Petitioners Brief — Southern Minerals Corp. v. Simmons

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IN THE

SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1940

SOUTHERN MINERALS CorporaTION, Petitioner,

v. 2

Jay SIMMONS, ET AL., Respondents :

BRIEF IN SUPPORT OF PETITION FOR WRIT :

OF CERTIORARI Ps

To THE HoNorRABLE, THE SUPREME COURT OF THE UNITED L

| STATES: #

I.

Opinions of the Courts Below

The opinion of the United States Circuit Court of Appeals

for the Fifth Circuit (R. 455), is reported in 111 F. (2d)

333. The judge before whom this cause was tried in the United

States District Court for the Southern District of Texas,

wrote no formal opinion but filed findings of fact and con-

clusions of law (R. 33-46).

II.

Jurisdiction

A statement of the grounds on which the jurisdiction of

this Honorable Court is invoked is set forth in the preceding

Petition under heading II (pp. 8-9) and are hereby adopted

and made a part of this brief.

: III.

Statement of the Case

A statement of the case has been made in the preceding

Petition under heading I (pp. 2-8) and is hereby adopted

and made a part of this brief.

$Y.

Specifications of Error

1. The Court of Appeals erred, particularly upon Pe-

titioner’s timely request therefor in its Petition for re-

hearing, in failing specifically and expressly (a) to find, as a

fact essential to a full and correct determination of the case

and the property rights of the parties in issue (instead of as-

suming as a fact for the purpose of disposing of the questions

of law expressly considered by it) that the well in question

is a gas well as described in the assignment from Houston

Oil Company to Southern Alkali, or (b) to set out its con-

clusions with respect to the rights and titles of Petitioner and

Respondents in gas from such well in the event it assumed or

found, as did the District Court, that the well in question was

an oil well as defined in such assignment.

2. The Court of Appeals erred in holding, inferentially,

that if the well in question be an oil well, Respondents

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Simmons and Webb are vested with title to gas produced

from such well.

3. The Court of Appeals erred in holding that Petitioner

was precluded from contending that Respondents had not

complied with conditions of the contract provisions in the

assignment from Houston to Southern Alkali under which

the title to products of five gas wells might be forfeited

to Houston, simply because Petitioner had alleged that the

well was drilled by Respondents “in an unsuccessful effort to

produce oil.”

4. The Court of Appeals erred in holding that Respond-

ents Simmons and Webb, by “drilling” the well in ques-

tion “beyond the gas strata,” in which it was completed, “in

a search of oil still lower,” complied with the condition of

the contract provisions of the assignment from Houston to

Southern Alkali giving Houston the right to complete a gas

well and take the products thereof upon failure of Southern

Alkali, or its assigns, to take the well over.

SADR GOT SE

GEER LOLOL D HEE LEIP

5. The Court of Appeals erred in holding that the contract

rights of Houston Oil Company under the assignment from

it to Southern Alkali Corporation, dated April 5, 1932, with

respect to five gas wells were assignable by Houston Oil Com-

pany.

6. The majority of the Court of Appeals erred in hold-

ing that the contract rights of Houston Oil Company under

the assignment from it to Southern Alkali Corporation, dated

April 5, 1932, with respect to five gas wells were intended

to be, and were, assigned by Houston Oil Company to Re-

spondents Simmons and Webb by the assignment dated Jan-

uary 6, 1938.

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7. The Court of Appeals erred in holding that the rights

of Petitioner under the contract provisions of the assignment

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30

by Houston to Southern Alkali defining Petitioner’s right to

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

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

placing upon Petitioner the burden of showing that it had

exercised the option within the time provided rather than

in accordance with the rules relating to forfeitures under

which the burden is placed upon Respondents of showing

strict compliance with all prerequisites to accomplish such for-

feiture.

V.

ARGUMENT

Summary of Argument

PoInT 1. Since Petitioner’s right to the gas from the well,

whether it be an oil well or a gas well, was in issue and before

the court, it was the duty of the Court of Appeals, par-

ticularly upon timely request of Petitioner in its Petition for

Rehearing, to find as a fact whether the well is an oil well or

a gas well and declare the rights of the parties upon the basis

of such finding. Or, if the court proposed to dispose of the

case on the basis of assumptions of fact, as distinguished from

findings of fact, then the court should have declared the

rights of the parties not only upon the hypothesis that the

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

an oil well. Anything less, as for example the court’s attempt

to decide the case upon the one hypothesis that it is a gas well,

results in failure fully to adjudicate the rights of the parties

and leaves such rights in confusion and doubt and deprives

the parties of specific findings and conclusions to which they

may assign error upon appeal to this Court for review.

Point 2. Petitioner owns the leasehold gas rights; Re-

spondents own only the leasehold oil rights. Respondents, as

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31

owners of the leasehold oil rights only, do not own gas pro-

duced from a well completed by them producing both oil and

gas, but have, at most, only a usufructuary right in the gas

from such a well, that is the right to make reasonable use of

such gas as a lift of the oil therefrom. In appropriating and

selling the gas off the premises Respondents are far exceeding

their rights of reasonable user.

Point 3. Respondent Webb testified that the discovery of

gas in the well in question was not the result of ‘an unsuc-

cessful effort to complete a commercial oil well” but that a

good producing oil well could have been completed in any

one of three or four shallower sands. In view of this testi-

mony and the express provisions of Rules 15(b) and 54(c)

of the FeperaL RuLEs oF Crvit Procepure, under which

this case was filed and tried, Petitioner was not precluded, by

its pleading, from contending that in respect to the well in

question Respondents had not complied with the contractual

provisions of the assignment from Houston to Southern Al-

kali giving Houston the right to complete a gas well and own

the products therefrom in the event Southern Alkali failed

to take the same over.

Pornt 4. Respondents did not, simply by drilling in search

of oil to lower depths than that in which the well in ques-

tion was completed, comply with the conditions of the con-

tract provision of the assignment from Houston to Southern

Alkali giving Houston the right to complete such well as a

gas well and take the products therefrom in the event South-

ern Alkali, or its assigns, failed to take the well over. Such

contract provisions do not give Houston the alternate right

to complete any well drilled by it as either a gas well or an oil

well but gives it the right to complete a well drilled by it as a

gas well only in the event such well cannot be completed as a

commercial oil well.

32

Point 5. The rights of Houston with respect to gas wells

which it might complete (up to five in number), under the

contract provisions of its assignment to Southern Alkali, were

not assignable by Houston to Respondents Simmons and

Webb.

