Opinion
No. 4078.
March 25, 1932. Rehearing Denied April 7, 1932.
Appeal from District Court, Gregg County; Reuben A. Hall, Judge.
Separate suits by J. J. Flewellen against the Simms Oil Company and others and against Mamie S. Hammonds and husband. Mamie S. Hammonds and husband intervened in the suit against the Simms Oil Company and others, and the two suits were consolidated. From an adverse judgment, Mamie S. Hammonds and husband appeal.
Affirmed.
J. J. Flewellen sued the Simms Oil Company, and J. M. Lumpkin, as receiver, and B. K. Isaacs, as trustee of the estate, of the Virginia Oil Refining Company, bankrupt, to have adjudged to be terminated and canceled, and to quiet title against, a certain gas and oil lease of three tracts of land, containing, respectively, 987, 184, and 42 acres of land. He had formerly in 1919 executed an oil and gas lease to a lessee who assigned it to the Virginia Oil Refining Company. J. J. Flewellen also filed a suit against Mamie S. Hammonds and her husband to have formally terminated and canceled, and to quiet title against, a gas and oil lease of 987 acres of land; the lease having been executed directly by J. J. Flewellen to J. A. Reynolds, and by J. A. Reynolds transferred and assigned to Mamie S. Hammonds. The 987 acres in the latter lease is the same 987 acres covered by the first lease mentioned. In the first mentioned suit, Mamie S. Hammonds, joined by her husband, intervened, setting up a valid and subsisting leasehold right in the 987-acre tract sued for and a claim for damages for being wrongfully dispossessed of the premises. Thereafter the two suits were consolidated, and, as consolidated, were on April 6, 1931, finally tried on the merits, and judgment was entered. The trial was before the court without a jury. The judgment made adjudication as to all matters and as to all parties involved in the litigation. The judgment as respects Mamie S. Hammonds and her husband reads:
"It is further ordered, adjudged and decreed that as between the intervenors, Mamie S. Hammonds and O. O. Hammonds and all other parties herein, the said Mamie S. Hammonds and O. O. Hammonds take nothing by their intervention and that the plaintiff J. J. Flewellen do have and recover of the said intervenors all of the lands and tenements described in the petition of the said intervenors, being the same property described and designated above as "first tract," and that the said oil and gas and mineral lease from the said plaintiff to the said J. A. Reynolds dated July 30, 1930, and all other contracts or purported contracts by and between the said plaintiff and the said J. A. Reynolds as affecting said lands and tenements under and by virtue of which the said interveners, Mamie S. Hammonds and O. O. Hammonds claim any right, title or interest in and to said lands or tenements and all contracts of every description heretofore existing by and between the plaintiffs and the intervenors, either or both, under and by virtue of which Mamie S. Hammonds and O. O. Hammonds, either or both, claim any right, title or interest in or to the said lands or tenements are by this judgment in all things declared terminated and hereby canceled, nullified and shall hereafter be of no force and effect and the plaintiff J. J. Flewellen shall have his writ of restitution and possession."
Mamie S. Hammonds and her husband only excepted to the judgment and gave notice of appeal and timely filed an appeal bond. The whole controversy on appeal is between J. J. Flewellen and Mamie S. Hammonds and her husband, and they are the only parties appealing.
It appears that on July 30, 1930, J. J. Flewellen, owner of the land, executed a lease to J. A. Reynolds of 987 acres of land to explore for oil and gas with right of seven-eighths of all the oil, gas, and other minerals produced on the leased premises. The following clause in the lease is material to the appeal: "If no well be commenced on said land on or before the 1st day of December, 1930, this lease shall terminate as to both parties unless the lessee on or before that date shall pay or tender to the lessor or to the lessor's credit in the First National Bank of Longview, Texas, or its successors, which shall continue as the depository regardless of changes in the ownership of said land, the sum of $987.00 which shall operate as a rental and cover the privilege of deferring the commencement of a well for twelve months from said date."
There also appears a clause, aside from rental payment, reading: "In the event lessor considers that lessee has not complied with all its obligations hereunder, both express and implied, before production has been secured or after production has been secured, lessor shall notify lessee in writing, setting out specifically in what respects lessee has breached the contract. Lessee shall then have sixty days after receipt of said notice within which to meet or commence to meet all or any part of the breaches alleged by the lessor."
