Opinion
No. 39535.
April 11, 1955.
1. Minerals — producing gas wells drilled on lands in drilling unit — extended primary term of lease.
Producing gas wells drilled on lands within drilling units extended primary term of oil and gas lease covering other lands included within and constituting part of such units under lease provision for annual renewal by rental payments or drilling for gas or oil well on leased premises.
2. Minerals — same — failure to drill below producing strata — on leased lands — did not terminate lease.
Where gas was being produced between 7,100 and 7,800 feet subsea level from wells drilled on lands in drilling units of which leased lands were a part, failure to drill a well on leased lands to the subsurface beneath the 7,800 foot depth did not terminate lease, under provision for termination of lease on failure to make annual rental payments or commence drilling operations on leased land within specified time, in absence of lease provision for drilling to any specified strata or depth.
Headnotes as approved by Roberds, P.J.
APPEAL from the Chancery Court of Jefferson-Davis County; NEVILLE PATTERSON, Chancellor.
Green, Green Cheney, Jackson, for appellant.
I. Admitting for argument's sake the validity of gas units 7 and 34, confined expressly to Eutaw-Upper Tuscaloosa, between 7100 and 7800 feet (called "Eutaw Horison"), the lease should be cancelled as to all horizons above and below and as to all other minerals than gas and distillate, appellees not having drilled thereinto as by the contract Exhibit "C" (R. 33) required. Adams v. Yazoo M.V.R.R. Co., 77 Miss. 194, 278, 24 So. 200; Baldwin v. Blue Stem Oil Co., 106 Kan. 848, 189 P. 920; Ballard v. Miss. Cotton Oil Co., 81 Miss. 507, 34 So. 533; Bandini Petroleum Co. v. Superior Court, 284 U.S. 8, 52 S.Ct. 103; Berry v. Tide Water Associated Oil Co. (Miss.), 188 F.2d 820; Bowles v. Willingham, 321 U.S. 503, 88 L.Ed. 892; Bradley v. Howell, 161 Miss. 346, 133 So. 660; Brewster v. Lanyon Zinc Co., 72 C.C.A. 213, 140 Fed. 801; Brown Plumbing Co. v. McDowell (Ala.), 200 So. 104; Butler v. State, 217 Miss. 40, 63 So.2d 779; Champlain Rfg. Co. v. Corporation Comm., 286 U.S. 210, 52 S.Ct. 559; Danciger Oil Rfg. Co. v. Powell, 137 Tex. 484, 154 S.W.2d 632, 137 A.L.R. pp. 408, 415; Donald v. J.J. White Lbr. Co., 68 F.2d 441; Dougherty v. Greene, 218 Miss. 250, 67 So.2d 297; Ellif v. Texon Drilling Co., 146 Tex. 575, 210 S.W.2d 558, 4 A.L.R. 2d pp. 191, 198; Eota Realty Co. v. Carter Oil Co. (La.), 74 So.2d 30; Fauntleroy v. Lum, 80 Miss. 757, 32 So. 290, 210 U.S. 230, 52 L.Ed. 1039, 28 S.Ct. 641; Federal Land Bank v. Dunn (Miss.), 188 So. 294; Fornea v. Goodyear Yellow Pine Co., 181 Miss. 50, 178 So. 914; Freeport Sulphur Co. v. American Sulphur R. Co., 117 Tex. 439, 6 S.W.2d 1039, 60 A.L.R. 890; Griffith v. Gulf Rfg. Co., 215 Miss. 15, 61 So.2d 306; Home Building Loan Assn. v. Blaisdell, 290 U.S. 397, 78 L.Ed. 413; Jefferson Standard Life Ins. Co. v. Noble, 185 Miss. 360, 188 So. 289; Koenig v. Calcote, 199 Miss. 436, 25 So.2d 763; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337; Lloyd's Estate v. Mullen Tractor