_..




                     TE~TE          ATTORNEYGENEFCAL
                                            OF     %=EXAS




      Hon. B66oam Gil66, Cormnissioner
      General Land Office
      aU6tin, T6las

      Dear Sirs                                           Opinion NC. O-1255
                                                          R68 Construotioa of a lea66 by
                                                               th0 CCarmi66iOn6rOf th6
                                                               General L+nd Offioe on public
                                                               6ehool land-to Reawar Oil
                                                               Corporation.

                  Thi6 till .6okacrledg6
                                 _ .     _r6eoipt~cf your 16ttsr of Deosmber 8, 1939,
      ~qU66ting     6ll   OpdniCn   Ofthi        a6pPrtmsnt   On   C6rt6m   qU66tiCU6   6ri6i6,g   i,,
      oonn6otica with b666  No. 22990, 6xeoutrd by V. El.MoDcndld, Land &",,iS-
      siowr, on lbwmber 6, 1937, covering 180 soms in Kleberg landKennedy
      County to R-r    Oil Corpcratioa. You eaolosod with your request a pho-
      toatatic copy of the application for th6 16a66 by Benmar O$l I%rporaticn
      dat6d 86pt6mb6r 7, 1937, a photorrtatiqaopy Of the 16a66 and,a photostatio
      ocpy of a bond which is not d+ted tit ha6 the 6t6mp of youi~offio? mark6d
      6Raooiv6d Xcvembor 6, 1937' on 66~~6,signed by R6nnar Oil Ccrporaticn,
      FrinoQnl, Roman S. Bond and S. F. EMbut,    Sur6ti66. The 166qs hrs th6
      following provisions6

                      "HOW, THEREFORE, I VU. II.MCEORALD, Ccmmissioaer of
                  ths General Land Office of the Stat6 of Texa6, by virtue
                  cf the authority vested in me, do hereby leas?~aad grant
                  unto REwiAR OIL CORF.. COFWJ8 QZ+ISTI, TBXA8 ths 6xclus-
                  iv6 right to prospect for, produo and take cut of th6
                  lfor66aid ar6a for a period of FIVE YW    and as long
                  th6rsaftsr 6s any miner6Js 6cv6red hereby ar6 prcducad
                  therefrom in oamnercial.quantitio.6,act to oxo66d TWWl!Y
                  FIVE YEARS, 611 oil and g66 upd oth6r miwrals, axc6pt
                  geld, silar, platinum, cinnabar and ot$or metals ssd
                  prsciou6 stones that may.be therein, upon the follovdng
                  ocnditions, to-witr

                      "1. If none of such mineral6 be producsd in ccnm6r-
                  oial.quantiti6s within,fiYe year6 this I6666 shall term-
                  inat..

                      u2. The caner h6r6of shall pay to the Commiesioner
                  Of th6 Goaaral Land Offi   at b6tlll,     T6Xa6, for tne "66
                  and bsn*rit 0r tn6 State of Tex66,    annually  m ww6noe
Honorable Basoam Gil.6 (O-1256) Page 2



           25+ per *cr. during th. life hereof, 60 long a6 the
           area may b6 imld undmulopsd, md not to 8xoo.d fiv.
           years without prcauctica.

               *3. Rhea prcauoticn of oil, gas or other miaemla
           ecver6a hy this leas. ia sscured the owner snail pay
           to th.~Com6i66icn6r of th. General Land Oftic., at
           liustin,hXa6, for th. U6. and benefit ofth. Stat. of
           T.x.6, l/8 of th. ml". of th. grcrs     oduotioa of oil,
           l/8 cfth. grO66prOdUCtiCn of'gas, 18p" of the grcrs
           productian of aulphur, and 1.8 of th. vmlu. of other
           minsrals, thatmay b. prcducrd from 6aid area.
           #520,000.00 out oi the 3/64 of th. 7.8 and a6 6nd if
           pmduo6d. Ih lgr.o to owmno.      cpwaticns for tb
           drilliag of a ~6~11in a.aroh of oil and/or gar on or
           kforo 330 day6 fran the dat6 of the drlivwy of thi6
           l.aso 6ndto continu6 th. drilling th.r.of with duo
           dilig.nos until th. d.pth of 7000 fo.t h66 bon r.aohod
           or oil and/or gar in paying quaatiti.6 ha6 b6.n produe-
           .d th.r.from. Failur. to oom6waoa raid 11.11a6 afcn-
           6aid 6h.ll r.nd.r thi6 1.a60 null rod void to both
           IWti.6,"

