Petition for a Writ of Certiorari — Southern Minerals Corp. v. Simmons

pil heladit

ae pO

feet

ites at) Oe abe Bes a dy pe

Pig Metdace Set aN ad obs

INDEX

SUBJECT INDEX

PAGE

PETITION FOR WRIT OF CERTIORARI . 1

Summary Statement of the Case 2

The Basis of Jurisdiction 8

The Questions Presented . 9

Reasons for Granting the Writ . 11

Prayer for Writ 24

BRIEF IN SUPPORT OF PETITION FOR WRIT OF CERTIORARI 27

Opinions of the Courts Below . 27

Jurisdiction . 28

Statement of the Case : 28

Specifications of Error 28

Argument 30

Summary of Argument 30

Point 1 . 32

Point 2 . 34

Point 3 . 43

Point 4 . 46

Points . 48

Point 6 . 49

Point 7 . 54

PRAYER §7

APPENDIX A 59

APPENDIX B 61

APPENDIX C 63

Beer omeeeewrse

TABLE OF CASES CITED

PAGE

Altgelt v. Texas Co. (Tex. Civ. App.), 101 S.W. (2d)

RR eee a ie ee pwns tk ee 43

American Ref. Co. v. Tidal Western Oil Corp. (Tex.

Civ. App., w. e. ref.), 264S.W. 335............-- 36

Amsco Pipe Line Co. v. Donico Production Co. (Tex.

Civ. App.), 112 S.W. (2d) 483..........---+.-- 48

Arkansas Smelting Co. v. Belding Mining Co., 127 U.S.

rey Poni) CV aS GA Bier: dl gtedse Sige phe eA Oe 48

Armstrong, et al., v. Skelley Oil Co., 55 F. (2d) 1066.. 42

Atwater v. North American Coal Corp’ n (C.C.A. 2nd

RES nets 20, 46

E. ‘tin v. Connecticut General Life Insurance Co. (Dist.

—t. Neb. Dist.) , 25 F. Supp. 579. ....-..-.-+----- 20, 46

Britton v. Cotton States Pet. Co. (Tex. Civ. App-), 283

I Sere ee id aap Wig: Vimeo WR 50

Burck v. Taylor, 152 U. "So eare se ee

Campbell v. Fetty, 271 F. 921..... , 54

Citizens Bank of Michigan City, Ind., v. y. Opperman, 249

0 ee aan a ree ere ee oe 9

Clymore Pro. Co. v. Thompson, 11 Fed. Supp. 791, 31

ee see eee eee 40

Collins v. Metro-Goldwyn-Mayer Pictures Corp’n (C. Re

A. 2nd Cir.), 106 F. (2d) 83, 86. ies 20, 46

Cozart v. Crenshaw (Tex. Civ. App.), 299 S.W.499.. 39

Demarest v. Dutton Lbr. Co., 161 F. 264...........- 49

Dittman v. Model Baking Co. (Tex. Com. a 271

at ne cw a5

Dorris v. Sullivan, 90 Cal. 27, 27 Pac. 216. Pe

Erhardt v. Boaro, et al., 113 U.S. 537............-.. 42

F. C. Henderson, Inc., v. Railroad Commission of Texas,

56F. (2d) 218..... EN Se oo - 40

Field v. Waterman Steamship Corporation (C. C.A. Sth’

a eee ee eee 19, 45

Foster v. Callahan & Co., 248 F. 944. .... ao gas a

It

PAGE

Gloyd v. Mid-West — Co., 62 F. (2d) 483...

Be ha Any ae eR ee oe ee a ee eee 24, 47, 55, 56

Goodloe & Meredith v. ‘Hartis, 127 Ta. 583, 94 S.W.

(2d) 1141, 58 S.W. (2d) 156. | 48

Guffey v. Stroud (Tex. Com. Ave., ‘opinion » adopted,

ore nets 16S.W. tinct §27, 64 A.L.R. 730.

ta I 15, 16, 18, 38, 39, ‘41, 42

Hillman v. Shannahan, 18 Am. Rep. 281..... catia 48

Houston Oil Company of Texas v. biases Mills Co., 109

po Ae: 5 Sr i ee a 42

Humble Oil & Ref. Co. v. Poe (Tex. Com. App.)» 29

$.W. (2d) 1019-1020... Pierre oe 36

Jones v. Gibbs, 133 Tex. 627, 130 S.W. (2d) 268. 24, 47, 55

Jones v. Sun Oil Co. (Tex. Civ. App.), 110 S.W. (2d) 80 37

Koenigheim v. Miles, 67 Tex. 213,2S.W.81......... 37

Little Miami Col. & S. R. Co. v. United States, 108

NE le a he eg ar ae Fg A Ot 34

Lone Star Gas Co. v. Stine (Tex Com. App.), 41 S.W.

RE Rae ae ee a cere ieee 36

Lutcher & Moore Lbr. Ca. v. Knight, 217 U.S. 257. 34

Magnolia Pet. Co. v. Havoline Auto Supply Co. (Tex.

Civ. App.), 172 S.\W. 759..... 225. DN eee 49

Maryland Casualty Co. v. Jones, 279 U. S. 792. on.

Menger v. Ward (Tex. Sup.), 30 S.W. 853. et ae

Miller Link Lumber Co. v. Stephenson (Tex. Com.

App.), 265 S.W. 215, aff'd — _ Ct. ds 277

as SOO cay os bens iG are abel edes bd id he AGE oh 4.

National Labor Relations Board v. Mackay Radio & Tele-

graph Co., 304 U.S. 333, 343-344........... 9

Nester v. Western Union Telegraph Co. — Ct. So.

Dist. Cal.), 25 F. Supp. 478. .... ae wine ae

Oklahoma Ref. Co. v. Sevenrns iain Co., 251 U.S.

oe, Se. .s ts ade

Neg Nes

SEU IRE

goth styl Be Pa Sik Sseeaat —

IV

PAGE

Panama Mail SS. Co. v. Vargas, 281 U.S. 670, 671..... 34

Phillips v. Oil, Inc. (Tex. Civ. App.) , 104 S.W. (2d) 576 48

Piper v. Union Pacific Ry. Co., 14 Kan. 568.......... 50

Public Service Commission v. Wisconsin Telegraph Co.,

Es i MN PS os nk ew en a Vs ee Ree ee es 34

Railroad Commission v. Lamb (Tex. Civ. App.), 81

ee eimai 43

Railroad Commission v. Maxcy, 281 U.S. 82, 83....... 34

Railroad Commission v. Rau (Tex. Civ. App.), 45 S.W.

a” by Sa NCR are Rp Paar rere 43

Reynolds v. McMann Oil & Gas Co. (Tex. Com. App.),

Pe ee eee ratte ta

Rogers v. Hill, 289 U.S. 582, 586-588........-..-.. 9

Settegast v. Foley Bros., 114 Tex. 452, 270S.W.1014.. 37

Sheffield v. Hogg, 124 Tex. 290, 77 S.W. (2d) 1021... 36

Shell Pet. Corp’n v. Liberty Gravel & Sand Co. (Tex.

