Court Opinion

ID: 9777176
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:01:21.923319+00
Date Added: 2024-06-11T07:32:49.751820
License: Public Domain

ON MOTION FOR REHEARING
In a vigorous motion for rehearing, appellants attack the decision of this Court. In that attack, they raise twenty-three points of asserted error. However, the thrust of those points is related to a single proposition, that being that the “consolidated area” described in the 1940 agreement, because of the bisecting right-of-way strip, *205included non-contiguous land. Therefore, they say, that “consolidated area” violated the contiguous lands requirement of Railroad Commission Special Order, Oil & Gas Docket No. 108, Affixing Allowable Production of Sweet and Sour Natural Gas in the Panhandle District of Texas (Dec. 10, 1935). Bottomed on this premise, they say that the production of gas from the Bed-norz No. 4 well on the consolidated unit is thus unlawful and does not constitute production which would continue the Grimes lease in force. We disagree and overrule the motion for rehearing.
The power of the Railroad Commission is not derived from the constitution but comes from legislative grants of powers and jurisdiction. The Supreme Court has generally held that the Commission has only such powers as are specifically delegated to the Commission. Railroad Commission of Texas v. City of Austin, 524 S.W.2d 262, 267 (Tex.1975); Humble Oil & Refining Co. v. Railroad Commission, 133 Tex. 330, 128 S.W.2d 9, 14-15 (1939). As relevant here, the power delegated to the Commission is to regulate production and to prevent waste. It is so well established as to have become axiomatic that the Commission has no power to determine property rights. Jones v. Killingsworth, 403 S.W.2d 325, 328 (Tex.1965); Nale v. Carroll, 155 Tex. 555, 289 S.W.2d 743, 745 (1956); Ryan Consolidated Petroleum Corp. v. Pickens, 155 Tex. 221, 285 S.W.2d 201, 207 (1955); Magnolia Petroleum Co. v. Railroad Commission, 141 Tex. 96, 170 S.W.2d 189, 191 (Tex.1943); Elliott v. Davis, 553 S.W.2d at 227; Whelan v. Placid Oil Company, 274 S.W.2d 125, 130 (Tex.Civ.App.—Texarkana 1954, writ ref’d n.r. e.).
In support of their proposition, appellants cite the statutes in force at the time of the 1940 agreement forbidding the production of gas “in violation of the valid orders of the Commission.” They reason that “the record before this Court shows without dispute that gas production from non-contiguous acreage was in violation of Texas law.” Pointing to the provisions of the Natural Resources Code Annotated that permit a party whose property interests are damaged by a party who violates “a valid rule or order of the Railroad Commission” (§§ 85.321 and 85.322 and predecessor statutes) to “sue for and recover damages and have any other relief to which he may be entitled at law or in equity,” they say they are entitled to rendition or reversal. Again, we disagree.
For reasons which we have heretofore stated, the parties specifically agreed in the 1937 and 1940 agreements that production from the Bednorz No. 4 well was sufficient to perpetuate the constituent leases. Moreover, because of the acceptance of royalties paid by virtue of that production by appellants and their predecessors, appellants are now estopped to deny the validity of the “consolidated area” described in that instrument. Kuklies v. Reinert, 256 S.W.2d 435, 444-45 (Tex.Civ.App.—Waco 1953, writ ref d n.r.e.).
Moreover, it is also undisputed that the well was drilled under a permit by the Railroad Commission and production permited therefrom since its completion. It is a well established principle that orders of the Commission, within its delegated authority, are immune from collateral attack and conclusively presumed to be valid unless brought in question in a direct proceeding instituted for that purpose under statutory authority. Railroad Commission v. Marathon Oil Co., 89 S.W.2d 517, 519 (Tex.Civ.App.—Austin 1935, writ ref'd). See also Trapp v. Shell Oil Co., 145 Tex. 323, 198 S.W.2d 424, 439 (1946); Dunbar v. Fuller, 253 S.W.2d 684, 686 (Tex.Civ.App.—Austin 1952, writ ref'd). Moreover, even assuming, arguendo, misrepresentations of the type alleged by appellants were made in the application for the well permit, that type of fraud would constitute intrinsic fraud in the obtaining of the Commission order and, accordingly, would not support a collateral attack upon the validity of that order, such as is here made. Bolton v. Coats, 514 S.W.2d 482, 487 (Tex.Civ.App.—Tyler 1974), rev’d on other grounds, 533 S.W.2d 914 (1975).
*206In summary, we remain convinced that our disposition of the case is correct. Appellants’ motion for rehearing is overruled and the judgment of the trial court affirmed.