_.. 

TE~TE ATTORNEYGENEFCAL 

OF %=EXAS 

Hon. B66oam Gil66, Cormnissioner 

General Land Office 

aU6tin, T6las 

Dear Sirs Opinion NC. O-1255 

R68 

Thi6 till 6okacrledg6 r6eoipt~cf 

. _ . _ 

your 16ttsr of Deosmber 8, 1939, 

~qU66ting 6ll OpdniCn Ofthi a6pPrtmsnt On C6rt6m qU66tiCU6 6ri6i6,g i,, 

oonn6otica with b666 No. 22990, 6xeoutrd by V. El. MoDcndld, Land &",,iSsiowr, on lbwmber 6, 1937, covering 180 soms in Kleberg land Kennedy 

County to R-r Oil Corpcratioa. You eaolosod with your request a photoatatic copy of the application for th6 16a66 by Benmar O$l I%rporaticn 

dat6d 86pt6mb6r 7, 1937, a photorrtatiq aopy Of the 16a66 and,a photostatio 

ocpy of a bond which is not d+ted tit ha6 the 6t6mp of youi~offio? mark6d 

6Raooiv6d Xcvembor 6, 1937' on 66~~6, signed by R6nnar Oil Ccrporaticn, 

FrinoQnl, Roman S. Bond and S. F. EMbut, Sur6ti66. The 166qs hrs th6 

following provisions6 

Construotioa of a lea66 by 

th0 CCarmi66iOn6r Of th6 

General L+nd Offioe on public 

6ehool land-to Reawar Oil 

Corporation. 

"HOW, THEREFORE, I VU. II. MCEORALD, Ccmmissioaer of 

ths General Land Office of the Stat6 of Texa6, by virtue 

cf the authority vested in me, do hereby leas?~aad grant 

unto REwiAR OIL CORF.. COFWJ8 QZ+ISTI, TBXA8 ths 6xclusiv6 right to prospect for, produo and take cut of th6 

l for66aid ar6a for a period of FIVE YW and as long 

th6rsaftsr 6s any miner6Js 6cv6red hereby ar6 prcducad 

therefrom in oamnercial.quantitio.6, act to oxo66d TWWl!Y 

FIVE YEARS, 611 oil and g66 upd oth6r miwrals, axc6pt 

geld, silar, platinum, cinnabar and ot$or metals ssd 

prsciou6 stones that may.be therein, upon the follovdng 

ocnditions, to-witr 

"1. If none of such mineral6 be producsd in ccnm6roial.quantiti6s within,fiYe year6 this I6666 shall terminat.. 

u2. The caner h6r6of shall pay to the Commiesioner 

Of th6 Goaaral Land Offi at b6tlll, T6Xa6, for tne "66 

and bsn*rit 0r tn6 State of Tex66, annually m ww6noe 
Honorable Basoam Gil.6 (O-1256) Page 2 

ThS Rb‘N6 proPi6iCn6 Of tb 1.a6. arOth. 6a6,. a6 6.t Cut iath. 

minwal lea68 6pplioaticn or bid byR.nw6r Oil Corporation. Th. bead r.- 

OSSS th. l.a6., aad th. agr66maat t0 drill aontaimd th.r6i8 and i6 ccaditit&d.on thi drilliag 66 prcvid.d in said leai. inthi p.n61 61~6 of 

#4;60&00 in.fav&of th. Caimi6ii~au bft h. &G.imi~&ad Offi& of'- 

T0X.i aid hi6 ‘SUOOO66Cr6’ ia Offih6. h YOW htkr'yh8 6tat. that,Cn 

Di6rmbir~ 6, 1939, ti compliano6 .iith th. demand of~$our d.pwtmat; th4 

~,SOO.OO p.n6ltg ih said bard m6 paid to.y&. YOU a166 6tat.d in your 

1ott.r that the R.nnr 011 Ccrporatica'plid‘tho ourront y.U'6 tintal 

bgianiag Hmb.r 6, 1939 on 4ugust 5,'~1939. Th. l pplicatica ud bond 

hav. be6a endcrsod on thm th6 following: 

25+ per *cr. during th. life hereof, 60 long a6 the 

area may b6 imld undmulopsd, md not to 8xoo.d fiv. 

years without prcauctica. 

