The Man in the Black Hat
By mastering the mysterious ways of South Texas, Clinton Manges has built an empire, amassed political influence, declared war on the state establishment—and left bitter enemies in his wake.
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The case of Grady Woodridge is by no means unique. Wooldridge, an Austin contractor, was hired to build a bunkhouse and cookshack at the Duval County Ranch in 1976. Wooldridge met with Manges on the job, but everything else was handled through an intermediary named Perry Horine, an old friend of Manges’. Within a few months the ranch company fell behind in its payments to Wooldridge by $27,000. Horine had the answer: Wooldridge should go to the Groos and borrow the money; Manges would pay off Wooldridge’s note when his cash flow improved. There was a catch: Wooldridge should borrow not $27,000 but $69,000. Part of the money would go to pay off another Manges debt. There was another catch: Manges did not guarantee Wooldridge’s note in writing. It may seem astonishing that anyone would agree to such a deal, but Wooldridge – and others who fell into the same trap – had bank notes of their own coming due elsewhere and a lot of money invested in Manges projects. They felt they had no choice but to go to the Groos and hope for the best. In fact, Wooldridge was a small-timer compared with another borrower at the Groos. The man who supplied Manges’ pipe is currently suing him over Groos loans totaling $1.2 million.
Despite the frantic wheeling and dealing, Manges slipped deeper and deeper into debt. In the Zapata County oil patch Manges was bringing in some wells, but they didn’t produce enough to pay for the all-out drilling he was doing. Not even his banks could supply enough capital to pay for the operations. Anyone who wants a short course in what is involved in drilling for oil and gas can learn everything there is to know by going to the squat, sagging Zapata County courthouse and looking at the list of plaintiffs who sued Clinton Manges for unpaid bills in the late seventies: roughnecks, well servicers, pumpers, drilling contractors, equipment rental companies, water haulers, mud suppliers, pipe servicers, tong operators, well loggers – nineteen suits for unpaid bills, plus another nine filed in Laredo.
There was more trouble in Jim Hogg County. Manges lost the second Guerra case, disastrously. The jury decided that even before the Wyatt loan Manges had had the secret intention of developing the Guerra lands for himself rather than leasing them out, as he was legally obligated to do. The loan, the jury said, was “in willful disregard” of the Guerras’ rights. (By the time the case came to trial, Manges had indeed leased 25,000 Guerra acres to himself on terms highly favorable to him and highly unfavorable to the Guerras.) The jury cancelled the self-dealing, socked Manges for hundreds of thousands of dollars in damages, and worst of all, stripped him of the right to lease the Guerras’ half of the minerals in the future.
Still more bad news came out of Corpus Christi. One of the aggrieved oil operators in the pollution suit went to federal court, charging that Manges and Carrillo had conspired to deprive him of his civil rights. Manges came up with an ingenious defense – a judge was immune from suit and Manges contended that the immunity protected anyone who dealt with a judge. But the U.S. Supreme Court wouldn’t buy it, and ultimately Manges paid $200,000 to settle the suit.
At the northern end of the brush country, things were falling apart for Manges even in Duval County. The Duke of Duval was dead by his own hand. Manges had broken with Parr shortly before the end in 1975, siding with O. P. Carrillo in a feud that reached its climax one day when Manges was at Parr’s house. Parr snatched a machine gun and rushed out with the announced intention of shooting Carrillo. (Manges got to Carrillo first.) A year later Carrillo, impeached and indicted, was out of power. For the first time, Manges had to take lawsuits in Duval County seriously – and soon there were dozens of them, most for unpaid bills related to still more drilling activities. Other creditors were after him in Alice and Corpus Christi. It didn’t take Manges long to find out how different things were going to be without Parr and Carrillo. In 1977, two years after Parr went to his grave, Manges received the unkindest cut of all. Duval County sued Clinton Manges and his ranch for delinquent taxes.
