## Facts

- Pierce A. Hoggett and his wife owned most of a 2,871-acre tract covered by an oil and gas lease; another owner held a 40-acre portion.
- Barron Kidd and A. W. Cherry acquired the lease by assignment shortly before the end of the primary term.
- Kidd and Cherry drilled a gas well on the 40-acre portion and claimed the well was capable of producing gas in paying quantities.
- The lease contained a shut-in royalty clause that could continue the lease if a gas well was capable of production but gas was not sold because there was no market, provided the lessee paid the stated shut-in royalty.
- Kidd and Cherry told the Hoggetts the well was producing but shut in for lack of a market, and they paid shut-in royalty payments to keep the lease in force.
- The Hoggetts later learned that the well was not actually producing and that a nearby gas purchaser (Junction Natural Gas Company) needed gas, contradicting the “no market” claim.
- The Hoggetts demanded that Kidd and Cherry release the lease of record; Kidd and Cherry refused and continued to assert the lease was still valid.
- The Hoggetts negotiated a new oil and gas lease with Ray Albaugh, conditioned on release of Kidd and Cherry’s lease; Albaugh would not proceed while the prior lease remained unreleased.
- The Hoggetts sued to clear title and recover damages for the lost Albaugh lease opportunity.
- After a non-jury trial, the court removed the cloud on title and awarded the Hoggetts $8,400 in damages against Kidd and Cherry; Kidd and Cherry appealed the damages award.

## Issues

1. Was the Hoggetts’ claim for damages, based on refusal to release and continued assertion of lease rights, essentially a slander-of-title claim requiring proof of malice and special damages?
2. Did the evidence support the trial court’s determination that the lease had expired (including that the shut-in royalty clause did not keep the lease alive because the well was not capable of production and/or the “no market” premise failed)?
3. Was there legally and factually sufficient evidence to support a finding (express or implied) that Kidd and Cherry acted with malice in maintaining the lease claim and refusing to release?
4. Was the damages claim barred by Texas’s two-year statute of limitations applicable to slander of title, and when did the claim accrue?

## Decision

- The Court of Civil Appeals affirmed the judgment awarding $8,400 in damages and clearing the cloud on title.
- The court treated the damages theory as slander of title (or the equivalent), meaning the Hoggetts had to show a false disparagement of title, malice, and special damages.
- The record supported the trial court’s conclusion that the lease was no longer valid and that Kidd and Cherry’s continued assertion of leasehold rights and refusal to release disparaged the Hoggetts’ title.
- The court held malice could be found from the circumstances and upheld the trial court’s implied finding of malice.
- The court rejected the limitations defense and held the action was timely under the accrual facts found by the trial court.
- The Texas Supreme Court later refused error with the notation “no reversible error.”

## Legal Principles

- A shut-in royalty clause continues an oil and gas lease only when its conditions are met, including that the shut-in well is capable of producing in paying quantities and the failure to sell is due to lack of a market as contemplated by the clause.
- A landowner seeking money damages for a recorded claim that wrongfully clouds title generally must proceed on a slander-of-title theory, which requires: (1) disparagement of title by a false claim, (2) malice, and (3) special damages.
- In slander of title, malice is not limited to spite; it may be shown by knowing assertion of an invalid claim or by reckless disregard for whether the claim is valid, and it may be inferred from conduct such as persisting in an invalid recorded claim after demand to clear title.
- Special damages must be tied to a specific, provable loss caused by the cloud on title, such as the loss of a particular sale or lease transaction that fails because the title is not cleared.
- The two-year limitations period applies to slander-of-title damages claims; accrual depends on when the cause of action is complete, including when the plaintiff suffers the special damages that make the claim actionable.

## Conclusion

Kidd and Cherry’s continued assertion of lease rights under an expired oil and gas lease, coupled with their refusal to release the lease of record, supported a slander-of-title recovery when it prevented the Hoggetts from completing a new lease; the appellate court upheld findings on falsity, malice, special damages, and timeliness and affirmed the $8,400 award.


Kidd v. Hoggett, 331 S.W.2d 515, 12 O. & G.R. 730, error refused, no reversible error (1959)