*3. Rhea prcauoticn of oil, gas or other miaemla 

ecver6a hy this leas. ia sscured the owner snail pay 

to th.~Com6i66icn6r of th. General Land Oftic., at 

liustin, hXa6, for th. U6. and benefit ofth. Stat. of 

T.x.6, l/8 of th. ml". of th. grcrs 

p" 

oduotioa of oil, 

l/8 cfth. grO66prOdUCtiCn of' gas, 18 of the grcrs 

productian of aulphur, and 1.8 of th. vmlu. of other 

minsrals, thatmay b. prcducrd from 6aid area. 

#520,000.00 out oi the 3/64 of th. 7.8 and a6 6nd if 

pmduo6d. Ih l gr.o to owmno. cpwaticns for tb 

drilliag of a ~6~11 in a.aroh of oil and/or gar on or 

kforo 330 day6 fran the dat6 of the drlivwy of thi6 

l.aso 6ndto continu6 th. drilling th.r.of with duo 

dilig.nos until th. d.pth of 7000 fo.t h66 bon r.aohod 

or oil and/or gar in paying quaatiti.6 ha6 b6.n produe- 

.d th.r.from. Failur. to oom6waoa raid 11.11 a6 afcn6aid 6h.ll r.nd.r thi6 1.a60 null rod void to both 

IWti.6," 

*Deo6m%6r 8, 1938* 

"The period of tim. al1ow.d in the drilliag obligatics i6 h.nby ixtmndmd for oa6 year aft.r it6 Original 

l xpiratica data. 

( Bigmod) lb J. YaDca6ld 

!hW6i66iCU.~* 

It will b. ncted that th. on. yrr ha6 rxpind should ruch *XIdcr6mant b. giaa any rff.ct. 

You a6k for am cpinic8 on th. following quostion68 
Honcrablo B86ccm Gil.6 (G-1235) Pago 3. 

1. SinC. no bond m6 mrnticnod ia the bid for 

a loam nor in the loaro i66u.d 6hculdth6 land cammi66iCnOr OCntiBU6 ia for06 ~adOffOOt thr 1086. by 

virtue of the payment of tbo pasalty prwid.d la the 

bcmd for failure to drill? 

2. Should the 1.16. bo doolarod fcrfoitod for 

failure to ocmply with tha ton66 of the bid and loa6o 

a6 i66U.d thorwon? 

It.i6 tb 0pilli0n of thi6 dopart6matthat in oM6truiag th. thr.0 

abow monticnod in6tru66nt6 that the loaro i8 quo6ticn t.rm1nat.d or b6- 

oa66 null and void cm the failure cf,th6 106i06 to oanmnenco cpWaticn6 for 

th. drillir of a rnll.in 6.aroh of oil ud g*r 08 or boforo %C~dayr Pra6 

the data of the doliY6ry cftho loaio bo~io of the j~fmisio~ ii th',ap 

pliaatica and 1.86. that .failuro,to'aC66kko. 6iid roll a6 afcniaid &all 

rond6r thi6 lo866 null and void t.o both prtior.~ It till bi noted thit 

in the 16660 l66soo wa6 not tivoa u opticr or l lootic8to oithor bigii 

thir no11 or pay aa agnod rrntal or otiply withtho acaditik6 of i'b6&. 