Point 6. The assignment from Houston to Respondents

Simmons and Webb, dated July 6, 1938, did not assign or

convey the rights of Houston under the contract provisions

of its assignment to Southern Alkali with respect to gas wells

(up to five in number) drilled and completed by Houston.

Pornt 7. The contract provisions as to taking over gas

wells by Petitioner provide a forfeiture and the rights of

the parties should have been determined in the light of the

rules governing forfeiture rather than the rules governing

simple options.

POINT 1

Court of Appeals’ Decision Based Upon

Assumption Rather Than Finding of

Fact Made by District Court

As Petitioner has pointed out in its Petition for Writ of

Certiorari (Reason 1, p. 11), it was the duty of the Court

of Appeals to find as a fact that the well in question is an oil

well or a gas well; or, if it intended to dispose of the case

upon questions of law, to announce its legal conclusions as to

Petitioner’s rights in gas therefrom not only upon the hy-

pothesis that it is a gas well but also upon the opposite hy-

pothesis that it is an oil well. The Court of Appeals announced

its conclusions upon the single asswmption that the well is a

gas well. It did not consider Petitioner’s rights in gas from

such well upon the opposite hypothesis that the well is an oil

well nor express its reasons for not considering such rights;

or, if it did consider such rights it failed to set out its con-

33

clusions with respect thereto. The Court of Appeals’ failure

in this regard could have been justified only upon the ground

that such rights were not in issue or before the court.

By its complaint, upon which the case was tried, Petitioner,

without alleging whether the well is a gas well or an oil well,

but alleging its ownership of the gas in place, sought to en-

join the appropriation and sale of gas therefrom by Respond-

ents as a continuing trespass upon its real property right and

estate therein and to recover damages for gas and liquid prod-

ucts of gas theretofore taken and converted by Respondents 2

(R. 15-21); it sought such relief whether the well be an oil %

well or a gas well. s

To this Respondents answered (R. 23), (1) that the well c

is an oil well and that Respondents own and accordingly have :

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the right to appropriate and sell gas produced therefrom with

oil; (2) but in the alternative, if the well is a gas well, Re-

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

The rights of Petitioner in gas from the well in question,

if it be an oil well, were therefore clearly in issue. That such

rights were properly before and considered by the District

Court is shown by the announced legal conclusions of that

court with respect to Petitioner’s right to the relief it sought

not only (1) upon the assumption that the well is a gas well,

but (2) also upon the finding of fact that it is an oil well. No

claim has ever been made by Respondents that if Petitioner

were entitled, upon the facts proven, to injunction and dam-

ages, it should be denied such relief because of any deficiency

in the pleading. This being true, Petitioner was entitled to

such judgment as the proof warranted, regardless of the state

of the pleading. Rules 15(b) and 54(c), FEDERAL RULES OF

Crvit PROCEDURE.

Such rights were likewise properly before and presented

to the Court of Appeals by appropriate specification and

proposition (Petitioner’s Brief, Court of Appeals, pp. 150,

et seq.) , to which Respondents replied by counter-propositions

Paenannr

34

(Respondents’ Brief, Court of Appeals, pp. 148-204), with-

out the remotest suggestion that Petitioner was changing the

theory from that upon which it has proceeded in the court

below or that its rights to gas from the well in question if

it be an oil well were not in issue or properly before the Court

of Appeals.

In this state of the case, it was clearly the duty of the

Court of Appeals to consider Petitioner’s rights with refer-

ence to gas from the well in question, though it be an oil well

and to set out its conclusions with respect thereto, or ex-

pressly to state why it had not considered such rights. Only

by so discharging its duty could the Court of Appeals avoid

the uncertainties resulting from the judgment rendered by

it or protect Petitioner in its right of full review before this

Honorable Court of the holdings of the Court of Appeals

upon vital and material questions in issue and properly pre-

sented to that court for its consideration. RAILROAD CoM-

MISSION v. Maxcy, 281 U.S. 82, 83; PaNaMa Maiz SS. Co.

v. VarGas, 281 U.S. 670, 671; PuBLic SERVICE COMMISSION

v. WISCONSIN TELEGRAPH Co., 289 U.S. 67, 69, 70; UNITED

States v. Macnouia Pet. Co., 276 U.S. 160, 165; OKLa-

Homa REF. Co. v. SEVENRNS Pavinc Co., 251 U.S. 104, 107;

MARYLAND Casuatty Co. v. Jones, 279 U.S. 792; LITTLE

Mirai Cot. & S. R. Co. v. Unrrep States, 108 U.S. 277;

LuTCHER & Moore Lprr. Co. v. KNIGHT, 217 U.S. 257.

POINT 2

Even If Well Is an Oil Well, Respond-

ents Do Not Have Title to Gas There-

from But Only Usufructuary Right in

Such Gas

The District Court found as a fact that the well in ques-

tion is an oil well (R. 41, 42, 45 and 46). Upon such finding

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35

the court held that Respondents were owners of gas produced

from such well with oil, basing such holding upon the fol-

lowing conclusions:

ERR LOR RED

(1) That Houston in its assignment to Southern Alkali

“reserved” the gas rights “appurtenant” to the right to drill

and produce oil and the gas coming from said oil well is

appurtenant and necessary to the production of oil

(FF (11), R. 43) and consequently the gas produced and

sold by Respondents was “appurtenant to the oil rights”

and a part of the gas rights retained by Houston and as-

signed to Respondents; that accordingly Respondents

owned the gas from such well (Concl. V, R. 45), and

(2) That in its assignment to Southern Alkali, Houston

“reserved the gas rights appurtenant to the right to drill

and produce oil and reserved the gas rights appurtenant to

the ownership of the oil rights as expressly provided for in

the original lease from Harrell and wife to Kelly, which

provides:

SENSE eA i 2 SU

* T essee shall have free use of oil, gas, wood and water

from said land except water from Lessor’s wells for all

operations hereunder, and the royalty on oil and gas shall

be in the net quantity after deducting any so used for

operation’ (Ex. ‘A,’ R. 388) ;”

ng A isk Deedee

and that such appurtenant rights were assigned by Hous-

ton to Respondents Simmons and Webb and that they

owned the gas produced from such well (Concl. VI, R. 45,

46).

