American Trading & Production Corp. v. Phillips Petroleum Co.

449 S.W.2d 794, 35 Oil & Gas Rep. 221, 1969 Tex. App. LEXIS 2559
CourtCourt of Appeals of Texas
DecidedDecember 31, 1969
Docket6004
StatusPublished
Cited by6 cases

This text of 449 S.W.2d 794 (American Trading & Production Corp. v. Phillips Petroleum Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Trading & Production Corp. v. Phillips Petroleum Co., 449 S.W.2d 794, 35 Oil & Gas Rep. 221, 1969 Tex. App. LEXIS 2559 (Tex. Ct. App. 1969).

Opinion

OPINION

FRASER, Chief Justice.

The statement of nature and result of the case is substantially set forth in appellants’ brief and appears to be reasonably satisfactory to the various appellees. This statement and nature of the case by appellants is substantially as follows:

The immediate suit grew out of a Rule 37 case, wherein appellant American Trading and Production Corporation (sometimes referred to as American Trading or simply as ATAPCO) obtained a permit to drill a well on a 160-acre tract in the Azalea Field, Midland County, Texas (the field rules provided for 640-acre spacing) as an exception to the field rules. The Railroad Commission had declined to issue the permit and appellees therefore appealed to the District Court of Travis County, which court issued its mandatory injunction ordering the Railroad Commission to issue the said permit. From this decision and order by the Travis County court, the Railroad Commission immediately appealed. The District Court judgment commanding the Railroad Commission to issue such a permit was rendered on September 24, 1958. The Commission, Phillips, Baxter et al., and O’Neill, et al. gave notice of appeal at tht time and the appeal was perfected on October 1, 1958. Thereafter, on October 2, 1958, the Commission issued a permit to American Trading for the drilling of the well. During the interval, from the date of the trial court judgment to the date that such judgment was finally determined to have been erroneous, American Trading drilled a well on its land and produced gas and condensate under an allowable issued by the Railroad Commission which it sold to Phillips for the sum of $94,246.16.

Appellee Phillips filed the present suit ostensibly as a stakeholder, alleging that it had in its possession $94,246.16, representing the proceeds realized from the purchase and sale of the gas and condensate *796 produced by American Trading; but actually representing the amount which Phillips agreed to pay American Trading and the royalty owners for gas and condensate which Phillips had purchased from them; that American Trading had no right to produce this gas and condensate because the permit under which the well was drilled was subsequently revoked; that, therefore, American Trading et al. have no lawful claim to the proceeds; that all of the remaining lease owners in the field would have produced such gas and condensate but for the American Trading’s unlawful conduct; and that, therefore, the proceeds should be awarded to the lease owners and royalty owners in the field other than the appellants.

Appellees O’Neill et al. and Baxter et al. filed pleadings essentially adopting the position of appellee Phillips.

Appellant American Trading filed exceptions to appellees’ theory of recovery and alleged by way of cross-action that it made a contract with Phillips under which the gas and condensate were sold, and that it had made demands on Phillips for the proceeds, as well as for interest and attorneys’ fees.

The royalty owners under American Trading’s 160-acre tract adopted American Trading’s exceptions and essentially its position, but in the alternative said that if American Trading was not entitled to the proceeds of the sale of gas and condensate from its lease, then the Group One Defendants were entitled to all of the proceeds by virtue of the fact that the gas and condensate were produced from their land.

The trial of the case was to a jury, which returned a verdict based on answers to special issues. The trial court, however, determined, as a matter of law, that appellants were not entitled to recover any portion of the proceeds and, based on some jury issue findings, distributed the fund among appellees, with interest.

The original dispute involving the Rule 37 question was decided by the Austin Court of Civil Appeals. (See 323 S.W.2d 474).

A subsequent appeal was perfected and disposed of by this court in an opinion found at 361 S.W.2d 942. (End of appellants’ statement).

We feel, however, that the Phillips ap-pellees have made some observations in their brief that should be included in the statement and nature of the case, and they are substantially as follows:

This court held in the previous appeal of this case (Cause No. 5536) that Phillips’ petition stated a cause of action. Phillips Petroleum Company v. American Trading and Production Corporation, Tex.Civ.App., 361 S.W.2d 942 (1962), error refused, N. R.E. That opinion states the background of the case; summarizing the prior litigation, Railroad Commission of Texas v. American Trading and Production Corporation, 323 S.W.2d 474 (Tex.Civ.App. 1959, error ref., n. r. e,, cert. den. 361 U.S. 886, 80 S.Ct. 158, 4 L.Ed.2d 121), where the Austin Court of Civil Appeals held that American Trading was not entitled to drill the well which precipitated the current suit; and gives the history of the drilling and production of the well by American Trading. The actual trial of this case confirmed the facts stated in the prior opinion.

Most of the facts have already been stipulated and the stipulation is in evidence. Appellees went to trial on the identical petition which had earlier been dismissed by the trial court and which this court held stated a cause of action. In the former appeal, this court ordered all of the exceptions to that petition contained in the answers involved in that appeal to be overruled. American Trading’s answer involved in that appeal was its Third Amended Original Answer. It went to trial on its Fourth Amended Original Answer, but that answer adopted all of the exceptions of the Third and contained no additional exceptions or defenses directed at appellee except its plea for recovery for asserted *797 good faith improvements. Thus, the pleadings on which the trial was conducted and now before this court are identical in all material respects to those involved in the former appeal.

The appellants, in their brief, also state that on a previous appeal styled Phillips Petroleum Company v. American Trading and Production Corporation, 361 S.W.2d 942, this court had before it essentially the same pleadings as we find in the present transcript.

We feel that the chronology of events stated in the appellee’s O’Neill brief should be included, and they are substantially as follows:

1. The Railroad Commission Order of August 28, 1953, being its state-wide density order;

2. The Railroad Commission Order of December 19, 1957, fixing field rules for the Azalea (Strawn) Gas Field;

3. The Application of American Trading for an exception to the Commission’s rules, filed on May 6, 1958;

4. The Order of the Railroad Commission of August 1, 1958 denying American Trading’s application;

5.

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449 S.W.2d 794, 35 Oil & Gas Rep. 221, 1969 Tex. App. LEXIS 2559, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-trading-production-corp-v-phillips-petroleum-co-texapp-1969.