It ir true that ordinarily m do not find ia oil alrd gal 1686.6 as abrolute l groanoht ta drill a roll togothor with a proYi6ica t.hat~tho'Ibaro 

rhall b. aull and void, tormiaat6 or wad om failure to &ill the-r&l1 1~ 

a s~oifiod ti6IC, but w. 0an 600 10 rYa6cn ww ruoh a oolltraaf could not 

k l nt.r .into. a The Ronwar Oil Ccrpomtic8 6ot cut i8 their 8pplic8tici 

aad bid thii l x6Ct pmviricn a6 bLg a pr~viric8 bywhioh it 1166 illling 

to b bound. T%. COUrt6 hW6 .h.~ 00~6tZ’Ud Oil ad g66 1.8606 agai66t 

the 106600 6ad o.rt&aly suoh ccB6tndic8 nould k giYOn 18 thi6 iB6t6no. 

6imo0 the 106600 i6 Ir6pCm6iblO for fh. 8%6V6 prOYi6iCa btig in the lOa60. 

m do not think that th6 bc8d, whioh ~6 aCt monticaod im the 

application or loaro, ha6 a- b6arimg on whothor or act tb6 2oaro to&atl d or ~oamo in111 amd void for failure to drill th6 ~611. If it aould 

haYo 6xy b.arilmg 01 th6 coatnot b&woon th6 parti. with nrp.ct to the 

loa6o, it lould cmly haw to do with th. damag.6 for viclatia 'aftho 

ccv.mnt or agm.mont to drill the null ud not with tb proviri&6 th6t 

the 1.86. rhculd brcDm6 void if the nllr66 mot drilled im tiw. Thir 

1.86. wa6 l xooutod aftor cixapetitiw bidding a6 roquind by ohrptor 271, 

Aot6 42ad L6gi6laturo, p. 462, and rtatutor th.roiu nforrod to. Suppc66 

6cmo cthor company had 6ubnittod 61 l xa6t bid a6 wa6 ruh6itt.d w Ro8war 

Oil Corporation with the l xcoptic~ of the provision with ro6p.d to drillimg a ~011 with18 360 d8y6. A6 betwo~ ruoh Md and Romar~a bid th6 Land 

CcmmLssicnor would haw boom jurtifiod 3.8 ac86idorimg R.War'r bid a highor 

bid, a6 the l gr66mont tu drill the roll 6nd th6 pmVi6iCa t&t the loaro 

would b6ccm null and void if 66.160 m6 not drilled withia a rpecifio time 

M6 a Yaluablo added ccm6idOxWtiCli The offrot of the Co6unis6icn.rg6 aCtic8 would result im the loaro nof having b6.~ giwa to the higha6t ud 

krt bidder which would b6 doing imdir6otly what +ho rtatut.6 pr.Y.nt him 

frcm doing dirootly. Arti6lo 5366, R.Yi6.d Civil Statutor 1926. lW find 

mothixg ~II the rtatutor, in th. applioatica for 16aro cc i8 the 1086. 
H6B. B86eomGil66 (O-1235) fig6 4. 

it6Olf whordy the &666&66iCaOr cfth6 tinOr LaBd Office i6 6uthCrirod to l 8t.Bd the drilling obligaticB in a 1.86. of thi6 aharaotor 

or to aocopt the fcrfoit of a bc8d and paywant thonof in 11.~ cf'tho 

drill-g provi6icnr ocBtai8od 18 the applicatic8 a8d b th. loam. 

It 16 diffioult to l lnyr toll whothor a pro~26ion 18 a loaro 

6imilv t0 the 080 abCY. i6 a 6p.0181 ldmit8ticB 08 th6 l 6tato gn8t.d 

or a oc8diticm Nboquont. If it 16 a llnitatlo8 the loa6o 1~60 h&c 

toxmi8atos on the 106600~6 failure to kgia drlllirg operations. 

. 