Equipment Co., 192 Miss. 62, 4 So.2d 282; Lochner v. New York, 198 U.S. 45, 49 L.Ed. 937; Lusk v. Seal, 129 Miss. 228, 91 So. 386; Mars v. Hendon, 178 Miss. pp. 157, 286, 171 So. 880, 173 So. 286; May v. Anderson, 245 U.S. 528, 97 L.Ed. 1221; Millette v. Phillips Petroleum Co., 209 Miss. 687, 48 So.2d 344; Moore v. Grillis, 205 Miss. 865, 39 So.2d 505; Mullane v. Central Hanover B. T. Co., 339 U.S. 306, 94 L.Ed. 865; New York v. New York, N.H. H.R. Co., 344 U.S. 293, 97 L.Ed. 333; Ohio Oil Co. v. Indiana, 177 U.S. 190, 44 L.Ed. 729; Pace v. State, 191 Miss. 780, 4 So.2d 270; Palmer Oil Corp. v. Amerada Petroleum Corp., 343 U.S. 390, 96 L.Ed. 1022; Phillips Petroleum Co. v. Millette, 221 Miss. 1, 72 So.2d 176; Piaggio v. Somerville, 119 Miss. 6, 80 So. 342; Ramsey v. Brown, 77 Miss. 124, 25 So. 151; Riley v. Gaddis, 146 Miss. 44, 111 So. 739; Smith v. Meridian Realty Development Co. (Miss.), 188 So. 295; State v. J.J. Newman Lumber Co., 102 Miss. 802, 59 So. 923; Stokely v. State, 149 Miss. 435, 115 So. 563 (appeal dismissed, 278 U.S. 584, 73 L.Ed. 520); Stone v. Independent Linen Service Co., 212 Miss. 580, 55 So.2d 580; Stone v. State of Mississippi, 101 U.S. 814, 25 L.Ed. 1079; Sumter Lbr. Co. v. Skipper, 183 Miss. 595, 184 So. 296; Superior Oil Co. v. Beery, 216 Miss. 664, 63 So.2d 115, 134; Superior Oil Co. v. Foote, 214 Miss. 857, 59 So.2d 85; Texas Gulf Producing Co. v. Griffith, 218 Miss. 109, 65 So.2d pp. 447, 834; Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 81 L.Ed. 510; Tyler Co. v. Laurel Equipment Co., 187 Miss. 592, 192 So. 573; Tyson v. Banton, 273 U.S. 418, 71 L.Ed. 718; Walls v. Midland Carbon Co., 254 U.S. 300, 41 S.Ct. 118; Wilson Banking Co. v. Colvard, 172 Miss. 804, 161 So. 123; Witherspoon v. Campbell, 219 Miss. 640, 69 So.2d 384; Chap. 8 and Secs. 6132-22, 6132-51, 6132-79, 6151, Code 1942; Chap. 117, Laws 1932; Chap. 305, Laws 1936; Chap. 256, Laws 1948; Chap. 220, Laws 1950; 11 Am. Jur., Sec. 339 p. 1153; 42 Am. Jur., Public Administrative Law, p. 470; Annos. 8 A.L.R. 537, 60 A.L.R. 901; 1 C.J.S. 1449; 14 C.J.S. 346; 16 C.J.S., Sec. 210 pp. 615, 619; 17 C.J.S., Sec. 289 (c) p. 679; 53 C.J.S. 16; Broom's Legal Maxims, pp. 126, 159, 242, 689; Vol. XVIII, Mississippi Law Journal, pp. 402, 404; Vol. XX, Ibid., pp. 51, 304, 319; Vol. XXVI, Ibid., pp. 30-31; Murphy on Conservation of Oil Gas (A legal history, 1948), Section of Mineral Law, A.B.A., Miss. Monograph.
II. This Court may not constitutionally integrate into Chapter 8, Mississippi Code of 1942, the vital words found in Section 6132-22, recompiled Code of 1942, there being no police power therefor by reason of alleged waste. Arkansas-Louisiana Gas Co. v. Southwest Nat. Pro. Co., 221 La. 608, 60 So.2d 9, 11; Bandini Petroleum Co. v. Superior Court, supra; Champlain Rfg. Co. v. Corporation Comm., supra; Green v. Superior Oil Co. (Miss.), 59 So.2d 100; Hunter Co. v. Shell Oil Co., 211 La. 893, 31 So.2d 10, 15; Lindsley v. Natural Carbonic Gas Co., supra; Scott v. Pure Oil Co., 194 F.2d 393; Texas Gulf Producing Co. v. Griffith, supra; Walls v. Midland Carbon Co., supra; Sec. 6132, et seq., Code 1942.