Civ. App.), 128 S.W. (2d) 471........------+-. 39

Sigler Oil Co. v. W. T. Waggoner Est., 118 Tex. 509, 19

oo a5 ........... pep aa eee

Southern Minerals Corp. v. Simmons, 111 F. (2d) 333.. 27

Smith v. Pitts (Tex. Civ. App.), 122 S.W. 46........ 48

Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex.

PO SS Oe. SS Perr ae ace eee are Pewee aw | 36

Swift & Co. v. Young (C.C.A. 4th Cir.), 107 F. (2d)

Es ese erro ek the Chee car eS 19, 46

Texas & Pacific Railway Co. v. Murphy, 111 U.S. 488,

see ed cates ed Gs ain bye eS aS eat OR 9

Tide-Water Oil Co. v. Railroad Commission (Tex. Civ.

Aae.), FES. (28) 393. 2. 0 Lijre ue, aa

United States v. Magnolia Pet. Co., 276 U.S. 160, 165.. 34

United States v. Seminole Nation, 299 U.S. 417, 419-420 9

FEL EBT ALLE HELENE ON AS BRR BIEL BOTS a RES

MBL IGE LW SED OEY: —— ~

Vv

STATUTES AND RULES CITED

PAGE

Federal Rules of Civil Procedure, Rules 15 (b) and 54(c)

ptt er eR | UM SRC ee ea .19, 31, 33, 45

Rule 38 (5b), Rules of Supreme Court. re: 8

Texas Revised Civil Statutes, Art. 4642............ 42, 63

Texas Revised Civil Statutes, Art. 6008, Secs.3 and7. 40, 59

Texas Revised Civil Statutes, Art. 6014. .40, 61

Judicial Code, Sec 240(a), as Amended (Sec. 347(a),

Re Se eS i ce eases 8

Judicial Code, Sec. 240, 8(c) .. ‘St ORR ar ain eer Us:

aes Rin, Os SO I PO ee ee i ee aes

TEXT BOOKS CITED

I MMe tee oe o2k ce co a

I ee gd cle wid Wp nies Soma i 57

ne a ag

Ro ee costae 49

Ok OR eee rennin mer ae etre are rer 42

Robertson and Kirkham, Jurisdiction of the Sup. Ct. of

ee Or I SOTA FO «8 es esi 9

Summers, Oil & Gas, Perm. Ed.. Vol. + p. 70, Sec. 28. 42

Summers, Oil & Gas, Perm. Ed., Vol. 4, p. 2, Sec. 652.. 39

went

GIR RB A LTE FE IE WO) RAL BAE ALE BO OLDE AOA

ened STS

IN THE

SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1940

SOUTHERN MINERALS CorPoRATION, Petitioner,

.

Jay Simmons, ET AL., Respondents

PETITION FOR WRIT OF CERTIORARI

To the United States Circuit Court of Appeals

for the Fifth Circuit

RELIC LTE ELE B

To THE HONORABLE, THE SUPREME COURT OF THE UNITED

STATES:

The petition of Southern Minerals Corporation for a Writ

of Certiorari to the United States Circuit Court of Appeals

for the Fifth Circuit respectfully shows to this Honorable

Court:

ay

&

Dy

%

<

Summary Statement of the Case

On March 24, 1930, T. M. Harrell and wife, as lessors,

executed to R. D. Kelly, as lessee, an oil and gas lease upon

333 acres of land in Nueces County, Texas (R. 385). Houston

Oil Company of Texas (hereinafter called Houston), hav-

ing become owner of said oil and gas lease, on April 5, 1932,

for a recited consideration of $177,756.00, assigned to South-

ern Alkali Corporation (hereinafter called Southern Alkali)

all its right, title and interest in six oil and gas leases, includ-

ing the Harrell lease, covering im excess of 1300 acres, ‘‘in-

sotar as the same cover the gas rights * * * together

with three certain gas wells now completed thereon.”

The assignment contained no reservation or exception. It was,

however, made “subject to the following specific under-

standing and agreement, viz.:

“Should Southern Alkali Corporation, or its assigns,

as a result of its operation on said leases, or either of

same, discover oil in any well drilled on said lands, said

Southern Alkali Corporation agrees to set casing in said

well and make a thorough and workmanlike test thereof

with a view to bringing in an oil well. Should said well,

when completed, produce as much as fifty (50) barrels

of oil per day for ten (10) consecutive days, the Houston

Oil Company of Texas, may at its option, within forty

(40) days after completion, take over and own said well

by paying to Southern Alkali Corporation the cost

actually incurred in drilling and equipping said well,

exclusive of any overhead charges * * * .”

Should Houston Oil Company of Texas, as a result

of its operations, discover gas in any well drilled on said

land in any well. drilled by the Houston Oil Company

of Texas in an unsuccessful effort to complete a com-

mercial oil well, the said Houston Oil Company of Texas

agrees to complete said well as a gas well; and should

Pee 3

. % hs : adores

oe NRG TO RES E, STN RET RR. ——

pa FLERE LG SEL LSE AL OE NI IE PENCE AD = FREER

heats eae sara lca PS FWD SRI RE ELI IRE AIS PIGEON NEES AL RDOT SEARE SEES

3

said well, when completed, produce merchantable gas

in marketable quantities, the Southern Alkali Corpora-

tion may, at its option, within forty (40) days after the

completion, take over and own said gas well by paying ‘

to the Houston Oil Company of Texas the cost actually i

incurred in drilling and equipping said gas well, exclusive

of any overhead charges, and exclusive of any drilling

costs below the producing horizon. Provided, however,

it is distinctly understood and agreed that the Houston

Oil Company of Texas shall not have the right or priv-

ilege of completing more than five (5) such gas wells.

