Musick v. Railroad Com'n of Texas

747 S.W.2d 892, 104 Oil & Gas Rep. 148, 1988 Tex. App. LEXIS 823, 1988 WL 31999
CourtCourt of Appeals of Texas
DecidedFebruary 24, 1988
DocketNo. 3-87-132-CV
StatusPublished
Cited by4 cases

This text of 747 S.W.2d 892 (Musick v. Railroad Com'n of Texas) 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
Musick v. Railroad Com'n of Texas, 747 S.W.2d 892, 104 Oil & Gas Rep. 148, 1988 Tex. App. LEXIS 823, 1988 WL 31999 (Tex. Ct. App. 1988).

Opinion

POWERS, Justice.

The Texas Railroad Commission denied Mary Ann Campbell Musick’s application for a permit to drill and complete a well in the Panhandle West Field, a natural-gas field in Moore County. She sued in district court for judicial review of the Commission’s decision, joined by W.V. Harlow, Jr. and Strick Watkins who were entitled to a royalty in production from the proposed well. The district court declined to reverse the Commission’s decision, a judgment we will affirm.1

THE CONTROVERSY

Harlow and Watkins discovered in 1980 a vacancy tract comprising 8.064 acres. The tract is some 9,000 feet in length but ranges in width from 31.58 feet to 45.80 feet. Weymouth Corporation, the surface owner who had in good faith enclosed the 8.064 acres, exercised its statutory right to purchase the small tract from the State and received a patent. Tex.Nat.Res.Code Ann. §§ 51.171-.173 (1978). Weymouth Corporation subsequently leased the land to Musick for development of the minerals.

Musick applied to the Commission for a permit to drill the first well on the small tract, intending to complete it in the Panhandle West Field — a natural-gas field discovered in 1933 from which production is enjoyed through several wells surrounding the small tract. Harlow and Watkins joined in the Commission proceedings in support of Musick’s application. Colorado Interstate Gas Company and Anadarko Production Company appeared in the agency proceedings in opposition to Musick’s application.

The Commission’s spacing rules prescribe 330 feet as the minimum distance between a well and the nearest property or lease line, allowing an exception when necessary to prevent waste or confiscation of property. Owing to the narrowness of Mu-sick’s tract, her application could be granted only on an exceptional basis because the distance from the proposed well to the north-south boundaries of her small tract is [894]*894only about 20 feet in either direction. She therefore proceeded in the Commission on a contention that she was entitled to an exception to prevent confiscation of her vested rights under the lease from Wey-mouth Corporation.

After notice and hearing, the Commission determined in its final order that Mu-sick was not entitled to the exception because she had not shown that it was necessary to prevent confiscation of any rights she had acquired in the lease from Wey-mouth Corporation. The agency reasoned that each of Musick’s predecessors in title and interest, first the State and then Wey-mouth Corporation, had in fact enjoyed during their respective periods of ownership a fair and reasonable chance to recover the natural gas in place under the small tract, it being undisputed in the case that each owned an interest in production from nearby wells that had drained from under the small tract all but 11,000 mcf of the natural gas previously in place there.2 Consequently, Musick’s claim of confiscation was precluded by the rule of law that one cannot acquire from his grantor a right to a well permit when the grantor himself had none. Railroad Commission v. Williams, 163 Tex. 370, 356 S.W.2d 131, 137 (1961). The Commission therefore denied Musick’s application for a well permit.

Musick, Harlow, and Watkins sued in district court for judicial review of the Commission’s final order. The Commission appeared in defense of its order as did Colorado Interstate Gas Company and Ana-darko Production Company, intervenors, who own interests in wells producing from the Panhandle West Field under nearby tracts. The district court refused to reverse the Commission’s final order and this appeal ensued.

DISCUSSION AND HOLDINGS

Musick contends the Williams decision was not applicable to the present controversy, or was misapplied by the Commission, for several reasons that we shall now consider.

Musick contends the Williams decision is not applicable to the case because the State’s conveyance to Weymouth Corporation was involuntary in the sense that the State was compelled to sell and convey the small tract to Weymouth Corporation once it had complied with the statutory provisions giving it the right to purchase the small tract.3 See Tex.Nat.Res.Code, supra, § 51.171 et seq. This theory is highly doubtful. Nothing “compelled” the [895]*895Legislature to enact the statute giving those in the position of Weymouth Corporation a preferential right to purchase the property; the Williams “corollary” to the “voluntary subdivision rule” would be entirely redundant under such a theory: and, nothing in Musick's contention alters the fact that Musick derives her “vested rights” immediately from Weymouth Corporation and not the State. We shall, [896]*896nevertheless, address the reasoning necessary to Musick’s theory.

Musick assertedly derives her contention from the following passage in Williams:

Murel, [the] grantee of the undivided one-half mineral interest, could have no better rights to a well permit [than his grantors]. To hold otherwise would mean that a grantor of a mineral interest could create valuable oil development rights in his grantee which he himself did not have. This rule is a necessary corollary to the voluntary subdivision rule. That rule prohibits the creation of a right to a well permit on each small tract subdivided from a large one when the owner of the larger tract did not have such a right....

356 S.W.2d at 137 (emphasis added). Mu-sick apparently argues from the unstated premise that the “corollary” can only apply when the “voluntary subdivision rule” also applies; and, that rule does not apply here because the Commission determined specifically that her small tract “was not a voluntary subdivision.”

Nothing in Williams suggests Musick’s premise and she offers no authority for it. Her premise is contradicted by Williams itself where the court, “without deciding” the issue, constructed an analysis that assumed the “voluntary subdivision rule” did not apply to the case because the 3.3-acre tract had been created as a separate tract, for oil and gas development purposes, before a 1958 judicial decree effectuated a voluntary subdivision under the applicant’s theory. In fact, the Court assumed the applicant’s grantors could have applied for a well permit as an exception grounded on confiscation (implying again the inapplicability of the “voluntary subdivision rule”) but noted that the grantors could not have established confiscation because it was undisputed that they shared in production from another well that drained the 3.3-acre tract. Having thus assumed the “voluntary subdivision rule” was not applicable, the Court then held the case was controlled by the “corollary” that the applicant could not have acquired a right to a well permit when his grantors had none. 356 S.W.2d 134, 135.

Musick’s premise is also contradicted by the fundamental proposition that both the “voluntary subdivision rule” and the Williams

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747 S.W.2d 892, 104 Oil & Gas Rep. 148, 1988 Tex. App. LEXIS 823, 1988 WL 31999, Counsel Stack Legal Research, https://law.counselstack.com/opinion/musick-v-railroad-comn-of-texas-texapp-1988.