_..



### TE~TE 

# ATTORNEYGENEFCAL
OF %=EXAS

Hon. B66oamGil66, 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,,**  oonn6oticawith **b666** No. 22990, 6xeoutrd byV. El. MoDcndld, Land &",,iSsiowr, on lbwmber 6, 1937, covering 180 soms in Kleberg land Kennedy County to R-r Oil Corpcratioa. You eaolosodwith 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 bondwhich is not d+ted tit ha6 the 6t6mp ofyoui~offio?mark6d 6Raooiv6dXcvembor 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 Construotioaof a lea66 by th0 CCarmi66iOn6r

Of th6 General L+nd Offioe on public 6ehool land-toReawar Oil Corporation.

"HOW, THEREFORE, I VU. II. MCEORALD, Ccmmissioaerof ths General Land Office of the Stat6 of Texa6, byvirtue cf the authorityvested inme, 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 th6rsaftsr6s any miner6Js 6cv6redhereby ar6 prcducad therefrom in oamnercial.quantitio.6, act to oxo66d TWWl!Y FIVE YEARS, 611 oil and **g66** upd oth6rmiwrals, axc6pt geld, silar, platinum, cinnabar and ot$or metals ssd prsciou6 stones thatmay.be therein,upon the follovdng ocnditions,to-witr

"1. If none of suchmineral6 be producsd in ccnm6roial.quantiti6swithin,fiYe **year6** this I6666 shall terminat..

u2. The caner h6r6of shall pay to the Commiesioner Of th6Goaaral Land Offi at **b6tlll,** T6Xa6, for tne "66 and bsn*rit 0r tn6 State of **Tex66, annually**  m **ww6noe**Honorable BasoamGil.6 (O-1256)Page 2

ThS Rb‘N6proPi6iCn6Of tb 1.a6. arOth. 6a6,. a6 6.t Cut iath. minwal lea68 6pplioaticnor 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.iithth. 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‘thoourronty.U'6 tintal bgianiag Hmb.r 6, 1939 on 4ugust 5,'~1939.Th. 

### l pplicaticaud bond hav. be6a endcrsod on thm th6 following:

25+ per *cr. during th. life hereof, 60 long a6 the areamay b6 imldundmulopsd, md not to 8xoo.d fiv. **years** without prcauctica.

*3. Rhea prcauoticn of oil, gas or othermiaemla ecver6a hy this leas. ia sscured the owner snail pay to th.~Com6i66icn6rof 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. grO66prOdUCtiCnof' gas, 18 of the grcrs productianof aulphur,and 1.8 of th. vmlu. of other minsrals, thatmay b. prcducrd from 6aid **area.** #520,000.00out oi the 3/64 of th. 7.8 and a6 6nd if pmduo6d. Ih l

gr.o to owmno. cpwaticns for tb drilliagof a ~6~11in a.aroh of oil **and/or** gar on or kforo 330 day6 fran **the** dat6 of **the** drlivwy of thi6 l.aso 6ndto continu6th. drilling th.r.ofwith duo dilig.nosuntil th. d.pth **of** 7000 fo.t **h66** bon r.aohod
or oil and/or gar in paying quaatiti.6ha6 b6.n produe- .d th.r.from. Failur. to oom6waoa raid 11.11a6 afcn6aid 6h.ll r.nd.r thi6 1.a60null rodvoid 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 xpiraticadata. ( Bigmod) lb J. YaDca6ld !hW6i66iCU.~*

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

You a6k **for** am cpinic8 on th. following quostion68HoncrabloB86ccmGil.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 fcrfoitodfor failure to ocmplywith 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 in6tru66nt6that 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.6iidroll a6 afcniaid &all rond6r thi6 lo866 null and void t.o both prtior.~ It till bi **noted** thit in the 16660 l66soowa6 **not** tivoa u opticr or l lootic8to oithor bigii thir no11 or pay **aa agnod**  rrntal or otiplywiththo acaditik6 of i'b6&. It **ir** true that ordinarilym do **not** find ia oil alrd gal 1686.6 as abrolute l groanohtta drill a roll togothorwith a proYi6ica t.hat~tho'Ibaro rhallb. aull and void, **tormiaat6** or wad om 