It was affirmatively shown that no well had been drilled or commenced and the rentals stated had not been paid at the time when due, which was "on or before the 1st day of December, 1930."
It affirmatively appeared that on October 31, 1919, J. J. Flewellen executed a lease of several tracts of land, including the 987-acre tract involved in this suit, to a lessee, who in turn on April 5, 1920, assigned it to Virginia Oil Refining Company. The term of the lease was twenty years from its date. The lease and the assignment were duly registered in the county clerk's office, the one on November 24, 1919, and the other on May 20, 1920. At the time of the assignment of the lease in suit by J. A. Reynolds to Mamie S. Hammonds, neither she nor her agent had actual notice of the outstanding lease to the Virginia Oil Refining Company. About the 1st of November, 1930, the accredited attorney of Mrs. Mamie Hammonds and, through him, Mrs. Mamie Hammonds, were informed of the execution of the outstanding lease mentioned. Thereupon, about November 15, 1930, the attorney for Mrs. Mamie Hammonds, and acting for her, sought and obtained a personal interview with J. J. Flewellen, and later with his son and son-in-law, respecting the outstanding lease. At the first interview the attorney for Mrs. Mamie Hammonds stated to J. J. Flewellen that the rental on the lease was coming due in about two weeks, and that Mrs. Mamie Hammonds expected to pay same by the date due, but that she did not feel justified in doing so with the outstanding lease existing and not adjudged terminated. The attorney then proposed to J. J. Flewellen, namely, that he enter suit to terminate and quiet the title against the gas and oil lease on the 987 acres previously executed to Turner, trustee, and by him assigned to the Virginia Oil Refining Company, Mrs. Mamie S. Hammonds paying all the costs and the attorney's fees of the proceeding, and J. J. Flewellen in turn to consent to defer or postpone the rental payments on the lease to Mamie S. Hammonds until the termination of that litigation. Several other conferences were held and telegrams passed. It is unnecessary to state the evidence in detail. The evidence in behalf of the appellants goes to show in substance that J. J. Flewellen accepted the proposition made and consented to postpone the rental payment during the pendency of the suit, and the appellant and her attorney believed that the rental payments were to be deferred and not be insisted on by the lessor until the termination of that litigation. On the other hand, the evidence in behalf of J. J. Flewellen reasonably goes to show in substance that, although he was desirous of having removed the cloud cast on his lands by the outstanding lease, he was not inclined to carry on litigation in the court, and that he did not agree to postpone the rental payment. It is believed the evidence does not affirmatively show that there was mutual postponement of the rental payment, and that the circumstances do not conclusively show that J. J. Flewellen and those acting for him so dealt with the lessee and her attorney as to mislead them into believing that the rental payment would be deferred. It is thought that a disputed question of fact exists.
There is involved in the judgment of the trial court the implied finding of fact by the court that the appellee J. J. Flewellen did not accept the proposition made by appellant's attorney and did not consent to postpone the rental payment, and J. J. Flewellen was not estopped from asserting that the lease had expired according to its terms. In view of the evidence, we approve and adopt such findings of facts.
The present suit was filed January 16, 1931, The amount of the rental called for in the lease was timely tendered into court.
Scott, Casey, Hall McHaney and Campbell, Hurst Lee, all of Longview, for appellants.
Chas. D. Smith, of Beaumont, Bramlette Meredith, of Longview, H. L. Baughman, Ben G. Smith, and E. H. Ratcliff, all of Fort Worth, and Thompson, Knight, Baker Harris, of Dallas, for appellees.
There is presented on appeal the points in view, in effect, that the lessor may not assert failure of compliance of the lease provision to pay the rental within the time limited, of December 1, 1930, and defeat the lessee's right in the lease, because (1) the lessor consented to the deferment of rental payment until the termination of a suit to be instituted to remove the claim and existence of incumbrance upon the premises of an outstanding gas and oil lease, and (2) the circumstances are sufficient to constitute estoppel as the lessor by acts and conduct so dealt with the lessee as to mislead her into supposing that the rental payment at the time due in the lease would not be insisted on, but would be deferred during the pendency of an action to free the leased premises from the existence of incumbrance.