III. Federal questions: Title 23, Chapter 8, Mississippi Code of 1942, embracing Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, contravenes (1) the Contract Clause of the Federal Constitution, and (2) the Equal Protection and Due Process Clauses of the Federal Constitution. Bouslog v. Gulfport, 112 Miss. 184, 72 So. 896; Briscoe v. Buzbee, 163 Miss. 574, 143 So. 887; Brotherhood of R.R. Trainmen v. Swan, 214 F.2d 56; California Co. v. State Oil Gas Bd., 200 Miss. 824, 27 So.2d 542; Chism v. Hollis, 152 Miss. 772, 118 So. 713; City of Jackson v. Miss. Fire Ins. Co., 132 Miss. 415, 95 So. 845; City of Meridian v. Miss. Valley Gas Co. (Miss.), 214 F.2d 525; Coe v. Armour Fertilizer Works, 237 U.S. 413, 424, 59 L.Ed. 1927; Coffey v. Noel (W. Va.), 11 F.2d 399; Donald v. J.J. White Lbr. Co., supra; Earp v. Mid-Continent Pet. Corp., 167 Okla. 86, 27 P.2d 855, 91 A.L.R. 188; Federal Trade Comm. v. Ruberoid Co., 343 U.S. 470, 96 L.Ed. 1081; First Natl. Bank of Memphis v. State Tax Comm., 210 Miss. 590, 50 So.2d 146; Green v. Superior Oil Co., supra; Griffin v. Griffin, 327 U.S. 220, 90 L.Ed. 635; Hansberry v. Lee, 311 U.S. 32, 85 L.Ed. 22; Hudson v. Lewis, 188 F.2d 679; Humble Oil Rfg. Co. v. Welborn, 216 Miss. 180, 62 So.2d 211; Hutchins v. Humble Oil Rfg. Co. (Miss.), 59 So.2d 103; Jack v. Thompson, 41 Miss. 49; Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 95 L.Ed. 817; Lake v. Perry, 95 Miss. 550, 49 So. 569; Lamar Life Ins. Co. v. Billups, 175 Miss. 771, 169 So. 32; LeBlanc v. Danciger Oil Rfg. Co., 218 La. 463, 49 So.2d 855; LeBlanc v. Southern Production Co., 202 F.2d 245; Lloyd's Estate v. Mullen Tractor Equipment Co., supra; Lochner v. New York, supra; Louisville Joint Stock Land Bank v. Radford, 296 U.S. 661, 80 L.Ed. 471; May v. Anderson, supra; Millette v. Phillips Petroleum Co., supra; Mississippi Gulfport Compress Warehouse v. Public Service Comm., 189 Miss. 166, 196 So. 763; Mullane v. Central Hanover B. T. Co., supra; Muran v. Murphy, 187 Miss. 633, 193 So. 29; New York v. New York, N.H. H.R. Co., supra; Nichols v. Gaddis McLaurin, Inc., 222 Miss. 207, 75 So.2d 625; Ohio Oil Co. v. Indiana, supra; Palmer Oil Corp. v. Amerada Petroleum Corp., supra; Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565; Perkins v. Benquet Consol. Mining Co., 342 U.S. 437, 96 L.Ed. 485; Porterfield v. Butler, 47 Miss. 165; Smith v. Smith, 211 Miss. 481, 52 So.2d 1; South Buffalo Ry. Co. v. Ahern, 344 U.S. 367, 97 L.Ed. 395; State Oil Gas Bd. v. Superior Oil Co., 202 Miss. 139, 30 So.2d 589; Steele v. Palmer, 41 Miss. 88; Stone v. State of Mississippi, supra; Superior Oil Co. v. Foote, supra; Superior Oil Co. v. Griffith, 214 Miss. 891, 59 So.2d 104; Superior Oil Co. v. Morgan (Miss.), 59 So.2d 105; Texas Gulf Producing Co. v. Griffith, supra; Trager v. Jenkins, 75 Miss. 676, 23 So. 424; Watson v. Employers Liability Assur. Corp., 99 L.Ed. 90; Wilby v. State, 93 Miss. 767, 47 So. 465; Wisconsin Lbr. Co. v. State, 97 Miss. 571, 54 So. 247; Sec. 6132-22, Code 1942; 42 Am. Jur., Public Administrative Law, p. 470; Vol. II, Mississippi Digest, Appeal and Error, Key 781; Vol. IV, Ibid., Constitutional Law, Key 42; Vol. XVIII, Mississippi Law Journal, p. 462; Vol. XX, Ibid., p. 51; Murphy on Conservation of Oil Gas (A legal history, 1948), Section of Mineral Law, A.B.A., Miss. Monograph.