+ * * (Tralics added.) (R. 386, 389-396.)

PROBA TOL LIE EE ITE

The clauses just quoted will be referred to hereafter as the

contract provisions of said assignment.

On September 15, 1933, Southern Alkali assigned and con- :

veyed to Petitioner, Southern Minerals Corporation, all the F

leasehold gas rights thus acquired by it from Houston (R. e

"$6-396).

On January 6, 1938, six years after Houston had assigned

its gas and gas rights to Southern Alkali, Houston assigned

to Respondents, Simmons and Webb, the leasehold ofl rights

in a portion of the 333-acre Harrell lease and a portion of the

Lawrence lease, two of the six leases covering 1300 acres of

land included within such previous assignment of gas and gas

rights to Southern Alkali (R. 386, 399, 403 ). Such assignment

recited in substance:

Sek SER

“Whereas First Party is the owner of the oil rights

under an oil and gas lease from Harrell and wife to

Kelly * * * ; and whereas First Party is the owner of the

oil rights under an oil and gas lease from Lawrence and

wife to Harrell and Harrell to Kelly * * * ; and whereas

it is the intention of this instrument for First Party to

assign to Second Parties the oil rights under said exist-

ing leases insofar as they cover a portion of the above

described lots, in consideration of the drilling of certain

wells and the payment of overriding royalty as herein

LATS ORIEN RO RSMO TH

4

provided * * * , Houston Oil Company does hereby

bargai’ sell, transfer and assign, subject to the perform-

anc’ ~ the obligations here imposed, unto Jay Simmons

an¢. 3, Webb, their heirs and assigns, all of its rights

u_» seid existing leases in so far as same cover 13/ 16ths

w.. king interest in the oil rights in and to Lots 23, 24

and 27 except the east 20 thereof, Lot 20 and part of

Lot 13; * * * it is understood that it is the intention of

the Parties of the First Part that this assignment of oil

rights shall assign to Second Party all of the rights under

the existing oil and gas leases except the rights of the

Southern Alkali Corporation and/or Southern Minerals

Corporation as evidenced by contract and assignment

of gas rights of April 5, 1932,* * *, to which instru-

ment and all the terms thereof reference is hereby made

as if same were fully copied herein. * * * As further

consideration for this assignment Houston Oil Company

reserves an overriding royalty of Yth in oil, that is Yeth

of 8/8ths of the value or proceeds of the oil which shall

be actually produced.” (Italics added.) (R. 386, 399-

403.)

In no sense does such instrument purport to assign any gas

rights. In the granting clause and throughout the instru-

ment, it will be noted, reference is made solely to “oil rights.”

On July 5, 1938, the well with respect to which the imme-

diate controversy arises, was completed by Respondents, Sim-

mons and Webb, on the Harrell land. The well since com-

pletion has produced and is capable of producing great quan-

tities of gas.

On or about August 9, 1938, under a written contract

dated July 30, 1938 (R. 420-421), Respondents, Simmons

and Webb, began selling and delivering gas from such well

to Respondent, Scuthern Coast Corporation (R. 188) for

fuel purposes and for jetting oil wells in Corpus Christi Field

(R. 189), an entirely different field from that in which the

well in controversy was situated. In such operations Respond-

ents, Simmons and Webb, to the time of trial in the District

5

Court, had produced from said well and sold to Respondent,

Southern Coast Corporation, approximately one half billion

cubic feet of gas (R. 189), and, as an incident to such gas

withdrawals, had obtained, appropriated and sold 19,126.33

barrels of hydrocarbon liquids (R. 448-453), a very sub-

stantial portion of which resulted from condensation of

gas existing as such in the producing sand (R. 102, 115, 144,

145, 283-288, 327-329, 459).

Alleging its ownership of gas in place and, in consequence,

its ownership of the liquid condensates therefrom, Petitioner,

by suit instituted in the District Court for the Southern Dis-

trict of Texas, sought to enjoin such appropriation and sale

of its gas as a continuing trespass upon its real property right

and estate therein and to recover damages for gas and products

of gas theretofore taken by Respondents (R. 15-21). To

Petitioner’s suit Respondents, by their answer, asserted (R.

23): That the well in controversy is an oil well, and that

as a result Respondents are vested with absolute title (as dis-

tinguished from a mere right of reasonable user) to gas pro-

duced therefrom with oil, and that accordingly they had the

right to sell and dispose of the gas; but in the alternate, if the

well is a gas well, Respondents are vested with all the rights

of Houston and drilled the well in compliance with said con-

tract provisions (giving to Houston the right to drill five gas

wells and take the products therefrom upon failure of South-

ern Alkali to exercise the option given it), and, Petitioner

having failed to take over the well in forty days, Respondents

are entitled to all the products thereof (R. 24, 25).

It thus appears that the parties join issue as to their re-

spective rights in gas from such well whether it be an oil well

or a gas well. If the well is an oil well, the principal question

of law is whether Respondents, owners of the oil rights only,

are entitled to take and sell as their own the gas produced

6

with the oil, and thus defeat Petitioner’s vested estate in the

gas, or are limited to a mere right of user of the gas as an in-

strumentality in producing their oil. If the well is a gas well,

the principal questions of law are whether Respondents have

succeeded to Houston’s rights under the contract provisions,

whether the well in controversy was drilled by Respondents

in compliance with the conditions of such contract provi-

sions, and whether Petitioner has forfeited its title to the gas

from the well.

After full trial upon the merits, the District Court ren-

dered judgment denying Petitioner any relief (R. 32). That

Court wrote no formal opinion, but filed Findings of Fact and

Conclusions of Law (R. 33-46), finding and concluding in

substance: (1) That the well in fact is an oil well (R. 41, 42,

45 and 46). and that Respondents, as a matter of law, were

owners of the gas produced from said well with oil, with the

consequent right to sell and dispose of such gas (R. 43-46),

despite the fact that Petitioner was owner of gas in place

without exception or reservation and had no right to take

over any oil well completed by Respondents. (2) That the

right of Houston, under the contract provisions of its as-

signment to Southern Alkali, to complete gas wells up to five

‘a number and take the products therefrom in the event

Southern Alkali, or its assigns, failed to take over such wells,

was assignable and was, in fact, assigned (by the assignment

above referred to) by Houston to Respondents, Simmons

and Webb; and if the well in question were a gas well, the

products of the well were property of Respondents, Simmons

and Webb, and Petitioner could not complain of the pro-

duction and sale of gas therefrom because Petitioner had failed

to take over the well within the forty-day period provided,

and had waived and was estopped to assert such right (R. 33-

41). The District Court made no finding of fact and ex-

pressed no conclusion of law as to whether Respondents had

7

complied with the conditions upon which their right to com-

plete the well as a gas well depended.

