Case Name: HOFFMAN v. CONTINENTAL SUPPLY CO.
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1938-09-30
Citations: 120 S.W.2d 851
Docket Number: No. 1835
Parties: HOFFMAN v. CONTINENTAL SUPPLY CO.
Judges: 
Reporter: South Western Reporter Second Series
Volume: 120
Pages: 851–858

Head Matter:
HOFFMAN v. CONTINENTAL SUPPLY CO.
No. 1835.
Court of Civil Appeals of Texas. Eastland.
Sept. 30, 1938.
Rehearing Denied Nov. 11, 1938.
Grisham & Grisham, of Tyler, for plaintiff in error.
Turner, Seaberry & Springer, of East-land, and McGown & McGown, of Fort Worth, for defendant in error.

Opinion:
GRISSOM, Justice.
This is a suit by The Continental Supply Company against Cecil H. Lockhart, upon an open account, for oil well casing, etc., sold by it to Lockhart, and against P. L. Hoffman for an alleged conversion of pipe sold by plaintiff to Lockhart, and upon which pipe plaintiff asserts a lien under Article 5473, R.S.1925, as amended in 1929, Vernon's Ann.Civ.St. art. 5473.
On November 28, 1930, Humble Oil & Refining Company and Lockhart entered into a contract, evidenced by a letter from the Humble Company to Lockhart, which, insofar as it is here material, is as follows:
"This will confirm an agreement entered into wherein the Humble Oil & Refining Company agrees to sell and you agree to purchase three oil and gas leases in Loving County, Texas, described as follows and subject to the terms and conditions as outlined below: (Here follows description of the land)
"Each tract above mentioned was assigned out of a different lease. However we shall consider the three leases as a single unit. The total consideration for these leases is $100 per acre or $22,000. You agree to pay this Company this money out of ⅞6 of the first oil produced, whether from one or all the leases to be assigned.
"It is further agreed that you will start operations for a well sixty (60) days from November 25th, 1930, and drill same with due diligence to the oil and gas horizon in the Delaware Pay now producing oil in this area of Loving County, unless oil and gas in paying quantities are found at a lesser depth.
"It is understood that you are to bear all the expenses of drilling and other operations.
"The title to this acreage was approved when same was assigned to this company by Lockhart & Company and the P. V. Petroleum Company, however, we do not obligate ourselves to defend this title.
"All the obligations called for in our leases above referred to shall be assumed by you, and in the event you become unable to meet same, this Company shall be immediately notified in writing.
"It also is agreed that you will furnish this Company with well logs, samples and other information pertaining to the drilling and completion of said wells.
"Please evidence your acceptanc'e of this contract by signing and returning to us the copy of this letter enclosed. "
In January, 1931, Lockhart commenced the drilling of a well on the land described in his contract with the Humble Company. Thereafter from January 26, 1931, to March 3, 1931, Lockhart purchased- from plaintiff, on open account, material and supplies which he used in drilling said well. In March, 1931, the well having been drilled to the horizon stipulated in the contract, the well was completed by Lock-hart .as a "dry hole." Thereupon, Lock-hart pulled the casing from the well and stacked it on the leased premises. In April, 1931, Lockhart, through an agent, sold to Hoffman 4138 feet of casing which Lockhart had purchased from plaintiff, and which had been used in drilling the well. On May 25, 1931, after Hoffman had bought, paid for and removed the casing, plaintiff. filed in the office of the County Clerk of Loving County, in which county the well was drilled, its sworn account against Lockhart for the purpose of fixing a materialman's lien upon Lock-hart's interest in the mineral leasehold estate, and upon the material and supplies furnished by plaintiff to Lockhart and used by Lockhart in drilling said well, including said casing. On September 11, 1931, Humble Oil & Refining Company executed to Lockhart an assignment of the oil and gas leases.
Article 5473, insofar as it is here material, provides as follows: "Any cprporation, who shall, under contract, express or implied, with the owner of any oil or 'mineral leasehold interest in -land furnish material or supplies used in drilling such oil or gas well shall have a lien on the leasehold interest therein and upon the material and supplies so furnished *
The trial was to the court. The court rendered judgment for plaintiff against defendant Lockhart for the amount of his account with plaintiff and against the defendant Hoffman for conversion of the pipe purchased by Hoffman from Lockhart, which it found to be of the value of $3800; from which judgment Hoffman has appealed.