Bernard Chill, Jackson, for appellee, Texas Gulf Producing Company.
I. By virtue of production, Texas Gulf's lease is now in full force and effect as to its entirety, by virtue of the terms of the Habendum Clause of said lease. Superior Oil Co. v. Beery, 216 Miss. 664, 63 So.2d 115, 64 So.2d 357; Texas Gulf Producing Co. v. Griffith, 218 Miss. 109, 65 So.2d pp. 447, 834.
II. Appellant's assignment of error and contentions presented by argument are inconsistent. Eaton v. Hattiesburg Auto Sales Co., 151 Miss. 211, 117 So. 534; Phillips Petrolem Co. v. Millette, 221 Miss. 1, 72 So.2d 176; Smith v. Williams, 36 Miss. 545; Superior Oil Co. v. Beery, supra; Texas Gulf Producing Co. v. Griffith, supra.
III. The theory behind the covenant to reasonably develop. Millette v. Phillips Petroleum Co., 209 Miss. 687, 48 So.2d 344; Phillips Petroleum Co. v. Millette, supra; Superior Oil Co. v. Beery, supra; Merrill on Covenants Implied in Oil Gas Leases (2d ed.), Chap. 6.
IV. In considering the question of reasonable development, a construction compatible with the theory of ownership prevailing in the forum must and should be adopted. Gregg v. Harper Turner Oil Co., 199 F.2d 1; Koenig v. Calcote, 199 Miss. 435, 25 So.2d 763; Lloyd's Estate v. Mullen Tractor Equipment Co., 192 Miss. 62, 4 So.2d 282; Stephens County v. Mid-Kansas Oil Gas Co., 113 Tex. 160, 254 S.W. 290; Stokely v. State, 149 Miss. 435, 115 So. 563; Texas Co. v. Davis, 113 Tex. 321, 255 S.W. 601, 354 S.W. 304; 7 Texas Law Review 593.
V. The prudent operator rule requires a finding of fact. Cosden Oil Co. v. Scarborough, 55 F.2d 634; Cosden v. General Crude Oil Co. (Tex.), 217 S.W.2d 109; Fisher v. Crescent Oil Co., 178 S.W. 905; Johnson v. Jackson, 113 Tex. 231, 254 S.W. 309; J.M. Guffey Petroleum Co. v. Jeff Chaison Townsite Co. (Tex.), 107 S.W. 609, 48 Civ. App. 555; Leonard v. Prater, 18 S.W.2d 681, 36 S.W.2d 216; Munsey v. Marnet Oil Gas Co., 113 Tex. 212, 254 S.W. 311; Pierce v. Texas Pacific Coal Oil Co., 225 S.W. 193; Rhouds Drilling Co. v. Allred, 123 Tex. 229, 70 S.W.2d 576; Saulsberry v. Siegel (Ark.), 252 S.W.2d 834; Scott v. Jackson, 37 S.W.2d 1068; Texas Co. v. Davis, supra; W.T. Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27.
VI. The only logical conclusion that could be reached on a trial to make a finding of fact, as required by the prudent operator rule, would be that the burden has been met here by the lessee. Texas v. Ramsower, 10 S.W.2d 537; Vol. II, Summers on Oil and Gas, Sec. 412 p. 356, et seq.
VII. Texas Gulf Producing Co. v. Griffith did not modify or abrogate the doctrine of reasonable development in any manner. Texas Gulf Producing Co. v. Griffith, supra; Wilcox v. Shell Oil Co. (La.), 76 So.2d 416.
VIII. By the very terms of the lease exhibited, appellant is precluded from a recovery. Goff v. Avent, 122 Miss. 86, 84 So.2d 134; Gulf S.I.R.R. Co. v. Patterson, 180 Miss. 756, 178 So. 468.
IX. A determination that Chapter 117, Mississippi Laws of 1932, and Chapter 305, Mississippi Laws of 1936, are not violative of the Due Process Clause and the Equal Protection Clause of the United States Constitution or the Due Process Clause of the Constitution of the State of Mississippi.
