Kidd v. Hoggett

Pierce Hoggett and his wife (plaintiffs) owned a tract of land subject to an oil and gas lease. Barron Kidd and A.W. Cherry (defendants) were the owners of the lease. The lease contained a shut-in royalty clause under which the lease would be extended if there was a producing well on the property, but there was no market for the produced gas. The clause provided that in such a scenario, the defendants would not extract gas, but would pay an annual royalty to the plaintiffs. The defendants told the plaintiffs that their gas well was producing, but that there was no market for the gas. The defendants thus paid the plaintiffs a royalty, and the lease term continued. In reality, however, the well was not producing gas and a nearby gas company, Junction Natural Gas Company (Junction), was in desperate need of gas. Upon learning of Junction’s need, the plaintiffs requested a release of the lease, but the defendants maintained that the gas well was producing. Around this time, the plaintiffs entered into a separate lease with Ray Albaugh. This lease was contingent on the defendants releasing their lease. The defendants continued to refuse to release their lease and as a result Albaugh refused to sign the new lease. The plaintiffs brought suit seeking damages resulting from their loss of the Albaugh lease. The plaintiffs claimed that the suit was to remove the cloud on their title and did not require a showing of malice. The defendants argued that the suit was a claim of slander of title and did require a showing of malice. The trial court found in favor of the plaintiffs, and awarded damages. The defendants appealed.