In this suit the Brazos River Conservation and Reclamation District sought and obtained by cross action condemnation of an easement in an oil and gas leasehold estate owned by Albert Adkisson. In addition, the judgment awarded Adkisson damages, and the District appeals. The proceeding is based on Art. 3269, R.S. 1925, Vernon's Ann.Civ.St. art. 3269, and is one branch of the litigation growing out of the case of Brazos River Conservation and Reclamation District v. E. P. Costello et al., 135 Tex. 307, 143 S.W.2d 577, 130 A.L.R. 1220.
The cause was tried before the Court without a jury. No request was made for findings of fact and conclusions of law. (All italics herein ours.)
From different angles appellant's first eight points raise the same controlling question presented by this appeal, and aptly stated by appellee as follows: "Did the Court properly require the District to pay appellee for the property taken, including casing and other fixtures affixed to the leasehold estate, where the lease, producing wells, and such equipment were inundated by the waters of the District's reservoir, even though as between the Appellee as Lessee and the original landowners as Lessors, Appellee had the privilege *Page 296 of removing such fixtures at the termination of the lease?"
On reason and authority we think this question must be answered in the affirmative.
The lease was a producing oil and gas lease embracing approximately 487 acres, and about 413.22 acres thereof were flooded by the reservoir, including 12 producing oil wells, casing, pumping unit, engines, and other such property and fixtures used by Adkisson in the operation of said lease as a unit or as a going concern, all of which was alleged to have been destroyed and rendered useless by the waters of the reservoir.
The Court's decree is in part as follows:
"The court further finds that certain fixtures located upon the lease-hold estates of Respondent on the above property have been covered and flooded by the waters of Petitioner's Reservoir; and that the condemnation of an easement on said property has resulted in Respondent's use thereof being totally destroyed and has resulted in a taking thereof by Petitioner.
"It is further ordered, adjudged, and decreed by the court that the Brazos River Conservation and Reclamation District do have and recover of and from the said Albert Adkisson full title in and to the hereinafter described property which is located on the above described land and flooded and covered by the waters of said reservoir: * * *
"It further appears from the evidence and the court finds that the Respondent Adkisson has been damaged by the condemnation of the easement hereinabove mentioned, and the taking and destruction of his leasehold estates, and the fixtures thereon * * *."
The judgment then identifies the equipment or fixtures so located and in the actual use on the leasehold. In other words, the trial court adjudged the casing and tubing in the producing oil wells, the engines, power house, tanks, flow lines, etc. so used in effecting production to be fixtures, and so treated them in his judgment awarding damages generally for the property rights condemned. The Court considered the fixtures as enhancing the value of appellee's property and not as separate items of recovery.
(As originally drawn, the trial court's judgment, after itemizing or enumerating said fixtures, contained an additional provision as follows: "Any and all other personal property in, on and under the above described real property, which is owned or claimed by the said Albert Adkisson." This provision of the original draft of the judgment will be disregarded in this opinion, since, as evidenced by supplemental transcript, the trial court held it was no part of said judgment and its inclusion therein a clerical error which was eliminated by proper order. This correction renders it unnecessary to resort to rules employed in construing judgments.)
In seeking condemnation of various lands in the area, the District included Adkisson's leasehold estate and in substance defined the issues by pleadings, as follows: "Your Petitioner further represents that it is necessary in order to make effective the purposes for which the District was created that Petitioner acquire, take, hold and enjoy all theproperties, property rights, rights and privileges of the said Respondent herein, in and to said lands and that an easement to said land and property rights be condemned."
Such allegations possibly amount to no more than emphasis of the object and general purpose of the proceeding, but they also reflect the scope and effect which the proceeding had upon said fixtures.
In response to such pleadings appellee Adkisson alleged that in the Costello and Carter lands he owned a certain oil and gas lease and that 413.22 acres were flooded and covered by the reservoir, including 12 producing oil wells, casing, pumping units, etc. and fixtures used by him in the operation of said lease as a unit; that all of same had been covered, destroyed or rendered valueless to him, to his damage, etc.