I8 the ca6o of Caulk ~6. Yillor, 18 8.W. (2d) 195, C.C A. of 

GalYo6to8, rhoroin the granko iB a dood agr6.d to bgia l otual drilll8g 

of m dl rll within rix month6 aftortho data of O& sale l 8d that 

failure to &s6aoaoo drilli8g opOmtioB6 sithi 6dX noathr ho should fdrfait all of hi6 right6 in th. miHral6. The court h.ld that th. failure 

to bgi8 drilling CpSntiOB6 Within 6iX mc8ths ip60 f6cfO t6miBat.d 

the titl. to ths mirnml6. fr.th. 0.6. Of otllf ~CdUCtiCa &.W,plty Y6e 

x16= l t al. 10s S.K (2d) 965; C.666. App. 6.0. B, ~inica w Judge 

k.dk?, th6 follcwi8g laBguag0 1666 used, in co88ooticm with a rimilar 

pMYiliC8 in th. 1.86.r 

“The 6-X.666 p~ti6iCY&l Of th. ~066.6 tht th. 

right6 or e6t6t.6 of iih6 loss04 6hall tWmi8atO on 

its failur6 to drill the well6 am limitaticlqs up 

ca the dumticB of the l 6t8tos ore&ted byth6 lccoos." 

833 6,160 Gulf Production Ccmpany et al v6. Ccatinental Gil Company et al, 

by the Supreme Court of Texas, opinion by Chief Justios Cureton on Dxr6e.1- 

lmr 11, 1939, and not yet reported. 

If such 0. provision is a condition rubsequ.8t then it 16 noco6- 

sary fcr the lesscr~tc make 6 r.-oatIy or it6 squinleat in order to 

tenniaate the 1.664. 

In the ca6. of Curry ~6~ Texas Campaw, 18 S.E. (2d), C.C.A., 

Sa6tla8d.tho fcllcwiag la8guago wa6 usrd whioh oxpr.ss.s.ths wall settlod law: 

"If the forfeiture provision be e condition sub 

66qU6nt, than W6 ar. unbl. tc attaah a8y impcrtanoo 

to tho preci66 wording Of same. The rtie i6 a6 Inoient astho cc6ncB law that a forfoituro pmYi6iC8, 

which is a condition subsequent, that may mrk a dsfeaaanoo of a8 estate 18 land, doss not affoot such 

dof.aaano6 in the absono. of a m-entry, or equiYalot&e, which in the court. of time hare corn4 to k 

r.ocgn1e.d.' 
c . . - 

Hon. Baaoom Gil.8 (o-1255) Page 5. 

Should we ti mistaken in construing the above provisions of the 

lease a8 constituting a Special limitation upoa the astate leased iastead 

of a condition subsequent, it nvuld be necessary for you to advise the 

lsrsee that the lease is at an end and has ao further force and offed on 

the above dascribd property in order to put the lease to an end, whioh 

pnoaution you should take if you desire to bs oertain that the lease is 

forfeited or terminated. As a general rule forfsitures are not favored 

Iy the court, lmt beoauaa of the aaturo of (La oil and gas loam ad the 

inequity im alluwimg a losaoe to sit back aad hold lessor'8 propslfy 

without devrlopPsmt of sam. aad prevent lossor frmn rsceivimg the bent 

fits therefrom in the nature of royalty, the courts have favored forfeiture of oil aad ga# lea8or for failure on the part of the lasaea to oomply with drilling obligations. See Stephemaon, et al v. Stite, at ux@ 

226 S. It. 812, C.C.A. of San Antonio, where the following lamguags i6 

used: 

"The oontraot iavolved being an oil aad gas leaso, 

it will bo &rietly coastnzed against the lasroe, and, 

although under hh* general rule forfeitures are not 

favored, they are ir faot favored ia contracts of this 

character." 

Ha trurt t&t the above suffioievtly anawers your requeste 

Yours very truig 

By /s/D..Do +hon 

DA Mahbn 

Amsistamt 

APPROVED DEC 23, 1939 

/a/GEBILD C. MUM 

ALTTOHNHY GER-BBAL OF TEXAS 

APPHOVED 

Opinion Cmmittee 

By BBS Chairman