A. No State constitutional questions are raised by counsel opposite. Sec. 197, Constitution 1890.
B. Federal constitution questions raised.
(1) The interpretation placed upon the Conservation Laws of 1932 and 1936 by the Mississippi Supreme Court does not contravene the Due Process Clause of the Federal Constitution. Green v. Superior Oil Co. (Miss.), 59 So.2d 100; Hunto Co. v. McHugh, 202 La. 97, 11 So.2d 495 (appeal dismissed, 320 U.S. 222, 88 L.Ed. 5, 64 S.Ct. 19); Hutchins v. Humble Oil Rfg. Co. (Miss.), 59 So.2d 103; Marrs v. Oxford, 32 F.2d 134 (cert. denied, 280 U.S. 573, 74 L.Ed. 625, 50 S.Ct. 29); Palmer Oil Corp. v. Amerada Oil Corp., 204 Okla. 543, 231 P.2d 997, 343 U.S. 390, 96 L.Ed. 1022, 72 S.Ct. 842; Patterson v. Stanolind Oil Gas Co., 182 Okla. 155, 77 P.2d 83, 305 U.S. 376, 83 L.Ed. 231, 59 S.Ct. 259; Superior Oil Co. v. Beery, supra, and 59 So.2d 689; Superior Oil Co. v. Foote, 214 Miss. 857, 59 So.2d 85, 844; Superior Oil Co. v. Griffith, 214 Miss. 891, 59 So.2d 105; Texas Gulf Producing Co. v. Griffith, supra; Chap. 117, Laws 1932; Chap. 305, Laws 1936.
(2) Chapter 117, Laws of 1932, and Chapter 305, Laws of 1936, are not subject to attack on the grounds that they impair the obligation of contracts. Alston v. Southern Production Co., 207 La. 370, 21 So.2d 383; Crichton v. Lee, 209 La. 561, 25 So.2d 229; Everette v. Phillips Petroleum Co., 218 La. 835, 51 So.2d 87; Palmer Oil Corp. v. Amerada Petroleum Corp., supra; Patterson v. Stanolind Oil Gas Co., supra; Smith v. Carter, 104 F. Supp. 463; Superior Oil Co. v. Beery, supra; Texas Gulf Producing Co. v. Griffith, supra.
Wells, Thomas Wells, Jackson; W.B. Wagner, Murray Christian, Houston, Texas, for appellee, The Superior Oil Company.
I. Texas Gulf's lease is now in full force and effect not by reason of any statute or any rule or regulation of the Oil and Gas Board, but as the result of the express terms of the lease contract itself. Superior Oil Co. v. Beery, 216 Miss. 664, 63 So.2d 115, 64 So.2d 357; Superior Oil Co. v. Foote, 216 Miss. 728, 63 So.2d 137, 64 So.2d 355.
II. All other issues presented by complainant's brief have been previously considered and decided adversely to complainant by this Court. Humble Oil Rfg. Co. v. Hutchins, 217 Miss. 636, 64 So.2d 733; Superior Oil Co. v. Beery, supra; Superior Oil Co. v. Foote, supra; Texas Gulf Producing Co. v. Griffith, 218 Miss. 109, 65 So.2d 447.
Robert O. Koch, Clyde E. Willbern, Houston, Texas; Wells, Thomas Wells, Jackson, for appellee, Tide Water Associated Oil Company; Earl A. Brown, Charles A. Wallace, Dallas, Texas; Brunini, Everett, Grantham Quin, Jackson, for appellee, Magnolia Petroleum Company; J.W. Timmins, Martin A. Row, Leo J. Hoffman, Dallas, Texas; Walter L. Shows, Jackson; Armstrong Hoffman, Hazlehurst, for appellee, Sun Oil Company; Joe A. Thompson, M.M. Roberts, Hattiesburg, for appellee, Humble Oil Refining Company.
I. Texas Gulf's lease is now in full force and effect, in its entirety, as to all minerals and all strata, by virtue of the express terms of said lease.
A. That subject lease is in full force and effect as to the Eutaw horizon is not, in this Court, seriously challenged, but at least argumentatively admitted by complainant. Humble Oil Rfg. Co. v. Hutchins, 217 Miss. 636, 64 So.2d 733, 65 So.2d 824; Superior Oil Co. v. Beery, 216 Miss. 664, 63 So.2d 115, 64 So.2d 357; Superior Oil Co. v. Foote, 214 Miss. 857, 59 So.2d 85, and 216 Miss. 728, 63 So.2d 137, 64 So.2d 355; Texas Gulf Producing Co. v. Griffith, 218 Miss. 109, 65 So.2d pp. 447, 834.
