Humble Oil & Refining Co. v. Woods , 1925 Tex. App. LEXIS 881 ( 1925 )

I find myself out of harmony with the majority as to the law of this case, and now state the reasons that have impelled me to dissent.

It is evident the majority decided against appellants on the idea that the use made of the land (that is to say, the erection of the pumping plant and the reservoir) was unauthorized, illegal, and injured the leasehold interest of appellee, diminished its value, and caused the damage for which recovery was permitted.

This idea is clearly shown by the following excerpt from the majority opinion:

"It was certainly not within the contemplation of the parties to the original mineral lease that the land covered by the lease owned and held by appellee should be submerged with water by building a dam or dyke so as to cover same to a depth ranging from 2 1/2 to 6 feet. Therefore such use, not only as affecting the right of mining and operating for oil and gas, but as injuring or damaging the commercial value of such lease, was unauthorized and unwarranted, in fact, was a wrongful invasion of the rights of appellee, amounting to a tort, for which appellee is entitled to full indemnity."

To this doctrine I cannot assent.

Appellant Humble Pipe Line Company, was the owner of the fee-simple title to the land in question and, as such, had the legal right to use the surface in any way and for any purpose that did not materially interfere with the right of appellee under his lease; this being the right to mine for oil and gas, and to lay such pipe lines and erect such buildings, tanks, power stations, and structures as were necessary to produce the minerals and to save and take care of the same. The right of appellee to the use of the surface was in the nature of an easement; that is, the right of ingress and egress, the right to possess and use such parts of the surface as were reasonably necessary to accomplish the purposes for which the land was leased.

The respective rights of a lessor and lessee in lands leased for mineral purposes was defined by the Supreme Court of Oklahoma in the case of Sanders v. Davis, 79 Okla. 253, 192 P. 694, as follows:

"The courts of this country have frequently been called upon to determine the respective rights of the lessor and lessee in oil and gas mining leases similar to the one in the instant case, and it has been held that under such lease contracts the lessee has the right to possession of such parts of the surface of the land covered by the lease as may be reasonably necessary for the development and exploration of the leased premises for oil and gas, or whatever mineral right may be covered by the lease, and the lessor has a right to possession of all the surface not reasonably necessary in the operation and exploration of such property by the lessee, and that both rights of parties will be protected by the injunctive power of the courts."

The same court, in Rennie v. Red Star Oil Co., 78 Okla. 209, 190 P. 392, on the same question, made the following announcement:

"Under an oil and gas lease the possession of the leased premises by the lessor and lessee is what might be termed a concurrent possession; that is to say, the lessee is entitled to enter upon the land leased and entitled to the possession of such parts and portions thereof necessary for developing the premises for oil and gas under the terms of the lease and to do the things necessary to make the operation successful."

To the same effect, see Thornton on Oil and Gas (3d Ed.) vol. 2, § 858; Imperial Elkhorn Coal Co. v. Webb, 190 Ky. 41, 225 S.W. 1077, 1078.

In the case of Westmoreland Gas Co. v. De Witt, 130 Pa. 235, 18 A. 724, 5 L.R.A., 731, the Supreme Court of Pennsylvania, defining the rights of a lessee under a mineral lease, said:

"Complainants' right in the surface of the land under the lease was rather in the nature of an easement of entry and examination, with the right of possession arising where a particular place of operation should be selected, and the easement of ingress, egress, storage, transportation, etc., during the continuance of the operation. The real subject of possession to which complainant was entitled under the lease was the gas or oil contained in, or obtainable through, the land."

In view of these authorities, and many others to the same effect that could be cited, I am of the opinion that appellant pipe line company, as the owner of the fee, had the unquestioned legal right to erect the reservoir and pumping station, and that it owed appellee no duty until it was informed by him on July 24, 1923, that it was his purpose to commence the drilling of a well on the land.