A simple question should be sufficient to demonstrate that

the trial court was in error and that Respondents do not own

gas produced with the oil from an oil well. The question is: If

Petitioner, as owner of the gas rights, should drill a well cap-

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36

able of producing large quantities of gas and relatively small

quantities of oil, would Petitioner thereby, under the terms

of its assignment, acquire title to the oil produced with the gas

as against Respondents, the owners of theoil rights? Obviously,

the answer is no. Petitioner owns the gas rights by assignment

under the original lease; Respondents own the oil rights by as-

signment under the original lease. Respondents do not hold

any title in Petitioner’s property, as Petitioner does not own

any title in Respondents’ property. The oil belongs to Re-

spondents, whoever may produce it; the gas belongs to Peti-

tioner, whoever may produce it.

By the oil and gas lease from Harrell and wife to Kelly,

the latter, as lessee, under the law as established in Texas,

became vested with title to oil and gas in place, as real

estate, in the Harrell land. (SicLER Om Co. v. W. T. Wac-

GONER Est., 118 Tex. 509, 19 S.W. (2d) 27; STEPHENS

County v. Mw-Kansas Om & Gas Co., 113 Tex. 160, 254

S.W. 290; SHEFFIELD v. Hoa, 124 Tex. 290, 77 S.W. (2d)

1021.) No change in such vested title results from the act of

producing or because of change of form from gas to liquid as

a result of production (LoNE Star Gas Co. v. STINE (Tex.

Com. App.), 41 S.W. (2d) 48; Humsie Om & Rer. Co. v.

Por (Tex. Com. App.), 29 S.W. (2d) 1019-1020; Rey-

NOLDs v. McMaNN Om & Gas Co. (Tex. Com. App.), 11

S.W. (2d) 778; AMERICAN RerF. Co. v. TiaL WESTERN Om

Corp. (Tex. Civ. App., w. e. ref.) , 264 S.W. 335). Such estate

as to gas was assigned and conveyed by Houston to Southern

Alkali and by Southern Alkali to Petitioner and Petitioner

thereby was vested with title to gas in place in the land.

From neither of such assignments was any portion of the

gas in and under the land and that might be produced there-

from excepted or reserved, except perhaps gas from five gas

wells which Houston might complete under the terms of the

contract provisions of the assignment from it to Southern Al-

37

kali and which Southern Alkali, or its assigns, failed to take

over. Such exception or reservation, if such it be, cannot be

extended by implication to gas from oil wells which Southern

Alkali and its assigns had no right to take over; nor implied

to defeat in whole or in part the express grant of gas to Peti-

tioner. (KOENIGHEIM V. MILEs, 67 Tex. 213, 2 S.W. 81;

SETTEGAST V. FoLEY Bros., 114 Tex. 452, 270 S.W. 1014;

Jones v. SUN Om Co. (Tex. Civ. App.), 110 S.W. (2d) 80,

w. e. ref.) It follows, therefore, that if the well is an oil

well as defined in the contractual provisions of the assignment

from Houston to Southern Alkali, Petitioner being vested

with title to gas in place and when produced at the surface

from such well, Respondents do not own or have title to gas

produced therefrom with oil, and a decision of the case is not

dependent upon a construction of instruments but upon

established local law.

Since no right, title or interest in the gas was by express

or implied reservation, exception or limitation retained by

Houston nor assigned by it to Respondents, any right Re-

spondents may have in the gas arises of necessity by implica-

tion as an appurtenant to their leasehold estate in the oil. Since

gas associated or blended with oil in production of an oil well is

a propelling agency of the oil, Respondents have by impli-

cation, and as an appurtenant to their estate in the oil, the

right (in the nature of an easement) of user of such gas

as a lift of the oil just as they have the implied and ap-

purtenant right of user of the surface, water an soil. How-

ever, Respondents clearly are not, by virtue of such right of

user, vested with title to gas produced from a well also pro-

ducing oil, no more than they are vested with title to the

surface and soil simply because of their implied right of user

thereof as an incident or appurtenant to their enjoyment of

their oil estate.

This was the holding of the Texas Commission of Appeals,

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with the approval of the Texas Supreme Court, in the case of

GuFFeEy v. Stroup, 16 §.W. (2d) 527, 64 A.L.R. 730. In

that case ‘the court had before it the respective rights of the

owners of an oil lease and the owner of a gas lease on the same

tract.of land. There the leasehold estates in the gas and in the

oil were established by two separate leases. The Harrell lease

under which the rights of both Petitioner and Respondents

are derived was assignable in whole or in part, and the estate

of Petitioner in the gas and of Respondents in the oil was ac-

complished by assignment of leasehold gas rights to the one

and leasehold oil rights to the other, in consequence of which,

just as in the case of GUFFEY Vv. STROUD, Petitioner owned the

leasehold estate in the gas and gas rights in the land and Re-

spondents the leasehold estate in the oil and oil rights in the

land, each holding as appurtenances to their respective estates

such rights of user as were reasonably necessary for them re-

spectively to enjoy the.estates owned by them.

In that case the court defined the rights of the owner of the

leasehold oil rights in the gas as follows:

“The right to take oil carried with it by implication

the right to tap gas pockets and ¢o bring to the surface

so much of the gas as was necessary in the proper drill-

ing for oil. The grant of the oil carried with it a grant

of the way, surface, soil, gas and the like essential to the

enjoyment of the actual grant of the oil. It cannot be said

that all use of or interference with the gas in place was

wrongful as against defendant in error.

“But the well having been a failure as an oil well, plain-

tiffs in error have no right to use it as a means or permit

it as an occasion for the taking of defendant in error’s

gas.” (Emphasis ours. )

That the court in GuFFEY v. Stroup did not intend to and

did not hold that the grant of the oil carried with it ownership

of gas produced with oil but only the right of user thereof,

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39

is clearly shown by its holding (1) that the right to take the

oil carried with it, “by implication,” the right to tap gas

pockets and to “bring to the surface” only “so much of the

gas as was necessary in the proper drilling for oil” and (2) by

its defining the oil owner’s right in the “gas” to be of the

same character as its right of “way, surface, soil and water

* * * and other like essential to the enjoyment of the actual

grant of the oil.” In other words the.court’s opinion is subject

only to the interpretation that the owner of the oil had a right

in the nature of an easement in:such amount of gas as was

essential to the enjoyment of the oil estate, i. e., as “was neces-

sary in the proper drilling for” and, by implication, pro-

ducing of oil. The case has been so interpreted by SUMMERS,

“Oil & Gas,” Perm. Ed., Sec. 652, in which ‘the author states:

“And if the lease grants only the oil, the lessee may not

market gas which he discovers, although he has an im-

plied right to use such gas for drilling purposes despite

the fact that another has a gas lease covering the same

land * * * ” (Emphasis ours. )

The right of user of gas as a lift must upon elemental prin-

ciple be reasonably and properly exercised just as the right of

user of surface, water and other appurtenant rights must be

so exercised with due regard for the title and estate of the Pe-

titioner in such gas (SUMMERS, “Oil & Gas,” Perm. Ed., Vol.