B. Subject lease is in full force and effect as to all minerals and all horizons or strata in and under the lands embraced therein by virtue of the express terms of said lease. Griffith v. Gulf Rfg. Co., 215 Miss. 15, 60 So.2d 518, 61 So.2d 306; Hassie Hunt Trust v. Proctor, 215 Miss. 84, 60 So.2d 551; Humble Oil Rfg. Co. v. Welborn, 216 Miss. 180, 62 So.2d 221; McCandless v. Clark, 172 Miss. 315, 159 So. 542; Merrill Engineering Co. v. Capital National Bank, 192 Miss. 378, 5 So.2d 666; Scott v. Pure Oil Co., 194 F.2d 393; Smith v. Carter Oil Co. (La.), 104 F. Supp. 463; Superior Oil Co. v. Beery, supra; Superior Oil Co. v. Foote, supra; Texas Gulf Producing Co. v. Griffith, supra; Chap. 117, Laws 1932; Chap. 305, Laws 1936; Vol. II, Summers on Oil and Gas (Perm. ed.), Sec. 297.
C. The implied covenant to develop the lease with reasonable diligence after production is obtained stands as assurance and protection vouchsafed unto complainant under subject lease of fair treatment by Texas Gulf in a proper development program of subject lands; but under the facts of this case, no breach by Texas Gulf or any other is shown or, as for that, can now be shown. Berry v. Tide Water Associated Oil Co., 188 F.2d 820; Brewster v. Lanyon Zinc Co., 140 Fed. 801; Gibson Jennings, Inc. v. Amos Drilling Co., 196 Okla. 143, 162 P.2d 1002; Hunter Co., Inc. v. Shell Oil Co., Inc., 211 La. 893, 31 So.2d 10; Meyerkort v. Warrington (Miss.), 19 So.2d 433; Stonewall Life Ins. Co. v. Cooke, 165 Miss. 619, 144 So. 217; Texas Pacific Coal Oil Co. v. Barker, 117 Tex. 418, 6 S.W.2d 1031, 60 A.L.R. 936; Thornton v. City of Natchez, 88 Miss. 1, 41 So. 498; Waldrop v. Whittington, 213 Miss. 567, 57 So.2d 298; Walker v. Polk, 208 Miss. 389, 44 So.2d 477; 24 Am. Jur., Gas and Oil, Sec. 176; Glassmire on Oil and Gas Leases and Royalties (2d ed.), p. 244; Griffith's Miss. Chancery Practice (2d ed.), Sec. 175; Hoffman's Voluntary Pooling and Unitization, p. 273; Merrill on Covenants Implied in Oil and Gas Leases (2d ed., 1940), Secs. 69-70, 122; Vol. II, Summers on Oil and Gas (Perm. ed.), Sec. 414; 31-A Texas Jur., Oil and Gas, Secs. 132, 135; Vol. II, Walker's Cases on Oil and Gas, p. 683.
II. All other issues presented by complainant's brief have been previously carefully considered and decided adversely to complainant by this Court. Cities Service Gas Co. v. Peerless Oil Gas Co., 340 U.S. 179, 95 L.Ed. 190, 71 S.Ct. 215; Fauntleroy v. Lum, 80 Miss. 757, 32 So. 290, 210 U.S. 230, 52 L.Ed. 1039; Griffith v. Gulf Rfg. Co., supra; Hassie Hunt Trust v. Proctor, supra; Humble Oil Rfg. Co. v. Hutchins, supra; National Bank of Greece v. Savarika, 167 Miss. 571, 148 So. 649, 652; Palmer Oil Corp. v. Amerada Petroleum Corp., 343 U.S. 390, 96 L.Ed. 1022, 72 S.Ct. 842; Palmer Oil Corp. v. Phillips Petroleum Co., 204 Okla. 543, 231 P.2d 997; Patterson v. Stanolind Oil Gas Co., 182 Okla. 155, 77 P.2d 83, 305 U.S. 376, 83 L.Ed. 231, 59 S.Ct. 259; Phillips Petroleum Co. v. State of Oklahoma, 340 U.S. 190, 95 L.Ed. 204, 71 S.Ct. 221; Soon Hing v. Crowley, 113 U.S. 703, 28 L.Ed. 1145, 5 S.Ct. 730; Superior Oil Co. v. Beery, supra; Superior Oil Co. v. Foote, supra; Texas Gulf Producing Co. v. Griffith, supra; Amend. XIV Sec. 1, Art. I Sec. 10 (1), U.S. Constitution; Chap. 117, Laws 1932; Chap. 305, Laws 1936; Holmes's Collected Legal Papers, p. 207.
