Court Opinion

ID: 9654115
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:06:50.033633+00
Date Added: 2024-06-11T18:13:06.021460
License: Public Domain

Mr. Justice: Culver,
joined by Justices Garwood and Wilson, dissenting.
I dissent from the majority opinion in so far as it holds that there is a fact issue in respect to the Howard leases. For the rea*495'son that .the-matter of the Howard leases is ,s.o closely interwoven with the facts .-pertaining to the acquisition by Bolin of the Gist and Crownovér “farm-outs,” it may be appropriate to discuss both phases of the .case.- •
On December 1, 1946,-the parties entered into an agreement denominated “Articles of Partnership” (set forth in the Court of Civil Appeals opinion).- All of the petitioners were business or professional men, though it was known to all at the time that one of the petitioners, Smith, had theretofore been engaged - with others in oil ventures; that Bolin was primarily and had been for over thirty years acquiring and drilling oil properties and was to continue his own operations. The petitioners and Bolin were acquaintances and friends over a period of years.
Each venture undertaken was proposed to the other partners and mutually accepted. The first project was based upon Bolin’s letter of December 6, 1946, -to the effect that he had three blocks of leases in Comanche County, Oklahoma at $8.00 per acre and the partnership would reimburse him at that valuation. The wells drilled thereon in 1947 proved to be nonproductive. Bolin drew checks on the partnership account payable to himself for the purchase of the leases and the drilling expenses and rendered detailed accounting to his partners.
In May of 1947 Bolin informed his associates that he had obtained some 580 acres in Montague County, Texas, known as the Howard leases and recommended that these properties be tested.
On May 12, 1947, in his letter to them Bolin stated:
“Therefore, believing it is a good place to drill and having the approval of Messrs. Nail, Smith, Gale Denny and E. A. Denney, I would like to know from all of you if it is agreeable to proceed to drill two wells on this acreage on the same basis that we have heretofore drilled, with the one exception that the acreage will be about $7.00 per acre to the group.” (S.F. 535-536)
At this point two of the original members withdrew, Doctors Arrington and Reagan, whose interests were taken over by Theo Beck and by Dr. Smith, one of the original partners. The first well drilled was completed as a dry hole in September of 1947 and an accounting rendered by Bolin to his partners in detail showing the drilling expenses as $10,776.87. He had theretofore reimbursed himself out of the partnership funds for the cost of acquiring the 580-acre Howard block at $6.00 per acre. In Octo*496ber of the same year Bolin sent to each partner a statement of credits and debits up to that date. Therefore, by the end of 1947 the original Howard land leases had been paid for, and all of the bills created by the first group in the Oklahoma drilling operations had been paid. The expenses incurred by the second group in drilling the first well on the Howard land leases had been defrayed and all of the money originally contributed by the parties was exhausted. During the year 1947 the delay rentals were not paid on the three Oklahoma blocks and consequently those leases expired. In July of 1948 Bolin arranged for the drilling of a second well on the Howard land leases, resulting in a “dry hole.”
On August 18, 1949 Bolin wrote the petitioners calling their attention to the fact that the leases would expire early in 1950 and recommended the drilling of two more wells, stating that while dry holes would probably result, he was unwilling to have the leases expire without further drilling and that if any preferred not to participate he would take over their interest. The Standard Oil Company agreed to contribute toward the cost of drilling. It proved to be unproductive. Smith declined to participate in the drilling of this well and, in fact, was then engaged in the drilling of some wells elsewhere. Only three of the petitioners agreed to participate and paid their prorata part of the expense. A fourth agreed but failed to pay until some two years later at the time of the filing of this suit when he tendered a check to Bolin, that was not accepted. No further operations were conducted by the partnership and the original leases covered the Howard lands expired on March 12, 1950.
