Phillips Petroleum Co. v. Rudd

226 S.W.2d 464, 1949 Tex. App. LEXIS 1899
CourtCourt of Appeals of Texas
DecidedOctober 6, 1949
DocketNo. 6457
StatusPublished
Cited by13 cases

This text of 226 S.W.2d 464 (Phillips Petroleum Co. v. Rudd) 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
Phillips Petroleum Co. v. Rudd, 226 S.W.2d 464, 1949 Tex. App. LEXIS 1899 (Tex. Ct. App. 1949).

Opinions

LINCOLN, Justice.

Appellees 'brought this suit against the appellants to cancel an oil and gas lease on 200 acres of land in Harrison County. The main, contention on "this appeal is that the evidence is insufficient to support the verdict of the jury and the judgment of the court, and that the trial court erred in refusing appellants’ motions for an instructed verdict.

The lease in question was dated March 13, 1943, and was for the primary term of five years. On March 8, 1948, the parties in interest executed an amendment to the lease, amending Paragraph 2 thereof, so as to extend the primary term for one additional month from its original expiration date, “and as long thereafter as lessee is. engaged in drilling or re-working operations thereon with no cessation of more than thirty (30) consecutive days.” If operations should result in the production of oil, gas or other mineral, then the lease was to continue so long thereafter as such products were produced from the land or from land with which it was pooled.

Paragraph 5 of the original lease also-carried the following provisions : “If at the expiration of the ’ primary term oil, gas or other mineral is not being produced on said land but the lessee is then engaged in [466]*466drilling or re-working operations thereon, the lease shall remain in force so long as operations are prosecuted with no cessation of more than thirty (30) consecutive days.”

A well was drilled on the land and was completed on May 8, 1948. However, it wias not a producer of oil or gas on the first test, although there was a showing of both. Efforts were continued to bring in the well as a producer, and on May 18 an official test was made by the Railroad Commission of Texas. The finding was negative.

The appellees, owners of the fee simple title, brought this suit to cancel the lease on the ground that there had been a cessation of drilling or re-working operations for more than thirty (30) consecutive days between April 13 and October 7, 1948, the first date being the expiration date of the primary term of the lease as amended and the second date is when the suit was filed. However, if there was any cessation of drilling or re-working operations for more than thirty consecutive days, such cessation occurred between June 10 and July 20, 1948, and this is the contention on the part of appellees.

Appellees presented only three fact witnesses. It would serve no useful purpose to set out in detail the testimony of these three witnesses, in view of the disposition we are making of the case. At the conclusion of all the evidence the court submitted only one issue, which, with its explanatory statement, is as follows:

“Do you find from a preponderance of the evidence that the defendants failed to engage in drilling or re-working operations on the land and premises in question with no cessation for more than thirty (30) consecutive days for any period of time from April 13, 1948, to October 7, 1948?

“You are instructed that after the Rudd-Hall well was completed and failed to produce on its original test, any and all efforts, acts, work or operations thereafter done in or on said well in a good faith effort to cause said well to produce oil or gas in paying qualtities are to be considered by you as re-working operations as that term is used in Special Issue No. 1.”

To this issue the jury returned an affirmative answer. The Supreme Court in the well-considered case of W. T. Waggoner Estate v. Sigler Oil Co., 117 Tex. 509, 19 S.W.2d 27, held that implied obligations in an oil and gas lease are neither limitations nor conditions subsequent, and their breach merely gives rises to an action for damages, and does not ordinarily terminate the lease. We are not to be understood as taking the position that the lease cannot be terminated by cessation of operations for thirty (30) consecutive days as provided for in the lease, as it is not necessary for us to pass upon that matter. However, to accomplish this result, the cessation must be complete. The written lease lays down no rule to determine what constitute cessation. The language of the clauses under consideration does not make the duration of the grant depend upon the degree of diligence to be exercised in the operations, nor the character or effectiveness of such operations, the number of employees to be used, hours or days of work, nor even is it specified that good faith must underlie such efforts. There is no provision for reversion or defeasance. The language chosen by the parties is, there must be no cessation of drilling or re-working operations of more than'thirty consecutive days. When it was shown that at the expiration of the primary term, April 13, 1948, a well was then being drilled for oil or gas, the burden was on appellees to prove there was a cessation of operations in such efforts for more than thirty consecutive days. Such requirement of proof is not met by showing operations for part of the time, or that the operations done were not of the character calculated to bring in a well. Whatever facts were shown by appellees in these regards went to negative rather than to sustain their cause of action. Since the parties did not choose to use language or insert provisions in their contract which would furnish a rule for themselves and for the court, we have no other alternative than to construe the quoted provision as above. It [467]*467is not ambiguous. When it says there must be no cessation of operations, it means simply that there must be no work of any kind done on the well to authorize cancellation, if we concede that cancellation could thereby result.

The testimony of appellees’ three main witnesses shows that after May 18, 1948, the big drilling rig was moved off and a smaller work-over rig was moved in; that a “draw-works” was brought in, that the tubing was pulled, that a packer was set, that the well was swabbed more than once ; and that it was acidized. Othér testimony of appellees’ witnesses could be' produced, but the foregoing is sufficient to show that re-working operations were in fact carried on. If such efforts were made between June 10 and July 20, the only period in which cessation is claimed, then appellees failed in their proof. The facts on that point are brief.

W. E. Hall, one of appellees’ witnesses, testified he visited the well each week after May 18. . He stated the small rig was moved in, but had no idea of when that was done. He saw swabbing truck at the well between June 10 and July 20, and saw several people there. His testimony shows the well was acidized.

Barry Rudd, not a party, but a son of appellee W. X. Rudd, says he was in the vicinity of the well frequently. He says the drilling rig was moved and a smaller rig was brought in, but he didn’t remember the date, some time in May.

O. A. Stephens, a witness for appellees, lives in Louisiana. He was engaged on two other oil wells in the vicinity of the Rudd-Hall well. His house was about 440 yards from the road that leads to the Rudd-Hall well. He lived in that house from February to August 31. While working at the Boynton well he was requested by an official of one of the appellants to go up to the Rudd-Hall well and open the valve to see if it would flow. His testimony is that he went to this well every day for about three weéks and opened the valve. According to his testimony the work-over rig was moved in about fifteen or twenty days after the big rig was moved off. The big rig was moved off some time after May 18.

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Cite This Page — Counsel Stack

Bluebook (online)
226 S.W.2d 464, 1949 Tex. App. LEXIS 1899, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-petroleum-co-v-rudd-texapp-1949.