affirmatively appears that the Railroad Commission did not so consider it; and did not grant any of the six permits here attacked on that-basis. In brief, this question — that is, what additional wells, if any, the 8.97 acres treated as one tract would have been entitled to — has not been presented to nor determined by the Commission. The trial court, as is mani[137]*137fest, took the view that in the light of the facts proven, the 8.97 acres treated as one tract was entitled to two additional wells to protect it against confiscation, and so sustained two of said permits and struck down the other four. And appellees here urge that the evidence was sufficient to sustain an order granting two additional wells on the entire tract. This contention, however, overlooks the fact that the Railroad Commission has never determined, nor been asked to determine, how many wells, if the 8.97 acres be treated as one tract, are necessary to prevent confiscation on such tract-; and if any are so needed, where they should be located' thereon. These matters are delegated to the Commission for determination; and it is now settled that the courts are without authority to substitute their findings in such matters for those of the Commission, which, in the instant case, have not yet been made. Gulf Land Co. v. Atlantic Refining Co., supra; Shell Pet. Corp. v. Railroad Comm., Tex.Civ.App., 133 S.W.2d 194, writ refused.

Appellants contend, however, that with the two wells already drilled on the 8.97-acre tract, it had a greater density than the surrounding eight times area; that these two wells were draining to the tract, the underground sand strata conditions being substantially uniform, as much or more oil than was being drained from it by appellants' wells; and that under the proration schedules the tract would produce more barrels per acre per day than was being produced from existing wells on appellants’ lands. That consequently, as a matter of law and under the facts, all of said permits should have been held invalid by the trial court.

This contention of appellants is not sustained. No useful purpose would be served by citation of authorities and review of the rules applicable in determining the relative rights of adjacent leaseholders .on the issue of confiscation. The rule was recently restated by us in Ward Oil Corp. v. Overton Ref. Co., Tex.Civ.App., 139 S.W.2d 292, writ refused. The record in the instant case shows that the Sun, one of the appellants here, by suit wherein it claimed to own the leasehold on the 8.97-acre tract itself, prevented any development of this property until the latter part of 1938; that both the Sun and the Humble had, for many years prior thereto, through wells within drainage distance on each side of this strip of land, been extracting large quantities of oil from the pool.

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143 S.W.2d 135, 1940 Tex. App. LEXIS 667, Counsel Stack Legal Research, https://law.counselstack.com/opinion/humble-oil-refining-co-v-potter-texapp-1940.