COURTING THE COURT
Where was Manges to turn? Besieged on all sides, he sought refuge in the lessons of South Texas. The idea that he had overextended himself, bet too much on the come, gambled and lost, was foreign to him. By the old Duval County standards, those explanations were mere apocrypha; “everything is politics and politics is everything” is the revealed truth. If government was not for him, then somewhere politics had to be turning it against him.
He knew just where it was, too: the Texas Supreme Court. If the court hadn’t historically favored the oil company at the expense of the landowner, if Texas oil and gas law had forced Mobil and the other companies operating on his ranch to develop it properly, he wouldn’t be so strapped for cash in the first place. From the time he bought the Duval County Ranch, Manges had been convinced that there was a huge gas play in the Deep Wilcox Trend, 20,000 feet and more below the surface, but the companies wouldn’t spend the millions necessary to drill a deep test well. Yet the law allowed them to keep the land – his land – tied up so that he couldn’t lease it to someone willing to try. Nor did the law require the companies to explore and drill extensively; one well could tie up thousands of acres as long as the company was making a profit from that well. Consequently, some areas of the Duval County Ranch remained unexplored, half a century after most of the leases had taken effect. The only way to fight the companies was to prove that they had not developed the property reasonably, and that required finding geologists who would testify against the oil company’s geologists – as hard to find as doctors who will testify against other doctors.
Manges had been trying to win the favor of the court for years. On trips to Austin he’d been known to drop by the court building, visiting one justice’s office after the other. Soon after Manges moved to Duval County, a district judge in Sinton invited several justices to go hunting; only after they arrived at their destination did the justices discover that they were on the Duval County Ranch and who their real host was. But the law continued to favor the oil companies, and the only way to change the law was to change the court. And the best way to do that was through campaign contributions. He would see the landowner triumphant yet.
There was just one anomalous note. The very sins Manges accused the big oil companies of committing against landowners – holding back money, not developing leases, polluting the surface – were exactly what the landowners were accusing him of doing on the ARCO farmout in Zapata County. Landowners discovered that he had failed to pay royalties. The president of the old Duval County Ranch company, checking up on Manges, also found that he had withheld royalties due the former shareholders from new wells on the ranch. One Zapata owner sued because Manges hadn’t developed his tract properly, putting only one well on 1053 acres. “What Mobil did to him, he’s doing to us,” the landowner said. ARCO took over the accounting. It also sued Manges for failing to clean up the surface damage to well sites. The landowners’ frustrations were summed up in a letter one of them wrote to ARCO: “Your company has got our property in a hell of a mess by farming out portions of this lease to a damned crook like Clinton Manges.”
A RACE AGAINST TIME
He was in a desperate race, a race against time. In a 1977 list of unpaid creditors (and it was not a complete list at that), Manges admitted to 167 overdue accounts, most of them owed to oil field businesses but at least a dozen to law firms and another thirteen to governmental bodies for delinquent taxes. Some creditors had already filed suit to get their money, and others would follow. The collection process confronting Manges was swift and inexorable: an adverse judgment without the formalities of a trial; then, if the money was still not forthcoming, a court-ordered sale of his assets. His empire was in utter peril.
Manges’ problem was more one of philosophy than one of money. His financial statement at the time showed $67 million in assets ($24 million or the Duval County Ranch, $33 million for oil and gas properties like the Guerra lands, and $5 million for the Groos Bank were the main items) and only $27 million in liabilities ($19 million in loans and the rest in past-due bills). That left his net worth at $40 million. But cash flow was his problem. To pay his debts he would have had to sell land, and that was unthinkable. Land is power; one gets rich by accumulating assets, not by selling them.
Bankruptcy was out. Manges says that he went all out to pay everyone, that had he taken bankruptcy, his creditors would have had to settle for a fraction of what he owed them. (Some had to anyway; others in time collected their due.) But taking bankruptcy would also have meant putting his assets in the hands of somebody else, and such a choice was inconsistent with everything Clinton Manges stands for.
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