Kidd v. Hickey

237 S.W.2d 389, 1950 Tex. App. LEXIS 1813
Court of Appeals of Texas·Decided October 11, 1950·No. 4744·Published·Cited by 6 cases

Opinions

McGILL, Justice;

This is an appeal from a judgment of the' District Court of Reeves County, 109th Judicial District.

The controversy involves the construction of an oil and gas lease under the Relinquishment Act, Vernon’s Ann.Civ.St, ■art. 5367 et seq., on a square section of land containing 640 acres in Reeves County.

Appellants by , an action in the statutory form of trespass to try title sought to re-, cover from appellees title to an .oil and gas leasehold estate in the SW4 of Section 10, Block 56, Township 2, T. & P. Ry. Co. Survey in Reeves County. Section 10, containing 640 acres classified as mineral land, was originally leased for oil and gas by Jack C. Tunstill, the surface owner, individually and as agent for the State of, Texas, to Texzona Production, Company, on November 7,. 1946. An assignment, of this .lease on the SW4 of Section 10 was, acquired by appellants on April 1, 1948. Appellees’ claim to title is grounded on a lease of the SW4 of Section 10 from the surface owners individually and as agents for the State, dated December 8, 1948. [390] The basic question for decision is whether the leasehold estate in the SW4 created by the original lease of Section 10 dated November 7, 1946, had terminated when appellees acquired their lease by reason of the lessees’ failure to drill or to pay delay rentals on the SW4. The facts are mostly covered by stipulation of the parties, and are undisputed. A photostatic copy of the original lease of November 7, 1946, appears in the Statement of Facts. We here reproduce the pertinent portions thereof. This lease is on form No. 5367, General Land Office lease form under Relinquishment Act. The portions herein italicized are inserted by typewriter:

“Oil and Gas Lease.
“This Agreement, made and entered into this 7th. day of November 1946, by and between Jack C. Tuwstill, a single man, individually and as agent for the State of T exas.
of Fort Worth, Texas. (Give permanent address) individually and as agent for the State of Texas, party of the first part, herein referred to as Lessor (whether one or more) and Texzona Production Company, 703 Ins. Bldg, of Fort Worth, Texas (Give permanent address) party of the second part, hereinafter called Lessee.
“Witnesseth: That the Lessor in the capacities aforesaid, for .and in consideration of $320.00 Dollars, cash in hand paid, as his individual property and estate, receipt of which is hereby acknowledged, (SEE NOTE BELOW) and a like amount paid to the State of Texas, and of the covenants and agreements hereinafter contained on the part of the Lessee to be paid, kept and performed do this day granted, demised, leased and let, and by these presents do grant, demise, lease and let unto the said Lessee, for the sole and only purpose of prospecting and drilling for and producing oil and gas, laying pipe lines, building tanks, storing oil and building power stations, telephone lines and other structures thereon, to produce, savé, take care, treat and transport said products of the lease the following land situated in ‘Reeves County, State of Texas, to-wit:
"All of Section 10, Block 56, Township 2, T. & P. Ry. Company Survey. And as a further consideration the lessee herein agrees to commence the actual drilling of a test well on the above described tract of land on or before 90 days from the date of this instrument, to a depth of 4000 feet, or unless oil and gas, or either of them is found in paying quantities at a lesser depth; It is further agreed that one well producing in paying quantities (oil or gas) will eliminate the delay rental requirement prescribed herein covering the 160 acres on which said well is located, ‘except the ten cents per acre minimum rental provided in Paragraph 8 hereof.’ containing 640 acres, more or less.
“Subject to the other provisions herein contained, this lease shall remain in force for a term of 5 years from this date, (herein called primary term) and as long thereafter as oil and gas, or either of them, is produced in paying quantities from the land hereby leased.
“In consideration of the premises the said Lessee covenants and agrees:
“1. To pay to the Commissioner of the General Land Office of the State of Texas, at Austin, Texas, free of cost in the pipe line with which the well or wells may be connected, 1/16 of the value of all oil and gas produced and saved from said leased premises as required by Article 5368 of the General Laws of the State of Texas, 1925, Revised.
“2. To deliver to the credit of the Lessor as the owner of the soil, free of cost, in the tanks or pipe lines to which wells may be connected an additional equal 1/16 part of all oil and gas produced and saved from said leased premises or at the option of Lessor 1/16 of the value of all oil and gas produced and saved from said leased premises.
“3. If no well be commenced on said land, hereby leased, on or before the 7th. day of November 1947, this lease shall terminate as to both parties, unless the Lessee on or before that date shall pay or tender to the Lessor as the owner of the soil or to his credit in the Continental Nat’l [391] .Bank, at Fort Worth, Texas, on that portion not held by production, or its successors, which shall continue as the depository regardless of changes in the ownership of said land, the sum of §320.00 (50c per acre) Dollars, and in addition shall pay to the Commissioner of the General Land Office of the State of Texas, at Austin, Texas, a Like Sum on or before said date, which shall operate as a rental and cover the privilege of deferring the commencement of a well for twelve (12) months from said date. In like manner and upon the payments or tenders the commencement of a well may he further deferred for like periods of the same number of months successively.
“8. However, it is understood and agreed that notwithstanding the fact that development may be in progress or production secured and royalty being paid hereunder the owner or operator of the leased premises shall continue to make annual rental payments to the State which, under such conditions and in the absence of any rentals being paid to the land owner, shall be the minimum of ten cents (10c) per acre as provided by said Article 5368.

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Kidd v. Hickey, 237 S.W.2d 389, 1950 Tex. App. LEXIS 1813 (Tex. Ct. App. 1950).

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Kidd v. Hickey
237 S.W.2d 389 (Court of Appeals of Texas, 1950)