*2 MсCORD, WAL- SIBLEY, Before LER, Judges. Circuit Judge. WALLER, Circuit price involving case another royalty owner should from well the Panhandle taken provisions in royalty Field of Texas. The those identical with Plaintiffs’ contract1 are Corpora- in Shamrock Oil & Gas construed Coffee, Cir., 5 tion v. this between difference substantial case is in the latter and the Shamrock admitted existed price while field a present plaintiffs say, case the mar- proven, insist that es- price for their had ever been sales, tablished, by actual and Tex., Bynum County, where the Moore located. sweet well is say ab- having shown an Plaintiffs Moore of such a sence Tex., required County, were not Judge, dissenting. through- show an absence market Field, entire Panhandle wherein is situated thеn entitled their well prove, prove, rea- and did the fair and value of the taken and used sonable defendant, premises off the and at its sev- gasoline, eral in the extraction of they say con- etc.—all was in applicable formity holdings of this Court.2 says that Defendant even it were concede, not, it does shown absence of a
had County, the well in at Moore Tex., would this suffice because proof of the existence of a market to, by, nor is not limited circumscribed 1 royalties by lessor, one-eighth “The reserved shall be thereon paid by and which shall be lessee are amount realized from such sale.” * * * gas produced (b) added.) (Emphasis from said Corporation and sold or off the land used Oil & Gas Shamrock v. including gasoline, Coffee, Cir., 409; in the manufacture 140 F.2d casinghead gas, Cir., Co., v. Service United Gas Pub. one-eighth 437; Oschsner, so sold F.2d v. provided used, 138; Phillips Record, if and les- wells, sell see shall lessor’s lines; county test whether Certain cases like features of That there was established cannot are: overlooked requires field. where payment sales in the Panhandle the contract at the well the Court geo- sayWe is not a matter make a new must contract. The Court graphy county area nor of lines nor of *3 undertake ried see that car- to the contract is field, it particular that embraced but in a reasonably possible. out if Neith- business, economics, of is a matter of of er the litigants away Court nоr get the can demand, supply and and of existence the that fact calls the contract here availability and of a market. payment the of market at the plaintiffs, perforce, must The and the fact that mar- the ascertainment of their concede that there is a market for troublesome, ket may be the or had outlet no market nоr improvident, contract is is of not a web mar it would be without either or the weaving. Court’s Court must Admittedly, an ket gas value. the has here parties the is to market at well if it the plants gasoline outlet to the of the defend possible price. to ascertain market gas ant Bynum the and without doubt the from parties Neither the of nor Court the pipe transported Wеll, which is right any option to exercise in gas lines to six defendant’s' five or of the matter. only theory upon which plants, readily could be delivered reduction the Court can allow recovery producers gasoline such to gas. of from other gas reasonable value of be- would be argue its against For to cause of proof impossible that it was as- to availability market is for to certain and, therefore, market im- in decry to value—both and possible carry to agreement of the not, cannot, say and trinsic. do Plaintiffs pay price. and to receive there is no demand for their Upon being it clearly appear made pur prime a claim their Such would defeat compensаtion provided measure in pose higher value attempting in show Court, applied, the in contract be ques being paid. for their than prevent injustice, require order to will tion, therefore, happens not in what the lessee reasonable value of County, but whether or not Moore part property such of lessor’s been as has substantial, recеnt, compar and have been taken theretofore. extracting gasoline gas to able sales of like The Courts must also realistic like, plants, plants, black and the carbon in considering price. of market availability area whose from in the wells Daily daily quotations, sales and as reasonably substantial marketing is for ly For cotton, wheat, corn, case of are not es involved. to that here similar price, sential to an ascertainment of market Cor instance, if Shamrock Oil & Gas although this would answer furnish the customarily buys wells gas from poration daily if there such Sartor v. sales. and in that field where Co., supra. & Pub. United Gas Ser. similar, comparable, are of such wells commodity nature of the involved renders plaintiffs, then well of the that of the it unnecessary that business connected with prices by Shamrock paid would daily be transacted on the mar basis of evidence, not competent and relevant fluctuations, and seeking mar of a existence ket quire the well we cannot re Skelly or intrinsic. Do the application daily rules of Shell, Shamrock, Magnolia, Company, Oil daily quotations when there is no show companies engaged in any other quotations ing that such sales occur. gasoline other in extraction of area gas, customarily buy litigation such feature by-products from Another of this appeared every similar in location seems gas from wells and, so, from other similar case avаilability, what do area and to the evi causes confusion they pay? In the absence available courts and litigants relevancy competency is the to market at the well dence as prices paid royalties in of evidence as appropriate and relevant to seem would pipe companies line by interstate deal quire paid as to the extractors, heating purposes. fuel ing gasoline after deduct transportation. case, every inas case com In this similar