Court Opinion

ID: 9828376
Source: CourtListenerOpinion
Date Created: 2023-09-01 18:19:49.96258+00
Date Added: 2024-06-11T07:42:47.633663
License: Public Domain

On Motion for Rehearing.
Appellants have filed a very forceful motion for a rehearing and in the motion ■say this court, in determining the legal effect of the contract, wholly failed to give any consideration to the situation of the parties and the obvious nature and object •of their agreement, and failed to give any ■consideration to appellants’ contention that the contract then under consideration was entered into in contemplation of the right •of the Railroad Commission to control the production of the oil wells referred to in the contract.
We think the opinion itself, though imperfect in many respects, negatives the above statements.
At the time the assignment was entered into, May 25, 1931, authorized production of oil in the East Texas Oil Fields was limited to production of seven hundred fifty barrels per well per day. The parties entered into the contract with full .knowledge and in view of and in contemplation of any action the Railroad Commission had then made or would thereafter make in the production of oil in the wells. Whether the past action of the Railroad Commission or a possible future action influenced the parties in entering into the terms of the contract would be wholly speculative, the contract making no reference to the Railroad Commission, its action, or any possible action, in limiting oil production.
Plaintiff pleaded, and we think correctly, that the contract was not ambiguous, which statement in the pleading and our construction of the contract itself led us to the conclusion that the contract was without a doubtful or equivocal meaning, uninfluenced by any action taken or to be taken by the Railroad Commission or any other body.
The contract being unambiguous, it could have but one meaning, and that meaning expressed in the contract itself.
The appellees in making sale of their overriding royalty interest in the lease retained and reserved to themselves the interest described until the full, open production of the well or wells to be drilled should decline to amount stated, when and at which time, evidently at such time when the open flow of oil in the well or wells should decline to the amount stated and agreed upon, the interest retained and reserved should pass to and vest in the assignees.
We cannot escape the conviction that the parties had in mind the capacity of the well or wells to produce oil to the extent of two hundred fifty barrels per day, and did not have in mind and contract with reference to any action the Railroad Commission might fix or limit in production. No test would be necessary to determine the production of oil limited and fixed by the Railroad Commission. We must consider the whole contract and not a part of it only.
To determine the time when and the circumstances under which the royalty interest should pass to the grantees the parties in the assignment agreed to ascertain the extent of the decline in the possible oil production of the well or wells by continuously pumping for three full days, and the average production thus obtained should be considered the correct daily production in determining the decline in oil production.
*814We have concluded that the proper result was reached in the opinion, and that the motion should be overruled, and it is so ordered. '