Hedgepeth, Ewing Hedgepeth, Satterfield, Shell, Williams Buford, Harvey L. Strayham and James A. Boone, Jackson; Archie D. Gray, Pittsburgh, Pennsylvania, for Gulf Refining Company, Amicus Curiae.
I. Production from one horizon by a lessee does not constitute abandonment of all other horizons which are subject to the lease. Butterfield Lbr. Co. v. Guy, 92 Miss. 361, 46 So. 78; DaCamera v. Binney, 146 S.W.2d 440; Gregg v. Harper-Turner Oil Co. (Okla.), 199 F.2d 1; Hunt v. Davis, 208 Miss. 710, 45 So.2d 350; Meyerkort v. Warrington, 198 Miss. 29, 19 So.2d 433; Millette v. Phillips Petroleum Co., 209 Miss. 687, 48 So.2d 344; Pohlemann v. Stephens Petroleum Co., 197 F.2d 134; Spurlock v. Hinton (Tex.), 225 S.W.2d 203; Superior Oil Co. v. Beery, 216 Miss. 664, 63 So.2d 115; Superior Oil Co. v. Foote, 216 Miss. 718, 63 So.2d 137, 64 So.2d 255; Trust Co. of Chicago v. Samedan Oil Corp., 192 F.2d 282; Waldrop v. Whittington, 213 Miss. 567, 57 So.2d 298; Walker v. Polk, 208 Miss. 389, 44 So.2d 477; W.T. Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27; 24 Am. Jur. 588.
II. The implied covenant of reasonable development or further development of the leased lands may only be invoked upon allegation and proof of facts warranting a reasonably prudent operator to drill and, at the most, under extraordinary circumstances, an alternative decree to drill within a limited period or to forfeit the lease is the proper remedy. Carter Oil Co. v. Mitchell, 100 F.2d 945; Ferguson v. Gulf Oil Corp., 192 Okla. 355, 137 P.2d 940; Gregg v. Harper-Turner Oil Co., supra; Millette v. Phillips Petroleum Co., supra; Trust Co. of Chicago v. Samedan Oil Corp., supra; W.T. Waggoner Estate v. Sigler Oil Co., supra; Fourth Annual Institute on Oil and Gas Law, Southwestern Legal Foundation, pp. 67-70, Merrill on Covenants Implied in Oil and Gas Lease (2d ed.), Sec. 69 p. 173; 1 Oil and Gas Reporter, pp. 33, 1685.
III. Texas Gulf Producing Company v. Griffith not only does not support the appellant's position, but its holding with respect to lands within the unit supports the position of the appellees in this appeal, all lands here being within the units involved. Beck v. Norbeck Co., 116 Mont. 345, 151 P.2d 1014; Cole v. Philadelphia Co., 345 Pa. 315, 26 A.2d 920; Crichton v. Lee, 209 La. 561, 25 So.2d 229; Godfrey v. McArthur, 186 Okla. 144, 96 P.2d 322; Gray v. Cameron, 218 Ark. 142, 234 S.W.2d 769; Hudson v. Newell, 172 F.2d 848; Humble Oil Rfg. Co. v. Welborn, 216 Miss. 180, 62 So.2d 211; Hunter Co. v. Shell Oil Co., 211 La. 893, 31 So.2d 10; Hunter Co. v. Vaughn, 217 La. 459, 46 So.2d 735; Leach v. Brown (Tex.), 251 S.W.2d 553; LeBlanc v. Danciger Oil Rfg. Co. (La.), 49 So.2d 855; McClain v. Harper, 206 Okla. 437, 244 P.2d 301; Matthews v. Landowners Oil Assn. (Tex.), 204 S.W.2d 647; Merrill Engineering Co. v. Capital National Bank, 192 Miss. 378, 5 So.2d 666; Miles v. Amerada Petroleum Corp., 241 S.W.2d 822; Ohio Oil Co. v. Kennedy (La.), 28 So.2d 504; Phillips Petroleum Co. v. Millette, 221 Miss. 1, 74 So.2d 731; Scott v. Pure Oil Co. (Tex.), 194 F.2d 393; Shell Oil Co. v. Coastal Club (La.), 141 F.2d 382, 142 F.2d 245; Smith v. Carter Oil Co., 104 F. Supp. 463; Sohio Petroleum Co. v. V.S. P.R.R. Co., 222 La. 383, 62 So.2d 615; Superior Oil Co. v. Dabney, 204 S.W.2d 681; Superior Oil Co. v. Foote, 214 Miss. 857, 59 So.2d 85; Texas Gulf Producing Co. v. Griffith, 218 Miss. 109, 65 So.2d pp. 447, 834; Veal v. Thomason (Tex.), 159 S.W.2d 472; Whelan v. Johnson, 192 Miss. 673, 6 So.2d 300; 58 C.J.S., Mines and Minerals, Sec. 202 pp. 461-62.