ing the cost of See years before this recent from Co., S 84 ing Pub. Service United Gas Texas, Field of con- Panhandle it is exception of ability pipe companies market? With the do ceded such line prices do incompetent testimony buy gas as to have, now, pipe furnished never interstate pur- dealing gas for and fuel any heating person other situated poses, It is without no substantial evidence similarly to the remains jury’s dispute support com- verdict record to most per or of panies wells thousand cubic feet. 4$ either have their own mаny embracing long-time contracts ap looked with We have not over extending thousands acres of proval upon the action the defendant delivery many years, requiring sitting offering aid back and lines under into their seller own question, the Court in the solution of this *4 they pressure, prescribed a that certain or its lessor: “We saying and in effect to large arеas communitized so fit, used, we have taken and as seen rentals, expense of delayed drilling of up your part Now gas. of it’s % wells, drilling numerous wells and off-set can, you you prove, what we other Moreover, pipe line is such eliminated.3 pay similarly people, manufacturers other subject companies rate-fixing are situated, for searchеd their We have gas.” governmental agencies, result with the per- principle for law that would some of ordinarily, the more their costs mit to announce that when defend- us higher proportion their rates will be. ant from takes all the the well and royalty they pay a the owner of % disposition of it makes such best suits they likely will in the rate that reflected purpоse under contract which does a compensation receive in for the % not state a sum to for definite These, other, they considerations own. fiduciary gas, a such there arose either noncompar- make to such lines pipe principal or a relation as relation able, irrelevant, incompetent in an en- agent plаce the lessee un- which would market deavor to ascertain either principal in- duty fully der the keep his purchasers gaso- sold to for facts came formed and to disclose all purposes only. ad- line extraction fully to his and to and faith- market mitted is no from fact there fully in view account to the lessor. But companies pipe plaintiffs’ gas line of law that owner the Texas clearly irrelevancy in- demonstrates part gas, has no title even to the % competency pipe prices of interstate line only and that the contractual relation question or value exists, debtor and creditor we unable plaintiffs’ gas. obligation to fasten the to make full dis- a really ought where it closure be. Notwithstanding plaintiffs the fact that are obliged to the burden is on proved and no admitted was no to show first that there was market for their ques- well for the in companies, nevertheless, they put in they permitted tion before in- should be witnesses, evidence of numerous over troduce rea- evidence as to actual or objections defendant, prove that such receiving value Before sonable thereof. pay from 3%^ question of in- evidence on the actual or per thousand feet. testi- cubic This 4%^ appropriate trinsic would seem mony competent not and the Court 49(a) should follow Rule ought not have admitted it. Procedure, Rules the Federal of Civil in Under the evidence cаse 723c, this following re- U.S.C.A. quire section plain substantial market special jury a verdict of the tiffs’ that afforded issue as to whether or existed products gasoline extract and other from jury for the If the affirmative, absence of an in answer should then there pro between combination necessity unlawful going would arise no into suppression of ducers for the market thereby of actual value and producers do such the test is what cluttering up the with record useless and quantity, quality, gas similar avail- irrelevant evidence. highly Thompson informative A note on this so footnote v. Consolidated phase Co., 55, 364, of the ease is found as a footnote 300 U.S. Gas S.Ct. opinion Phillips 510, to the Oschsner, Pet. Co. v. L.Ed. footnote to same case F.Supp. D.C., al See the the their determina- charge jury Court on issues to the question-of mar tion described verdict for returned a by daily ket characterized sales. Such appropriate show absence of a comes forward and defendant now ing busi that Such a existed in the presents intricate and to the court several question. A market ness' briefs, difficult in the case like those 1,200-pound, sound, six-year-old mule Johnson, Petroleum Co. v. has never been can sold be established bitterly complain community. there recent have been proceedings the entire in the two court sound, 1,200-pound, six-year- sales of other favorably compare cases. These briefs old mules. Jeremiah, with the lamentations of when we come to find out that in neither pro- for further Reversed and remanded case did scintilla defendant offer one ceedings not inconsistent herewith. evidence, these their own briefs fall of weight, sheer them as unless one treats (dissenting). Judge evidence. here, finding question, for. at the well in Let which this us examine the cases sought until found the Went out hеretofore, court has heard and in which *5 they gas the best fair market value of value,” and “market value” “fair market elsewhere, there- could in field and and the discussed, the “fair com- value” are and upon court brought in such evidence to the pare them with involved: the issues here presented jury. law is Coffee, it the and Corporation & Shamrock v. Oil Gаs settled, think, that where I the effect remanded, Cir., 5 140 F.2d reversed and prima plaintiffs facie 409; Oschsner, made out a the Phillips Petroleum Co. v. here, case, the more is remanded, Cir., much made and 146 reversed and 5 F.2d thereupon to 138; burden the defendant Record, shifts to Phillips re- Petroleum v.Co. Certainly go 486; with the evidence. remanded, Cir., forward and 5 146 versed F.2d defendant, this is wherе the because (Loui- true Arkansas Natural Gas Co. contract, facts in has all the lease case), 5 This case siana 924. F.2d plain- duty possession its owes to the and times been before at least six has this court Selma, honestly 1946, tiffs such facts. to disclose 23, finally January and was affirmed States, Rome & Dalton v. United R. R. Co. 560, 561-568, 638, 139 U.S. S.Ct. L.Ed. I do not contend that these decisions in 266; Bros.