Southwestern Oil & Refining Co. v. Morgan

280 S.W. 320
CourtCourt of Appeals of Texas
DecidedDecember 19, 1925
DocketNo. 11317. [fn*]
StatusPublished
Cited by2 cases

This text of 280 S.W. 320 (Southwestern Oil & Refining Co. v. Morgan) 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
Southwestern Oil & Refining Co. v. Morgan, 280 S.W. 320 (Tex. Ct. App. 1925).

Opinion

DUNKLIN, J.

The Southwestern Oil & Refining Company has prosecuted this appeal from 'a judgment rendered against it in favor of the plaintiff, David H. Morgan, for damages sustained by Morgan for the alleged breach of defendant’s written contract to convey to him an undivided one-half interest in and to oil leases on 4,373 acres of land in consideration of Morgan’s contract to drill the land for the purpose of developing it for the production of oil and gas.

The trial of the case was before the court without a jury and findings of fact and conclusions of law by the trial judge, upon which the judgment was based, are shown in the record.

The contract upon which the suit was predicated was dated February 13, 1924, prior to its execution, Morgan had already begun the drilling of a well upon the land for the purpose, of discovering oil or gas thereon in paying quantities, and by the terms of the contract between the parties he agreed to continue the drilling of the well already started with due diligence to a depth of 2,000 feet, unless gas or oil in paying quantities was discovered at a shallower depth. It was further agreed that, if that well was drilled to a depth of 2,000 feet without discovering oil or gas in paying quantities, he would drill a second well to the same depth if necessary to make it a paying well. Morgan further contracted to prosecute the drilling of the wells continuously in the ordinary and usual manner, except that he wpuld not be required to drill on Sundays and holidays, and to keep the leasehold estate free and clear of any and all liens for labor and material, and the contract stipulated that the term “due diligence” would include performance of those obligations. The cost of drilling the wells and all expenses of every kind and character incident thereto was to he borne by Morgan.

It was further provided in the contract that, if Morgan should fail to prosecute the drilling of the wells with due diligence, then the defendant would have the right, at its option, to declare the contract terminated and of no further force or effect, and to take charge and control of the leasehold estate and any and all wells that Morgan may have drilled thereon, and thereafter to use the same without paying to Morgan compensation for the purpose of completing said wells, but that, if Morgan performed his obligations as fixed by the contract, he should receive an undivided one-half interest in the leases on the entire acreage. Prior to the execution of the written contract between the defendant and plaintiff, plaintiff had employed T. B. White to drill the first well. By the terms of that contract White obligated himself to do the drilling for a consideration of $4 per foot, and to drill it to a depth of 2,000 feet, unless oil- or gas in paying quantities was discovered at a shallower depth, and to furnish all necessary tools, material, labor, and equipment. White agreed to begin the work on or before January 2, 1924, and thereafter continue it with due diligence. Morgan agreed to furnish fuel oil and pay for the hauling thereof to be used by White in the drilling operations. At the time the drilling contract was entered into, Morgan paid White the sum of $1,500 to be applied on the- contract and agreed to pay *321 the balance flue thereon upon the completion of the well.

John Turbeville owned the fee-simple title to the land, and had executed an oil and gas lease thereon to the defendant company. On February 16, 1924, Morgan assigned to A. W. Hepworth, of Chicago, Ill., an undivided two-thirds interest in his contract made with him by the defendant, in consideration of Hepworth’s agreement to carry out Morgan’s drilling contract with the defendant. R. K. Wilson was Hepworth’s representative, who came to Texas from Chicago to look after the drilling operations in controversy. As Hep-worth’s representative, Wilson made some payments to White for drilling and for furnishing and hauling fuel oil for drilling operations.

Dr. C. V. Comfort was president of the defendant company and executed the contract with plaintiff as such president. On February 19 or 20, 1924, Wilson returned to Chicago from the field of operations, and thereafter he left the conduct of those operations to driller White. During practically all of the drilling operations by White, the plaintiff Morgan had left the state, relying upon White and Hepworth to drill the wells which he had contracted with the defendant to drill. On February 19th or 20th, he communicated with White over long distance telephone from another state, and was informed by the latter that drilling operations had been shut down upon instructions of Turbeville and Dr. Comfort. On February 20, 1924, the defendant granted plaintiff permission to cease drilling operations until March 20th, upon the express condition that drilling operations would be resumed on or before the expiration of that extension period. On the 24th of March, White, the driller, filed a mechanic’s or laborer’s lien upon the lease for an alleged indebtedness due him by plaintiff Morgan for shut-down time of drilling operations,, at the rate of $50 per day, which, as stated in his affidavit filed as a part of his lien, was the price which Morgan had agreed to pay for such delay. The affidavit contained the further statement that White had drilled the. well to a depth of 1,430 feet. He claimed a lien for $5,720 as the amount due for drilling at the contract price of $4 per foot, and allowed as a credit on his account the sum of $3,300, $300 of which was the amount paid for fuel by Wilson for Hepworth. The remaining $3,000 had been paid in two installments of $1,500 each, one by Morgan and one by Wilson. The amount claimed for shut-down time from February 21st to March 24th at $50 per day was $1,650.

In plaintiff’s pleading it was alleged that, soon after the execution of the contract by the defendant, and while plaintiff was performing the same, the defendant conspired with other parties to deprive the plaintiff of the benefit of his contract by causing the drilling of the well to be shut down, and thereby enable the defendant to claim a forfeiture of plaintiff’s contract, under and by virtue of the stipulations therein requiring him to pursue the work of drilling with due diligence. It was further alleged that, in pursuance of that conspiracy, the defendant induced the driller, T. B. White, to file a laborer’s lien against said property for an alleged debt due him by the plaintiff, when in fact plaintiff was not indebted to him in any sum, and, in order to induce White’s cooperation, the defendant paid him a certain sum of money, alleged to be for shutdown time, which in fact was caused by the wrongful acts of defendant in inducing White to cease drilling operations; that, pursuant td said conspiracy, the defendant. took charge of the well and lease and dispossessed the plaintiff thereof on May 10, 1924.

It was further alleged in his pleadings that plaintiff was induced to delay the resumption of the drilling after the same had ceased, by persuasion on the part of the defendant to enter into a compromise agreement with it for the settlement of the controversy growing out of the cessation of the drilling'operations, which compromise agreement defendant never intended to perform, but which was used as a means to induce plaintiff to desist from work on the well, thereby furnishing defendant with a pretext for claiming a forfeiture on plaintiff’s part of his contract with the defendant.

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Bluebook (online)
280 S.W. 320, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southwestern-oil-refining-co-v-morgan-texapp-1925.