Petition for Writ of Certiorari — Hastings v. Selby Oil & Gas Co.

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CHASL ES & |

SUPREME COURT OF THE UNITEDLSLATES”

OCTOBER TERM, 1942

No. 528

0. L. HASTINGS, ET AL.,

P, hilecuee ie:

SELBY OIL AND GAS COMPANY, ET AL,

Re sponde wis,

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF APPEALS

FOR THE FIFTH CIRCUIT AND BRIEF THEREON.

¢ :

GiEnarip (', Mass

Athorme ua Gereval oft Tearas;

kK. R. StmMmewns,

James D. SmMuLbeN,

{ysunteyl Atlorie ys Creneral,

Counsel tor Petitioner

Riuslroad Cope. doodd of Ts Lads

and Its Members:

“ W. Bowsrp Ler.

Jounx Porvrer,

Counsel tor Petitioners O ]

Hastings and ey P. Dodson

em

INDEX.

Supsect INDEX.

Page

Petiiben for weet of certiorari... ..... 2... cee ne. ]

I et Dei oe gy sig ask pak |

Statement of the matters involved.............. 2

I aN er ss i ws hog ow bs 3

Ses obec a eee dagnas 3

Reasons why writ should be allowed......... 4

Brief in support of petition..................... me 7

I 28 Geode feo ss 0% atlas oe ee os 7

Ovinion of the court below................... 3 7

NS occas cg Sas uh ae & a ptath aa cee We 7

RE RR ae a i Ss

NII OE UNNI goa vives sot decbeeees 4)

aa Re aie yc gv ovina Kam 10

Statement under Point I................... i0

Authorities under Point I.................. 11

Argument under Point I................... 11

UR ra ee ee oe aw ks 15

Authorities under Point II................. 15

Statement and argument................... 16

EES RRM es PS ea ah a ate mC ed 17

OS En Visas whic s aR eee 17

SS ot Nae) re ge oe chee eed 17

Argument... ... SEP e ac ear erat el ape 18

RAN IE es cleo now's Kade s es 20

Cases CITED.

Chicago v. Fieldcrest Dairies, — U. S. —, 62 Sup. Ct.

PEEP SPREE SSIS LT RERT LO ES ee oe 11,15

City of St. Louis v. Western Union ‘Tdepash Company,

I a RG i MO I a ek Ss os oa vs 17,19

Coler y. City of Cleburne, 131 U. S. 162, 9 Sup. Ct. 720.. 18, 19

Dunsmuir v. Scott, Z17 Fed. 200.................... 18,19

George A. Fuller Company v. Brown, 15 Fed. (2d) 672.. 18, 19

Griffin v. Thompson, 10 Fed. (2d) 127................ 18,19

—3155

ii INDEX

Page

Gulf Land Company v. Atlantic Refining Company. 134

BR SO ce I ss 5 ev doce cance 8,5, 16

Magnolia Petroleum Company v. Railroad Commission,

CEASE, BO) BO Ws Wee I Bs oe tcc trees 15, 16

McLaughlin v. Pacific Lumber Company, 293 U.S. 351,

oo | IR Aiea ear en ceeeren cane 17,19

Railroad ee of Texas vy. Pullman Company,

gis ee Gf Rh eee 11,15

Railroad Cominanion v. Shell Oil Company, 161 S. W.

a eh cs cana bak awwn 5, 15, 16, 17

Rowan and Nichols cases:

Oe SB e a ape aes aaa panes a 4:

och i. EE ne peo e ee hee 4,11

a SE a eer 4,11

Selby Qil & Gas Company, et al. v. Railroad Commission

of Texas, et al. 128 Fed. (2d) 334-337.......... 3,8,9, 11

Sun Oil Company v. Burford, 124 Fed. (2d) 467, 130

We rr as ees 5, 15

Thomas v. Peyser, 118 Fed. (2d) 369.. Pee

Tulsa City Lines v. Maims, 107 Fed. (2d) 377. Ras aS 18, 20

STATUTE CITED.

Py Ws x ORG ce roe rk kc k ae Se 18

Text CITep.

18 Hughes Federal Practice, Sections 24531-24572 .... 17,18

SUPREME CCURT OF THE UNITED STATES

OCTOBER TERM, 1942

No. 528

O. L. HASTINGS, ET AL.,

a Petitioners,

SELBY OIL AND GAS COMPANY, ET AL.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF APPEALS

FOR THE FIFTH CIRCUIT AND BRIEF THEREON.