Appellee brought suit and was permitted to recover damages for injury to his leasehold interest caused by the erection of the reservoir and the pumping station by appellants. His suit was not on the idea that, after serving notice of his intention to drill, he was prevented, delayed, or frustrated, or that the drilling operations were rendered more expensive by reason of any conduct on the part of appellants that supervened after the serving of the notice. He did not seek the recovery of any such damages.

Must the owner of the fee maintain the surface in status quo and stand at attention during the existence of the lease, or else improve and use his land as he sees fit, at the risk of being mulched in damages at the suit of a lessee? I think not. To so hold would be to absolutely subordinate the rights of the owner of the fee in regard to the use of the surface to the rights of the owner of the mineral lease, whose right to use the same is merely incidental to the exercise of its right to obtain minerals from the land.

If it is true, as held by the majority, that the use made of the land by appellants prior to being notified by appellee that he intended to drill, constituted an invasion of his rights and furnished grounds for the recovery of damages, then it must follow that any use that the owner of the fee may see fit to make of his land during the existence of an oil or mineral lease would constitute a potential injury to the leasehold and furnish grounds for an action for damages. This has never been declared to be the law in any jurisdiction so far as I have been able to ascertain; it ought not to be the law, and, in my opinion, is not the law.

There is another reason, in my opinion, that forbids recovery by appellee in the manner and form in which the suit was brought; that is, even if it could be said, as a matter of law, as was said by the majority, that the building of the reservoir and the pumping station on the land by the owner of the surface violated the legal rights of appellee and gave him a cause of action, still the damages that were sought and proven, and for which recovery was obtained, were special in nature, and not such as would naturally and probably result from the breach of the obvious purposes of the contract.

The existence of the pumping plant and reservoir on the land did not destroy any of its mineral wealth. About all that could be said is that, by reason of their presence on the land, appellee would probably be delayed in drilling, that the cost of drilling might be increased, and doubtless other elements of general damages could be mentioned, but surely it was not within the contemplation of the parties when the contract was entered into that, at any juncture, when the lessee might exercise his option to drill, the lease for commercial purposes might possess a fictitious value, influenced by the drilling of another well by other parties in the vicinity, and that such use of the land by the owner of the surface would lessen its market value for trading purposes.

At the time appellee gave notice of his purpose to commence a well on the land, he manifested no intention or desire to sell the lease, nor were appellants apprised of the fact that he had had an offer from any one to purchase, nor did he complain that the use then being made of the land would or might result in diminishing the market value of the lease for trading purposes, or that the same would or might defeat a profitable sale. He simply gave notice that it was his intention to commence the drilling of a well, and, in that connection, demanded that the reservoir be drained.

Under my view of the law, as applied to the nature of this suit, and to the facts of the case, appellee was not entitled to recover either general or special damages, but, if entitled to recover at all, was only entitled, under the undisputed facts, to recover damages general in nature such as would naturally and probably result from the acts complained of. My position on this proposition is justified by the rule announced in 8 Rawle C. A., subject "Damages," § 27, as follows:

"In order to recover special damages under this rule, however, it must appear that at the time of the making of the contract the defendant had reasonable notice of the special conditions rendering such damages the natural and probable result of such breach, otherwise the damages recoverable will be limited to those flowing from the ordinary and obvious purposes of the contract. The damages resulting by reason of their existence are disallowed in such case, not because they are uncertain, nor because they are consequential and remote, but because they cannot be fairly considered to have been within the contemplation of the parties when the contract was made."

The same doctrine is announced in 17 C.J. p. 746, as follows:

"Damages arising out of the special circumstances surrounding the contract and different from those which would naturally and probably flow from the breach of such contract may be recovered, where it is shown that, at the time of making the contract, the defaulting party had knowledge of such special circumstances. In the absence of proof of the knowledge of such special circumstances by the defaulting party at the time the contract is entered into, only the amount which would arise generally, and in the great multitude of cases not affected by any special circumstances by such a breach of contract, may be recovered."

To the same effect, see Jones v. George, 61 Tex. 354, 48 Am.Rep. 280.

Therefore I am of the opinion that the judgment of the trial court in this case should have been reversed, and judgment rendered in this court in favor of appellants.