On appeal the Court of Appeals, in affirming the judgment

of the District Court, assumed, without definitely finding as

a fact, “that this is zof a well ‘producing as much as 50 barrels

of oil per day’ but is a well producing merchantable gas in

marketable quantities,” and, accordingly, assumed the well is a

gas well as described in the contract provisions of the assign-

ment from Houston to Southern Alkali. Upon such assump-

tion the Court of Appeals held that the right of Houston to

complete five such gas wells was assignable and was, in fact, as-

signed by it to Respondents, Simmons and Webb; that Peti-

tioner had failed to exercise its option to take the well over;

and that consequently the products thereof belonged to Sim-

mons and Webb. Jupce HuTCHESON dissented from the view

of the majority that the right of Houston to complete five gas

wells was assigned to Respondents, Simmons and Webb, by the

assignment dated January 6, 1938, and upon that basis thought

the case should be reversed and Petitioner granted the relief

it sought.

Notwithstanding the District Court found as a fact that

the well is an oil well as defined in the contract provisions of

the assignment to Southern Alkali (R. 41, 42, 44, 45 and 46),

the Court of Appeals did not expressly reject that finding of

fact and substitute its own contrary finding therefor, but

merely “assumed,” without definitely finding as a fact, that

the well is a gas well as therein defined, and then proceeded to

dispose of the rights of the parties upon such “assumption.”

The Court of Appeals expressed no opinion upon, but left to

surmise and speculation, the rights of the parties in gas from

the well in question if, as found as a fact by the District Court,

the well is in fact an “oil well.” By this anomalous procedure

the Court of Appeals, without accepting or rejecting the find-

ing of the District Court that the well in controversy is an oil

ee Se

. es en

re Sl SMS Se ee ae eT: =

—_

PRT PON DANA BOA Ahi Red TEL BOGE bd Sh LIM Ie eng

8

well, adjudicated the rights of the parties upon the hypothesis

that such well is a gas well, but failed and refused to determine

the respective rights of the parties upon the contrary finding

by the District Court that the well is an oil well.

The Court of Appeals further held in effect that Petitioner

having alleged that “Simmons and Webb completed the well

‘in an unsuccessful effort to produce oil,’” was precluded

because of this pleading from contending that Respondents

had not complied with the conditions of the contract pro-

visions of the assignment from Houston to Southern Alkali

limiting Houston’s right and duty to complete the well in

question as a gas well, notwithstanding the fact that Re-

spondents, by their undisputed testimony upon the trial in

the District Court, confessed that they had not complied with

such conditions.

The opinion of the Court of Appeals is reported in 111 Fed.

(2d) 333 (R. 456). Petition for rehearing was overruled with-

out further opinion, or statement of findings of fact, or con-

clusions of law (R. 478).

II.

Jurisdiction

Judgment of the Court of Appeals is dated April 25, 1940

(R. 471). Petition for rehearing was filed on the 14th day of

May, 1940 (R. 472), within twenty-one days from the date

of the judgment as permitted by the rules of the Circuit

Court of Appeals for the Fifth Circuit (Rule 29), and was

denied June 11, 1940 (R. 478). Petition for writ of certiorari

was filed in this Court within three months from the date upon

which the petition for rehearing was overruled. Jurisdiction

of this Court is thereby timely invoked under Sec. 240 (a) of

the JupictaL Cope, as amended (Sec. 347 (a), Title 28, U.S.C.

A.), and Rule 38 (5b) of this Court, and Sec. 240, 8(c) of the

PULTE RATA IAI EPA APTOS OITA LONE DRE LIE IS IIa CY PAMPLONA REE LI Eb IRIN SLI RPO GER IO RD

JupiciaL Cope, and Sec. 350, Title 28, U.S.C.A. NATIONAL

LaBor RELATIONS Boarp v. Mackay Rapio & TELEGRAPH

Co., 304 U.S. 333, 343-344; Unirep States v. SEMINOLE

NartIoNn, 299 U.S. 417, 419-420; Rocers v. Hix, 289 U.S.

582, 586-588; CiTIzENs BANK OF MICHIGAN Cry, IND., v.

OprEeRMAN, 249 U.S. 448, 449; Texas & Paciric RAILWAY

Co. v. MurpHy, 111 U.S. 488, 489; ROBERTSON AND KirkK-

HAM, Jurisdiction of the Sup. Ct. of the U. S., Sec. 354, p.

720.

Questions Presented

(1) Did the Court of Appeals properly decide the issues be-

fore it by assuming, but not finding as a fact, that the well in

controversy is a gas well, and by failing and refusing to de-

termine the rights of the parties to gas produced therefrom if

the well, as expressly found by the District Court, is in fact an

oil well?

(2) Do Respondents, as owners of the leasehold oil rights

in the Harrell land, also own gas produced from a well drilled

by them which produces both oil and gas, notwithstanding

the leasehold gas rights in such land were vested in Petitioner

by prior conveyance, or do they have only the appurtenant

right of reasonable user of such gas as a lift of the oil?

(3) Did the Court of Appeals correctly hold that Peti-

tioner, having alleged that Respondents Simmons and Webb,

“in an unsuccessful effort to produce oil from said land,

drilled, and on or about July 5, 1938, completed a well thereon

producing and capable of producing great quantities of gas,”

was precluded by its pleadings, despite the express provision

of Rules 15 (b) and 54(c) of the RULEs or Civil PROCEDURE,

from contending that Respondents had not discovered gas

therein “in an unsuccessful effort to complete a commercial

oil well,” within the terms of the contract provisions, even

PEERS REO ASR neon

TIS SS

pear ES ag SDAIN RIE MaTGAES

ILIA EN SEI 0h A EWING OF

10

though that fact was true and had been conclusively estab-

lished by judicial admissions made by Respondents at the trial

in the District Court?

