Rist v. Westhoma Oil Co.

Westhoma Oil Company (plaintiff) held the lease rights to all mineral horizons below sea level on a tract, while other lessees held the rights above sea level; the lease contained a Pugh clause terminating coverage of any tract excluded from a pooled unit unless that tract had its own production. Production continued above sea level but never occurred below sea level. After the lease's primary term expired, Westhoma sued B.C. and Gladys Rist (defendants), the lessors, to quiet title, arguing the above-sea-level production extended the lease as to the below-sea-level rights too; the Rists argued the Pugh clause split the lease horizontally by depth, letting the below-sea-level rights lapse. The trial court ruled for Westhoma, and the Rists appealed.