The factual background of Appellee's contentions reflected by the testimony generally, and especially that of Montgomery is, in substance, as follows:
Said witness testified he was familiar with the fixtures on said leases and made an inventory of the same at the time or immediately before appellee's property was taken or covered by water from the dam. That all such fixtures or equipment were used by Adkisson in the production of oil. That the power house, etc., was 1,800 to 2,500 feet from the shore out in the lake, and about 30 feet under water. That the casing in some of the wells was cemented, and all wells had casings; that tubing, rods, pump, flow lines, and well head fittings were all connected to the casing. *Page 297 That the flow tanks were connected with the flow lines. That the tanks were of steel, of 100 to 250 barrel capacity, some welded, some put together with bolts, and resting on heavy timber foundations. That on the lease in an iron house there was a central power and an 18 foot band wheel power on a concrete foundation, with which appellee pumped eight of the wells. That this power was connected by pull rod lines, with pump jacks on the wells; that the pump jack sat over the well and lifted the sucker rods in the tubing and pumped the oil. That the sucker rods ran down through the tubing and connected with working slides. That the pump jacks were on timber foundations about 8x10 in size. The testimony gives in detail the operations and mechanics employed in producing oil wells.
The District's contentions with reference to these fixtures is reflected, by a discussion between its counsel and the trial court. That discussion will, in part, be set out, since it focuses attention on the theory advanced in the trial, as well as the material questions presented by this appeal.
"Mr. Kilgore: Now, your Honor, we object to any testimony with reference to the fixtures or the equipment, because this is a proceeding to condemn an easement and is not a proceeding to take over the fixtures and equipment he might have had, and, therefore, it is wholly irrelevant as to what fixtures or equipment was on the property; and they are still there unless he removed them, which he had the right to do.
"Court: Do you have any authorities?
"Mr. Kilgore: I think it's elementary when we seek only to condemn an easement, the right to inundate a piece of property only; there are means by which they could still save his equipment.
"Court: They would now be under water, wouldn't they?
"Mr. Kilgore: I did not say they would not be under water."
In the judgment the Court found as follows: "The Court further finds that certain fixtures located under the leasehold estates of Respondent of the above property have been covered and flooded by the waters of Petitioner's Reservoir; and that the condemnation of an easement on said property has resulted in Respondent's use thereof, being totally destroyed and has resulted in a taking thereof by Petitioner."
The appellant insists the trial court erred in the judgment (1) "in mingling indistinguishably the value of the equipment on the lease with the value of the mineral estate which had been submerged by the waters of the District", (2) by fusing the value of the equipment on the lease with the value of the mineral estate", (3) "The mechanical equipment * * * on the mineral estate of Adkisson were not fixtures in the sense that such fixtures become a part of the realty, but were trade-fixtures, and, therefore, could not be estimated as a separate element of damage against the District", and (4) "If the equipment on the mineral lease that had been utilized by Adkisson in drilling for oil and gas and in extracting oil and gas from the soil should be considered as fixtures so that such fixtures became a part of the realty, then such fixtures would belong to the owner of the soil (Costello and Carter) and not to Adkisson, and consequently could not be an element of damage or of value in the condemnation suit of the District." Four propositions following those above stated raise, in substance, the same question.
On the other hand, appellee Adkisson contends that the testimony of Montgomery and other witnesses conclusively shows that the equipment on the lease listed by Montgomery was affixed to the leasehold estate and constituted fixtures, and that the trial court specifically so found and awarded judgment for condemnation and taking of said easement in the leasehold and fixtures thereon as a unit; that is, the Court considered the fixtures as affecting or enhancing appellee's damages for the easement condemned and did not consider any other property or items except those specifically in Montgomery's inventory.
This contention of appellee is well supported by the testimony, and it limits the inquiry to the controlling question stated in the outset.
As we interpret the record, it is not accurate to refer to said equipment in the manner installed and as being used merely as "drilling equipment" that might be found in a supply house or elsewhere, nor to refer to the same as "portable property used by an oil driller in search of oil and gas", although such use could have been made of the same. In other words, the equipment enumerated by Montgomery must be viewed in the light of its actual use or attachment at the time in the production *Page 298 of oil from a developed lease which the Appellee was obligated to keep producing in order to keep the lease alive under the terms thereof. Watson v. Rochmill, 137 Tex. 565, 155 S.W.2d 783, 137 A.L.R. 1032.