          ThS Rb‘N6 proPi6iCn6 Of tb 1.a6. arOth. 6a6,.a6 6.t Cut iath.
minwal   lea68 6pplioaticn or bid byR.nw6r Oil Corporation. Th. bead r.-
OSSS th. l.a6., aad th. agr66maat t0 drill aontaimd th.r6i8 and i6 cca-
ditit&d.on thi drilliag 66 prcvid.d in said leai. inthi p.n61 61~6of
#4;60&00 in.fav&of th. Caimi6ii~au bft h. &G.imi~&ad         Offi&  of'-
T0X.i aid hi6 ‘SUOOO66Cr6’ ia Offih6. h YOW htkr'yh8      6tat. that,Cn
Di6rmbir~6, 1939, ti compliano6.iith th. demandof~$our d.pwtmat; th4
~,SOO.OO p.n6ltg ih said bard m6 paid to.y&.       YOU a166 6tat.d in your
1ott.r that the R.nnr 011 Ccrporatica'plid‘tho ourront y.U'6 tintal
bgianiag Hmb.r       6, 1939 on 4ugust 5,'~1939. Th. lpplicatica ud bond
hav. be6a endcrsod on thm th6 following:

               *Deo6m%6r 8, 1938*

               "The period of tim. al1ow.d in the drilliag obliga-
           tics i6 h.nby ixtmndmd for oa6 year aft.r it6 Original
           lxpiratica data.
                                               ( Bigmod) lb J. YaDca6ld
                                                !hW6i66iCU.~*

           It will b. ncted that th. on. yrr     ha6   rxpind   should ruch *XI-
dcr6mant    b. giaa any rff.ct.

           You a6k for   am   cpinic8 on th. following quostion68
Honcrablo B86ccm Gil.6 (G-1235) Pago 3.



            1. SinC. no bond m6 mrnticnod ia the bid for
         aloam nor in the loaro i66u.d 6hculdth6 land cam-
        mi66iCnOr OCntiBU6 ia for06 ~adOffOOt thr 1086. by
        virtue of the payment of tbo pasalty prwid.d la the
        bcmd for failure to drill?

             2. Should the 1.16. bo doolarod fcrfoitod for
         failure to ocmply with tha ton66 of the bid and loa6o
         a6 i66U.d thorwon?


         It.i6 tb 0pilli0nof thi6 dopart6matthat in oM6truiag th. thr.0
abow monticnod in6tru66nt6 that the loaro i8 quo6ticn t.rm1nat.d or b6-
oa66 null and void cm the failure cf,th6 106i06 to oanmnencocpWaticn6 for
th. drillir of a rnll.in 6.aroh of oil ud g*r 08 or boforo %C~dayr Pra6
the data of the doliY6ry cftho loaio bo~io      of the j~fmisio~ ii th',ap
pliaatica and 1.86. that .failuro,to'aC66kko. 6iid roll a6 afcniaid &all
rond6r thi6 lo866 null and void t.oboth prtior.~     It till bi noted thit
in the 16660 l66soo wa6 not tivoa u opticr o r llootic8to oithor bigii
thir no11 or pay aa agnod   rrntal or otiply withtho acaditik6 of i'b6&.
It ir true that ordinarily m do not find ia oil alrdgal 1686.6 as abro-
lute lgroanoht ta drill a roll togothor with a proYi6ica t.hat~tho'Ibaro
rhall b. aull and void, tormiaat6  or wad om failureto &ill the-r&l1 1~
a s~oifiod ti6IC,but w. 0an 600 10 rYa6cn ww ruoh a oolltraafcould not
k lnt.r .a into.  The Ronwar Oil Ccrpomtic8 6ot cut i8 their 8pplic8tici
aad bid thii lx6Ct pmviricn a6 bLg     a pr~viric8 bywhioh it 1166 illling
to b bound. T%. COUrt6 hW6 .h.~       00~6tZ’Ud  Oil ad g66 1.8606 agai66t
the 106600 6ad o.rt&aly suoh ccB6tndic8 nould k giYOn 18 thi6 iB6t6no.
6imo0 the 106600 i6 Ir6pCm6iblO for fh. 8%6V6 prOYi6iCa btig in the lOa60.

