Knott v. Medina No. 1

SPENCE, J.

In this action based upon the alleged conversion of personal property consisting of a certain oil-well drilling outfit and equipment, the jury rendered a verdict in favor of plaintiff for the sum of $8,250 and interest. Prom the judgment entered upon the verdict defendants appeal.

The defendants Medina No. 1 and Medina No. 2 are unincorporated associations and the remaining defendants are individuals associated together under those names. Defendants held an oil and gas lease on certain lands in Medina County, Texas, which lease was for a term ending August 11, 1926. It was dated August 11, 1921, and provided: “It is agreed that this lease shall remain in force for five years from this date and as long as oil or gas or either of them is produced from said land by the lessee.” Although defendants carried on drilling operations, no oil or gas was produced during the term of the lease. On January 2, 1926, being several months prior to the expiration of the lease plaintiff entered into a contract with defendants relating to a well located on the property which well had been partially drilled for defendants by the Pacific Southwest Development Company. This agreement was evidenced by a lengthy letter signed by defendants, the main purpose being expressed in the last paragraph reading: “Our proposition to you as outlined in the preceding portions of this document is conditional that you shall furnish sufficient money to start and continue drilling operations in said well immediately and that there shall be no stoppage in said operations which could be attributed to lack of funds until said well is drilled to 3200 feet or commercial oil in paying quantities, ...” In consideration for the assistance of plaintiff, the agreement provided among other things as follows:

“4th. And we further agree that you shall have the same rights and title to the drilling outfit, equipment and

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casing in said well as are accorded to the Pacific Southwest Development Co. in the contract which we entered into with it, namely, that if you drill to 3200 feet, or any greater depth, without producing commercial oil in paying quantities then said outfit, equipment and casing shall belong to you so that you may salvage same and receive back the money you have expended in operations at the well, and in this connection will state that we are informed that said outfit and equipment, together with the casing when pulled from the well, should bring approximately eleven thousand dollars ($11,000.00);