To Said Honorable Court:

The Attorney General of the State of Texas on behalf of

the’ Texas Railroad Commission, and O. L. Hastings and

GF. Dodson on their own behalf, pray that a Writ of Cer-

‘tiorari issue to review the final judgment and decision of

the United States Circuit Court of Appeals for the Fifth

Circuit entered on May 13, 1942 (R. 112), in Cause No. 9729

on the docket of said Court, reversing the judgment of the

United States District Court for the Western District of

Texas (R. 49-50), and remanding said cause for trial. Peti-

1m

»

=

tions for rehearing were duly filed and overruled and de

nied, without further opinion, on June 30, 1942 (R. 121).

This petition is filed pursuant to Act of February 13, 1925,

and within the extended time granted by an order entered by

Mr. Justice Douglas, upon application. dated September

25, 1942, on which jurisdiction rests.

Petitioners Hastings and Dodson are resident citizens

of the State of Texas. The Railroad Commission of Texas

is a department of executive agency of the government of

the State of Texas and as such is authorized to sue and be

sued. It maintains its offices and its members reside in the

State of Texas.

Respondent, Selby Oil & Gas Company, is a corporation

duly organized and existing under the laws of the State of

Delaware and is a citizen of said State. Respondent, Lewis

Preduction Company, is a corporation duly organized and

existing under and pursuant to the laws of the State of

Pennsylvania, and is a citizen of said State.

Statement of the Matters Involved.

Respondents, as plaintiffs below and as appellants in the

Fifth Cireuit Court of Appeals, instituted this suit by

filing petition in the United States District Court for the

Western District of Texas on July 17, 1939 (R. 4-13), for the

purpose of setting aside a permit granted by the Railroad

Commission of Texas (R. 12, 71), to Hastings and Dodson,

authorizing the drilling of Well No. 2 on a 3.85-acre tract of

land ou. of the Mary Cogswell Survey, Rusk County, Texas,

and to enjoin production herefrom (R. 4-13). Jurisdiction

was predicated upon (a) diversity of citizenship, and (b)

the alleged violation of rights vouched respondents by the

Fourteenth Amendment toe the Federal Constitution. Issue

joined on a trial to the Court without a jury. Respondents

3

offered evidence (R. 60-101), and at the close of respond-

ents’ evidence petitioners moved for judgment (R. 100)

which was allowed, and they offered no evidence. Judgment

was for petitioners as defendants (R. 50), and respondents

gave notice of and perfected their appeal to the United

States Circuit Court of Appeals for the Fifth Circuit

(R. 51).

The judgment of the trial court was reversed by the

Circuit Court of Appeals and the cause remanded for trial

(R. 112). See Selby Oil & Gas Company, et al., v. Railroad

Commission of Texas, et al., 128 F. (2d) 334-337, and (R.

106-112) for the Court’s holding.

Petitions for rehearing were duly filed (R. 114, 117) and

denied without written opinion on June 30, 1942 (R. 121).

Upon proper application, Mr. Justice Douglas of this

Court entered ‘an order under date of September 25, 1942,

extending the time for filing Petition for Certiorari herein

to and including November 14, 1942.

Jurisdiction.

The jurisdiction of this Court is invoked under Section

240) of the Judicial Code, as amended by the Act of Febru-

ary 13, 1925 (U.S. C. A., Title 28, Section 347). For the

importance of the issuance of the writ see ‘‘Reasons Re-

lied On"’ to follow.

Questions Presented.

1. Whether a Federal District Court may pass upon is-

sues arising under State law in cases involving the con-

servation of a State’s natural resources where jurisdiction

is predicated in part upon the diversity of citizenship; and

thus whether the Circuit Court of Appeals erred in refusing

2m

i

to afficm the judgment of the Federal District Court rele-

gating respondents to their remedy in the State courts.

2. Whether the Circuit Court of Appeals erred in direct-

ing the Federal District Court to substitute its judgment

for that of a state executive agency authorized to adminis-

ter a state’s conservation laws when jurisdiction rests in

part on diversity of citizenship.

3. Whether the responderts, Selby Oil and Gas Company

and Lewis Production Company, discharged the burden of

proving the illegality of the administrative order of the

Texas Railroad Commission; and thus whether respond.

ents, by their evidence, overcame the prima facie validity

of the administrative order involved.