(4) Since the right of Houston, under the contract pro-

visions of its assignment to Southern Alkali, to complete five

gas wells and to take the products therefrom upon the failure

of Southern Alkali, or its assigns, to take over said wells, was

expressly limited to those instances in which Houston “as a re-

sult of its operations discover gas in any well drilled by Hous-

ton Oil Company of Texas in an unsuccessful effort to com-

plete a commercial oil well,” did the Court of Appeals cor-

rectly hold that Respondents, Simmons and Webb, had com-

plied with such conditions simply because “the drilling” of the

well in controversy “was continued beyond the gas strata,” in

which it was completed, “in a search for oil still lower, when

the drill was twisted off in the hole,” in the light of the undis-

puted testimony of Respondents that a good oil well could

have been completed in three or four shallower sands and that

the well in question was not completed “in an unsuccessful

effort to complete a commercial oil well” as was required by

the contract provisions of such assignment?

(5) Was the right of Houston to complete five gas wells

under the contract provisions of its assignment to Southern

Alkali, assignable by it to Respondents, Simmons and Webb?

. (6) Was the right of Houston to complete five gas wells in-

tended to be, and was it, in fact, assigned by Houston to Re-

spondents, Simmons and Webb, by the assignment dated

January 6, 1938, as held by the majority of the Court of

Appeals, Juoce HuTCHESON dissenting?

(7) Did the Court of Appeals correctly hold that the rights

of Petitioner under the contract provisions of the assignment

by Houston to Southern Alkali defining Petitioner’s right to

take over a gas well drilled by Houston are to be governed

by rules relating to simple options, of which time is the

11

essence, placing upon Petitioner the burden of showing that

it had exercised the option within the time therein provided,

or are such rights to be governed by the rules relating to pro-

visions for forfeiture, placing upon Respondents the burden

of showing strict compliance with all prerequisites to ac-

complish such forfeiture?

Reasons for Granting Writ

(1) In disposing of the issues before it, the Court of Ap-

peals, by assuming, but not finding as a fact, that the well in

controversy is a gas well, and by failing and refusing to de-

termine the rights of the parties to gas produced therefrom

if the well, as expressly found by the District Court, is in fact

an oil well, has so departed from the accepted and usual course

of judicial procedure as to call for the exercise by this Honor-

able Court of its power of supervision. It was the duty of the

Court of Appeals, particularly upon timely request by Peti-

tioner in its petition for rehearing, to state in writing its find-

ings of fact and conclusions of law with respect to the rights

of the parties in gas from the well in question if such well

were, as found by the District Court, in fact an oil well, or to

state the reasons for its failure to do so.

There is in issue not only (1) Petitioner’s rights in gas from

the well in question if it be a gas well, but (2) its rights in gas

from such well if it be an oil well. The case therefore, presents

only two ultimate and opposing fact questions; the well

is a gas well or it is an oil well. It follows that if the Court

of Appeals intended to define and adjudicate the nature

and extent of Petitioner’s legal rights and deny it the relief

it sought, upon a fact finding, it was incumbent upon it, in

the accepted and usual course of procedure (1) to find

whether the well was in fact an oil well or a gas well, and (2)

state its legal conclusions based thereon. Accordingly a full,

12

comprehensive and proper disposition of the case by the Court

of Appeals upon a finding, rather than upon an assumption,

of fact required of it, in deference to the rights of Petitioner,

an unequivocal statement either approving the finding of the

District Court that the well is in fact an oil well or revers-

ing that finding and substituting therefor its own finding

that the well is a gas well, and a definite statement of the

legal conclusions reached upon the fact so approved or found

by it.

On the other hand, if the Court of Appeals intended to

leave the fact question undetermined and to dispose of the

case solely upon questions of law it was incumbent upon it to

consider and expressly determine the respective rights of the

parties, as a matter of law, not only upon the hypothesis that

the well is a gas well but also upon the hypothesis that it

is an oil well. This the Court did not do. It assumed, without

finding as a fact, that the well was a gas well and decided the

case upon that single assumption. It expressed no legal con-

clusions as to Petitioner’s right to gas from the well if it be an

oil well. It affirmed the judgment of the District Court, ap-

parently without considering Petitioner’s right to the relief

it sought and its propositions presenting such right in the

event such well be an oil well. It made no statement as to its

reasons for declining to set out its conclusions with reference

to such rights or to pass upon such propositions.

In failing to find as a fact that the well is a gas well or an oil

well; in declining expressly to consider Petitioner's rights in

gas therefrom if it be an oil well, with no statement as to why

such rights were not considered; and, if such rights were con-

sidered, in declining to set out its conclusions with respect

thereto, the Court of Appeals has deprived Petitioner of spe-

cific findings and conclusions to which definite specifications

of error might be addressed to this Court for review. In so do-

ing the Court of Appeals deprived this Petitioner of its right

13

accurately to assign for review before this Honorable Court

the findings and holdings of the Court of Appeals upon Peti-

tioner’s valuable property rights properly in issue and pre-

sented to that court.

In the absence of any statement on the part of the Court of

Appeals as to why it did not pass upon Petitioner’s asserted

rights in gas from the well in question though it be an oil well

or as to why it denied plaintiff any relief based upon such

rights in the event it did pass thereon, Petitioner is forced

to assume that the Court of Appeals either (1) considered

that such rights were not in issue and before it, or (2) in-

tended inferentially, by affirming the judgment of the trial

court, to hold that if the well be an oil well Respondents

owned the gas produced therefrom with oil and accordingly

Petitioner was without ground for complaint regardless of

the relative quantity of gas to oil taken and sold by Respond-

ents therefrom. If the Court thought that the matter was not

properly in issue or before it, it should have so announced,

stating its reasons therefor. Had it done so, Petitioner could

accurately and precisely have presented to this Court for re-

view the correctness of the ruling of the Court in this regard.

On the other hand, if the Court intended to hold that Peti-

tioner had no interest in gas produced from the well in ques-

tion if it produced both oil and gas, such a decision was cer-

tainly of such vital importance to Petitioner, to a proper ad-

judication of the case and to oil and gas jurisprudence as

clearly to require the Court to set out its reasons for so con-

cluding in order that its decision might, in due order of pro-

cedure, be precisely and accurately presented to this court for,

review. In short, the Court of Appeals should either have ex-

pressly declined to pass upon such rights, stating its reasons

therefor, or expressly set out the legal grounds upon which its

decision was based. Had it done either Petitioner would not

have been deprived of specific findings and conclusions essen-

£2 RA ONG

. ee arena te anes SM ECVE

PEALE NE LILES AR AERA

{ROOM EO

14

tial to the exercise of its right of accurate, fair and full review

before this Honorable Court; and the effect of the judgment

of the Court of Appeals upon Petitioner’s valuable property

rights in gas from a well drilled by Respondents, and pro-

ducing both oil and gas, would not be the subject of specula-

tion and uncertainty.