4, p. 2, Sec. 652; CoZART v. CRENSHAW (Tex. Civ. App.),

299 §.W. 499; SHELL Per. Corp’N v. LIBERTY GRAVEL &

SAND Co. (Tex. Civ. App.)., 128 S.W. (2d) 471.

That the oil owner’s right of user of gas is not an unquali-

fied one is clearly held in GUFFEY v. STROUD, when due con-

sideration is given to the following language of the court:

“The right to take oil carried with it by implication

the right to tap gas pockets and bring to the surface so

much of the gas as was necessary in the proper drilling

for,” and by implication, production of oil.

*

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40

And further:

“But the well having been a failure as an oil well,

plaintiff in error has no right to use it as a means or per-

mit it as an occasion for taking defendant in error’s gas.”

(Emphasis ours. )

The court does not further define the word “proper.” It

may be said with confidence, however, that a “proper” amount

of gas could not exceed that which might be legally used as

a lift in the production of oil.

The classification of the well as a gas well by the Railroad

Commission of Texas established as a matter of law that the

gas from such well could not be used as a Jift of the oil. In-

stead, the well being so classified could be operated only

for the production of gas which was required to be util-

ized for light, fuel or other permitted purposes to which

gas from gas wells might be put (Tex. Rev. Civ. STATS.

Art. 6008, Secs. 3 and 7, Appendix A and Art. 6014, Ap-

pendix B; CLyMoreE Pro. Co. v. THOMPSON, 11 Fed. Sup.

791, 13 Fed. Supp. 469; F. C. HENDERSON, INc., v. RAILROAD

CoMMISSION OF TEXAS, 56 F. (2d) 218). The liquid ob-

tained from the well was but incidental to the production of

gas. Accordingly, Respondents in operating the well in ques-

tion as a gas well were taking therefrom more gas than might

be legally taken and, hence, reasonably used, as against the

right of Petitioner, as a lift of the liquid products of the well.

Nor can Respondents operate the well as a gas well and ap-

propriate, sell and dispose of the gas upon the ground that

since they cannot operate their well as an oil well (because

of its high gas-liquid ratio) it is “necessary” for them to

operate it as a gas well and sell and dispose of the gas in

order to obtain their oil. It would indeed be the assertion of

a strange doctrine that one owner has the right to destroy the

property and estate of another in order to recover his own,

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41

particularly where his estate has been acquired subsequent

and subject to the estate of the other.

In the words of GuFFEY v. STROUD, supra, “the well having

been a failure as an oil well,” Respondents “have no right ¢o

use it as a means or permit it as an occasion for taking” Pe-

titioner’s gas.

Nor was a “reservation” of “ownership of the gas” pro-

duced from such well accomplished by the socalled “free use”

clause in the original lease, under the terms of which the lessee

was given the right as against the lessor to use on the premises

free of cost, gas, oil and water produced on said land for its op-

erations thereunder. It was the express purpose of this clause,

which is a customary one in the usual form of oil and gas lease,

to give the lessee the right to use gas in well and lease operations

upon the leased land without the necessity of paying royalty

on the gas so used in such operations. Upon the severance, by as-

signment, of the leasehold gas estate from the oil estate,

the owner of the gas estate and the owner of the oil estate

each was entitled to the benefits of such provision. Such

clause does not seek to provide for the respective rights

of the owner of the leasehold oil rights and the owner of the

leasehold gas rights, between themselves, in the use of gas. It

may be said with certainty, therefore, that Respondents, as

owners of the oil rights, if they have the right to use of gas

in conducting operations under the lease and on the land in

question, do not have such right, as against Petitioner, by virtue

of such clause but as an appurtenant right to the enjoyment

of the estate in the oil owned by them. It is unnecessary, how-

ever to determine this question here, for even if the defend-

ants, as owners of the oil rights, were entitled, under such free

use clause, to use gas produced by them from such land for

operations they might properly conduct on the leased prem-

ises under said lease, the gas is not being so used for any such

permitted operation but is being transported from the prem-

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42

ises and used and sold for fuel and jetting of wells in Corpus

Christi Field. To such use and sale and operation the free use

clause clearly has no application. ARMSTRONG, ET AL., V.

SKELLEY Om Co., 55 F. (2d) 1066.

As heretofore stated, gas in place is real property in Texas.

Petitioner is owner of the gas in place, subject alone to Re-

spondents’ implied right to use such amount of gas as might

be legally used as a lift of oil. Respondents, as heretofore

shown, were, therefore, without right as against Petitioner

to operate the well as a gas well and use and dispose of the gas

therefrom for jetting of wells or fuel purposes in Corpus

Christi Field, an entirely different field, for the reason that

such exceeded their right of user as against the Petitioner.

It accordingly constituted a trespass upon Petitioner’s real

property right in gas, because of which Petitioner was en-

titled upon equitable principles (14 R. C. L. 443-445; 32 C.

J. 139, 140), as well as by Statute in Texas (Art. 4642, REv-

Civ. Srats., 1925, Appendix C) to have such operation

of the well and appropriation, use and sale of its gas restrained

by injunction. GuFFEY v. Srroup (Tex. Com. App.), 16

§.W. (2d) 527; Miter Link LuMBER Co. v. STEPHENSON

(Tex. Com. App.), 265 S.W. 215, affirmed (Tex. Sup. Ct.)

277 S.W. 1039; ERHARDT v. Boaro, ET AL., 113 U.S. 537;

Houston Om CoMPANY OF TEXAS v. VILLAGE MILLs Co.,

109 Tex. 169, 202 S.W. 725. As stated in SUMMERS’ “OIL

AND Gas,” Perm. Ed., Vol. 1, p. 70, Sec. 28:

“I andowners or persons having separate estate in oil

and gas have been allowed in numerous cases injunctive

relief against trespassers actually taking or threatening

to take oil and gas.” (Citing numerous cases, Note 92.)

Petitioners, of course, are entitled to damages for gas and

condensates of gas heretofore converted and appropriated by

them from such well.