4. Whether if the Circuit Court of Appeals did not err

in directing the Federal District Court to pass upon issues

arising under a state’s conservation laws, it nevertheless

erred in declining to hold that, as a matter of law, the order

involved was reasonabiy supported by substantial evidence.

5». Whether the Circuit Court of \ppeals erred in holding

that a Fedoral District Court is required to file findings

when a motion for judgment that plaintiff had not made

out a case is sustained at the conclusion of plaintiff*s

evidence.

Reasons Why Writ Should Be Aliowed.

1. The decision of the Cireuit Court of Appeals in this

case is contrary to and in direct conflict with the opinions

of this Court in the Rowan and N’vhois cases, 310 U.S. 573,

311 U. S. 614, (On rehearing); and 311 U. S. 370.

2. The opinion of the Cireuit Court of Appeals in this

ease (128 F. (2d) 324) is in direct conflict with each of

5

its opinions in Sun Ou Company v. Burford, (124 F. (2d)

. 467, 130 F. (2d) 10), decided at the same term of court.

3. The United States Circuit Court of Appeals for the

Fifth Cireuit has decided a question of procedural law ot

momentous importance to maintenance of harmony between

state and federal courts by holding that the United States

District Court was empowered to adjudicate matters in-

volving a state’s conservation of its natural resources.

4. The language of the opinion of the Cireuit Court of °

Appeals in this case conflicts with the language of the Texas

Supreme Court in Radroad Commission vy. Shell, (Texas

Sup. Ct.) 161 S. W. (2d) 10€22, in the pronouncement of the

applicable local law in eases involving the conservation

of the State’s natural resources.

). Nothing is of more importance to the people of Texas

than the assurance of proper adjective and substantive

rules of law respecting the conservation of their great oil

reserves. The three opinions of the Circuit Court of Ap-

peals (124 F. (2d) 467, 128 F. (2d) 334, 130 F. (2d) 10),

have placed these rules in utter and hopeless confusion.

WHEREFORE, petitioners respectfully pray that a Writ of

Certiorari be issued out of and under the seal of this Honor-

able Court directed to the Honorable Circuit Court of Ap-

peals for the Fifth Circuit commanding that Court to cer-

tify and send to this Court, for its review and determina-

tion, a full and complete transcript of the record and all

proceedings in the cause entitled Selby Oil d Gas Company,

et al., Appellants, v. Railroad Commission of Texas, et all.,

Appellees, numbered 9729 on the Docket of said Court to

the end that the judgment and decree of said Circuit Court

of Appeals in said cause may be reversed by this Honorable

6

Court and the judgment of the United States District Court

affirmed, and that petitioners have such other and further

relief as may seem meet and just.

Respectfully submitted,

Geratp C. Many,

Attorney General of Texas;

E. R. Simmons

Assistant Attorney General;

James D. SMULLEN,.

Assistant Attorney General,

Counsel for Petitioners,

Railroad Com mission of T: ras

and Its Members.

W. Epwarp Leg,

1400 Peoples Bank Building,

Tyler, Texas;

Joun Porter,

Glover-Crim Building,

Longview, Teras,

Counsel for Petitioners,

O. L. Hastings and C. F. Dodson.

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, i942

No. 528

0. L. HASTINGS, ET AL.,

Petitioners,

0s.

SELBY OLL AND GAS COMPANY, ET AL.,

Respondents.

BRIEF FOR PETITIONERS.

To the Honorable Supreme Court of the United States:

Petitioners respectfully present this their brief in-sup-

port of petition for Writ of Certiorari to the United States

Circuit Vourt of Appeals for the Fi’ .1 Circuit.

Opinion of the Co'.rt Below. i

The opinion of the United States Circuit Court of Ap-

peals for the Fifth Circuit is reported as Selby Oil & Gas

Company, ct cl., v. Railroad Commission of Tecras, et al.,

in 128 Fed. (2d) and appears in the record at pages

106-112.

Jurisdiction.

The judgment and decree to be reviewed was rendered

by the Fifth Cireuit Court of Appeals on May 13, 1942

-

8

(R. 112). Petitioners duly filed their respective petitions

for rehearing (R. 114, 117). The petitions were each over-

ruled, without written opinion, on June 30, 1942 (R. 121).