         m do not think that th6 bc8d, whioh ~6 aCt monticaod im the
application or loaro, ha6 a- b6arimg on whothor or act tb6 2oaro to&at-
ld or ~oamo in111amdvoid for failure to drill th6 ~611. If it aould
haYo 6xy b.arilmg01 th6 coatnot b&woon th6 parti. with nrp.ct to the
loa6o, it lould cmly haw to do with th. damag.6 for viclatia 'aftho
ccv.mnt or agm.mont to drill the null ud not with tb proviri&6 th6t
the 1.86. rhculd brcDm6 void if the nllr66   mot drilled im tiw.   Thir
1.86. wa6 lxooutod aftor cixapetitiw bidding a6 roquind by ohrptor 271,
Aot6 42ad L6gi6laturo, p. 462, and rtatutor th.roiu nforrod to. Suppc66
6cmo cthor company had 6ubnittod 61 lxa6t bid a6 wa6 ruh6itt.d w Ro8war
Oil Corporation with the lxcoptic~ of the provision with ro6p.d to drill-
img a ~011 with18 360 d8y6. A6 betwo~   ruoh Md and Romar~a bid th6 Land
CcmmLssicnor would haw boom jurtifiod 3.8ac86idorimg R.War'r bid a highor
bid, a6 the lgr66mont tu drill the roll 6nd th6 pmVi6iCa  t&t the loaro
would b6ccm null and void if 66.160m6 not drilled withia a rpecifio time
M6 a Yaluablo added ccm6idOxWtiCli The offrot of the Co6unis6icn.rg6aC-
tic8 would result im the loaro nof having b6.~ giwa to the higha6t ud
krt bidder which would b6 doing imdir6otly what +ho rtatut.6 pr.Y.nt him
frcm doing dirootly. Arti6lo 5366, R.Yi6.d Civil Statutor 1926. lW find
mothixg ~IIthe rtatutor, in th. applioatica for 16aro cc i8 the 1086.
H6B. B86eomGil66    (O-1235) fig6 4.



it6Olf whordy  the &666&66iCaOr cfth6  tinOr   LaBd Office i6 6uthCr-
irod to l8t.Bd the drilling obligaticB in a 1.86. of thi6 aharaotor
or to aocopt the fcrfoit of a bc8d and paywant thonof in 11.~ cf'tho
drill-g provi6icnr ocBtai8od 18 the applicatic8 a8d b th. loam.

         It 16 diffioult to llnyr toll whothor a pro~26ion 18 a loaro
6imilv t0 the 080 abCY. i6 a 6p.0181 ldmit8ticB 08 th6 l6tato gn8t.d
or a oc8diticm Nboquont.    If it 16 a llnitatlo8 the loa6o 1~60 h&c
toxmi8atos on the 106600~6 failure to kgia drlllirg operations.
                                                          .
         I8 the ca6o of Caulk ~6. Yillor, 18 8.W. (2d) 195, C.C A. of
GalYo6to8, rhoroin the granko iB a dood agr6.d to bgia lotual drilll8g
 of m dl rll within rix month6 aftortho data of O& sale l8d that
failure to &s6aoaoo drilli8g opOmtioB6 sithi 6dX noathr ho should fdr-
fait all of hi6 right6 in th. miHral6.   The court h.ld that th. failure
to bgi8 drilling CpSntiOB6 Within 6iX mc8ths ip60 f6cfO t6miBat.d
the titl. to ths mirnml6.   fr.th. 0.6. Of otllf~CdUCtiCa   &.W,plty Y6e
x16=  lt al. 10s S.K (2d) 965; C.666.App. 6.0. B, ~inica w Judge
k.dk?,   th6 follcwi8g laBguag0 1666 used, in co88ooticm with a rimilar
pMYiliC8 in th. 1.86.r

