In re Trice Production Co.

251 F. Supp. 675, 1965 U.S. Dist. LEXIS 7433
CourtDistrict Court, E.D. Texas
DecidedJanuary 4, 1965
DocketNo. 3901
StatusPublished
Cited by1 cases

This text of 251 F. Supp. 675 (In re Trice Production Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Trice Production Co., 251 F. Supp. 675, 1965 U.S. Dist. LEXIS 7433 (E.D. Tex. 1965).

Opinion

SHEEHY, Chief Judge.

This is a corporate reorganization proceeding under Chapter X of the Bankruptcy Act, which was commenced in this Court on October 15, 1962. The Debtor is Trice Production Company which will hereinafter be referred to as Trice. Joe D. Huffstutler is the duly appointed, qualified and acting trustee in this proceeding and will be referred to hereinafter as the Trustee.

Among the assets of the Debtor at the time of the commencement of this proceeding was an oil, gas and mineral lease and a joint operating agreement, hereinafter referred to as “lease,” dated August 1, 1961, between Martin 0. Miiler, hereinafter referred to as Dr. Miller, as lessor, and Trice, as lessee, covering certain lands in Cameron Parish, Louisiana. Said lease is duly recorded in Book 171 in the office of the Clerk of the 14th Judicial Court of Cameron Parish, Louisiana, bearing file No. 92937, to which record reference is made for a full description of the lands covered by said lease. Paragraph 7 of said lease provides as follows:

“Lessee shall have a reasonable time to locate and utilize a market for gas and so long as reasonable diligence is exercised in this direction, any gas well shall be considered as producing hereunder. This right, however, shall not exceed three (3) years from the date of completion of the well.”

In Paragraph 16 of the Order Approving the Debtor’s Petition entered in this proceeding on October 15, 1962, it is provided in part as follows:

“and all creditors and stockholders, and all sheriffs, marshals and other officers, and their respective attorneys, servants, agents and employees, and all other persons, firms and corporations be, and they hereby are, jointly and severally, enjoined and stayed from commencing or continuing any action at law or suit or proceeding in equity against said debtor or said trustee in any court, or from executing or issuing or causing the execution or issuance out of any court of any writ, process, summons, attachment, subpoena, replevin, execution or other process for the purpose of 'impounding or taking possession of or interfering with or enforcing a lien upon any property owned by or in the possession of the said debtor or said trustee, and from [676]*676doing any act or thing whatsoever to interfere with the possession or management by said debtor or said trustee of the property and assets of the within estate, or in any way interfere with said trustee in the discharge of his duties herein, or to interfere in any manner during the pendency of this proceeding with exclusive jurisdiction of this court over said debtor and said trustee and their respective properties; and all persons, firms or corporations owning any lands or buildings occupied by said debtor or said trustee or wherein is contained any property of the within estate be, and they hereby are jointly and severally, stayed pending the further order of this court, from removing or interfering with any such property.” (Emphasis supplied)

In 1961 Trice caused a well to be drilled on a portion of the lands covered by the lease, above referred to, in an attempt to find oil and/or gas in paying quantities. Two zones of gas production in commercial quantities were found. Although said well was completed as a dual producer, with production from each of the productive zones, only one bore hole was drilled. In the record the well is sometimes referred to as Miller Well No. 1 and Miller Well No. 1-D. However, for convenience said well will be referred to hereinafter as the Miller Well No. 1.

Subsequent to the completion of the Miller Well No. 1 Trice, as well as Dr. Miller, had much difficulty in obtaining a buyer for the gas the Miller Well No. 1 was capable of producing. Finally, in the summer of 1963 the United Gas Company agreed to purchase gas from the Miller Well No. 1 and submitted a contract for the approval of the interested parties including Dr. Miller and Trice. In November 1963 Dr. Miller executed said contract and forwarded same to Trice after consulting not only his geologist but his attorneys. Trice’s attorney, upon examining the contract, determined that the terms of same might affect the price of other gas being produced in the area in which Trice and Dr. Miller had an interest and called such fact to Dr. Miller’s attention. Dr. Miller then insisted that the contract be restricted to the Miller Well No. 1. Thereafter Trice had further lengthy negotiations with United Gas Company in an effort to obtain such a restriction in the contract. In July 1964 United Gas Company finally agreed to a contract with such a restriction in it and submitted a contract so restricted for signature of Trice and Dr. Miller. Dr. Miller refused to sign such contract giving first as his reason for such refusal the fact that Republic Supply Company held a mechanic’s lien on the Miller Well No. 1 which had not been satisfied and released. After the Republic Supply Company lien, which lien was in full force and effect at the time Dr. Miller signed the gas purchase contract in November 1963, as aforesaid, had been fully satisfied and discharged, Dr. Miller on or about November 30, 1964, for the first time advised a representative of the Trustee that he would not sign the last gas purchase contract submitted by United Gas Company because it was his contention that the lease, above referred to, had expired because Trice had not located and utilized a market for the gas from the Miller Well No. 1 within three years from the date of the completion of said well as required by the provisions of Paragraph 7 of the lease above quoted. In. that connection Dr. Miller contended that the well was completed within the meaning of Paragraph 7 of said lease on October 27, 1961.

On December 5, 1964, the Trustee filed herein an Application for a show cause order requiring Dr. Miller to appear and show cause why:

(1) He should not execute the contract with United Gas Pipe Line Company and permit the debtor estate to enjoy the sale of gas therefrom;
(2) He should not be enjoined from asserting that the said lease has terminated for failure to locate and utilize a market for gas; and
[677]*677(3) He should not grant access to the Trustee and Trice Production Company and such ingress and egress on and across his land for purposes of laying a pipeline for use in marketing the gas from said well.

On that date the show cause order as prayed for by the Trustee was entered directing Dr. Miller to appear in this Court at two o’clock p. m., on December 9, 1964. Said order further directed the Trustee to serve a copy of said order on Dr. Miller at his office address in New Orleans, Louisiana, by registered mail with return receipt requested. A copy of such order was duly received by Dr. Miller by registered letter from the Trustee in Dr. Miller’s office in New Orleans, Louisiana, on December 7, 1964.

On December 9, 1964, Dr. Miller, through his attorneys, entered a special appearance in this matter- objecting to the jurisdiction of this Court to proceed in this matter on the following grounds:

(1) The shortness of time between the time Dr. Miller received the notice of the Show Cause Order and the time set for the hearing thereon resulted in a deprivation of Dr. Miller’s right to due process of law as guaranteed by the Fourteenth Amendment to the Constitution of the United States; and

(2) This Court lacks summary jurisdiction over Dr. Miller and the lease in question and over this proceeding.

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Bluebook (online)
251 F. Supp. 675, 1965 U.S. Dist. LEXIS 7433, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-trice-production-co-txed-1965.