Jurisdiction of this Court is invoked under Section 240 (a)

of the Judicial Code, as amended by the Act of February

13, 1925 (28 U.S. C. A., Section 347 (a)).

The Facts.

In Texas, Jurisprudence cases such as the instant one

are known as ‘‘Rule 37° cases. Rule 37 is the rule gov-

erning the spacing of wells in the oil fields of Texas pro-

mulgated by the Texas Railroad Commission. No well

may be drilled in Texas unless it can be drilled in con-

-formity to the rule; or under one of the exceptions pro-

vided in the rule ‘*to prevent confiscation of property’ or

to ‘‘ prevent physical waste.”"* See Gulf Land Company v.

Atlantic Refining Company, 134 Tex. 59, 131 S. W. (2d) 73,

for statement of the rule.

On July 5, 1939, the Texas Railroad Commission, after

notice and hearing, granted petitioners, Hastings and

Dodson, permit to drill an oil well in Rusk County, Texas

(R. 12, 71) under the exception to the spacing rule ‘to

prevent confiscation of property.”

Respondents, as plaintiffs in the Federal District Court,

insituted suit to set aside and cancel this permit on July

17, 19389 (R. 15). Upon a trial had before the Court with-

out a jury, the Court sustained a motion for judgment for

the defendants at the conclusion of plaintiffs’ evidence

(R. 101-108). Petitioners, defendants below, offered no

evidence. Respondents thereupon gave notice of appeal

to the Cireuit Court of Appeals for the Fifth Circuit

(R. 51).

The judgment of the trial court was reversed by the Cir

cuit Court of Appeals and the cause remanded for a new

trial (R. 112). See Selby Oil and Gas Cumpany, et ul., v.

9

Rai!road Commission of Texas, et al., 128 Fed. (2d) 334-

337, and R. 106-112, for the Court’s opinion.

Pe''tions for rehearing were duly filed (R. 114, 117)

and denied without written opinions on June 30, 1942

(R. 123).

Specification of Errors.

The Cireuit Court of Appeals erred:

1. In hoiting that the United States District Court must

determine too validity under the Texas law of an order

of the Texas Railroad Commission granted after notice

and hearing pevvuitting the drilling of an c'] well for the

purpose of preventing ‘‘confiscation of property’’ or

drainage of oil by ciher wells in the vicinity.

2. In holding that the United States District Court must

exercise an ‘‘independeni iudgment’’ on the fact issue of

drainage or confiscation; and thereby in holding that a

Federal District Court may substitute its judgment on

the fact issue of drainage for thai of the Texas Railroad

Commission.

3. In holding that the Federal District Court erred in

holding that respondents, Selby Oil and Gas (Company

and Lewis Production Company, failed to discharge ti-

burden of proving the illegality of the order of the Texas

Railroad Commission permitting the drilling of the well

in question; and in holding that respondents have failed,

by their evidence, to overcome the prima facie validity of

the order.

4. In declining to hold that as a matter of law the ad-

ministrative order involved was reasonable supported by

substantial evidence.

2. In holding that a Federal District Judge must file

findings of fact when he sustains a motion for judgment

at the conclusion of the plaintiff’s evidence,

10

Point I.

(Germane to Specification of Errors 1 and 2, and Questions

Presented 1 and 2.)

The holdings in this case by the Circuit Court of Appeals

being in conflict with the opinions of th.s Court in the

Rowan & Nichols cases, and the language of this case being

in conflict with the language in the Sun-Burford case; and

the questions involved being of great importance to the

procedure by a Siaie in conserving its natural resources,

this Court should eliminate the conflict and make certain

and definite the procedure to be followed.

STATEMENT Unper Pornt I.

