Freeport Sulphur Company v. American Sulphur Royalty Company of Texas

Summary

The Texas Supreme Court affirmed the Court of Civil Appeals' reversal of the district court, holding that the contract implied a covenant to operate the one‑unit sulphur plant with reasonable diligence but did not impose a general duty to fully develop the property. It adopted the reasonable‑diligence standard for measuring performance and ruled that damages consist of the royalties that would have been earned during any unreasonable suspension, plus legal interest.