Siti eases,

a NSS ae ee

RL ROL AT Rm MAE tS RE ALPL ES AEE REE ALLOA

43

Nor is the question here one of regulation of which the

Railroad Commission of Texas would have jurisdiction as con-

cluded by the District Court. The basic substantive question

presented is whether Respondents own the gas from such

well or have only the right of reasonable user. This question is

obviously one of title over which clearly the Railroad Commis-

sion of Texas is utterly without jurisdiction. ALTGELT V.

Texas Co. (Tex. Civ. App.), 101 S.W. (2d) 1104 (w. of e.

dis.) ; RAILROAD COMMISSION V. LAMB (Tex. Civ. App.), 81

$.W. (2d) 161; Tie Water Or Co. v. RaiLRoaD Com-

MISSION (Tex. Civ. App.), 76 S.W. (2d) 553; Ramroap

ComMISSION v. Rau (Tex. Civ. App.), 45 S.W. (2d) 413.

No question of conservation is raised.

POINT 3

Petitioner Not Precluded by Pleading

From Contending Respondents Had Not

Complied With Condition Giving Hous-

ton Right to Drill Gas Well

The Court of Appeals held (R. 461):

“Southern’s State court suit, and also that before us,

alleged that Simmons and Webb completed the well

‘in an unsuccessful effort to produce oil.’ This being true,

the second part of the working agreement, * * * required

that the well be completed by them as a gas well.”

Actually Petitioner alleged “that defendants, 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” (R. 15, 16).

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

Jay Simmons, testified:

F

i

essai 5G AR GL ERE ATOR

he

NASR, OT OM

44

. Well, you couldn’t drill that hole any further than

your 6600 where you twisted off, could you?

. I made up my mind that I didn’t want to try to get

any deeper after having so much trouble.

Then you concluded to abandon that and bring the

well in at the depth which you did bring it in?

There are three or four sands you can make a good

producing well at. ae

. What kind of well?

Oil wells.

. Ata shallower depth than the 5800 horizon?

Yes.

+ + %

re)

Did you discover gas in this well in an unsuccessful

effort to complete a commercial oil well?

I did not” (R. 231-234).

> O PAPO P O P

and:

“We topped that sand around 5784 and went out of

it below 5800, and after we had encountered the first

three or four feet of the sand it was completely saturated

from the gasoline, and upon removing some above the

core barrel, which I had taken out to a tool shed I had

on the lease for that purpose, I took samples of the core

and squeezed them between my hands and gasoline ran

out of the cores, and I left them in the core house and

it remained in that condition several days until the at-

mosphere completely dried the sand out” (R. 233).

That testimony stands uncontradicted and proves that it

is not “true” that this well was completed in compliance with

the contract right of Houston Oil Company to complete

not exceeding five gas wells, and proves that it is “true” that

Respondents knew the 5800-foot sand at which the well was

completed to be a gas sand, and “knew” the well could have

been completed as an oil well at a shallower sand, but never-

theless deliberately completed it in the gas sand.

45

The holding by the Court of Appeals that solely because

of its pleading and regardless of the uncontradicted proof

in the case Petitioner is precluded from insisting upon de-

cision by the court whether the well is such gas well as Hous-

tion Oil Company was given the right to complete, and that

Petitioner has, therefore, because of such pleading, forfeited

any right in gas from the well in question, is directly contrary

to the theory of pleading on which the FEDERAL RULES OF

Civ Procepure were designed and adopted. (Proceedings

of the American Bar Association Institute at Cleveland, pp.

219-224.)

Such holding is in direct contravention of Rule 15 (b):

*“AMENDMENTS TO CONFORM TO THE EVIDENCE.

When issues not raised by the pleadings are tried by ex-

press or implied consent of the parties, they shall be

treated in all respects as if they had been raised in the

pleadings. Such amendment of the pleadings as may be

necessary to cause them to conform to the evidence and

to raise these issues may be made upon motion of any

party at any time, even after judgment; but failure so

to amend does not affect the result of the trial of these

eS. F

me

ae eee PNR RR NIT RET RTS ESS REESE BE

and Rule 54(c):

*« * % % every final judgment shall grant the relief to

which the party in whose favor it is rendered is entitled,

even if the party has not demanded such relief in his

pleadings.”

Such holding also is in conflict with other decisions of other

Circuit Courts and District Courts with respect thereto.

(NEsTER v. WESTERN UNION TELEGRAPH Co. (Dist. Ct.

So. Dist. Cal.), 25 F. Supp. 478, and authorities cited; FreLp

v. WATERMAN STEAMSHIP CorPorATION (C.C.A., Sth Cir.),

104 F. (2d) 849; Swirt & Co. v. Youne (C.C.A. 4th Cir.),

ee ee

/ Me ete ae, a a eae oer oes Eee ‘

ys Ld a OEE tha RE GE EE PI PN OR PRE EP IIL TE EAE AL TAURI PI ph a Ba OY EO pel a

5 Beebe NE Pp A ME OR RIEL

46

107 F. (2d) 170, 172; CoLtins v. MerRo-GoLDwYN-MAYER

Pictures Corp’N (C.C.A. 2nd Cir.), 106 F. (2d) 83, 86;

ATWATER v. NortH AMERICAN Coat Corp’N (C.C.A. 2nd

Cir.), 111 F. (2d) 125; BartiIn v. CONNECTICUT GENERAL

Lire INsuRANCE Co. (Dist. Ct., Neb. Dist.), 25 F. Supp.

579).

The Court of Appeals, therefore, having erroneously de-

prived Petitioner of very substantial property rights upon a

technical construction of pleading, and in disregard of the

uncontradicted proof, in justice such decision should be re-

versed and the holding should be made in accordance with

the uncontradicted proof that the well is not such gas well

as was required to be completed by the owner of the oil rights

in said land.

POINT 4

Well in Question Not Drilled by Re-

spondents in Compliance With Condi-

tions Giving Right to Houston to Drill

Gas Well and Take Products

Assuming the well in question to be a gas well the Court of

Appeals held that Petitioner having failed to exercise its

option to take the well over, Respondents had the implied

right under the contract provisions of the assignment from

Houston Oil to Southern Alkali to take all the products

therefrom. Since Petitioner was vested with title to gas in

place and upon production, it is clear that the effect of the

court’s holding was that Petitioner, by failure to exercise its

option, had forfeited to Respondents its title to so much of the

gas as might be produced from the well in question. Such be-

ing the case it was necessary for Respondents strictly to

comply with the conditions of the contract provision giving

Houston the right to drill gas wells before they could com-

plete the well in question as a gas well, and take the gas there-

47 a

from for failure of Petitioner to take it over. (JONES V.