Upon the trial of the cause in the Federal District Court

one expert witness, a petroleum engineer, testined for

plaintiffs, respondents herein (R. 72-99). Ho testified that

he had made a study of the East Texe- Gil Field and the

lease in question (R. 72); he testined concerning the sand

thickness in the area (R. 7°) and that he had made ealeu-

lations as to the revoyerable oil beneath the lease in suit

and surrovné tug leases (R. 73); that in making these caleu-

lations ne teok into consideration the sand thickness, the

probable recovery factor and shrinkage due to the differ-

ence in volume of oil in the sand and the pressure and

temperature existing in the sand, and the pressure and

temperature existing on the surface (R. 73-74). He

further estimated the probable producing life of the wells

in the area (R. 74) and undertook on his estimate of re-

serves to allocate a certain portion of oil to each tract in

the area based on acreage; he further caleulated the

amount ef oil that would be drained by the well in suit,

based upon his estimate of reserves and the production

allowable (R. 77); he further detailed the density of wells

\

11

on the various tracts (R. 80-82); avd the amount of past

production (R. 85-86). Based u;un the figures and esti-

mates given, the witness offere. his opinion that the well

was not necessary to preve:: drainage of oil from peti-

tioners’ lease. |

On cross-examinatie:, however, the witness admitted

that it was his op’.ion that petitioners’ tract was at a

silo% disadvantege in density of diilling when compared

with the eight umes area surrounding (R. 92).

Upon thus evidence the trial court sustained a motion

for imcgment presented by the defendants holding that in

his opinion he was precluded by the Rowan and Nichols

cases from substituting his judgment and discretion on

the question of drainage for that of the Texas Railroad

Commission (R. 102-103).

Avtruorities Unper Point I.

Railroad Commission of Texas vy. Rowan and Nichols

Oil Company, 310 U.S. 573;

Railroad Commission of Texas v. Rowan and Nichols

Oil Company (on rehearing), 311 U. S. 614;

Railroad Commission of Texas v. Rowan and Nichols

Oil Company, 311 U.S. 570;

Selby Oil €& Gas Company v. Railroad Commission of

Tewvas, 128 Fed. (2d) 10;

Railroad Commission of Texas vy. Pullnan Company,

312 U.S. 496, 61S. Ct. 643;

Chicago v. Fieldcrest Dairies, —- U. S. —, 62S. Ct. 986.

ARGUMENT UNbER Portnt I

In this case, the majority opinion of the Circuit Court

held that the Federal District Court was empowered, and it

Was its consequent duty, not only to determine whether

plaintiffs showed confiscation in violation of the Fourteenth

12

Amendment, but also to determine whether, upon their

claim in their statutory suit, the attacked order of the Com-

mission was supported by substantial evidence, and as to

this that the trial court must exercise an ‘‘independent

judgment.”’ Thus the cause was reversed and remanded

for a new trial. The dissenting opinion stated that this

Court's opinions in the Rowan and Nichols cases had given

rise to no little doubt and confusion as to the proper method

of disposing of cases involving the conservation laws of a

state, but thought the circuit court should not change face

and position to that taken by it in the first Sun-Burford

opinion witil this Court had considered the point and finally

clarified the issue (128 F. (2d) 337). The judge who dis-

sented in this case specially concurred in that Court’s sec-

ond opinion in the Sun-Burford case; thus changing ‘face

and position’’ before this Court had asserted any change of

its holding in the Rowan ond Nichols cases (130 F. (2d) 18).

In order to more sharply focus the alleged conflict, indul-

genee is prayed to quote brief excerpts from this Court's

opinions in the Rowan and Nichols cases. In the first case,

the Court said:

‘*Certainly so far as the federal courts are concerned

the evolution of these formulas belongs to the Commis-

sion and not to the Judiciary’? (310 U.S. 580).

After discussing factual matters presented, it further

held that:

‘*Plainly these are nei issues for our arbitrament"’

(310 U.S. 583).

and

‘It is not for the Federal courts to supplant the

Commiussion’s judgment even in the face of convincing

proof that a different result would have been better’’

(310 U.S. 584).

13

On rehearing it said that:

‘‘What ought not to be done by che Federai courts

when the due process clause is invoked ought not to

be attempted by these courts under the guise of enfore-

ing a state statute’’ (311 U. S. 615).

In the second Rowan & Nichols case, it was said that:

‘*We rejected these arguments as an attempt to sub-

stitute a judicial judgment for the expert process in-

vented by the state in a field so peculiarly dependent on

specialized judgment’’ (311 U.S. 573).

Further holding that:

oo * > *

a state’s interest in the conservation and

exploitation of a primary natural resource is not to be

achieved through assumption by the federal courts

of powers plainly outside their province and no less

plainly beyond their special competenece’® (311 U.S.

Oe ).

And ceneluding, said:

‘‘In denying the petition for rehearing in earlier

cases we held that whatever rights the state statute -

may afford are to be pursued in the statc courts”? (311

U.S.577). (Emphasis supplied.)