### failure to &ill the-r&l1 1~ a s~oifiod ti6IC, butw. 0an 600 10 rYa6cnww ruoh a oolltraaf couldnot k l nt.r.a

into. TheRonwar Oil Ccrpomtic8 6ot cut i8 their 8pplic8tici aad bid thii l

x6Ct pmviricn a6 bLg a pr~viric8bywhioh 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%6V6prOYi6iCa btig in the lOa60.

m do not think that **th6** bc8d,whioh ~6 aCtmonticaod im the applicationor loaro, ha6 a- b6arimg on whothor or act tb6 2oaro to&atl **d** or ~oamo in111

amdvoid 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. rhculdbrcDm6 void if the nllr66 mot drilled im tiw. Thir 1.86.wa6 l

xooutod aftor cixapetitiwbidding a6 roquind by ohrptor271, Aot6 42ad L6gi6laturo,p. 462, and rtatutorth.roiu nforrod to. Suppc66 6cmo cthor companyhad 6ubnittod 61 l xa6t bid a6 wa6 ruh6itt.dw Ro8war Oil Corporation **with** the l xcoptic~ of the provisionwith ro6p.d to drillimg a ~011 with18 360 d8y6. **A6 betwo~**  ruohMd and Romar~a bid th6 Land CcmmLssicnorwould haw boom jurtifiod 3.8 ac86idorimgR.War'r bid a highor bid, a6 the l

gr66mont tu drill theroll 6nd th6 pmVi6iCa t&t the loaro would b6ccm null and void if 66.160 m6 not drilledwithia a rpecifiotime M6 a Yaluablo added ccm6idOxWtiCli The offrot of the Co6unis6icn.rg6aCtic8would result im the loaronof having b6.~ giwa to the higha6t ud krt bidderwhich would b6 doing imdir6otly **what** +ho rtatut.6pr.Y.nthim 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 106600~6failure 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 otualdrilll8g 

### of m dl rll within rixmonth6 aftortho data of O& sale l 8d that failure to 

### &s6aoaoo drilli8g opOmtioB6 sithi 6dXnoathr ho should fdrfait 

### allof hi6 right6 in th.miHral6. The court h.ld that th. failure to bgi8 drilling CpSntiOB6 Within 6iXmc8ths ip60 f6cfO t6miBat.d the titl. to thsmirnml6. 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 follcwi8glaBguag0 **1666** 

### used,in co88ooticmwith a rimilar pMYiliC8 in th. 1.86.r

**“ The**  **6-X.666 p~ti6iCY&l**  **Of** th. ~066.6tht th. right6 or e6t6t.6of iih6loss04 6halltWmi8atO 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. CcatinentalGil 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.8tthen 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 la8guagowa6 usrdwhioh oxpr.ss.s.thswall settlod law:

"If the forfeitureprovision be e condition sub

**66qU6nt,** than **W6** ar. unbl. tc attaah a8y impcrtanoo to tho preci66wording Of same. The rtie i6 a6 Inoient astho cc6ncB law that a forfoituro pmYi6iC8, which is a condition subsequent, that maymrk a 

### dsfeaaanoo

of a8 estate 18 land, doss not affoot such dof.aaano6 in the absono. of a m-entry, or equiYalot&e,

### whichin the court.of timehare 

### corn4 to k r.ocgn1e.d.'c

.. -

Hon. BaaoomGil.8 (o-1255)Page 5.

Shouldwe timistaken in construingthe above provisionsof the lease a8 constitutinga Special limitationupoa 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 shouldtake if you desire to bs oertain that the lease is forfeited or terminated. **As** a general rule forfsituresare 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 devrlopPsmtof sam. aad prevent lossor frmn rsceivimgthe bent fits therefrom in the nature of royalty, the courtshave favored forfeiture of oil aad ga# lea8or for failure on the part of the lasaea to oomplywith drilling obligations. See Stephemaon, et alv. Stite, at ux@ 226 S. It.812, C.C.A. of SanAntonio, where the following lamguags i6 used:

"The oontraot iavolved being an oil aad gas leaso,

itwill bo &rietly coastnzedagainst the lasroe, and, althoughunder hh* general rule forfeitures are not favored, they are ir faot favored ia contractsof this character."

Ha trurt t&t the above suffioievtlyanawersyour requeste

Yoursvery 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