Rogers v. Ricane Enterprises, Inc.

884 S.W.2d 763, 1994 WL 264963
CourtTexas Supreme Court
DecidedNovember 3, 1994
DocketD-3826
StatusPublished
Cited by181 cases

This text of 884 S.W.2d 763 (Rogers v. Ricane Enterprises, Inc.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rogers v. Ricane Enterprises, Inc., 884 S.W.2d 763, 1994 WL 264963 (Tex. 1994).

Opinions

ENOCH, Justice,

delivered the opinion of the Court

in which PHILLIPS, Chief Justice, and GONZALEZ, HECHT, and CORNYN, Justices, join.

This case involves a trespass to try title action among various parties asserting ownership to a partial assignment of an oil and gas lease. The trial court rendered judgment that the Petitioners take nothing and the court of appeals affirmed, concluding that the assignee had abandoned the purpose of the oil and gas lease in question. 852 S.W.2d 751. We reverse the judgment of the court of appeals.

I.

The trespass action began when Lavina Rogers and others (Rogers), claiming as shareholders of defunct Western Drilling Company (Western), sued Ricane Enterprises and others (Ricane) to recover possession of a working interest under a partial assignment of a larger oil and gas leasehold estate. In May 1937, Carrie Slaughter Dean, lessor, entered into an oil and gas lease with lessee P.N. Wiggins. The lease covered approximately 7,893 acres (base lease). The lease contained a habendum clause providing that Wiggins was “TO HAVE AND TO HOLD [the 7,893 acres] ... for a term of ten (10) years from [May 31, 1937,] ... the primary term, and as long as oil and gas ... is produced....” The lease also provided that if the leased premises “shall hereafter be owned in the severalty or in separate tracts, the premises, nevertheless shall be developed ... as one lease_” The lessee achieved production within the primary term and subsequently assigned the base lease to Superior Oil Company (“Superior”).

[765]*765In June of 1949, Superior assigned 329.3 acres of the base lease, on which there was no production, to Western. The assignment noted that the conveyance would terminate and revert to Superior unless Western commenced actual drilling within thirty days. Western also agreed to assume all express and implied base lease obligations. Western immediately drilled and completed a well. The well was marginally productive and ceased production in July of 1961. Western and its shareholders did not drill any wells on the tract from 1961 to the present.

In August of 1960, before the well ceased production, Western’s president, E.P. Campbell, signing in his personal capacity, conveyed all his rights to the 329.3 acres to the Dakota Company, Inc. In return, Dakota gave Campbell a promissory note and deed of trust which Campbell transferred to Union Bancredit Corporation. Union Bancredit purported to foreclose on the 329.3 acres when Dakota defaulted on the note. Union Bancredit subsequently assigned the 329.3 acres to Harry Allred, a majority shareholder of the Torreyana Oil Corporation. Torre-yana successfully completed a new producing well on the property in October 1979 and is a part of the Ricane group.1

Campbell died in 1961, and in 1966 the State of Texas forfeited Western’s corporate charter due to nonpayment of franchise taxes. In 1984, Rogers brought a trespass to try title action against Ricane, seeking to recover possession of the working interest under the partial assignment of the base lease. They also sought damages from various members of the Ricane group for conversion of oil and casinghead gas produced or purchased from the properties.

The trial court granted summary judgment in Ricane’s favor, finding that the lease automatically terminated because: 1) of cessation of use; 2) the property was abandoned; 3) of laches; and, 4) of the statute of limitations. The court of appeals affirmed on the cessation of use theory. 776 S.W.2d 391. This Court concluded that the assignment language in question created a covenant, not a condition, and that breach of that covenant could not have resulted in automatic termination of Western’s rights. See Rogers v. Ricane Enterprises, Inc., 772 S.W.2d 76 (Tex.1989) (Ricane I). Thus, we reversed the summary judgment and remanded the case for trial on the merits. Id.

On retrial, the trial court rendered a take nothing judgment in the trespass to try title and conversion claims. The court of appeals affirmed after concluding that the lease had terminated based on the jury’s finding of abandonment of purpose. 852 S.W.2d 751. Rogers argues that the court of appeals erred in its holding because this Court in Ricane I held, as a matter of law, that the assignment had not terminated, thereby implicitly rejecting the Davis doctrine. See Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304 (1923) (calling for automatic termination of lease after the purpose of lease has ceased or has been abandoned). Ricane responds that the assignment automatically terminated under the terms of the assignment instrument itself or pursuant to the Davis doctrine.

II.

First, we address whether the assignment terminates pursuant to the terms of the assignment instrument. In Ricane I, this Court specifically addressed paragraphs 1 and 2 of the assignment. Ricane I, 772 S.W.2d at 79. The parties acknowledged that the provisions of paragraph 1 had been satisfied, and we held that a violation of paragraph 2 would not result in automatic termination of the property interest. Id.

In this appeal, we are now pointed to paragraphs 5 and 7 of the assignment instrument. They state:

5.
In the event that production of oil, gas or other hydrocarbon substances is developed on the above described leased premises by Western, and Western desires to abandon or cease operating the same, Western shall [766]*766notify Superior in -writing of such desire, and Superior may, at its election, require Western to transfer and assign to Superior [the holder of the base lease] or to its nominee all of Western’s right, title and interest inland[sic] to said lease, together with the well or wells located thereon and together with such equipment used in connection therewith which Superior may desire to acquire.
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7.
Upon termination of the rights of Western hereunder and/or with respect to the above described lease, as herein and in said lease expressly provided, or otherwise, Western shall deliver to Superior upon demand, a good and sufficient quit-claim deed and release. Any delay, failure or refusal on thepart [sic] of Western to deliver any such quit-claim and release shall in no way prevent such rights from terminating, and reverting to and revesting in Superior as herein expressly provided and contemplated....

Ricane argues that by reading paragraphs 5 and 7 together, it becomes evident that the assignment terminated because of Western’s failure to transfer the assigned premises back to the holder of the base lease.

We disagree. Paragraph 7 is only triggered upon failure of some other provision leading to termination of Western’s rights. Western met the only condition in the assignment which could lead to automatic termination of the assignment by drilling an initial well within thirty days. Ricane I, 772 S.W.2d at 79; see also Colby v. Sun Oil Co., 288 S.W.2d 221, 225 (Tex.Civ.App.

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884 S.W.2d 763, 1994 WL 264963, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rogers-v-ricane-enterprises-inc-tex-1994.