Superior Oil Co. v. Stanolind Oil & Gas Co.

240 S.W.2d 281, 150 Tex. 317, 1951 Tex. LEXIS 437
CourtTexas Supreme Court
DecidedMay 2, 1951
DocketA-2767
StatusPublished
Cited by45 cases

This text of 240 S.W.2d 281 (Superior Oil Co. v. Stanolind Oil & Gas Co.) 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
Superior Oil Co. v. Stanolind Oil & Gas Co., 240 S.W.2d 281, 150 Tex. 317, 1951 Tex. LEXIS 437 (Tex. 1951).

Opinions

Mr. Justice Griffin

delivered the opinion of the Court.

On March 3, 1944, J. 0. Dodson, et al, owners, executed to P. W. Anderson an oil and gas lease on a section of land located in Scurry and Borden Counties for a primary term of 10 years. They used a printed form described as “C-88 R-Producers’ 88 Special-Téxas Form.” The dispute between the parties is determined by the proper construction of the primary terms, rental and dry hole provisions of the lease, which are, respectively :

[319]*319“It is agreed that this lease shall remain in force for a term of 10 years from this date, said term being hereinafter called ‘Primary Term’, and as long thereafter as oil or gas, or either of them is produced from said land by the lessee.
* *
“If no well be commenced on said land on or before the 3rd day of March, 1945, this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor, or to the lessor’s credit in the Snyder National Bank at Snyder, Texas, or its successors, * * * which shall continue as the depository, regardless of changes in the ownership of said land, the sum of Three Hundred Twenty and no/100 Dollars, which shall operate as rental and cover the privilege of deferring the commencement of a well for twelve (12) months, from said date. In like manner and upon like payments or tenders the commencement of a well may be further deferred for like periods of the same number of months successively. And it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid, but also the lessee’s option of extending that period as aforesaid, and any and all other rights conferred.
“Should the first well drilled on the above described land be a dry hole, then and in that event, if a second well is not commenced on said land within twelve months thereafter, this lease shall terminate as to both parties, unless the lessee on or before the expiration of said twelve months shall resume the payment of rentals in the same amount and in the same manner as herein-before provided. And it is agreed that upon the resumption of the payment of rentals, as before provided, that the last preceding paragraph hereof, shall continue in force just as though there had been no interruption in the rental payments.”

On August 21, 1944, Anderson assigned this lease to Rich-field Oil Corporation (hereafter called “Richfield”), which began drilling a well on January 10, 1945, and completed it as a dry hole on February 3, 1945. On January 28, 1946, Snyder National Bank received from Richfield a check for $320.00, which the letter of transmittal described as being “in payment of delay rentals for the period of February 3, 1946 to February 3, 1947 due” under the Anderson lease. By endorsement on this letter, the bank acknowledged receipt of the check, stating that it “has been credited according to your instruction”, sent a copy to “J.O. Dodson et al., Snyder, Texas”, and returned the original to [320]*320Richfield. The same procedure was followed when, on January 29, 1947, Richfield sent a check for $320.00 to the bank to pay delay rentals due under the lease “for the period of February 3, 1947 to February 3, 1948,” and again when, on January 19, 1948, Richfield sent a check for $320.00 to the bank to pay delay rentals due under the lease “for the period of February 3, 1948 to February 3, 1949.”

Deciding to sell its Texas oil and gas leases, Richfield published notice inviting bids for them. The leases in Borden and Scurry Counties were described as Tract 5 and included the section covered by the Anderson lease. This notice, dated October 15, 1948, stated that all bids received would be publicly opened at Richfield’s Midland office and the highest cash offer would be accepted; it stated that the original leases, assignments, title opinions and all title data in Richfield’s hands were available for inspection by prospective bidders, at its Midland office; that each bidder must satisfy himself regarding the leases without regard to information or assistance furnished by Richfield; and that lease assignments would be without warranty of any kind. The Superior - Oil Company (hereafter called “Superior”) and Intex Oil Company (hereafter called “Intex”) bid in the Tract 5 leases together. On December 1, 1948, Richfield assigned the Anderson lease to Intex, “without warranty of any kind”, and oii December 30, 1948, Intex assigned' an undivided interest in it to Superior.

'" On December 15, 1948, Richfield delivered to Intex papers relating to the lease and these included the last rental receipt above mentioned showing payment of delay rentals for the period of February 3, 1948 to February 3, 1949; and on January 14, 1949, it delivered to Superior the other two receipts showing such payment for the periods from February 3, 1946 to February 3, 1947, and from February 3, 1947 to February 3, 1948.

On February 5, 1949, Superior and Intex tendered payment of the annual rental to the Snyder bank but the tender was refused, under lessors’ instructions, because payment had not been made by February 3. Before March 3, 1949, Superior and Intex began drilling a second well on the lease land.

On August 9, 1947, J. O. Dodson et al. executed to one Jordan a warranty deed conveying to him the surface estate and one-half the minerals in the section covered by the Anderson lease. This deed also contained a power of attorney authorizing Jordan, [321]*321when the land was not under lease, to execute oil and gas leases on all or any part of the land covering their interest as well as his own.

On March 9, 1949, Jordan executed to Stanolind Oil & Gas Company (hereafter called “Stanolind”) an oil and gas lease on the whole section.

Thereafter Stanolind and Jordan, respondents, filed this suit against Superior, Intex and others, petitioners, to recover title and possession of both surface estate and minerals in the land and to enjoin them from drilling an oil well or otherwise trespassing thereon. Under our conclusions, it is sufficient to say that, when the pleadings were all in, the issue was whether the original Anderson lease, under which petitioners claim, was still in effect when petitioners started drilling a second well on the land after February 3, but before March 3, 1949.

A trial court judgment for respondents was affirmed by the Court of Civil Appeals. 230 S.W. 2d 346.

The Court of Civil Appeals held that the language of the lease was free of ambiguity; that it “plainly and expressly required commencement of a second well or payment of rental within twelve months after the date of the dry hole”; that, as the dry hole was drilled February 3, 1945, payment of rental within twelve months did not keep the lease alive for thirteen months; that, after the dry hole, commencement of a well or payment of rental every twelve months was required; that neither action could keep the lease alive for more than twelve months.

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Bluebook (online)
240 S.W.2d 281, 150 Tex. 317, 1951 Tex. LEXIS 437, Counsel Stack Legal Research, https://law.counselstack.com/opinion/superior-oil-co-v-stanolind-oil-gas-co-tex-1951.