The lease under consideration expressly provides that the rights thereunder of the lessee shall terminate if the drilling of a well in exploration of oil be not begun, or, in lieu of it, payment of the rental stated, on or before December 1, 1930. The stipulation clearly manifests that time is the essence of the contract, and the parties have expressly so treated it. And by its very terms all the rights and privileges of the lessee would legally cease to exist upon the failure at the time specified, either to commence to drill the well or to make the rental payment. Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 255 S.W. 601; Humble Oil Ref. Co. v. Davis (Tex.Com.App.) 296 S.W. 285; Empire Gas Fuel Co. v. Saunders (C.C.A.) 22 F.2d 733. That is the contract, and the parties had the right to make it. It is apparent then that, unless the lessee was absolved from strict performance within the time limit, there is ample foundation for a decree in favor of the lessor adjudicating the termination of the lease upon the proof, as conclusively established, of entire failure on the part of lessee of performance of this condition. Undoubtedly the lessee would be absolved, and the lessor could not demand rental payment within the time limited in case the lessor consented to another time of rental payment, as a substitution pro tanto of what the parties had contracted, for every such agreement is ended by a new one which contradicts it. The power is legally existing, as a fundamental principle of law, to parties to a contract which has not been fully performed by mutual consent to alter or modify its provisions. There is doubt, though, of the application in the circumstances of the case. The evidence, it is believed, does not, as matter of pure law, produce assurance and certainty that a new parol contract assented to by both the lessor and the lessee was made modifying the condition for the payment of the rental by December 1, 1930. The facts are not clearly established forming proper basis for an absolute and conclusive presumption of law. The inferences the circumstances warrant are questions purely for the jury. The points under consideration entirely rest upon the circumstances as respects efforts and purpose to have instituted court proceedings to remove the existence of the incumbrance upon the premises. As was shown, there was a prior oil and gas lease of the premises, executed some ten years previous to the present lease. That lease was duly registered, and notice of the lease would be legally imputed, although the lessee had no actual notice of its existence. And there does not appear any covenant of the lessor to make the present lessee a lease free from incumbrances. In this situation, the present lessee at a time some three weeks before the rental payment was due, and in the purpose and aim to have freedom of the premises from the claim and existence of an incumbrance, asked the lessor to enter suit to terminate and quiet the title against the outstanding lease. She proposed to bear the cost and pay the attorney's fees of the litigation. The rental payment due on December 1, 1930, was to be deferred until the termination of that litigation. There is evidence going to show that the lessor "flatly refused to enter the suit," and, after and during several conferences between the parties, he was not willing to defer the time of rental payment beyond December 1, 1930. There is evident different declarations by the parties, and presumptions reasonably arise from the circumstances that there was no understanding of the time of rental payment different from that stated in the lease itself. Where from a given set of circumstances two conflicting presumptions arise, an absolute and conclusive presumption of law cannot be said to prevail. Where a presumption is one of fact merely, the appellate court is not warranted in disturbing the findings of the jury or the trial court.
It is the plainly settled rule that, if a person, either by words or conduct, has intimated that he will offer no opposition to an act to be done, or induces a reasonable belief that he consents to the act in view to be done, and another person is thereby induced to do that from which he otherwise might have abstained, such person would be estopped from questioning the act done or the fair inference to be drawn from his conduct. If indeed the lessee was induced to believe that strict observance of rental payment when due by December 1, 1930, would not be required of her, it must rest upon the fair inference to be drawn from the lessor's conduct during the conferences between the parties. The answer is that the circumstances present a pure question of fact. There is affirmative evidence authorizing a conclusion of fact that during the conferences the lessor and those acting for him refused to accept the proposition of the lessee to finance a suit to terminate the outstanding lease and defer payment of rental pending such suit. The proposal to finance the suit and to defer the rental payments during the pendency of the suit were terms connected together and not divisible nor intended by the parties to be separate. No inference from acts or from conduct can be depended upon as reliable drawn from disputable circumstances. If the circumstances authorized the presumption, as is believed might be inferred by the trial court, that the lessor did not reasonably lead the lessee into the belief that the rental payment at the exact time would not be insisted on, then the equitable situation would be entirely wanting. The element of deception or of acquiescence would not be existing.
The judgment is affirmed. The judgment as respects the appellees B. K. Isaacs, trustee, and John L. Lamkin, receiver, and J. J. Flewellen, not being appealed from, will remain in all things undisturbed.