-Ripley Lykes Miller v. S. S. point wrong. cases I desire 185; Co., Cir., 98 F.2d Manufacturers’ opinions out that evidence our as to the. 521, Marks, Cir., Finance Co. v. necessary disclose fair market important controlling is- which is the and accurately “fair defendant the knew cases, nearly every sue one of these value”, value”, the the “fair and confusing seem to have and mislead- been price” gas; it knew “market also ing. Lawyers counselors have not and gas much had been taken from how guide been them there- able to use as a and taken, taken, kind by escape reversal when to us come taken, price for and the actual cost where appeal. gas to where was delivered piping the it fiduciary, deаling are not with here and defendant and there used relations, trusts, principal with and with What others. the refuse afterwards sold to to, agent. all it Like adverted cases important is that the defendant re- here law, a contract involves and was tried at with the evidence go fused forward duty it was is a of the law court to and and plaintiffs had rested their case. after upon fully, call the defendant disclose any to offer evi- defendant declined fairly honestly facts and those and matters its case. It in effect It rested dence. also peculiarly within which are jury to the court and to “we said gained by it and which reason of lease this and more about the know all When the defendant contract. refused have tаken over the question; we one- plaintiffs offer such evidence the were en- gas, proceeds from which eighth titled to a directed verdict. belongs to the and we have used case, it, out, can, Phillips you like the case Petro- you find it and sold Johnson, leum Co. v. became of it and its fair
what Thereupon, go back must now court submitted another and dif- value.” I (2) issues, possible, The contract between ficult with trial it by unless the Court submit, up ignored cannot be nearly than cluttered more impossible performance. illegal all were paying After ever before. been try to costs, again must (3) price of is determined Market “at the prove price” the “market quan- comparable time, sales of well,” when, matter mouth of as a marketing tity, quality, and fact, such market no outlets. this, failing go then to the defendant proof by plaintiffs of no com- fair kindly beg it to inform as to parable County sales in Moore is not one-eighth royalty market value of over, proceeds taken net could shown. be Moreover, belong to the opinion opinion also the case of in the (5) County are not boundaries a factor Co. v. further Petroleum Johnson in making proof of the existence or non- complicate in the bringing the issues price in existence of market the Panhandle constructing question “implied, equity Field. trusts,” etc., resulting they differ plaintiffs’ Since sold par- from each other in than more one pipe lines, since numerоus factors ticular, opinions also from the enter into the or value of just other cases adverted to. generally do not enter into Field The life of these Panhandle Gas non-pipe or value of probably twenty years, wells is Field, it was error Panhandle to admit expiration may that time be that prices paid by pipe line evidence of the gas may fair market value of found either of mar- established, owing and also amount or actual value. ascertained, may be end that *6 (7) daily The absence sales of heirs now owners of on these lands finally competitive may fluctuating which the wells are located market can- provisions secure settlement. not annul of the contract rеquiring payment royalty gas at the The admonition of the elders well, was, price if there "Judges hope Courts of market should be price actuality, all suffer and the who a market by who dread of all created wrong,” gone time, seems into the dis- quantity, qual- card. ity, marketing outlets. judgment should be affirmed. price (8) The “market term at the well” Bynum cannot mean Petition fоr Rehearing. On Well, it means which similar call attention to a material dif gas brings the mouth of generally wells utilization of ference Rich- To otherwise field. would ren- Louisiana, Field as discussed meaningless, obviously der the term cases, utilization taken, but the lessee or can none take plaintiffs’ It is a matter gas. of common present contract, under that in Richlаnd Field mouth of that and it was never the readily marketable intention of the to allow the lessee companies. In the Panhandle Field of by to fix that it fixed. portion gas produced Texas It could not set its own as the stand- pipe lines, is taken it is conceded right, ard of for it was intended that parties that both there is no market for required should be as much as oth- plaintiffs’ companies. purchasers er similar were paying in com- Therefore, prices paid by pipe line parable purchases of similar companies in the Panhandle Field can value or may Actual intrinsic value fixing bearing either the market shown unless first be not be shown plaintiffs’ there was no market established to that extent the Louisiana cases are not comparable sales. applicable here. petition substance, rehearing this Court holds: denied. In plain- The burden Judge, tiffs. dissents.