In the original opinion in the first Rowan and Nichols

case, this Court held that:

‘*Except where the jurisdiction rests, as it does not

here, on diversity of citizenship, the only question open

to a Federal tribunal is whether the state action com-

plained of has transgressed whatever restrictions the

Vague contours of the due process clause may place

upon the exercise of the state’s regulatory power’’ (311

U.S. 614).

It plainly appeared from the last quoted language that

an exception was made where jurisdiction was invoked on

xrounds of diversity. Deleting this sentence on rehearing,

14

the Court added that what ought not to be done when the

due process clause is invoked ought not to be attempted

under the guise of enforcing a state statute, and indicated

in the closing sentence that the remedy rested in the state

courts.

As basis for the Cireuit Court’s opinion in this case, it

quoted the sentence which this Court deleted from its origi-

nal opinion in the first Roszean and Nichols case (128 F. (2d)

336), and held that since diversity was not invoked in the

Rowan and Nichols cases, this Court could not lay down a

rule applicable where jurisdiction was invoked on diversity.

It appears to us that this Court deliberately deleted the

exception first niade in favor of diversity and laid down a

rule appilcable to all litigation where a state statutory

remedy is invoked

As showing conflict between this case and the Sun-Bur-

fo. d case, the Circuit Court held in this there were two suits,

one invoking the due process clause, and the other a state

statutory suit (128 F. (2d) 335). In the Sun-Burford case,

the sanie court held in a like proceeding that there were not

two suits, one *‘constitutional’’ and the other state statu

tory (130 F. (2d) 16). In construing this Court’s opinions

in the Rowan and Nichels cases, the Cireuit Court held in

the Sun-Burtord cave that ‘*feder:] courts should not sub-

stitute their judgment for that of the Commission’’ (130 F.

(2d) 14); whereas in this case the “ireuit Court held that

the Federal Distriet Court could exercise **independen!

judgment’ as to whether an order of the Commission was

supported by substantial evidence (128 F. (2d) 337).

It thus plainly appears that private litigants and the

Railroad Commission of Texas do not know, and cannot

know, their rights in respect to this and related matters

unless and until this Court eliminates the conflict and either

reannounces its former holdings or recedes therefrom and

restates them.

15

If ever there existed any doubt as to the meaning of the

plain language of this Court in the Rowan and Nichols

cases, that doubt was certainly removed by the opinions of

this Court in Railroad Commission of Texas v. Pullman

Company, 312 U.S. 496, 61S. Ct. 643; and Chicago v. Field-

crest Dairies, — U. S. —, 62 S. Ct. 986.

Thus, the Fifth Cireuit Court cf Appeals was right in

relegating to the State courts for determination issues

other than questions under the Federal Constitution in

cases arising from the enforcement of a state’s conserva-

tion law, (Sun Oil Company v. Burford, 124 Fed. (2d) 467) ;

and wrong in departing from that practice in its subse-

quent opinions, (128 Fed. (2d) 334; 180 Fed. (2d) 10.) We

pray that this Court settle the hopeless confusion now ex-

isting in the opinions of the Fifth Circuit Court of Appeals

and once again set forth the law to the satisfaction of that

Court that whatever rights a state statute may afford in

conservation cases ‘‘are to be pursued in the state courts.’

Pont II.

(Germane to Specification of Errors 3 and 4, and Ques-

tions Presented 3 and 4)

The validity of the permit in suit was established as a

matter of law by the testimony of respondents own witness

in the trial court under State law as enunciated in the

opinions and judgments of Texas Courts.

Avtuorities Unprer Port IL.

Magnolia Petroleum Company vy. Railroad Cominis-

sion, (TCA, 1939) 127 8. W. (2d) 228;

Gulf Land Company vy. Atlantic Refining Company,

134 Tex. 59, 131. S. W. (2d) 73;

Railroad Commission vy. Shell Oil Company, 161 8. W.

(2d) 1022. |

16

Statement and Argument.

The plaintiffs offered but one expert witness. The char-

acter of testimony he gave is detailed under Point I and i-

adopted here. Upon cross-examination, he admitted that

the tract in suit was at a 3742% disadvantage as compared

with an area eight times its size surrounding it (R. 92).

The instant permit was granted as an exception to the

well spacing rule ‘‘to prevent confiscation of property”’

As stated by the Texas Supreme Court in Gulf Land Com-

pany v. Atlantic Refining Company, 134 Tex. 59, 131 S. W.