The importance to Petitioner of the implications of such an

indeterminate adjudication is clear, and the effect of such

judgment may extend beyond the immediate case. Petitioner

is the owner of the leasehold gas rights, and Respondents and

Houston Oil Company are the owners of the leasehold oil

rights in some 1300 acres of land in the immediate vicinity of

the well in controversy, all affected by the terms and pro-

visions of the assignment from Houston to Southern Alkali

and the contract provisions therein contained. Accordingly

if the opinion of the Court of Appeals should be construed,

by implication, to hold that if the well in question produces

some oil as well as gas, Petitioner has no title to gas therefrom

but the Respondents are vested with title thereto, then its

effect may and probably will be to adjudicate that Petitioner

has no title to or right in gas from any other well producing

oil and gas drilled by Respondents or Houston on the lands

affected by the assignments. Such judgment, if given that

effect, will permit the Respondents, and accordingly Houston,

to operate any well producing both oil and gas, and completed

by them, in any manner they see fit and to take and appro-

priate the gas therefrom regardless of the relative quantity of

gas to oil produced. As a result of such decision, if so inter-

preted, the gas reserves of Petitioner might and probably will

be entirely dissipated. Under the contract provisions referred

to, Petitioner can protect its right to gas from a gas well but it

cannot do so with respect to a well producing oil and gas for

it has no right to take over such a well. It is apparent, we

think, that such valuable property rights of Petitioner should

15

not be left to speculation and doubt nor Petitioner’s full right

of review before this Court embarrassed by any such un-

certainty and indefiniteness of decision by the Court of Ap-

peals.

In its petition for rehearing, Petitioner pointed out the pos-

sible effect of the opinion and judgment rendered by the Court

of Appeals upon its substantive rights, and requested the

court to make specific findings and conclusions with respect

to the matters here presented (R. 472). In overruling the Pe-

tition for rehearing without further statement, opinion or

finding, the Court of Appeals declined such request, thus

leaving the rights of the parties to gas from an oil well unde-

termined except perhaps by implication, with the attendant

consequences pointed out above; and the case has been de-

cided on incomplete fact assumptions rather than upon com-

plete findings of fact.

(2) If the Court of Appeals held inferentially (by affirm-

ing the judgment of the District Court) that Respondents,

Simmons and Webb, owners onl of the leasehold oil rights,

also own gas produced with oil from the well in question

though the leasehold gas rights in the land from which said

well produces are vested in Petitioner, the Court of Appeals

has decided a question of particular and outstanding import-

ance to the oil and gas industry, probably untenable and in

conflict with the established law, and has decided an import-

ant question of local law contrary to the holdings of the Su-

preme Court of Texas. GUFFEY v. Stroup (Tex. Com. App.,

opinion adopted, Tex. Sup. Ct.), 16 S.W. (2d) 527.

The question here involved—the determination of the re-

spective rights of the leasehold owner of oil rights and

the leaschold owner of gas rights in gas from an oil well

—is not only of vital importance to the litigants but to

the oil and gas industry in general. If, as has been held in-

ferentially by the Court of Appeals, the owner of leasehold

GASES EEN LOLA MIE LLL OEE LOOP GEE

PRATT COL 2

16

oil rights also owns gas produced from a well completed by

him which produces both oil and gas, instead of having the

mere right of reasonable user of such gas as a lift of oil, then

such owner of the leasehold oil rights, may, upon such hold-

ing, entirely dissipate previously vested gas rights and estates.

This is true for the reason that if the owner of the leasehold oil

rights also owns gas from a well producing both oil and gas,

then he may produce, sell and dispose of the gas regardless of

the relative quantity of gas to oil produced and without regard

to the fact that another is vested with the estate in the gas.

Such decision attributes no value to gas and utterly disregards

the rights of those vested with title thereto.

At most, owners of leasehold oil rights only, as are Respond-

ents here, have solely a right of user in gas, that is, a right in

the nature of an easement to the use of gas as a lift of oil, just

as they have the right to the use of surface, water and other

essentials to the enjoyment of the oil estate. Such appurtenant

right of user no more vests Respondents with ownership of

gas than the right of user of the surface and soil vests them

with title thereto. Respondents, having only the right of user

of gas as an appurtenant to their estate in the oil, must exercise

such right reasonably with due regard for the previously

vested estate of Petitioner in such gas.

The holding of the District Court, in which the Court of

Appeals impliedly acquiesced, that Respondents owned the gas

produced from such well with oil, with the consequent right

to appropriate, sell and dispose of such gas, regardless of the

relative quantity of gas to oil produced from said well, is

clearly in conflict with the case of GUFFEY v. STROUD, 16 S.W.

(2d) 527, by the Texas Commission of Appeals, in which that

Court, in an opinion approved by the Supreme Court of

Texas, held that the owner of the leasehold oil rights had no

title to gas encountered in drilling for oil, but had only the

a neeatmeenicentinse

17

right to the use of such gas in“ properly” drilling for and pro-

ducing oil.

Because of its high gas-liquid ratio or because of the nature

of the liquid products, found by the District Court to be “gas-

oil” (R. 42), the well in question was reported by Respond-

ents to and by the Railroad Commission of Texas classified as

a “gas well producing condensate and/or crude oil” (Exhibits

99-101, R. 427 to 438). The well has at all times been operated

as a gas well, the gas therefrom being sold by Respondents

Simmons and Webb to Respondent Southern Coast Corpora-

tion to be utilized by the latter for the jetting of oil wells

and fuel purposes in Corpus Christi Field, an entirely dif-

ferent field from that in which the well is situated. The well

having been classified as a gas well, the gas therefrom cannot

legally be used as a propelling agency or lift of the oil there-

from and thereafter blown into the air, as might be done had

the well been classified by the Commission as an oil well. In-

stead the well can be operated only for the production of

gas, and the liquid products (whether oil or condensates of

gas) are but incidental to gas withdrawals.

