London v. Merriman

756 S.W.2d 736 (1988)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

D owns two adjoining tracts of land and holds the executive right to all the minerals. She owns a 3/16 royalty interest in the eastern tract and a 1/8 royalty interest in the western tract. P's own a 1/16 non-participating (no right to lease) royalty interest in the western tract, created by reservation when P conveyed the land to D. In 1980, D executed a single oil and gas lease which included both tracts. The lessee later assigned its interest to the McCord Exploration Company. In 1982, McCord brought in successful gas wells on the eastern tract, in which D owns all the royalty interest. No wells have been drilled on the western tract. In 1983, P sued McCord and D, claiming that McCord breached a duty to protect the tract in which they owned a royalty interest against drainage by the other tract. In 1984, they successfully sought statutory forced pooling of their royalty interest with D's by the Railroad Commission, enabling them to share in the royalties paid on the wells since the effective date of the Commission's order, March 7, 1984. P pursued their suit for a common law recovery of royalties allegedly lost by drainage until the effective date of the order. In 1986, P filed a supplemental petition, alleging that they had ratified the lease between McCord and D and so had accepted D's alleged offer in the lease to pool their royalty interest with hers. The ratification theory was tried to the court, while the breach of duty theory was tried to the jury. Ps were successful on both. The court found that Ps ratified the lease by filing suit on July 14, 1983, entitling them to their share of royalties from that date until the effective date of the Railroad Commission's forced pooling order, March 7, 1984. They elected to have the judgment on the ratification theory, and the trial court awarded them $390,051.35 for royalty payments due them from the time the wells began to produce until the Railroad Commission ordered pooling. D appealed. D asserts that the oil and gas lease by its terms precluded ratification and the consequent pooling of the royalty interests.