Gress, 133 Tex. 627, 130 S.W. (2d) 265, 268; GLoyp Vv. Mip

West REF. Co., 62 F. (2d) 483). Stated differently Respond-

ents had no right to complete the well in question as a gas well F

and force Petitioner to take it over under penalty of for-

feiture of all its products until compliance with all the con-

ditions giving rise to such right were plainly shown.

ore

The contract provision of the assignment from Houston *

to Southern Alkali gave the former the right to complete a

gas well only in the event Houston, “as a result of its opera-

tions, discovered gas in any well drilled” by it “in an wnsuc-

cessful effort to complete a commercial oil well” (R. 389,

395). In other words, Respondents were permitted to com-

plete a gas well only if the well could not be completed as an

oil well. That the right was to be a limited and special right and

privilege is sufficiently indicated by the following stipulation

of the contract:

“Provided, however, it is distinctly understood and

agreed that the Houston Oil Company of Texas shall

not have the right or privilege of completing more than

five (5) such gas wells” (R. 395).

By their own confession Respondents (1) could have com-

pleted a good oil well in three or four shallower sands (R. 231-

234), and (2) they did not complete the well “in an unsuc-

cessful effort to complete a commercial oil well” (R. 231-4).

Having failed to comply with the conditions giving them the

right to complete the well in question as a gas well—they had

no right to take its products upon Petitioner’s failure to take

it over. This being true it is manifest that Petitioner was en-

titled to injunction and damages. The decision of the Court

of Appeals to the contrary is clearly wrong.

48

POINT 5

Rights of Houston to Gas Wells Com-

pleted By It Not Assignable

The terms of the agreement as to completing five gas wells

evidence the intention of the parties that such right should

be personal to Houston Oil Company and not assignable.

Burck v. TAYLorR, 152 U.S. 634.

The contract provision of the assignment by Houston Oil

Company to Southern Alkali Corporation dated April 5,

1932, with respect to oil wells expressly extends to Southern

Alkali Corporation, or its assigns, but the use of the word

“assigns” is wholly absent from the provision as to gas wells

not exceeding five in number that could be completed by

Houston Oil Company.

The use of the word “assigns” has been held by the Texas

courts to indicate an intention that the contract may be

assigned. Puituirs v. Om, Inc. (Tex. Civ. App.), 104 S.W.

(2d) 576; GoopLor & MEREDITH v. Harris, 127 Tex. 583,

94 $.W. (2d) 1141, Tex. Civ. App. 58 S.W. (2d) 156.

Conversely, the absence of the word “assigns” evidences

the intention that the contract not be assignable. HI1LMAN

v. SHANNAHAN, 18 Am. Rep. 281; 4 AM. Jur. 236.

Furthermore, the contract provision with regard to com-

pleting gas wells, not exceeding five in number, necessarily

involved the skill, integrity, credit and responsibility of Hous-

ton Oil Company and personal trust and confidence in that

company. Such a contract is not assignable. ARKANSAS

SMELTING COMPANY v. BELDING MINING CoMPANY, 127

U.S. 379; Amsco Pire Line Company v. Donico Propuc-

TION Co. (Tex. Civ. App.), 112 S.W. (2d) 483, writ dis-

missed; MENGER v. Warp (Tex. Sup.) , 30 S.W. 853; SMITH V.

Pitts (Tex. Civ. App.), 122 S.W. 46; DiTTMAN Vv. MopDEL

BaKiNc Company (Tex. Com. App.), 271 S.W. 75; Mac-

ae:

SF OO eee eee % . % a

; SNR aE NRC nares rast peemNR sommes: —

4

a

4

;

y

s

"3

*

49

NOLIA PETROLEUM CoMPANY v. HavoLiINne AUTO SUPPLY

Co. (Tex. Civ. App.), 172 S.W. 759; FosTER v. CALLAHAN

& Co., 248 F. 944; Demarest v. DUNTON Lp. Co., 161 F.

264; 6 Corpus JuRIs SECUNDUM, p. 1076.

Factors of such personal trust and confidence reposed in

the skill, integrity, credit and responsibility of Houston Oil

Company include: provision for actual cost to the produc-

ing horizon exclusive of overhead and drilling costs below

the producing horizon, and keeping record thereof; reliance

upon Houston Oil Company to use machinery and drilling

equipment adequate to safely complete and equip a gas well,

gas being an inflammable, explosive and dangerous element;

confidence in the integrity and reliability of Houston Oil

Company not to complete a gas well unless such well could

not be completed as an oil well; and willingness to pay to

Houston Oil Company its actual cost of drilling and equip-

ping a gas well because of reliance on the skill and ability

of Houston Oil Company to drill and equip such well at an

actual cost that would be the proper cost of such an operation.

POINT 6

Right of Houston Oil Company to Com-

plete Gas Wells Not in Fact Assigned By

It to Respondents Simmons and Webb

The right of Houston under the contract provisions of its

assignment to Southern Alkali to complete five gas wells was

clearly not a right appurtenant to, nor essential to the enjoy-

ment of, the oil estate retained by it nor a covenant which

without express words of grant would ordinarily pass by an

assignment of such oil estate. It is a special contract provision

relating alone to five gas wells and to the products thereof. It

follows of course, therefore, that the granting clause of the

assignment covering only “oil rights under said existing

SANE SR ERG TIOGA LLL NEIL DE IEEE ES fae

50

leases,” was a limited and special grant and would not pass

the rights of Houston under such contract provisions unless

some other language of the assignment required such con-

struction (BRITTON v. CoTTON SraTEs Pet. Co. (Tex. Civ.

App.) , 283 S.W. 887; Dorris v. SULLIVAN, 90 Cal. 27, 27 Pac.

216; Prrer v. UNION Paciric Ry. Co., 14 Kan. 568).