G. W. Oliver, Division Exploration Superintendent of Standard Oil Company, testified that for the first time he received authority from his company about March 1, 1950, to drill some of the company’s leases on a “farm-out basis” and that prior to that time a “farm-out” would not have been considered. He thereupon proposed such a contract to several parties and other members of his staff made similar efforts, all of which proposals were rejected. He then entered into negotiations with Bolin resulting in the acceptance of the Standard proposal on May 6, 1950, by the terms of which Bolin was to drill three wells at an estimated cost of $30,000 or more on the Gist and Crownover lands. Bolin then sought to find someone to share the expense of these operations, ultimately contracting with certain California people, also defendants herein, who, agreed to bear two-thirds of the estimated expense in consideration of a proportionate interest, Bolin agreeing to carry the remaining one-third.
*497On June 14, 1950, the first well was completed as a dry hole and on the following day Bolin began the drilling of a well on the Gist lease, which was shortly thereafter completed as a commercial producer.
On the 19th day of June when Bolin first knew that the Gist farm-out was a “producer,” he authorized a broker to secure leases from the fee owners of the Howard land which were obtained for Bolin at a cost of $15.00 per acre. This was the same land on which leases had formerly been owned by the partnership and which had expired in March of 1950.
I agree with the majority opinion of the Court of Civil Appeals that petitioners have not discharged the burden of raising an issue of fact and that the trial court properly entered summary judgment in favor of respondents.
Petitioner Smith testified that he had on more than one occasion urged Bolin to acquire the farm-out leases. His insistence was founded on some exploration nearby which he had done as a member of a former partnership. Bolin finally, toward the end of November, 1949, replied that the geology had been thoroughly checked. No merit was found in it and he was not further interested.
In my opinion this testimony is not sufficient to show a violation of any fiduciary relationship. The partnership ventures were each on a separate basis and agreed to by all of the parties before operations commenced. I see no obligation on Bolin’s part after acquiring the farm-outs to have offered them to the petitioners for participation. Bolin’s conduct does not comport with petitioners’ contention. He was still enjoying a friendly relationship with them. It is unreasonable to conclude that he would search out strangers in California if he had believed that petitioners would be interested to the extent of putting up the necessary $22,000 in this venture.
With respect to the Howard leases, considerable store is laid in the testimony of one of the petitioners, Nail, who related a conversation with Bolin in February of 1950 just prior to the expiration of the Howard leases, in which Nail urged Bolin to get a renewal or an extension of the Howard leases for the members of the partnership. Bolin replied, “We could no more get that than we could get wings to fly to Heaven this afternoon.” Now whatever credence Nail may have given to that statement there is no indication that it was relied on to his detriment or *498created any inference of. an intention on- Bolin’s-part-.to secure the. ^eases'for himself; -For three months - after: the expiration the lands lay- unleased,' available to ■ any and all willing to buy and pay the price. The fact seems to be established .beyond- doubt, that it was not until and on account of the Gist well that Bolin became interested in the reacquisition of the Howard leases. This well was located in the south center of a 100-acre tract adjoining the Howard' leases on the north and at-most only a few hundred feet away.-. -
It is my opinion that there are no facts nor inferences to support the claimed violation of a fiduciary relationship in the obtaining by Bolin of these leases. There seems to be no showing that any geological information obtained by the drilling done on the Howard leases while the partnership arrangement was effective that induced Bolin to purchase the farm-out leases or to obtain the renewal of the Howard leases for his personal benefit.
Many wells had been drilled in this general area. The respondent Bolin, had on his own account been active in prospecting for oil and drilling in the vicinity. Unquestionably each well added to the geological picture, but to say that the data, obtained from the wells drilled by the partnership in the extreme south part of the Howard leases, was a causative factor enters the realm of speculation.
The evidence, in my opinion, fails to raise-an issue of fact sufficient to be submitted to a jury for determination and therefore summary judgment for respondents was proper. Willoughby v. Jones, 151 Texas 435, 251 S.W. 2d 508; Fowler v. Texas Employers Insurance Co., Texas Civ. App., 237 S.W. 2d 373, wr. ref.
I would affirm the judgment of the Court of Civil Appeals.
Opinion delivered July 14, 1954.
Rehearing overruled October 13, 1954.