Court Opinion

ID: 9648144
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:04:36.058536+00
Date Added: 2024-06-11T15:22:27.146745
License: Public Domain

On Appellants’ Motions for Rehearing
First we wish to allay any concern by the Commission that we have trespassed upon the rule of capture in oil and gas matters. We have not done so intentionally and do not believe we have done so unintentionally and we disclaim any intention to do so.
We did not discuss the inclusion of Smith Prices’ one half mineral interest in the 3.3 acre tract in the Addie Stephens Unit in our original opinion because we believed the principle involved was the same principle we applied in disposing of the contention that its inclusion in the Grayson Unit barred further mineral development. We adhere to this belief.
As to the Grayson Unit the facts are that Mrs. Smith Price leased her mineral interests in the 3.3 acre tract to Bright who assigned to Reynolds who pooled with Grayson to form a unit on which a well was drilled and still produces.
As to the Stephens Unit the facts are that the Williams (appellee’s predecessors in title) and Smith Price leased the 3.3 acre tract which lease was ultimately assigned to Southern Production Company. Smith Price agreed with Southern that it could pool his interest in the lease with other lands. This Southern did and formed the Stephens Unit. A well was drilled on the Unit which produced until 1957. .Smith Price received his portion of the royalties. The Williams did not agree to this pooling arrangement and did not accept any of the royalties.
We quote the contention made by appellants, other than Reynolds, with reference to the Addie Stephens Unit:
“ * * * appellants contend that under well settled rules governing co-tenancy relationships the inclusion of the 3.3 acres in the Addie Stephens Unit by Smith Price affected the entire tract and that under well settled rules relating to pooling agreements production from the unit amounted to production from the 3.3 acres by Smith Price.
“ * * * In ignoring the effect of the Addie Stephens Unit the Court did not affect the Ryan case in any way; instead it cast doubt upon time honored and long standing rules of cotenancy and contract law, rules which have been applied again and again in a multitude of cases and situations and which have never been and cannot be questioned from either a legal or equitable standpoint.”
Appellants, other than Reynolds, cite Sayers v. Pyland, 139 Tex. 57, 161 S.W.2d 769, 771, 140 A.L.R. 1164, for the holding that “The interest of each (cotenant) is coextensive of the property, and extends to every part thereof.” They also cite for similar statements Spradley v. Finley, 157 Tex. 260, 302 S.W.2d 409 and Willson v. Superior Oil Co., 274 S.W.2d 947, writ ref., N.R.E., Texarkana Court of Civil Appeals.
These appellants then continue: “This is not to say that Smith Price could include the estate of Appellee’s predecessors in the unit, but Smith Price could develop the entire 3.3 acres without authority from Appellee’s predecessors, and this he did.”
We disclaim any intention to cast clouds over settled rules of contract and coten-ancy laws. We believe we follow them. For instance, in Willson, supra, the court stated [274 S.W.2d 950]: “An oil and gas lease executed by one co-tenant is valid as between the parties, but ineffectual as to the co-tenant of the grantor,” and again “Each owner in a co-tenancy acts for himself and no one is the agent for the other nor has he any authority to bind the other because of the relationship unless authorized to do so.”
All that we have held in this regard is that the pooling agreement executed by *808Southern as authorized by Smith Price was ineffective as to Williams.
We repeat that we cannot say what we know is not true and hold that production from the Stephen Unit is production from the 3.3 acre tract or that this is made so as to appellee by the agreement of Smith Price fclone.
These appellants reargue the equities of this case. Our decision, however, establishes rules and principles which would apply to all similar cases. They should be clear enough to be understood. We should either hold that unauthorized inclusion of a person’s land in a drilling unit is binding and the equivalent of production from such land in all cases or we should hold it ineffectual in all cases. We again take the liberty of quoting from appellee’s brief the possible consequences of adopting the first stated alternative:
"A owns a tract of 500 acres, B owns an adjoining tract of .5 acres; the two tracts were voluntarily subdivided after the discovery of oil in the area. Spacing rules, as in the Joaquin Field, call for 640 acre proration units, so that in order to get a well, A must reconstruct his tract with that of B. If the rule of Ryan v. Pickens were followed, and both A and B applied for a well, it is certain that A would get the well and all of the production.
“If Appellants’ rule were the law, however, B could go out in the dead of night, lease his .5 acres into an existing unit, and destroy the right of the 500.5 acre tract to a well. A would suffer a tremendous loss, with no protection from the Commission, no notice of B’s stealth, and no cause of action against B. Or, more probably, B could use the threat of his leasing his tiny fraction to force A to give him a goodly share of the production from any well A drilled on the tract. The tail would be wagging a dog 1,000 times its size.
“The rule of Ryan v. Pickens allows one owner to exercise the reconstructed tract’s right to a well, but it is only after all of the elements of justice and due process have been met. Appellants’ rule has no elements of due process, leaves the door open for blackmail and fraud, and is unworkable and unjust. As stated above, we believe this to be a case of first impression on this point. In setting a precedent, we earnestly urge the Court to refuse the rule for which Appellants contend. The only just and workable rule is that established in Ryan v. Pickens towit: Let there be notice and a hearing before the Commission with appeal open to the courts, before the right of a reconstructed tract to a well can be exercised. Let the tract owners come before the Commission and courts and prove which is entitled to a well.”
We believe we have correctly decided this case and the motions for rehearing are overruled.
Motions overruled.