The assignment by Houston Oil Company to Respondents

Simmons and Webb, dated January 6, 1938 (R. 399), con-

veyed only oil rights under portions of the Harrell and Law-

rence leases, which in turn, were two of six leases covering

1300 acres in which Houston had theretofore, on April 5,

1932 (R. 389), assigned to Southern Alkali and its assigns, the

gas rights. The controlling terms of the assignment to Sim-

mons and Webb (R. 399, 464) are these:

“Whereas, First Party is the owner of the oil rights

under an oil and gas lease from Dr. T. M. Harrell and

wife to R. D. Kelley, * * * ; and, Whereas, First Party

is the owner of the ol rights under an oil and gas lease

from L. S. Lawrence and wife, R. M. Lawrence and wife,

and T. M. Harrell and wife, to R. D. Kelley, * * * ”;

it is the intention “of this instrument for First Party

to assign to Second Parties the oil rights under said

existing leases in so far as they cover a portion of the

above described lots, in consideration of the drilling of

certain wells and the payment of the overriding royalty,

as hereinafter provided; * * * Houston Oil Company of

Texas, * * * does hereby bargain, sell, transfer and as-

sign, subject to the performance of the obligations herein

imposed, unto Jay Simmons and J. E. Webb, their heirs

and assigns, all of its rights under said existing leases

* * * in so far as same cover a thirteen-sixteenths

(13/16) working interest in the oil rights in and to Lots

23, 24 and 27, except the East 20 acres of each of said

Lots 23, 24 and 27 * * *, all of Lot 20, and all of Lot 13

less 10 acres * * *. It is understood that it is the intention

Rekey ee ag% OL TRE SERIE TIRES EEE EET TREES OLE _—

51

of First Party that this assignment of the oil rights shall

assign to Second Parties all of the rights under the

original oil and gas leases, except the rights of the South-

ern Alkali Corporation and/or the Southern Minerals

Corporation, as evidenced by the contract and assign-

ment of gas rights of April 5, 1932, by and between

the Houston Oil Company of Texas and the Southern

Alkali Corporation affecting, among other property, the

above described property, * * *, to which instrument

and all of the terms thereof reference is hereby made,

as if same were fully copied herein. Second Parties, by the

acceptance hereof, agree, for themselves, * * *, to com-

mence within ten (10) days from such acceptance drill-

ing operations * * *, Second Parties will continue drill-

ing the premises herein assigned with not more than

thirty (30) days elapsing between the completion of one

well and the commencing of another well, * * * until the

premises herein assigned are completely drilled, * * *, in

the event said Second Parties, * * *, should fail or refuse

to comply with the terms and conditions hereof, * * *

revert to First Party, * * *. As further consideration

for this assignment, the Houston Oil Company of Texas

reserves unto itself, its successors or assigns, an over-

riding royalty of one-eighth (Y%) in oil—that is, / of

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

actually produced, * * * First Party, * * *, shall have

the preferential right to purchase the oi produced * * af

Second Parties agree and obligate themselves, * * *, to

furnish First Party with cuttings and core samples from

any and all wells drilled on the premises * * *. Second

Parties also agree to furnish First Party a copy of the

Schlumberger record of any and all wells; and First

Party shall at all reasonable times have access to the

premises where the well or wells are being drilled, and

First Party shall be permitted to have a representative

present to inspect any test made of any such well

+ % % 99

t

:

52

Clearly, Houston Oil Company did not assign to Re-

spondents Simmons and Webb any of its rights as to comple-

tion of gas wells, limited to five in number. As expressed by

the minority opinion of the Court of Appeals.

“Not only in the granting clause of this assignment

but throughout, the thing assigned is declared to be, the

oil rights under the Harrell lease. Nowhere in the as-

signment is there a reference to gas rights of any kind.

It is quite plain therefore, that the parties had in mind,

transferring not gas but oil rights, * * * ” (R. 465).

Additionally indicative of the absence of any intention by

Houston Oil Company to assign to Simmons and Webb its

rights to complete gas wells are the following points:

(1) Houston’s contract right to complete five gas wells

applied to six leases (R. 389) covering 1300 acres of land

(R. 207), but it only assigned to Respondents Simmons and

Webb (R. 400) “the oil rights” in portions of two of said :

leases. |

(2) The expression of intention “that this assignment of

the oil rights shall assign to second parties all of the rights

under the original oil and gas leases, except the rights of the

Southern Alkali Corporation and/or the Southern Minerals

Corporation, as evidenced by the contract and assignment of

gas rights of April 5, 1932” (R. 465), cannot be taken as

an enlargement of the granting clause which is limited to

“oil rights,” and negatives any intention to assign any por-

tion of Houston’s right to complete five gas wells; Houston’s

right to complete five gas wells was not a right under “the

original oil and gas leases” but was a right provided to Hous-

ton under the contract provision of the mentioned assign-

see ae POE STIS BRITA) ARAMA OY 2 RN aay PELLET BALL LEN NII EERE RACER OT DO yO Ey ph SEN PY Rt Ip COL a :

53

ment to Southern Alkali Corporation. Such contract right

was not assigned.

(3) Houston’s reservation of an overriding royalty of %

of 8/8 “of the value or proceeds of the oil which shall be

actually produced” negatives any intention to assign its right

to complete gas wells; otherwise, its overriding royalty would

have been made to apply to gas as well as to oil.

(4) Houston reserved the right to purchase production of

oil but not gas.

(5) Simmons and Webb were obligated to furnish Houston

with cores and cuttings and Schlumberger records, and to

permit Houston’s representative to inspect any test of any

such well; thereby clearly indicating intention that the

rights of Simmons and Webb were confined to oil wells.

(6) Such construction deprives Houston of a valuable

property right without any compensation, and without its

day in court.

(7) No reference is made to the rights of Houston Oil

Company under the contract and assignment of gas rights

dated April 5, 1932, and the only purpose of the reference

to the rights of Southern Alkali Corporation was to call to

the attention of Simmons and Webb that the assignment of

the oil rights was subject to the right of Southern Alkali to

complete oil wells as provided in said previous assignment.

(8) The contract right to drill five gas wells applied to

1300 acres. It cannot be supposed that Houston Oil Company

intended to convey to Simmons and Webb the right to drill

all five wells on the portions of the two leases assigned, and

no words were used indicative of any intention to assign the

right to drill a proportionate number of gas wells or what

such proportion should be.

EAE EN RS EMR TCR ES

54

POINT 7

The Court of Appeals Erroneously Con-

strued the Contract Provision as to Gas

Wells as Affording a Simple Option

Rather Than as Providing a Forfeiture.

The Court of Appeals, in its opinion (R. 459), holds:

“Jt is well settled that in the exercise of options the

time limited is generally of the essence of the contract.