Obviously the fixtures under consideration might have remained in place over a period of many years, or during the life of the active lease, the length of which could not be definitely determined; and the voluntary cessation of production by appellee would have forfeited his lease estate, since the primary term of the lease had expired and the lessee's primary function thereunder was to produce oil. The maintenance of the casing and the connected operating equipment in the wells and the power for pumping the wells and producing oil was vital to the continuation of the lessee's estate.
In answering the questions presented by this appeal, it is necessary to recognize that an oil and gas lease is a determinable fee, and since it is a fee, it could continue forever. As stated in 31 T. J. p. 596, § 46 et seq., and the numerous authorities cited therein, "It is now a well settled rule of property in Texas that the estate therein acquired by the lessee is a determinable or defeasible fee — that is, a fee simple estate which is subject to one or more special limitations." Texas Co. v. Daugherty, 107 Tex. 226, 176 S.W. 717, L.R.A. 1917F, 989; Sheffield v. Hogg, 124 Tex. 290, 77 S.W.2d 1021, 80 S.W.2d 741; Stephens County v. Mid-Kansas Oil Gas Co., 113 Tex. 160, 254 S.W. 290, 29 A.L.R. 566; W. T. Waggoner Estate v. Sigler Oil Co., Tex.Com.App., 284 S.W. 921, reversing Tex. Civ. App. 276 S.W. 936; but set aside on other points118 Tex. 509, 19 S.W.2d 27; Mon-Tex Oil Corporation v. Potest,118 Tex. 546, 19 S.W.2d 32, reversing Tex. Civ. App. 13 S.W.2d 211; Hogg v. Magnolia Petroleum Co., Tex.Com.App., 267 S.W. 482, reversing Tex. Civ. App. 254 S.W. 580; 7 T.L.R. p. 9 (Judge Walker); Summers on Oil Gas, Perm.Ed., Vol. 4, p. 2, § 652.
In said text it is stated: "An oil and gas lease carries with it the right to possession of the surface to the extent reasonably necessary to enable the lessee to perform the obligations imposed upon him by the lease."
As to the nature of the casing and pumping equipment, the same text, based on an abundance of authorities, says: "It is a well-settled rule that casing in wells, derricks, engines, and other machinery and appliances placed upon the land by the lessee for testing, developing and operating the land for oil and gas purposes are trade fixtures. They may, therefore, be removed at any time during the existence of the lease, or within a reasonable time after its termination. If they are not so removed, they become the property of the landowner." Summers on Oil Gas, Perm. Ed., Vol. 3, p. 214, § 526.
The last sentence of that quotation is significant in that if such fixtures do not by attachment to the soil become a part of or partake of the nature of the freehold, then they would not become the property of the landowner.
According to the opinion in Texas Co. v. Daugherty, 107 Tex. 226,176 S.W. 717, 718, L.R.A. 1917F, 989, appellee Adkisson not only owned the minerals conveyed him by the lease, but the possession of the surface, insofar as necessary for the purpose of producing oil. That opinion so holds in this language: "For the purpose of making the exploration and producing all the oil, gas, and other minerals that might be within the ground, and the erection of all structures necessary thereto, as well as their storing and transportation, the possession of the land itself is likewise granted, with no limitation upon the number of wells or shafts that the grantee might sink, or the extent of its operations in that connection, and consequently no qualification of its right of possession to all such parts of the surface * * * as might be necessary to its full use by the grantee for the purposes named."
As applied to the facts of the instant case, it cannot be denied that if Costello, the owner of one tract, had drilled the wells himself and had put casing in them, the casing would have become a part of the freehold and would pass to the purchaser of the land from him. The same is true of the other items affixed to the soil and the wells, rendering the lease a live and producing unit. 10 R.C.L., p. 143, § 125.
True, the ownership of such equipment and rights thereto as between the lessor (landowner) and the lessee is generally fixed by the stipulations in the lease protecting same as personal property of the lessee with right to remove within reasonable time after expiration of the lease, etc. *Page 299 31 T. J. p. 924, § 24 et seq. However, the controversy presented by the instant suit is one between a third party, the District, whose condemnation rights have destroyed the appellee's property in a leasehold estate which he could not keep in existence without active operation which necessitated retention of the fixtures on the ground and did not permit their removal. Watson v. Rochmill, 137 Tex. 565, .155 S.W.2d 783, 137 A.L.R. 1032.
