Atlantic Refining Co. v. Buckley , 123 S.W.2d 413 ( 1938 )

The writer dissents from the majority judgment striking down the permit to drill the oil well in question. In the main the majority view is predicated upon the ground that fraud was practiced upon the Commission to obtain the permit by an alleged collusive judgment of the District Court, which is held to be a voluntary subdivision of the .16-acre tract in question from the larger 23-acre O. W. R. tract after the effective date of Rule 37. The Commission could not have been defrauded by the alleged collusive judgment partitioning the .16-acre tract from the larger tract, because it knew all about the alleged collusive judgment when the permit was granted, the alleged collusive judgment being urged as a ground for denying the permit. Manifestly the Commission granted the permit to drill the well upon the ground that if this small tract be treated as a part of the O. W. R. tract from which it was partitioned by the judgment, the whole tract would be entitled to the additional well in accordance with the rule insisted on by the Commission and sustained by the Supreme Court in the Magnolia Case, 130 Tex. 484, 109 S.W.2d 967. The Commission has urged this ground in defense of the permit in the instant case both in the trial court and in this court. The majority view is necessarily in conflict with said Magnolia Case for the reason that the Commission's order, as held in that case, "may be supported upon a ground different from that recited in the order," [page 971] and for the reason that the undisputed evidence showed that if the .16-acre tract be considered as a part of the larger tract from which it was partitioned, the whole tract was entitled to the additional well in order to afford the owners an equal opportunity to recover their fair share of the oil thereunder.

The expert witness for appellant testified that from a purely offset well theory, the two tracts considered as a whole had sufficient wells to protect the whole tract, but that the adjoining leases of appellants from the standpoint of density of wells had the advantage over the .16-acre and 23-acre tracts considered as a whole. His testimony was as follows:

"Q. Each of the protestants in this case, then, have the advantage on the well density basis at the time of the granting of this permit; is that correct? A. That is correct.

"Q. Now isn't it a fact, Mr. Parker, that both the Kewanee and the Atlantic leases have been developed under exceptions to Rule 37 on spacing? A. You mean by that do they have less than one well to ten acres on the entire lease?

"Q. Yes. A. That is correct."

This testimony brings the instant case in every respect within the rule announced in the Magnolia Case, supra.