(2d) 73, **the term ‘confiscation’ evidently has reference

to depriving the owner or lessee of a fair chance to recover

the oil and gas under his land or their equivalents in kind.

It is evident that the word refers principally to drainage."

And in Magnolia Petroleum Company v. Railroad Com-

mission, (TCA, 1939) 127 S. W. (2d) 223, writ of error

denied by the Supreme Court, the Court stated the method

generally used in this State in determining drainage ad-

vantage or disadvantage:

‘“‘The method generally applied in determining

whether a tract in question is at a drainage disadvan

tage, or, to put it differently, whether the owners

thereof are given an equal opportunity with lessees

of the surrounding properties to recover their fair

share of oil in place beneath such tract, is to compare

the density and location of wells on such tract with

those on the surrounding 8 times area.”’

The respondents own witness and the only one to testify

before the District Court stated that in his opinion the

tract in suit was at a density disadvantage of 3712% when

compared with the eight times area surrounding. Under

the local Texas law a permit must be sustained if it be rea-

sonably supported by substantial evidence. Railroad Com-

17

mission Vv. Shell Oil Company, 161 S. W. (2d) 1022. It is

obvious that the permit in suit was so supported and that

the Cireuit Court of Appeals erred in declining to affirm

the trial court’s judgment for the defendants, petitioners

here, given upon motion for judgment at the conclusion of

the plaintiffs’ evidence and this even if the Cireuit Court

of Appeals was correct in its interpretation of the Rowan

and Nichols cases.

Pornt III

(Germane ‘to Specification of Errors 5 and Questions Pre-

sented 5).

The Trial Court having granted defendants’ motion for

judgment at the completion of plaintiffs’ case was not re-

quired to file findings of fact as the question of whether

or not plaintiffs’ evideace was sufficient to make out a

prima facie case was one of law.

Statement.

One of the reasons for reversal given by the Circuit

Court of Appeals was that the trial court failed to make

findings as contemplated by Rule 52 of the Rules of Civil

Procedure, 28 U.S. C. A., following Section 723¢.

It will be recalled that in this case the trial court sus-

tained defendants’ motion for judgment at the conclusion

of plaintiffs’ evidence and that defendants offered no evi-

dence,

Authorities.

18 Hughes Federal Practice, Sections 24531-24572;

City of St. Louis v. Western Union Telegraph Cum-

pany, 148 U.S. 92, 37 L. Ed. 380; .

McLaughlin vy. Pacific Lumber Company, 293 U.S. 351,

79 L. Ed. 423;

18

Coler v. City of Cleburne, 131 U.S. 162,9'S. C. 720;

Dunsmuir v. Scott, 2i7 Fed. 200;

George A. Fuller Company v. Brown, 15 F. (2d) 672;

(rriffin v. Thompson, 10 F. (2d) 127;

Thomas v. Peyser, 118 F. (2d) 369;

Tulsa City Lines v. Maims, (C. C. A. OkL-1940) 107

F’. (2d) 377;

Article 6049¢, Vernon's Annotated Texas Civil Stat-

utes.

Under the federal statutes prior to the aduption of the

rules of practice and procedure the option lay with the trial

court in a non-jury case to make special or zeneral findings.

U.S. C., Title 28, Sections 773, 875. However, numerous

decisions announced that unless special findings were made

an appellate court would not look at the evidence to deter-

mine its sufficiency to support the judgment or a ruling of

the Court. Rule 52 (a) of the rules governing practice and

procedure in the Federal Courts, provides, in part:

‘In all actions tried upon the facts without a jury,

the court shall find the facts specially and state sepa-

rately its conclusions of law thereon and direct the

entry of the appropriate judgment; and in granting or

refusing interlocutory injunctions the court shall simi-

larly set forth the findings of facts and conclusions of

law which constitute the grounds of its action. Re

quests for findings are not necessary for purposes of

review.”’

Other than to make special findings obligatory, rather

than optional, and to obviate the necessity of counsel re-

questing special findings, we do not understand that the new

Rule 52 has changed the prior practice. See 1s Hughie.

Federal Practice, Sections 24531-24572.

Under the prior practice there existed one well recognized

instance when the appellate court would examine the evi-

19

dence even in the absence of special findings and that was

where a party moved for a judgment in his favor at the

conclusion of the opposing party’s evidence or upon the

whole case. The question there being one of law rather

than fact, the appellate court would examine the evidence

to determine the propriety of the Court’s ruling. City of

St. Louis v, Western Union Telegraph Company, 148 U.S.