The law applicable in condemnation proceedings, where such fixtures are involved is stated in 10 R.C.L. p. 143, par. 125, as follows: "Where fixtures are of such a character that if put in by the owner, they would constitute a part of the real estate, they must be paid for as realestate by the party condemning the land."
Stated somewhat differently, Lewis on Eminent Domain, 3rd Ed., Vol. 2, p. 1276, says: "Fixtures upon the property taken must be valued and paid for as a part of the real estate and any depreciation in the value of fixtures upon the part not taken is to be taken into consideration the same as damages to the soil." See 20 C. J., p. 799, 29 C.J.S., Eminent Domain, § 175.
Regardless of the legal nomenclature employed in stating the rules and reason affording just compensation in condemnation suits, the authorities are generally in accord that what must be paid for in condemnation proceeding, is determined by viewing the condemnor as a purchaser, and the condemnee as a seller. That is, if the appellee sold his leasehold estate in the ordinary course, would the casing in the well, and pumping equipment go with the sale ?
There is logic in appellee's reply to a hypothetical question, wherein he says: "We can answer this by observing that (the primary term having expired) if the casing etc. did not go with a sale, but was pulled and retained by the Seller, there would be no production and no lease — and, therefore, no sale !"
This announces a correct legal conclusion according to Watson v. Rochmill, 137 Tex. 565, 155 S.W.2d 783, 784, 137 A.L.R. 1032, which says: "It appears to be very well settled that under the terms of the lease, upon cessation of production after termination of the primary term, the lease automatically terminated. W. T. Waggoner Estate v. Sigler Oil Co.,118 Tex. 509, 19 S.W.2d 27."
The above test of rights as between seller and purchaser is explained and approved in an opinion by Judge Alexander in State v. Miller, Tex. Civ. App. 92 S.W.2d 1073, 1074. There the State, undertaking to condemn land for highway purposes, took the position that a building on the desired strip should be moved by the owner to another portion of his land (not being condemned), and that the State should be required to pay for no more than the bare land taken plus the cost of moving the improvements. Such theory was rejected by the court, which in part held as follows:
"Such a rule would be intolerable. The law will not sanction such unnecessary meddling with a citizen's rights. Ordinarily in condemnation cases in determining what improvements pass with the title to the condemned land, the same rule applies as that which governs between an ordinary vendor and vendee. The building here under consideration was a permanent improvement and constituted an appurtenance to the land which would pass with the title in an ordinary conveyance, and in our opinion the state should be required, as held by the trial court, to accept and pay for it along with the land so condemned." (Citing numerous authorities.)
Such authorities illustrate the rule which obtains, not between a lessor and a lessee, whose rights are usually determined by the lease, but when a third party, the State in that case and the District in the instant one, steps in and condemns the property rights of the lessee.
The opinion in the Miller case cites United States v. Seagren,60 App.D.C. 183, 50 F.2d 333, 335, 75 A.L.R. 1491, which is very similar to the instant case. There the lessee held a long term lease on property on which he had erected a filling station and installed underground tanks, pumps, piping, etc. The lease, as in this case, provided the fixtures could be removed at termination of lease. The holding made in that condemnation proceeding is as follows:
"And so the agreement for removal made by these parties at another time, for another purpose, and affecting no interests but their own, must be rejected here as irrelevant, when set up by the United States to control its condemnation proceedings against the tenant's interest in the land.
"But applying the general language of the Boston Case [Boston Chamber of *Page 300 Commerce v. City of Boston, 217 U.S. 189, 30 S. Ct. 459, 54 L. Ed. 725] as quoted above to the present controversy, the United States contends that the tenant here has lost nothing by the taking of the property.
"He reserved the right to remove his structures whenever the landlord should terminate his tenancy; now that the United States has terminated his tenancy by taking the land, he may exercise his right and remove his structures.
"Nothing has been taken from him. Only his performance of an inevitable obligation has been accelerated.
"But much the same argument could be made in support of murder, for all that any murderer ever did was to accelerate the debt that every mortal owes to nature.
"If the structures here in question had been built by the landlord, they would have been taken and paid for by the government without question, as the government concedes they are now part of the realty. Is the tenant's reserved power of removal as against the landlord's termination of the lease to work a forfeiture in favor of the government? We think not.