It follows that Respondents, in operating the well as a

gas well and in appropriating and selling the gas to be used

for jetting of wells and fuel purposes in another field, are

taking from the well in question far more gas than would be

legally permitted in the production of oil therefrom. If Re-

spondents are taking more gas from the weil than can be

legally used as a lift of oil therefrom, it must follow that

by such excessive withdrawal of gas they are exceeding their

right of reasonable use of the gas as a lift of oil. Assuming

therefore that the well was upon completion made to pro-

duce as much as fifty barrels of oil per day for ten con-

secutive days by extremely large gas withdrawals and was

for that reason an oil well as defined in the contract clauses

of the assignment from Houston, it does not follow that

18

Respondents are making reasonable use of the gas to produce

the oil.

Instead they are appropriating and selling the gas for other

purposes and obtaining such oil, if any, as the well produces,

as an incident to gas production. This they can not do and

thus destroy Petitioner’s previously vested estate in gas, un-

less they have title (as distinguished from the right of reason-

able user of gas as a lift of oil) to gas from the well. The de-

cision of the Court of Appeals, if construed as inferentially

holding to the contrary, is clearly wrong and in conflict with

the settled law of Texas as declared in the decision of GUFFEY

v. Stroup (Tex. Com. App.), 16 S.W. (2d) 527. Further-

more by the authority of that decision, Petitioner was clearly

entitled to an injunction to restrain the appropriation and sale

of gas from the well and to judgment in damages for that

heretofore taken by Respondents; and the holding of the

Court of Appeals that Petitioner is not entitled to such relief

is in conflict with the holding in that case.

(3) Petitioner alleged in its complaint (R. 15-21) that Re-

spondents, “Jay Simmons and J. E. Webb, in an unsuccessful

effort to produce oil from said land, drilled, and on or about

July 5, 1938, completed a well thereon producing and capable

of producing great quantities of gas;” and that Respondents

are converting large quantities of gas therefrom. Petitioner

did not thereby allege the well to be either a gas well or

an oil well; it merely alleged, as is uncontradicted in the

proof, that the well “is producing and capable of producing

great quantities of gas,” and sought an injunction restrain-

ing appropriation of its property and damages.

In their answer Respondents allege that they are owners

of all rights formerly owned by Houston and specifically

pleaded in substance that the well in question, if a gas well,

was drilled by them in compliance with the contract pro-

_

19

visions giving Houston the right to drill five gas wells (R.

24, 25).

Respondent, J. E. Webb, a partner of his corespondent, Jay

Simmons, and in charge of the drilling of the well (R. 221),

testified upon cross-examination without objection (1) that

a good oil well could have been completed in three or four

shallower sands, and (2) that Respondents did not discover

gas in the well in question “in an unsuccessful effort to com-

plete a commercial oil well” (R. 231-234). This evidence

wa. material only upon the question of whether or not the

well in controversy was within the terms of the contract pro-

visions (a matter peculiarly within the knowledge of Re-

spondents) ; and such evidence was admitted without ob-

jection or claim of surprise by Respondents as to proof of

fact or as to theory upon which Petitioner was proceeding.

There was no claim that any prejudice resulted from the

quoted allegation of plaintiff’s petition.

Notwithstanding Respondents’ confession at the trial that

they could have completed the well as a good oil well in any

one of three or four shallower sands and that they did not

discover gas in the well “in an unsuccessful effort to complete

a commercial oil well,” the Court of Appeals nevertheless

held that Petitioner was precluded because of its pleading

from asserting the truth of such admission (R. 461).

Such holding is contrary to the intention and meaning of

the FeperaL RuLEs oF Civit Procepure, and is expressly

contrary to Rules 15(b) and 54(c) thereof, and is in conflict

with other decisions of the Circuit Courts and District Courts

with respect thereto. (NESTER v. WESTERN UNION TELE-

GRAPH Co. (Dist. Ct. So. Dist. Cal.), 25 F. Supp. 478, and

authorities cited; Frep v. WATERMAN STEAMSHIP CorPor-

ATION (C.C.A. Sth Cir.), 104 F. (2d) 849; Swirr & Co. v.

Youne (C.C.A. 4th Cir.), 107 F. (2d) 170, 172; ATWATER

v. NortH AMERICAN Coat Corp’N (C.C.A. 2nd Cir.), 111

20

F. (2d) 125; COLLINS Vv. MeEtRo-GoLDWYN-MayYER PICTURES

Corr’Nn (C.C.A. 2nd Cir.), 106 F. (2d) 83, 86; BaRTIN Vv.

CoNNEcTICUT GENERAL LIFE INSURANCE Co. (Dist. Ct.

Neb. Dist.) , 25 F. Supp. 579).

(4) By the contract provisions of the assignment from

Houston to Southern Alkali, the former was given the right

to complete a gas well only in the event, as a result of its oper-

ations, it should discover gas in a well drilled by it in an unsuc-

cessful effort to complete a commercial oil well. The import-

ance to both parties of the right of Houston to complete gas

wells is clearly indicated by the fact that they were strictly

limited to five in number and by the conclusion reached by the

Court of Appeals that the products of such five wells should

be forfeited by Southern Alkali to Houston in the event

Southern Alkali failed to take over such wells. Houston wanted

the privilege to complete such wells; Southern Alkali wanted

such privilege strictly limited both as to number and condi-

tions upon which they might be completed. Southern Alkali

insisted upon such limitations because the forfeiture of the

products therefrom to Houston (which might result in the

complete exhaustion of its gas reserves) could have been pre-

vented only by paying the cost of drilling and equipping such

well to the producing horizon. This being true, it seems clear

that the parties contemplated that Houston should not be per-

mitted to complete any well drilled by it as a gas well simply

because it had unsuccessfully explored sands below the gas

producing horizon in search of oil, but only after it had also

unsuccessfully explored sands above as well. In this instance, as

shown by the undisputed testimony, Respondents made no ef-

fort to complete the well as an oil well in three or more known

shallower oil producing sands. In other words, they not only

did not discover gas from the well in question in an unsuccess-

ful effort to produce oil, but they willfully completed the well

knowing that shallower sands existed in any one of which

21

they could have completed, but made no effort to complete,

a commercial oil well. In this situation, assuming that Re-

spondents were, by assignment, vested with the rights of

Houston, they have utterly failed to show compliance with

the conditions of the contract by which the title to gas from

the well in question, if it be a gas well, should be forfeited by

Petitioner to them.

