Texas Gulf Producing Co. v. Gulf Coast Drilling & Exploration, Inc.

154 So. 2d 559, 20 Oil & Gas Rep. 393, 1963 La. App. LEXIS 1783
CourtLouisiana Court of Appeal
DecidedJune 3, 1963
DocketNo. 5878
StatusPublished
Cited by2 cases

This text of 154 So. 2d 559 (Texas Gulf Producing Co. v. Gulf Coast Drilling & Exploration, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Texas Gulf Producing Co. v. Gulf Coast Drilling & Exploration, Inc., 154 So. 2d 559, 20 Oil & Gas Rep. 393, 1963 La. App. LEXIS 1783 (La. Ct. App. 1963).

Opinion

REID, Judge.

This matter is before this Court on a motion for summary judgment filed by the defendant under LSA-C.C.P. Article 966.

Plaintiff, Texas Gulf Producing Company, brought this action against Gulf Coast Drilling & Exploration, Inc., for alleged damages arising out of the failure to pay renewal rental on an oil, gas and mineral lease. Plaintiff held an oil, gas and mineral lease from John Nunez, dated September 8, 1955, affecting 71.22 acres in Vermillion Parish, Louisiana. By letter agreement executed by Texas Gulf on August 19, 1957 and by Gulf Coast on August 28, 1957, Texas Gulf agreed to sublease to Gulf Coast the Nunez lease and other leases and by instrument dated October 3, 1957, did sublease to Gulf Coast said Nunez lease “down to, but not below the stratigraphic equivalent of the sand shown at 10,664 feet on the Schlumberger log of the Continental-Norma LeBlanc Well No. 1, in Section 52, T 12 S, R 3 E Vermillion Parish, Louisiana, but only insofar as said leases cover the lands particularly described in said Exhibit ‘A-l’ ”. Under the agreement Gulf Coast obligated itself to:

“maintain the leases in force and effect as to the tracts hereby subleased by rental payment, shut-in royalty payments, drilling operations thereon, or production therefrom. If Subleassee does not elect so to maintain the subleased premises or any part or portion thereof, Sublessee shall reassign the subleased premises to Sublessor thirty (30) days prior to the rental or shut-in royalty date or the time drilling operations are required to be begun in order to perpetuate such leases and Sub-lessor hereby reserves the reversionary right of having such subleased premises reassigned prior to surrender or abandonment of the subleased premises.”

Plaintiff alleged that defendant failed to discharge its obligations under the agreement by failing to maintain the Nunez lease in force beyond September 8, 1959, and prayed for damages in the amount of $1,076,890.00 and interest.

Gulf Coast answered the complaint and denied any failure to discharge its obligations and on the contrary avers plaintiff itself undertook to make the payments required to keep the lease in effect after September 8, 1959 as to lands not in a producing unit and did make payment but in the wrong amount. In the alternative defendant avers,

“the plaintiff itself was contributorily negligent, which bars any recovery, in that plaintiff had an important interest in having the rental paid and undertook to make the payment; plaintiff had itself calculated the amount of rental to be paid and had the opportunity to pay the correct rental in the first instance; plaintiff furthermore was informed by the lessor by letter dated September 5, 1959 received by plaintiff before the anniversary date of the lease had elapsed that the [561]*561amount of rental tendered was in error, and thus had an opportunity to correct the error and to pay the proper amount and had the opportunity to notify respondent SO' that respondent would have an opportunity to correct plaintiff’s error and to pay the correct amount on time, but that plaintiff failed in all these respects.”

Defendant further alleged in its answer that in 1957 plaintiff undertook to explain to respondent the amount of delay rental due under the Nunez lease with respect to the acreage not included in the producing unit; defendant requested plaintiff to pay the rental for its account, which plaintiff did; in 1958 plaintiff again advised defendant of the amount of rental to be paid and inquired as to whether defendant would pay the same or desired plaintiff to pay for its account and defendant requested plaintiff to pay the rental in the amount specified by plaintiff, which plaintiff did; on August 17, 1959 plaintiff again wrote defendant noting,

“rental in the amount of $1,492.00 is due under the above lease on or before September 8, 1959, and asking whether respondent would handle the payment of the rental as had been done the previous year”

and on September 1, 1959, defendant wrote plaintiff agreeing that plaintiff pay the rental as it had done in the previous years. Defendant further alleged Texas Gulf on September 2, 1959 paid the rental determined by it to be due and on September 11, 1959 advised defendant the rental “was paid by us for your account as per your letter of instructions dated September 1, 1959.” Defendant assuming the position of plaintiff in reconvention, prayed for judgment against Texas Gulf Producing Company in the sum of $6,327.00. which it represented to be the value of Gulf Coast’s interest in said lease as to the land outside the drilling unit as of September 8, 1959.

Defendant then filed a motion for summary judgment alleging the Nunez lease contained a provision that if any of the land covered by it was included in a production unit with other land the lease as to the remainder not included in the unit could be held by the payment of specified delay rentals and defendant was obligated to maintain the lease or to reassign to the plaintiff 30 days prior to the date when payment of money or action was required to maintain the lease. The motion for summary judgment further stated plaintiff each year offered to make the delay rental payments for the account of the defendant, each offer being accepted, and twice plaintiff correctly paid the rental but the third time paid too little, having failed to take into consideration that by order of the Commissioner of Conservation of the State of Louisiana the number of acres of the Nunez lease being maintained by production had been reduced from 11.54 acres to 7.95 acres and delay rental at $25.00 per acre was due on the difference. The motion further states when the incorrect rental was received by John Nunez, lessor, he promptly gave written notice to plaintiff the payment was in error. Employees of plaintiff received the notice on the day on which rental was due, discussed the complaining notice, and had time and means with which to correct the error that day, but failed to do so.

Following argument the Trial Judge maintained the defendant’s motion for summary judgment. It is from that judgment that plaintiff has appealed.

In support of its motion for summary judgment, the defendant filed the discovery depositions of four of plaintiff’s employees, the discovery depositions of one of defendant’s employees taken by the plaintiff, and the deposition of John Nunez, the lessor, together with a letter of December 2, 1957 from the plaintiff to the defendant explaining to the defendant the amount of delay rental due under the Nunez lease with respect to the acreage not included in the producing unit.

The plaintiff, in opposition to the defendant’s motion for summary judgment, and in [562]*562order to controvert the allegations of fact made by the defendant in its motion for . summary judgment, and also to show what additional evidence would be introduced at the trial, offered the affidavits of seven of its employees, including the four whose depositions were offered by the defendant, together with 32 accompanying documents and the discovery deposition of Robert T. Jordan, an attorney who represented the defendant in a unitization hearing before' the Conservation Commission, and of C. Dale Armour, an employee of the defendant.

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Related

Burrell v. Baton Rouge Securities Co.
169 So. 2d 668 (Louisiana Court of Appeal, 1964)
Texas Gulf Producing Co. v. Gulf Coast Drilling & Exploration, Inc.
156 So. 2d 606 (Supreme Court of Louisiana, 1963)

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Bluebook (online)
154 So. 2d 559, 20 Oil & Gas Rep. 393, 1963 La. App. LEXIS 1783, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texas-gulf-producing-co-v-gulf-coast-drilling-exploration-inc-lactapp-1963.