Court Opinion

ID: 3929299
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:54:56.610702+00
Date Added: 2024-06-11T14:16:40.527605
License: Public Domain

I have not been quite able to concur in the majority opinion. It seems undisputed in the evidence that at the time of the lease in question it was very confidently believed by both Mr. Gholson and representatives of the appellant company securing the lease that the land described in the lease was within proved territory, and rich in oil, and when the lease, as set out in the majority opinion, is construed in the light of those facts, with especial reference to paragraphs 2, 4, and 7, I incline to the view that upon appellant's failure to pay the rentals, as shown in the record, the lease by its own terms became of no further effect. It will be observed that the lease is not in the usual form treated in the authorities, and particularly does it differ in the paragraphs relating to rentals. These paragraphs, when construed in the light of the evidence and of the long delay of Gholson in claiming any benefit thereunder, indicate that the purpose and object to be attained in the insertion of the clause was by providing a penalty to insure an early development of the land, and not to embody a separable rental contract. It seems to me that their form and connection and Mr. Gholson's waiver of the rentals due under the terms of paragraph 4 for the years 1918 and 1919 indicates that the parties so construed the lease. That appellant later sufficiently developed the land seems to be unquestioned. It is to be observed that under the terms of the seventh paragraph it is provided in express terms that, in event of "second party [the appellant company] failing to pay the first party [Mr. Gholson] in advance on 10 days' notice in writing by the first party to second party, as above provided, the ground rent due under the terms and provisions hereof that this lease shall be null and void, and the first and second parties shall be released from all liabilities herein mentioned," thus preventing appellant from receiving the *Page 658 
benefit of any equitable or other excuse for its failure to pay rentals, and thus enabling Mr. Gholson, the lessor, without judicial or other action, to forthwith convey to another. The estate conveyed by the lease was clearly a limited one. It clearly terminated at the end of 5 years in the event no oil or gas was found and, as it seems to me, was also made terminable by the terms used in the subsequent condition of nonpayment of rentals. The lease, executed as it was by the lessor, is to be construed most strongly against him, and hence, as indicated, I incline to the view that the lease and all of its parts became, automatically, of no further force and effect upon the nonpayment of the rent.
The same final conclusion is reached by another line of reasoning urged in behalf of appellant.
The lease was for a term of 5 years, and so long thereafter as oil and gas were produced in paying quantities. Our Supreme Court has, in unmistakable terms, held an oil and gas lease in Texas to convey a determinable fee title, and has construed the same to contain a limitation — not a condition subsequent or a forfeiture — on the title granted and the term or duration of same. The expressed term of the lease — 5 years, and so long thereafter as oil and gas is produced in paying quantities — is limited to so much of said time during which the lessee pursues the essential purposes of the lease. It seems to have been definitely settled that a complete abandonment of the lease automatically ends its terms, and all rights and duties of the parties as to the future are at an end.
Said limitation of the term to such a period as the lessee pursues the essential purposes of the lease is as much a part of the term as the 5 years and so long thereafter as oil and gas is produced in paying quantities. Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 255 S.W. 601; Robinson v. Jacobs, 113 Tex. 231, 254 S.W. 309; Thomason v. Ham,113 Tex. 239, 254 S.W. 316; Stephens County v. Mid-Kansas Oil  Gas Co., 113 Tex. 160, 254 S.W. 290, 29 A.L.R. 566.
In the recent case of W. T. Waggoner Estate v. Sigler Oil Co., 284 S.W. 921, Section B of the Commission of Appeals, in discussing the effect of an abandonment of an oil and gas lease, after citing and analyzing the above cases, says:
"The reasoning which is unanswerable is that the nature of the grant is not an absolute fee, but a determinable fee, which fee is ended when the lessee ceases to exercise diligence in the development of the land for minerals according to the terms of the lease. This is not, perhaps strictly speaking, a condition subsequent, as a contract to drill within a definite time or the like, but rather it is a limitation affecting the extent of the estate granted. * * *
"The reasoning of the Supreme Court in the group of cases just discussed leaves no doubt; that that court recognizes a substantial distinction between a title upon condition subsequent and a determinable fee ending upon an event; that, where the essential purpose of the grant is the development of the lease and the production of oil, the grant is of a determinable fee ending with the cessation of such reasonable development and production; that this determination of the estate is not upon any principle of abandonment of title required. * * *
"We add this further word in emphasis of the controlling feature of these cases, as is perfectly apparent from a consideration of the opinions reviewed. The action to cancel, so-called, is not in reality the equitable action to forfeit for breach of covenant, either as to condition precedent or subsequent, and therefore to divest title for cause. It is in truth a proceeding to recover the land unaffected by the lease which has expired by its terms as interpreted. The case is maintained on the theory, not that the lease should be forfeited for cause, but that there is no further title — it has ended."
The foregoing opinion was approved by the Supreme Court, and is now pending on motion for rehearing on the question, as I understand, of whether a partial abandonment will work a termination of the lease, or whether it will require a total abandonment to terminate same. However, it seems to be the settled law that a total abandonment ends the term of a lease the same as an expiration of the primary term or a cessation of production in paying quantities after the expiration of the primary term.
The undisputed facts show, and the trial court found, that the lease in suit was completely abandoned and the lessor notified of said fact prior to the period for which rentals were recovered. The lease having been terminated by abandonment prior to said period, no further rentals accrued.
It is insisted that the lessee cannot take advantage of his own wrong. Under the terms of the lease, as construed by our Supreme Court, the lease is one upon a limitation and automatically ends upon the happening of the abandonment. The doctrine that a party to a contract cannot take advantage of his own wrong in ending same applies to contracts subject to forfeiture. It has no application to a grant upon a limitation. A limitation is self-enacting, regardless of the wish, knowledge, or consent of either party. 1. Jones on Real Property and Conveyancing, § 628; Brewster on Conveyancing, § 174; 1 Washburn on Real Property (6th Ed.) § 167; 1 Tiffany on Real Property (2d Ed.) p. 334; 21 Corpus Juris, p. 924.
The rental provision contained in the lease provides:
"Beginning at the expiration of 12 months from date hereof, second party agrees to pay first party, 1 year in advance, ground rent at the rate of $100 per acre per annum."
This provision is not a promise to pay rent for any definite time. It amounts to nothing *Page 659 
more than a promise to pay rent during the term of the lease. The term of the lease is for 5 years, limited, however, to such portion of said term as the lessee pursues its essential purposes. Upon the complete abandonment of the lease within said term, as was held in the case of Texas Co. v. Davis, supra, the term automatically ends. Thereafter there was not any lease in existence to pay rentals upon, and the term during which the lessee agreed to pay rental ended, and no future rental accrued thereunder.
Nor do I concur, if deemed material, in the conclusion, expressed or implied, that the release executed by the vice president of appellant company on the 2d day of October, 1920, was without effect because not impressed with a seal, and not in accordance with the requirements of the statute of frauds. It is true that it has been held, as asserted in the majority opinion, that a conveyance of oil and gas in place is a conveyance of real property and requires for its transfer an instrument in writing in all respects in compliance with the statutory requirements, but at the time of the execution of this release, if the evidence is to be credited, there was substantially no oil and gas in place to be conveyed, and it is well established that a sale or conveyance of a thing or property without actual or potential existence is of no force. The release therefore, I think, was competent to be considered for whatever it was worth on the issue of abandonment and of Mr. Gholson's consent thereto.