If, in its drilling operations, Houston drilled a well that

could be completed either as a commercial oil well or a com-

mercial gas well, the contract provisions of the assignment

did not give Houston the privilege of electing to complete it

as the one or the other, because its right to complete gas wells

was limited to those instances in which gas was discovered “in

an unsuccessful effort to complete a commercial oil well.” It

follows that if Houston, in its operations, as was the situation

in the instant case, drilled through three or four oil sands, in

any one of which a commercial oil well could have been com-

pleted, and though one gas sand in which a commercial gas

well could have been completed and thereafter prosecuted its

drilling operations to a greater depth in an effort to find a

more productive oil sand but, due to mechanical difficulties,

was unable to complete an oil well at such lower depth,

Houston, having closed off the lower part of the hole,

would not have the right to elect whether it would per-

forate the casing in the gas sand and complete the well as

a gas well or perforate the casing at one of the shallower

oil sands and complete the well as an oil well. The same is

true of the rights of Respondents if the rights of Hous-

ton were assignable and were assigned to Respondents. Hav-

ing found oil sands in this well, it was Respondent’s duty to

leave Petitioner’s property undisturbed and to complete the

well in one of the shallower oil sands that had been found and

drilled through. It follows that the Court of Appeals was

clearly wrong in holding that, simply because the drill was

tai

7 sens Big aH Ye NE BO ERA AM ST MEA SRS NIY SF

ae Lt

PERRI Bitlet tN a a.

22

twisted off at a lower depth than that at which the well was

completed, the well was completed “in an unsuccessful effort

to complete a commercial oil well” and therefore drilled and

completed in compliance with the conditions giving Houston

the right to drill and complete such well as a gas well and take

the products therefrom in the event Southern Alkali failed to

take it over.

(5) The contract provision of the assignment from Hous-

ton to Southern Alkali, by which Houston was given the right

to complete five gas wells was not assignable: (a) Because by

the language of such contract provision the right to complete

five gas wells was restricted to Houston and was not extended

to its “assigns” as was true of the correlative right of Southern

Alkali to complete oil wells under such contract provision;

(b) Because the duty imposed upon Houston to complete five

gas wells under the conditions expressed in the contract provi-

sion and to permit Southern Alkali to take over such wells by

paying the cost actually incurred “in drilling and equipping

said gas well, exclusive of any overhead charges and exclusive

of any drilling cost below the producing horizon,” conferred

special privileges and responsibilities upon Houston, involv-

ing its special skill, integrity, credit and responsibility, in re-

liance upon which Southern Alkali reposed special trust and

incurred substantial risk. The Court of Appeals, in holding

that such contract right to complete five gas wells was assign-

able by Houston to Respondents, Simmons and Webb, has

decided an important question of general law, particularly

affecting the entire oil and gas producing industry, which is

probably untenable.

(6) Respondents have only such rights in the 333-acre

Harrell tract as passed to them by the assignment from Hous-

ton of the leasehold oil rights in a portion of said land. The

assignment is limited to the “oil” rights under a portion only

of the Harrell lease and a portion of the Lawrence lease,

sae ERK

23

Houston retaining the oil rights to the remainder of the six

leases to which the contract provisions of the assignment of

gas rights by Houston to Southern Alkali, dated April 5,

1932, related. The majority holding by the Court of Appeals

that the rights of Houston, under the contract provisions

of said assignment, to drill not exceeding five gas wells were

assigned by it to Respondents Simmons and Webb by the as-

signment dated January 6, 1938, is incorrect, and in so holding

the majority of the Court of Appeals has decided an important

question of general law, particularly affecting the entire oil

and gas producing industry, which is probably untenable and

in conflict with the weight of authority.

(7) The Court of Appeals construed the contract provision

of the assignment dated April 5, 1932, as to taking over gas

wells by Southern Alkali, merely to afford a simple option right

of which time is the essence, rather than as a provision whereby

Southern Alkali, or its assigns, as the owner of the gas in place

by failure to take over the well would forfeit its title to such

gas. On that erroneous construction of the nature of the con-

tract provision as to taking over gas wells, for the sole reason

that Petitioner did not offer to take over the well within forty

(40) days, the Court of Appeals held that “it is unnecessary to

inquire whether the further finding of the District Court was

correct, that the option right was waived by Southern and the

waiver was converted into an estoppel because Simmons and

Webb made contracts and substantial expenditures on the

faith of Southern’s statement that it did not wish the well.”

Had the Court of Appeals properly construed the contract

as a provision for forfeiture, decision as to questions of waiver

and estoppel, and as to whether forfeiture resulted from such

facts, would have been required because the equitable rules

governing questions of forfeiture impose the burden of proof

SO AE

_

”

24

upon the party asserting the forfeiture to have occurred; and

the rule as to simple options, upon which the court based its

opinion, would not have been applicable. Accordingly, the

Court of Appeals has held that Petitioner has forfeited its

valuable property rights in gas in place upon inapplicable and

erroneous rules of construction and has decided an important

question of general law probably untenable and in conflict

with the weight of authority, and an important question of

local law contrary to a decision of the Supreme Court of Texas

as expressed in JoNEs v. Gipps, 133 Tex. 627, 130 S.W.

(2d) 268, and at variance with and contrary to a deci-

sion of the Circuit Court of Appeals for the Tenth Circuit

as expressed in GLoyp v. Mip-WEst REFINING COMPANY,

62 Fed. (2d) 483.

Prayer for Writ

WHEREFORE, Petitioner respectfully prays that a writ of

certiorari issue under the seal of this Court directed to the

Circuit Court of Appeals for the Fifth Circuit at New Orleans,

commanding said Court to certify and send to this Court on a

day certain to be named therein, a full and complete transcript

of the record and the proceedings had in said Court in the case

numbered and entitled on its docket No. 9183, SOUTHERN

MINERALS CORPORATION, APPELLANT V. JAY SIMMONS, ET

AL., APPELLEES, to the end that this cause may be reviewed and

determined by this Court as provided by the statutes of the

United States and that the judgment of the Circuit Court

of Appeals and of the District Court be reversed by this Court

and judgment rendered for Petitioner granting the injunction

and damages as prayed, or in the alternative, that the cause be

remanded to the Circuit Court of Appeals for a more complete

statement of the facts as found by that Court and conclusions

ee

25

upon which its judgment was based, and for such other relief

as to this Honorable Court may seem right and proper.

a’

eu.

Date this day of September, A.D. 1940.

SOUTHERN MINERALS CORPORATION,

By Birce Ho tt,

Corpus Christi, Texas;

By Dan Moopy,

Austin, Texas;

By RatrH R. Woon,

Houston, Texas.

Counsel for Petitioner

Of Counsel

*

CATES a NS