Hoffman contends the court erred in holding a lien existed in favor of plaintiff against t'he casing purchased by Lockhart from plaintiff, for the reason that Lockhart was not an "owner" of an "oil or mineral leasehold interest in land" within the meaning of article 5473. With reference thereto Hoffman, in construing the contract between Humble Company and Lock-hart heretofore set out, states: "The most logical construction of the writing is that the company was thereby obligated to deliver the assignment upon payment of the agreed consideration. It might not be an unreasonable construction to hold that Lockhart, under its terms, would become entitled, upon discovery of oil in paying quantities, to an assignment of the lease, such assignment to be burdened with an oil payment obligation in the sum pf $22,-000 to be paid out of 7/16ths of the first oil produced; but certainly this would be the most favorable construction that Lock-hart could have insisted upon with any show of reason."
Plaintiff, appellee here, contends that when Lockhart bought the pipe from plaintiff he was in possession of the oil and gas lease under an executory contract of pur-cha'se, and that since he performed the terms of the purchase contract and thereby became entitled to sue for and enforce specific performance, and since he later received an assignment vesting him with title to the lease, he was the "owner" of a mineral leasehold interest in land within the meaning of said statute.
We are of the opinion that if the contract between the Humble Company and Lockhart did not evidence an equitable title or interest in the leasehold estate in Lock-hart so as to constitute Lockhart the "owner" thereof within the meaning of article 5473, when the well had been drilled by Lockhart to the contract depth and found to be a dry hole Lockhart was then entitled to compel the execution and delivery by the Humble Company of an assignment of the leases, either burdened with an oil payment or with an interest reserved by the Humble Company. (We think it is immaterial here whether such payment as was provided for in the first paragraph of the lease be regarded as a debt or whether the transaction should be regarded as a reservation by the Humble Company of an interest in the leasehold estate conveyed. See Tennant v. Dunn et al., Tex.Com.App., 110 S.W.2d 53.)
It appears to be settled that if Lockhart was entitled to enforce specific performance of the Humble Company's-contract,to assign the lease he was an owner thereof within the meaning of article 5473. Northern Texas Realty & Const. Co. v. Lary, Tex.Civ.App., 136 S.W. 843, 846, writ refused; Schultze v. Alamo Ice & Brewing Co. et al., 2 Tex.Civ.App. 236, 21 S.W. 160. Also, that a purchaser of land under an executory contract of purchase, who, after the sale by a material-man of supplies upon which the material-man claims a lien, later obtains a conveyance of the property, is an owner within the meaning of the statute. R. B. Spencer & Co. v. Brown, Tex.Civ.App., 198 S.W. 1179, 1181, writ refused; Hicks v. Faust, 109 Tex. 481, 212 S.W. 608; Breckenridge City Club v. Hardin, Tex.Civ.App., 253 S.W. 873; Wm. Cameron & Co., Inc., v. Trueheart, Tex.Civ.App., 165 S.W. 58. It appears from the decisions cited that if Lockhart was the owner of the equitable title, or was entitled to enforce a specific performance of the Humble Company's contract to assign the lease, or, if Lock-hart afterwards obtained the assignment, he was an "owner" within the meaning of article 5473. (We have heretofore concluded that Lockhart was entitled, at least, upon the completion of the well to enforce specific performance of the Humble Company's contract to assign the lease to him.)
Appellant insists that the assignment by the Humble Company to Lockhart was not effective for the reason that although the assignment was duly executed, it was not 'shown to have been delivered. We think there is -circumstantial, evidence-sufficient to authorize the trial court's conclusion that it was delivered. However, an actual manual delivery of the instrument is not a prerequisite to the vesting of-title in Lockhart if the grantor so intended. City of Corpus Christi v. Guth, Tex.Civ.App., 68 S.W.2d 546, writ refused; Taylor v. Sanford, 108 Tex. 340, 193 S.W. 661, 5 A.L.R. 1660; Haraway v. Haraway, Tex.Civ.App., 59 S.W.2d 249.
We conclude that the evidence was-sufficient to authorize a conclusion by the trial, court that if Lockhart was not the "owner" of' any "mineral leasehold interest in land" at the time he purchased the pipe, that he thereafter, by complying with the terms of his contract with the Humble- ' Company, became entitled to enforce specific performance of the contract to assign the lease and for that reason was am •owner within the meaning of article 5473, and further, that Lockhart thereafter acquired title to the lease and thereby became an "owner" within such article. 29 Tex. Jur. 504; Schultze v. Alamo Ice & Brewing Co., supra; William Cameron & Co. v. Trueheart, supra.
