• Supreme Court of Texas
  • 15-0142
Petitioner Richard Crawford sued XTO Energy for breach of contract for failure to pay royalties on an oil-and-gas lease on a small strip of land (the Crawford tract). The land was surrounded by lots that his mother had conveyed years earlier; she reserved the oil and gas rights only beneath Crawford tract. When an XTO well began producing, XTO obtained a title order concluding that the share of royalties for the Crawford tract should go to the surrounding landowners under the strip-and-gore doctrine. XTO began paying the landowners, failed to pay petitioner, and petitioner sued. The trial court ruled that petitioner must join the landowners in his suit as necessary parties under Texas R. Civ. Pro. 39, eventually dismissing the suit, and the appeals court upheld the ruling. Petitioner argued before the Supreme Court that the adjacent landowners never claimed an interest, the landowners have no interest because the strip-and-gore doctrine does not apply, and the appeals court erred in holding that XTO's payments to the landowners created an interest. The Supreme Court denied Petitioner's strip-and-gore argument, siding with the appeals court's decision that the question of whether the landowners are necessary parties must be decided first. However, it agreed with petitioner's other arguments that they are not necessary parties. The court found that the landowners did not assert a claim in any way and noted that in relevant caselaw, parties asserted their rights by holding leases or filing suits. It also found that XTO had a legitimate concern that the landowners might sue when their royalties are reduced, but held that XTO cannot create a claim for the landowners by unilaterally deciding to pay them. Furthermore, it noted that XTO can address its concern by joining the landowners as proper (but not necessary) parties under Rule 37. The court reversed the appeals court's judgment and remanded. Crawford v. XTO Energy, Texas Supreme Court, Case No. 15-0142, 2/3/17.

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