Nelson Bunker Hunt Trust Estate v. Jarmon

345 S.W.2d 579, 14 Oil & Gas Rep. 652, 1961 Tex. App. LEXIS 2235
CourtCourt of Appeals of Texas
DecidedMarch 22, 1961
Docket13722
StatusPublished
Cited by4 cases

This text of 345 S.W.2d 579 (Nelson Bunker Hunt Trust Estate v. Jarmon) 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
Nelson Bunker Hunt Trust Estate v. Jarmon, 345 S.W.2d 579, 14 Oil & Gas Rep. 652, 1961 Tex. App. LEXIS 2235 (Tex. Ct. App. 1961).

Opinion

BARROW, Justice.

This suit was brought by appellees against appellants for a declaratory judgment as to the validity of a certain oil and gas lease executed on September 15, 1956, by A. A. Moczygemba and wife, Sallie Moczy-gemba, two of appellants herein, as lessors, to Jake Jarmon, Sr., one of appellees herein, as lessee. Between October of 1956 and January of 1958, various undivided interests in and to such oil and gas lease were assigned by Jake Jarmon, Sr., to Charles R. Porter, Jr., Walter R. Taber, I. P. O’Neil, and the Papalote Corporation, the other appellees herein. The lease in question will be referred to as the Jarmon lease.

*580 On July 17, 1959, Nelson Bunker Hunt Trust Estate, the other appellant herein, acting through its agent, Moliere Scarborough, Jr., obtained an oil, gas and mineral lease on the same premises from A. A. Moczygemba and wife, Sallie Moczygemba.

After the taking of depositions, appellants and appellees filed their respective motions for summary judgment. Said motions were heard together, and on May 28, 1960, the trial court entered its judgment: (a) denying the motion for summary judgment filed by appellants; (b) granting the motion for summary judgment filed by ap-pellees; (c) declaring the Jarmon lease a valid and subsisting lease in accordance with its terms and provisions; and (d) extending the primary term of the Jarmon lease for a period of time equal to the time which had elapsed from July 17, 1959 (date of Nelson Bunker Hunt Trust Estate lease) to May 28, 1960 (date of judgment).

Appellants, and each of them, have perfected their appeal from all of said judgment.

The Moczygembas will be referred to herein as lessors, and Jake Jarmon, Sr., as lessee. The lease in question contained the usual “unless” clause reading as follows:

“5. If operations for drilling are not commenced on said land on or before one year from this date the lease shall terminate as to both parties unless on or before such anniversary date Lessee shall pay or tender to Lessor or to the credit of Lessor in the Karnes County National Bank at Karnes City, Texas * * * the sum of One Hundred and no/100 Dollars ($100.00), (herein called rental), which shall cover the privilege of deferring the commencement of drilling operations for a period of twelve (12) months. In like manner and upon like payments or tenders annually the commencement of drilling operations may be further deferred for successive periods of twelve (12) months each during the primary term. The payment or tender of rental may be made by the check or draft of Lessee mailed or delivered to ' said bank on or before such date of payment * *

There is no contention that any drilling operations have ever been commenced on said land, and there is no contention that the first annual delay rental due on or before September 15, 1957, was not paid. Therefore, the lease was extended to September 15, 1958. The controversy herein arises in connection with the delay rental payable on or before September 15, 1958, for a period of twelve months, from that date to September 15, 1959.

With respect to this second annual rental payment, it is undisputed that Jarmon’s assignees, the other appellees herein, sent their pro rata portion of the 1958 delay rentals to Jarmon, and entrusted him to act for them and make the payment, and that none of them, nor did Jarmon make the payment direct to lessors, but on or about August 18, 1958, Jarmon mailed his check for $100 to the Karnes County National Bank. The check bore the following notation: “Delay rentals A. A. Moczy-gemba 100 a. O. & G. lse. due 9-15-58 Karnes County.” The check was drawn on the First-Nichols National Bank of Kenedy, Texas. Upon receipt of the check, the Karnes County National Bank made out a deposit slip to the account of lessors and sent a copy thereof to them. A copy was also sent to lessee Jarmon. The check, in the usual course of banking business, on August 19, 1958, was transmitted to the drawee bank. On August 21, 1958, the check was returned to the depository bank because of insufficient funds. On August 22, 1958, the check was re-submitted by the depository bank to the drawee bank, and on August 25, 1958, was again returned because of insufficient funds. On August 26, 1958, the check was again forwarded to the drawee bank for collection, but was again returned unpaid for insufficient funds. On August 30, 1958, the check was charged back to lessors and the unpaid check, without further endorse *581 ment, together with, advice of the charge, was mailed to lessors. The check was never paid. There was no communication or correspondence between any of the parties from August 18, 1958, to and including September 15, 1958, other than as above stated. The record shows that from August 14, 1958, to September 4, 1958, lessee did not have sufficient funds in his account with drawee bank to cover said $100 check; that lessee had no agreement with said bank to cover overdrafts, and that lessee knew when he tendered the check to the depository bank that unless prior arrangements were made to cover the overdraft the check would not be paid. On September 4, 1958, lessee borrowed $500 from drawee bank and deposited it in his checking account for the purpose of covering overdrafts, but from that time until September 15, 1958, he made no inquiries of either of said banks or the lessors as to the status of said check. Lessee keeps no running account of checks drawn or of his bank balance. He received his regular monthly bank statement during the first two weeks in September, 1958, but did not open the same until in January, 1959, when he learned for the first time that the check in question had not been paid. The lessors simply kept the unpaid check which was mailed to them by the depository bank and did not notify the lessee of its nonpayment. On July 17, 1959, the lessors leased the land in question to appellant Nelson Bunker Hunt Trust Estate.

Appellants contend that by reason of the failure of the lessee to pay to lessors the $100 annual delay rental, either by payment to them or by depositing the same to their credit in the depository bank on or before September 15, 1958, the lease terminated on that date. On the other hand, appellees contend that the mailing of the check in question to the depository bank, even though the check was worthless and has not been paid, amounts to payment of the delay rental and discharged lessee’s obligation under the contract, and on account of the facts lessors are estopped to declare a forfeiture of appellees’ lease. We agree with appellants.

The parties do not question that the lease created a determinable fee estate and, no drilling operations having been commenced, that unless the delay rental was paid on or before the anniversary date the lease terminated. See, Humble Oil & Refining Co. v. Harrison, 146 Tex. 216, 205 S.W.2d 355; Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27. But appellees seemingly take the position that the tender of the worthless check fulfilled lessee’s obligation under the lease, and that if lessors have any cause of action it is upon the check.

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345 S.W.2d 579, 14 Oil & Gas Rep. 652, 1961 Tex. App. LEXIS 2235, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-bunker-hunt-trust-estate-v-jarmon-texapp-1961.