Since the pipe was sold under contract with the' "owner" of a mineral leasehold interest in land and itsed in drilling a well thereon, and since plaintiff by filing its affidavit fixed a • materialman's lien which related back and took effect at the time the casing was furnished, it results that plaintiff acquired a valid lien superior to the rights of the defendant Hoffman. Trammell v. Mount, 68 Tex. 210, 4 S.W. 377, 2 Am.St.Rep. 479; Longhart Supply Co. v. Keystone Pipe & Supply Co., Tex.Civ.App., 26 S.W.2d 389. Also, see Berry v. Harrett, 5 Cir., 83 F.2d 671; Chicago Humber Co. v. Fretz, 51 Kan. 134, 32 P. 908; Floete v. Brown, 104 Iowa 154, 73 N. W. 483, 65 Am.St.Rep. 434; Galveston Exhibition Ass'n v. Perkins, 80 Tex. 62, 15 S.W. 633; Hubbell v. Texas Southern Ry. Co., 59 Tex.Civ.App. 185, 126 S.W. 313; Montgomery v. Allen, 107 Ky. 298, 53 S.W. 813; Thomas v. Perkins, 301 U.S. 655, 57 S.Ct. 911, 81 L.Ed. 1324.
We do not think the above decision conflicts with the cases cited by appellant, such as Taber v. Interstate B. & L. Ass'n, 91 Tex. 92, 40 S.W. 954, and Galveston Exhibition Ass'n v. Perkins, supra. In most of the cases cited by appellee, the interest of a purchaser under an executory contract was held insufficient to constitute a buyer an "owner", but, as stated by ap-pellee each decision was rendered in connection with a fact situation in which the executory contract of purchase had been breached by the buyer, the buyer had neither title nor right to enforce specific performance, and in addition plaintiff was seeking to enforce the lien as against the title of the vendor.
Hoffman contends the court erred in holding plaintiff had a lien against the pipe purchased by Hoffman because the evidence failed to show an agreement between plaintiff and-Lockhart that the casing was to be used in drilling this particular well. We think the proposition must be overruled for the reason that, according to our interpretation, the statute in question (Article 5473) does not require an agreement for the pipe to be so used, but the statute only requires that it be actually used in drilling such well. Article 5473. However, we think, the evidence sufficient to authorize a conclusion by the trial court that under the 'agreement between Lockhart and plaintiff the pipe was furnished for use in drilling the well.
We shall next consider whether the judgment must be reversed because plaintiff did not prove it had a permit to do business in Texas.
Plaintiff's petition contained the following allegation: " The Continental Supply Company is a corporation organized and existing under and by virtue of the laws of the State of Delaware with its principal office and place of business in Dallas, Dallas County, Texas, and doing business in Texas under and by virtue of a lawful permit so to do The exhibits attached to plaintiff's petition, and made a part thereof, also reveal that the plaintiff is a foreign corporation doing business in Texas. There is no allegation that the transaction which is the basis of plaintiff's suit involved Interstate Commerce.
Plaintiff having alleged that it was a foreign corporation with (1) its principal office and place of business in Texas, and (2) that if was doing business in Texas, has, we think, by such allegations brought itself clearly within the class of corporations referred to in Article 1529, R.S.1925, and Article 1536, R.S.1925, as amended in 1931, Vernon's Ann.Civ.St, art. 1536. They provide that such corporation may not maintain a suit in -this State unless it had filed its articles of incorporation and obtained a permit to do business in Texas. Plaintiff alleged it had obtained such permit. This it failed to prove. Under such allegations the burden of proving that it had obtained such permit rested upon the plaintiff. Hoffman's general denial was sufficient to raise the issue. 11 Tex.Jur. 185. Under such situation the trial court erred in rendering judgment for plaintiff against defendant Hoffman. Taber v. Interstate Bldg. & Loan Ass'n, 91 Tex. 92, 94, 40 S.W. 954; Smith et al. v. Jasper County Lumber Co., 124 Tex. 156, 76 S.W.2d 505; General Motors Acceptance Corporation v. McCracken, Tex.Civ.App., 48 S.W.2d 480; Jenkins v. Pure Oil Co., Tex.Civ.App., 53 S.W.2d 497; Feder v. Texas Bitulithic Co., Tex.Civ.App., 82 S.W.2d 724, 726; Bigelow v. Delaware Punch Co., Tex.Civ.App., 37 S.W.2d 353; Cosey v. Supreme Camp of American Woodmen, Tex.Civ.App., 103 S.W.2d 1076, writ dismissed; Oklahoma Tool & Supply Co. v. Daniels, Tex.Com.App., 290 S.W. 727, 728; Smythe Co. v. Ft. Worth Glass, etc., Co., 105 Tex. 8, 13, 142 S.W. 1157.
The judgment against Lockhart is affirmed; 'the judgment against Hoffman is reversed and the cause remanded.
Affirmed in part and reversed and remanded in part.