"The inherent character of these structures is real estate; no agreement can change that character, though the landlord may waive the right which might otherwise accrue to him from the character of the structures placed upon his land. At the most, that is all that this agreement did."
Annotations (75 A.L.R. 1495) following the Seagren case analyzes that authority as follows: "Without question the tenant in the reported case * * * would have suffered a pecuniary loss if he had been compelled to protect his ownership of the filling station equipment, consisting of divers tanks, pipes, pumps, and other paraphernalia, by removing the same from the premises and making what use he could of the equipment on other premises. Even though he might ultimately have had to vacate and salvage what equipment he could from the station, it was to his advantage to maintain his property in the condition in which it was installed so long as he had a right to occupy the premises. The rule of the reported case (United States v. Seagren), that an agreement between landlord and tenant that the tenant shall have the right to remove improvements placed upon the premises by him shall not inure to the benefit of the condemner, is supported by considerable authority."
For other authorities applying the rule under similar facts, see: In re Postoffice Site, etc., 2 Cir., 210 F. 832; Jackson v. State, 213 N.Y. 34,106 N.E. 758, L.R.A. 1915D, 492, Ann.Cas. 1916C, 779; In re: Block Bounded by Ave. A, Etc., 66 Misc. 488, 122 N.Y.S. 321; In re North River Water Front, Etc., 118 A.D. 865, 103 N.Y.S. 908; In re City of New York (In re Water Front in City of New York), 189 N.Y. 508, 81 N.E. 1162; In re East River Drive, Etc., 159 Misc. 741, 289 N.Y.S. 433; Dept. of Pub. Works v. McBride, 338 Ill. 347, 170 N.E. 295; Mayor, etc., of Baltimore v. Himmel, 135 Md. 65, 107 A. 522.
In Jackson v. State, 213 N.Y. 34, 106 N.E. 758, L.R.A. 1915D, 492, Ann.Cas. 1916 C, 779, it is said in an opinion by Justice Cardozo in a condemnation suit: "We think that the power of the state is not so great, nor the plight of the citizen so helpless. `Condemnation' is an enforced sale, and the state stands toward the owner as buyer toward seller. On that basis the rights and duties of each must be determined. It is intolerable that the state, after condemning a factory or warehouse, should surrender to the owner a stock of secondhand machinery and in so doing discharge the full measure of its duty. Severed from the building, such machinery commands only the prices of secondhand articles; attached to a going plant, it may produce an enhancement of value as great as it did when new. The law gives no sanction to so obvious an injustice as would result if the owner were held to forfeit all these elements of value."
It follows that if the foregoing conclusions are correct and the cited authorities sound, the condemnor must pay for the fixtures along with and as part of the underlying land or minerals of said leasehold estate destroyed or rendered valueless, and it is unnecessary to discuss appellant's contention that it was the duty of the appellee to bring a separate suit for damages and recover the value of the fixtures flooded or destroyed. Evidently the fixtures in question go with the taking of the lease or the part destroyed.
There is no merit in the appellant's further contention or suggestions that Adkisson was under the duty to pull the casing, etc., from the wells, and that he had ample time in which to plug them and avoid the effects of the water from the lake submerging same. Adkisson had nothing but a determinable fee. The *Page 301 primary term of the lease had expired and Adkisson's title to the leasehold estate and property rights therein depended upon the continuation of production. He did not dare do what appellant suggests with forfeiture staring him in the face. Watson v. Rockhill, supra. The law imposed no such duty or hazard under the lessee under the circumstances.
The trial court was correct in considering said fixtures as adding to and enhancing the value of Adkisson's property condemned and in refusing to consider same as separate items of recovery.
As the case was tried, no question of double recovery is presented when tested by such authority as State v. Carpenter, 126 Tex. 604, 619,89 S.W.2d 194, 979, and cases therein cited. In Parker County v. Jackson, 5 Tex. Civ. App. 36, 23 S.W. 924, it was in substance held that the value of such improvements may be admitted for the purpose of determining the market or intrinsic value of the land itself, and augmenting such value, but not as a separate or distinct recovery.
In considering the above and other issues of fact presented by this record, we must presume the trial court refrained from giving effect to inadmissible testimony, if any. As stated, there are no findings of fact or conclusions of law, and neither is there a certificate showing the judge considered any inadmissible testimony in arriving at his judgment.
