Face Challenges Confidently

017 Thomas v. Thomas

Wednesday, September 2nd, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
Thomas v. Thomas, 767 S.W.2d 507 (Tex. App.–Amarillo 1989, no writ), involved a dispute over the proper interpretation of a “free gas to lessor” clause contained in a 1938 oil and gas lease. The lease provided that:
Lessor shall have the privilege at his risk and expense of using gas from any gas well on said land for stoves and inside lights in the principal dwelling thereon out of any surplus gas not needed for operations hereunder.  [emphasis added]
When the lease was executed, there was no dwelling on the property. Jerry and Patricia Thomas (lessor) placed the first house on the property in 1950 and began taking gas. Stephen Thomas purchased one acre from his parents in 1975, built a second house, and began taking gas. By 1980 the parents had died and the first house was unoccupied. In 1985, the Thomas children partitioned the property. Stephen got the second house and 64 acres around it. Greg Thomas got the rest of the property, including the first house.  Greg cut off Stephen’s  gas.
Held: the gas belonged to Greg. The right to free gas is a covenant running with that portion of the land upon which the principal dwelling was located at the time the original lease was executed. If, as in this case, there is no dwelling in existence on the leased premises at the time of the execution of the original oil and gas lease and a principal dwelling is placed on the premises years later, the right to receive the free gas attaches to that portion of the surface estate where the first dwelling is located. The court left open what result might follow if the original principal dwelling is removed.
The case is significant because there are very few Texas cases on the subject and because the reasoning in the case may have application in construing the similar and more significant “right to irrigation gas” clause contained in some leases. The court cited with approval a number of cases from other jurisdictions establishing general principles governing free gas clauses.  The clause is a covenant running with the surface estate, the surface estate receives the benefits, the mineral estate has the burden, the burden cannot be extended to other dwellings without the consent of the mineral owner, the right and the burden are assignable and transferable as is any other property interest, the right to take free gas is an interest in real property, and the usual rules of transfer by gift, sale, exchange or adverse possession apply.