On November 15, 1939, J.E. Thrift, Jr., acquired an oil and gas lease on certain lands located in Jefferson Davis County, Mississippi. The lease was for a primary term of ten years, to be annually renewed by rental payments or the drilling of a gas or oil well on the leased premises. Title to this lease became vested in Texas Gulf Producing Company. Default was made in annual rental payments, but the lands covered by the lease were included within and became a part of Units 7 and 34 in the Gwinville Gas Field. No well was sunk on the lands described in the lease but producing gas wells were drilled upon lands within said units.
Geraldine B. Martin acquired an undivided mineral interest in the lands in question subject to the Thrift lease.
In her bill she set forth the foregoing facts and alleged that the Thrift-Texas lease had terminated because of failure to make the annual renewal payments and because no well had been drilled upon the premises described in the lease, and also raised certain constitutional questions directed to the legality of the oil and gas laws in this State and their administration, and asked for an accounting. A general demurrer on the ground that the bill stated no cause of action was sustained in the lower court, and complainant refusing to further plead, the bill was dismissed, from which action Mrs. Martin appeals to this Court.
(Hn 1) The bill asserting the stated grounds for relief was filed in August 1950, before decisions in the cases of Superior Oil Company v. Beery, 216 Miss. 664, 63 So.2d 115, 64 So.2d 357; Superior Oil Company v. Foote, 216 Miss. 728, 63 So.2d 137, 64 So.2d 355; Humble Oil Refining Company v. Hutchins, 217 Miss. 636, 64 So.2d 733, 65 So.2d 824; and Texas Gulf Producing Company v. Griffith, 218 Miss. 109, 65 So.2d 447, 834, which cases upheld the constitutionality of the oil and gas legislative acts, and also adopted the rule that the drilling of a well on a duly constituted unit, embodying into the unit the particular land described in the lease of complainant, although the well was not located on the land described in the lease, had the effect to renew and keep alive the lease on the particular land just as though the well had been located on the particular leased land. Therefore, the contentions above set out are not well taken.
(Hn 2) Mrs. Martin also urges the unique contention that gas in the Gwinville Field is being produced between 7,100 and 7,800 feet subsea level, and that the Thrift-Texas lease has terminated because of failure to drill a well through the subsurface beneath the 7,800 foot depth. We cannot agree to that contention. The lease provides for termination on failure to make annual payment or "If operations for drillings are not commenced on said land * * *" within the time specified. There is no contractual obligation to drill to any named strata or depth. The obligation is to locate a well on the "land" described in the lease. That was done within the meaning of the law as announced in the foregoing cases when the well was brought in on the unit of which the leased land was a part.
This Court knows, from the many cases which have come to it involving gas leases, their extension, termination, etc., and the rights to share in production under them, that the gas is being produced in the Gwinville Field from the depth and strata as shown in this case, yet we have held that the leases have been perpetuated by producing wells from that strata on the leased premises or from the unit of which the leased lands were a part, and production apportionment has been made upon land surface acreage. Cases supra, especially Texas Gulf Producing Company v. Griffith. We think the contention necessarily has been refuted by the wording of the statute and of the leases, the actions of the Oil and Gas Board and the adjudications by this Court.
Affirmed.
Kyle, Arrington, Ethridge and Gillespie, JJ., concur.