Under the authorities we do not believe that the rules of law applicable to the condemnation of an easement in a leasehold estate differ in principle from the rules applicable to the condemnation of a fee or interest owned by the lessor. As a practical matter it was in no respect feasible for Adkisson to drill in the water and produce oil. The use and value of his property was destroyed, as in the case of United States v. Lynah, 188 U.S. 445, 23 S. Ct. 349, 357, 47 L. Ed. 539, where the court, in disposing of a case where land was flooded by a dam, says:
"It is clear from these authorities that where the government by the construction of a dam or other public works so floods lands belonging to an individual as to substantially destroy their value there is a taking within the scope of the 5th Amendment. While the government does not directly proceed to appropriate the title, yet it takes away the use and value; when that is done, it is of little consequence in whom the fee may be vested."
In Cumbaa v. Town of Geneva, 235 Ala. 423, 179 So. 227, the condemnor in building a levy, undertook to raise the improvements onto the levy and require the owner to use them. The opinion held:
"The law is for practical purposes and looks to practical ends, and * * * in the ordinary case of an application to condemn an easement, not limited to a term of years, the rule is to award to the owner the value of the entire fee at the time of the taking. * * *
"The town cannot avoid these consequences by a preservation of the buildings and raising them to the level of the levee, and, as thus elevated, thrust their involuntary ownership upon [Appellants]."
In the instant case the District has not acted with the same generosity by preserving the fixtures and thus thrusting them upon the owner, but has permanently submerged them in water and, in effect, suggested to Adkisson that he recover them.
What has been said in effect overrules appellant's first eight points and does so by the application of correct rules of law to the facts of acondemnation case.
As stated, the instant case is not one dealing with the status of oilfield casing, equipment, or rights therein as between a lessor and lessee, or persons asserting mechanic's or chattel mortgage liens therein. Illustrative of such cases are Moore v. Carey Bros, Oil Co., Tex.Com.App., 269 S.W. 75, 39 A.L.R. 1247; Wagner Supply Co. v. Bateman,118 Tex. 498, 18 S.W.2d 1052; Armstrong v. Federal Supply Co., Tex. Civ. App. 17 S.W.2d 170, etc., but these are not condemnation suits, as in the instant case, where a third party, or outsider, seeks to impress an easement on a leasehold, the effect of which works the destruction, or substantial destruction, of the same. However, the principles applied in the type of cases just mentioned in no way clash with the proper application of the rules and authorities herein cited in support of this court's conclusion.
The trial court awarded Appellee as part of his damages interest on the property taken from him at the legal rate from October 30, 1940 (when taken by the District), until June 13, 1942 (the date of the judgment). The interest amounted to $8,550. *Page 302
After that date — October 30, 1940 — and before, or while water was accumulating in the reservoir, the appellee Adkisson continued (as found by the trial court) "with the consent of the District" to produce some oil, the net value of which was $4,479.83. The court credited this amount on the $8,550 interest awarded appellee and entered that credit as of June 13, 1942, the date of the judgment. The appellant now contends the trial court erred in not allowing the interest on the proceeds of oil sales (evidenced by the $4,479.83), made by Adkisson and retained by him, after the taking by the District had occurred. That appellee was allowed to retain such interest on the proceeds of said oil sales.
The amount of each of said oil runs is not made to appear in the record, nor the respective dates they were collected by Adkisson. In its brief the appellant says: "The District was entitled to 6% interest on the oil runs as they were received by Albert Adkisson, and said amount of interest should be deducted from the judgment rendered in said cause. The exact amount of this interest the Appellant does not know, for the reason that the dates that these various oil payments accrued are not known to Appellant, and, therefore, Appellant cannot determine the exact amount of interest that should be deducted from the judgment."
Obviously if this record is so void of testimony or information that appellant is unable to estimate the amount of said interest claimed, certainly this court is in no position to reform or correct the judgment for such an alleged error. The burden was upon the appellant to show the date of the collection or accrual of said amounts in the hands of the appellee, and it has failed to do so, and the trial court evidently had no other alternative than to enter the judgment as he did. Points 9 and 10 are overruled.
All other points have been duly considered, and believing them to be without merit, they are overruled.
For the reasons assigned, the judgment of the trial court is affirmed.