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McCurdy v. Harry L. Edwards Drilling Co.

Court of Civil Appeals of Texas, Galveston

November 21, 1946

No. 11816


 [*610]  CODY, Justice.

This was a suit for the construction of two drilling contracts, for an accounting, and for the recovery of certain items claimed by plaintiffs, McCurdy and Johnson, to be due them from defendant, Harry L. Edwards Drilling Company, a corporation. The Gulf Oil Corporation was also a formal party defendant in the suit.

Plaintiffs were the owners of two Brazos River Bed leases in Lochridge Oil Field in Brazoria County in September 1937, and at that time entered into a drilling contract with defendant to drill a well on one of the leases. That contract was in the usual form, providing for a specified depth, at a specified cost per foot, etc. Then, on November 16, 1937, after the well had been drilled to a depth entitling defendant to approximately $ 40,000 under the contract, the parties superseded the aforesaid contract with two new contracts, under which a well was to be completed on each of said leases. Under this new arrangement the sole compensation that defendant was to receive for performance [**2]  of its obligation was an undivided one-third interest in the mineral estates held by plaintiffs in virtue of said leases from the State, less an oil-payment reserved by plaintiffs out of said one-third interest.

A well was completed as a producer on each lease by early February, 1938. And plaintiffs have operated said leases ever since. On August 31, 1945, (which was the accounting date used at the trial), the value of the production from the two leases exceeded $ 400,000. The amount of the oil-payment had been reduced from $ 67,019.35, to $ 4,248.94. However, over the period from April 1 to August 31, 1945, the operation costs exceeded the value of the production, marketed for same period, by $ 24,420.54.

It was the theory of plaintiffs' suit that the terms of the reservation of the oil-payment were such as to make the oil-payment bear interest at the legal rate. It was further the theory of their suit that defendant was personally liable to plaintiffs, who paid the $ 24,420.54 deficit, for one-third of said sum, and for interest thereon at the legal rate; and that plaintiffs were entitled also to a lien on defendant's interest in the leases, to enforce the payment thereof.

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198 S.W.2d 609 *; 1946 Tex. App. LEXIS 601 **



leases, costs, Drilling, one-third, oil-payment, plaintiffs', drilling contract, court erred, reserved, parties, oil, adjudging, operating costs, co-tenant

Energy & Utilities Law, Financing, Grants & Reservations, Drilling Contracts, Oil, Gas & Mineral Interests, Personalty & Realty Interests, Real Property Law, Estates, Concurrent Ownership, General Overview, Surface Use Interests, Civil Procedure, Costs & Attorney Fees, Costs