92, 37 L. Ed. 380; UWeLaughlin vy. Pacific Lumber Company,

295 U.S. 351, 79 L. Ed. 423; Coler v. City of Cleburne, 131

U.S. 162, 9 S. C. 720; Dunsmuir vy. Scott, 217 Fed. 200;

George A, Fuller Company v. Brown, 15 F. (2d) 672. As

the Court said in Griffin v. Thompson, 10 F. (2d) 127:

r

I Error is also assigned to refusal of the court to

make special findings of fact and of law. This was

within the diseretion of the court and not error, but, as

a motion for judgment was uiade by the defendant the

whole case is before us on the facts and law.’’

In the present case the court sustained defendants’ mo-

tion fpr judgment at the conclusion of the plaintiffs’ evi-

denee and it was plainly the duty of the Circuit Court to

inok at the evidence in order to pass upon the Court’s ruling

that the plaintiff had failed to establish a prima facie case.

In Thomas v. Peysery, 118 F. (2d) 369, the Court held Rule

02 (a) inapplicable where facts are admitted by the defend-

ant filing a motion to dismiss, saying:

‘Obviously there need be no fact findings where

facts are not in issue. The only issues determined by

the trial court were questions of law.’’

The question presented in the instant case by the Court's

ruling upon the defendants’ motion for judgment at the

conclusion of the plaintiffs’ evidence being one of !aw, Rule

02 (a) is inapplicable and the Court erred in declining to

pass upon the question properly presented to it.

20

Moreover, even if we should be in error and it should be

held that Rule 52 (a) must be complied with when a motion

for judgment is made by a defendant at the conclusion of

the platutiffs’ case and is sustained by the trial court:

nevertheless, the purpose of the rule is to aid the reviewing

court by according it arclear understanding of the basis of

the decision of the trial court. Tulsa City Lines v. Maims,

((*.C. A. Okla., 1949) 107 F. (2d) 377. Surely in the instant

case the Court properly understood the basis of the trial

vourt’s decision.

Conclusion and Prayer.

We respectfully submit that the opinion of the Circuit

(‘ourt is squarely in conflict with those of this Court in the

Rowan and NicbAs cases; that the Circuit Court was un

Warranted in departing from its recent decision in the Sun

Oil Company case; and that even if the Court was war.

ranted in its change of opinion, nevertheless the respond.

ents wholly failed to establish a case under the Fourteenth

Amendment to the Federal Constitution or under Section

of Article 6049¢, Vernon's Annotated Texas Civil Statutes.’

This case presents important questions pertaining to thic

jurisdiction and practice of Federal Courts which should be

settled by this Court in order to avoid the utmost confusion

* “Any interested person affected by the conservation laws of this Stat«

relating te erude petreleum oil or natural gas, and the waste thereof, in

cluding this Act, or by any rule, regulation or order made or pronulgate:

by the Commission thereunder, and who may be dissatistied therewith, sha!!

have the right to file a suit in a Court of competent jurisdiction in Tr: \i-

County, Texas, and not elsewhere, against the Commission, or the members

thereot, as defendanta, to test the validity of said laws, rules, regulation-

or ordeys. Such suit shall be advanced for trial and be determined a-

expeditiously as possible and no postponement thereof or continnance sba!!

be granted except for reasons deemed imperative by the Court. In all such

trials, the burden of proof shall be upon the party complaining of such

rule, law, regulation or order; and such laws, rule, regulation or order so

complained of shall be deemed prima facie valid.”

21

which has arisen by virtue of the conflicting decisions of the

Cireuit Court of Appeals. Fer reasons stated, therefore,

it is respectfully submitted that this petition for Writ of

Certiorari be granted.’

\

Greratp C. Mann,

Attorney General of Texas;

kK. R. Simmons,

Assistant Attorney General;

James D. SMULLEN,

Assistant Attorney General,

Counsel fur Petitioner,

Railroad Commission of Texas

and Its Members.

W. Epwanrp Leg,

1400 Peoples Bank Building,

Tyler, Texas;

Joun: Porter,

Glover-Crim Building,

Longview, Teras,

Counsel for Petitioners,

O. L. Hastings and C. F. Dodson.

(3155)