             “The 6-X.666 p~ti6iCY&l Of th. ~066.6 tht th.
         right6 or e6t6t.6 of iih6loss04 6hall tWmi8atO on
         its failur6 to drill the well6 am limitaticlqsup
         ca the dumticB of the l6t8tos ore&ted byth6 lccoos."

833 6,160Gulf Production Ccmpany et al v6. Ccatinental Gil Company et al,
by the Supreme Court of Texas, opinion by Chief Justios Cureton on Dxr6e.1-
lmr 11, 1939, and not yet reported.

         If such 0.provision is a condition rubsequ.8t then it 16 noco6-
sary fcr the lesscr~tc make 6 r.-oatIy or it6 squinleat in order to
tenniaate the 1.664.

         In the ca6. of Curry ~6~ Texas Campaw, 18 S.E. (2d), C.C.A.,
Sa6tla8d.tho fcllcwiag la8guago wa6 usrd whioh oxpr.ss.s.ths wall set-
tlod law:

             "If the forfeiture provision be e condition sub
         66qU6nt, than W6 ar. unbl. tc attaah a8y impcrtanoo
         to tho preci66 wording Of same. The rtie i6 a6 In-
         oient astho cc6ncB law that a forfoituro pmYi6iC8,
         which is a condition subsequent, that may mrk a ds-
         feaaanooof a8 estate 18 land, doss not affoot such
         dof.aaano6 in the absono. of a m-entry, or equiYa-
         lot&e, which in the court.of time hare corn4to k
         r.ocgn1e.d.'
c   ..   -




             Hon. Baaoom Gil.8 (o-1255) Page 5.



                      Should we ti mistaken in construing the above provisions of the
             lease a8 constituting a Special limitation upoa the astate leased iastead
             of a condition subsequent, it nvuld be necessary for you to advise the
             lsrsee that the lease is at an end and has ao further force and offed on
             the above dascribd property in order to put the lease to an end, whioh
             pnoaution you should take if you desire to bs oertain that the lease is
             forfeited or terminated. As a general rule forfsitures are not favored
             Iy the court, lmt beoauaa of the aaturo of (Laoil and gas loam ad the
             inequity im alluwimg a losaoe to sit back aad hold lessor'8 propslfy
             without devrlopPsmt of sam. aad prevent lossor frmn rsceivimg the bent
             fits therefrom in the nature of royalty, the courts have favored forfeit-
             ure of oil aad ga# lea8or for failure on the part of the lasaea to oom-
             ply with drilling obligations. See Stephemaon, et al v. Stite, at ux@
             226 S. It.812, C.C.A. of San Antonio, where the following lamguags i6
             used:

                          "The oontraot iavolved being an oil aad gas leaso,
                      it will bo &rietly coastnzed against the lasroe, and,
                      although under hh* general rule forfeitures are not
                      favored, they are ir faot favored ia contracts of this
                      character."

                     Ha trurt t&t   the above suffioievtly anawers your requeste

                                                      Yours very truig




                                                  By /s/D..Do   +hon

                                                         DA   Mahbn
                                                           Amsistamt



             APPROVED DEC 23, 1939
             /a/GEBILD C. MUM                               APPHOVED
             ALTTOHNHYGER-BBALOF TEXAS                   Opinion Cmmittee
                                                            By BBS Chairman