Campbell v. Fetty, 271 Fed. 621, 17 C.J.S., p. 1072. Es-

pecially is this true when a thing so uncertain and fluctu-

ating as a new gas well is the subject of the option. 17

C.J.S., p. 1071. The option to take over this well, which

was limited to forty days from its completion, could not

be exercised four months after its completion. It is unnec-

essary to enquire whether the further finding of the dis-

trict court was correct, that the option right was waived

by Southern and the waiver was converted into an estop-

pel because Simmons and Webb made contracts and sub-

stantial expenditures on the faith of Southern’s statement

that it did not wish the well.”

In so holding the Court of Appeals construed the contract

provision of the assignment as being a simple option rather

than a forfeiture provision. CAMPBELL V. Fetty, 271 F. 921,

the only case cited by the Court in its opinion in this connec-

tion, was a suit to recover on a simple guaranty letter in words

as follows:

“In consideration of this subscription, as I stated to

you, should you carry this stock for 24 months, and then

desire to dispose of it, I will take it off your hands and al-

low you 8 per cent. carrying charge. You understand

that, should any dividends be paid in the meantime, they

would, of course, be deducted from the carrying charge.”

The Court in that case held that time was the essence of the

os

55

agreement, and since demand was not made at expiration of the

24-month period the option to require defendant to pay for i

the stock was lost. 3

The construction by the Court of Appeals of the contract

provision of the assignment as being a simple option and not a

forfeiture provision is wrong because title to all gas in place in

and under the land when the well was drilled having been for

a large consideration, vested in Petitioner, loss of the right to

“take over” the well necessarily results in forfeiture of Peti-

tioners’ title to gas. Such construction and holding is contrary

to the weight of authority and in direct conflict with the es-

tablished law in Texas as announced by the Supreme Court of

Texas in Jones v. Gress, 133 Tex. 627, 130 S.W. (2d) 268,

and is at variance with and contrary to the decision of the Cir-

cuit Court of Appeals for the Tenth Circuit in GLoyp v. Mip-

wEst REFINING CoMPANY, 62 F. (2d) 483.

In Jones v. Grpss, 133 Tex. 627, 130 S.W. (2d) 268,

Jones conveyed to Gibbs all the merchantable pine timber

on 1981.2 acres of land with the right for a period of 10 years

to remove the same and with the additional right to extend

such time an additional 5 years by the payment of 15 cents

per acre per year, which

ETAL ERIC TARE I oT

reer

+

®

:

+

:

Pa

RS

e

;

a

3;

“shall be paid for as much as one year in advance.”

The Court, in holding that such contract right was not a

simple option but a conveyance on valuable consideration and

therefore to be construed as a forfeiture provision against the

heirs of Jones seeking to declare the contract right to renew the

contract terminated by the failure of Gibb’s successors to

strictly comply with the provision for payment of 15 cents

per acre, said:

“Since the privilege to extend the time for removal of

the timber is given in the deed itself and is supported by

—_—_—_ OREM REI ANOS ESSEC PREP ARN THAI SHEER UBER I ATEN

LALA RL RN

56

the consideration paid at the execution of the deed, the

agreed value of the timber, and inasmuch as the deed is

treated, upon the exercising of the privilege, as a present

grant for the full term, including the period of the ex-

tension, a judgment decreeing that such deed became no

longer operative at the end of the primary term upon the

grantee’s failure to comply strictly with the terms of the

provision for extension, while technically but an adjud-

ication that the grant terminated by its own terms, would,

practically considered, and certainly from the viewpoint

of the grantees, amount to a forfeiture of a valuable prop-

erty right for which they had fully paid. In view of these

differences between the option for extension granted by

the deed to defendants in error and the ordinary option

to buy land, it is our opinion that, in determining whether

defendants in error did those things necessary under the

deed to extend the right to cut the timber, a too exactly

strict compliance with the terms of the option should not

be required and that the equities in favor of defendants in

error, on account of their having paid the purchase price

for all of the timber and having removed less than one-

third of it, should not be disregarded.”

The case of GLoyp v. Mipwest REFINING CoMPANY, 62

Fed. (2d) 483, in construing the nature of the rental payment

clause of an oil and gas lease, held that in determining whether

the lease had terminated such clause was to be construed as a

forfeiture provision and not as a simple option provision, hold-

ing:

“If the lease creates an option to explore, which the

lessee may continue and extend by the payment of rental,

that option right is forfeited. This, therefore, is esentially

a suit to establish a forfeiture as a matter of record and to

obtain the cancellation of the thing forfeited. Equity

will only give its aid to enforcement of a forfeiture where

to do so is more cognizant with the principles of right,

justice, and morality than to withhold it.”

a a Ne nC eas ee eee

57

Had the Court considered the rights of the parties under the

rules governing forfeitures rather than the rules governing

failure to exercise a simple option, we confidently assert the

Court would have held that Petitioner, under the facts and

circumstances of this case, did not waive its right and is not

estopped to take over the well at “cost to the producing hor-

izon;” and that Petitioner is now entitled to take over the

well as of the date of completion and to an accounting for

production therefrom.

In seeking to establish a forfeiture the burden of proof is al-

ways on the party asserting the forfeiture and claiming the

benefits thereof. 19 AM. JuR., pp. 96-99.

“Where a litigant, by the terms of his contract, is

made liable at law for a penalty or is subject to loss in

the nature of a forfeiture, owing to the nonperform-

ance by him of a condition or covenant therein con-

tained, the situation is viewed by equity with extreme

disfavor, and the contractual provision will be con-

strued strictly against the interest of the party who

claims the benefit thereof. * * * A party who seeks to

enforce a forfeiture must show that he has done every-

thing on his part to be entitled to claim enforcement.

The burden of proof is cast upon him; and if he fails to

establish the necessary facts, his right to insist upon the

forfeiture will be deemed to have been waived.”

Petitioner’s right to take over the well, if it be a gas well,

should be reéxamined in the light of the equitable rules gov-

erning forfeitures.

WHEREFORE, Petitioner respectfully submits that this ;

case is one over which this Honorable Court has jurisdiction %

and one calling for the exercise by this Court of its supervisory

powers, by granting a Writ of Certiorari and thereafter re-

58

viewing and reversing said decision, granting to Petitioner

the relief to which it is entitled.

SOUTHERN MINERALS CORPORATION,

By Birce Ho tt,

Corpus Christi, Texas;

By Dan Moopy,

Austin, Texas;

By RatrpH R. Woon,

Houston, Texas.

Counsel for Petitioner

Of Counsel

ose