Portwood v. Buckalew

521 S.W.2d 904, 51 Oil & Gas Rep. 400, 1975 Tex. App. LEXIS 2555
CourtCourt of Appeals of Texas
DecidedMarch 27, 1975
Docket790
StatusPublished
Cited by31 cases

This text of 521 S.W.2d 904 (Portwood v. Buckalew) 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
Portwood v. Buckalew, 521 S.W.2d 904, 51 Oil & Gas Rep. 400, 1975 Tex. App. LEXIS 2555 (Tex. Ct. App. 1975).

Opinion

*909 MOORE, Justice.

The principal issue in this case is whether a landowner, having executive leasing privileges, may demand and receive from the oil and gas lessee and keep for himself to the exclusion of the non-executives, overriding royalties and cash-per-acre payments, ostensibly paid for surface damages, where, by virtue of the terms of a partition deed, the non-executives were granted a right to participate in all royalties and bonuses.

The suit commenced as a multiple party action between the heirs of W. H. and Dottie Portwood, and involved the issue stated above. This appeal grows out of a cross-action between some of the heirs, and likewise involves the issue. The cross-action was filed by Jo Ann Portwood Bucka-lew who is the surviving wife of Billy Sunday Portwood and who is the Mother, guardian and attorney-in-fact for Harley Portwood, Linda Jo Portwood and Billy Sunday Portwood, Jr. Named as cross-defendants in the cross-action were appellants, Mrs. Dannie Fancher, Harry Port-wood and Sam Portwood, who are the surviving sister and brothers of Billy Sunday Portwood. As grounds for a cause of action, appellee alleged in her cross-action that in 1948 and 1954, the Portwood heirs entered into a certain partition agreement 1 dividing the surface estate of the Port-wood ranch but leaving the mineral estate undivided. She alleged that under the terms of the partition deed each heir was allotted the surface estate to certain tracts of land and that under the terms of the agreement it was stipulated that each of the respective surface owners was to have executive leasing privileges to lease the mineral estate under his land without the joinder of the other heirs. She further alleged that the agreement provided that the heirs were to share in all rentals, bonuses and royalties received from oil and gas leases in proportion to their ownership as set forth by the partition deed. She alleged that over the years since 1954, appellants had executed numerous oil and gas leases and in connection therewith had taken for themselves overriding royalties and cash bonuses classifying such payments as surface damages; that such self-dealing amounted to nothing more than a subterfuge in order to deprive her children of their rightful share to the royalties and bonuses which appellants labeled as payments for surface damages. Her prayer was for *910 a recovery on behalf of her children for their proportionate share of all overriding royalties and cash bonuses taken by appellants and labeled as surface damages and for an accounting. Appellants denied generally the allegations of the cross-action and affirmatively alleged that appellee’s cause of action was barred by the five-year statute of limitations. Trial was before a jury. The trial court rendered judgment in favor of the appellee based in part on the verdict of the jury and in part upon a judgment non obstante veredicto. Appellants duly perfected this appeal but specifically limit the scope of their appeal to that part of the judgment granting appellee a recovery upon her cross-action.

We affirm the judgment rendered by the trial court.

Before discussing the points of error, we think it appropriate to state some of the vital facts which do not appear to be in dispute, as well as some of the general principles of law applicable to those facts.

The Portwood Ranch, which is the subject of the partition agreement, consists of several thousand acres of land situated in Baylor, Throckmorton, Young and Archer Counties, Texas. The land is, for the most part, ranch land and has always been devoted to the pasturing of livestock. There is no dispute between the parties as to the execution of the partition agreement, nor is there any dispute with regard to the provisions thereof. Appellants do not deny that they have taken royalties or both royalties and cash-per-acre compensation for surface damages when executing leases upon the mineral estate of the Portwood lands. There is nothing in the partition agreement which would specifically prohibit such practice. It appears that all of the Portwood heirs, except appellee and her children, have, from time to time, engaged in the practice of taking for themselves overriding royalties and cash-per-acre compensation and labeling some surface damages. While the evidence shows that the production of oil and gas is calculated to cause at least some amount of surface damages, such damages are usually temporary as distinguished from permanent injury to the land. Usually the surface damage is confined to approximately one acre around the well site. It is customary, according to the evidence, in the oil and gas industry for the lessee to pay, and the landowner to accept, $50 — $100 per well in payment for the surface damages. It is not customary, and is almost unheard of in the industry, for the lessee to agree to assign overriding royalty or agree to pay the landowner on a cash-per-acre basis for anticipated surface damages. The evidence shows that out of approximately 100 oil and gas leases executed in the area of the Portwood Ranch, the Portwood heirs were the only lessors who received overriding royalties or cash-per-acre compensation allegedly for surface damages. When leasing their own lands, in which appellee’s children had no interest, the evidence shows that appellants did not take royalty or cash-per-acre compensation for surface damages, but were usually compensated for surface damages on a per-well basis. There is no evidence showing the specific amount of damages, if any, which were sustained by appellants by reason of the drilling and the production of oil, nor is there any evidence that the damages allegedly sustained by them bore any reasonable relationship to the royalties or cash-per-acre payments which they received. There is evidence to the effect that any damages sustained by them were negligible. Appel-lee concedes that the appellants were possibly entitled to reasonable surface damages in the amount of $50 — $100 per well, but takes the position that the enormous amounts received by them were unreasonable and actually amounted to royalties and cash bonuses paid in consideration of the execution of the leases in which her children were entitled to participate. Appellants testified that they took surface damages in good faith believing they had a right to be compensated in such amounts *911 for the anticipated damages to their surface estate.

Since the partition agreement was executed by the parties to put into effect a family arrangement, it becomes apparent that a fiduciary relationship was created between the appellants and the appellee’s children. 57 Tex.Jur.2d Trusts, Sec. 69.

As between the appellants and ap-pellee’s children, there is an implied covenant arising from the partition deed that the appellants would use the utmost fair dealing in executing oil and gas leases so as to protect the interest of appellee’s children. Moore v. City of Beaumont, 195 S.W.2d 968 (Tex.Civ.App., Beaumont, 1946) affirmed 146 Tex. 46, 202 S.W.2d 448 (1947); Federal Land Bank of Houston v. United States, 168 F.Supp. 788, 144 Ct.Cl. 173 (1958); 2 Williams and Meyers, Oil and Gas Law, Sec. 339.3; Jones, Non-Participating Royalty, Vol. XXVI, Texas Law Review (1948) p. 569; also see Schlittler v. Smith, 128 Tex. 628, 101 S.W.2d 543 (1937).

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Bluebook (online)
521 S.W.2d 904, 51 Oil & Gas Rep. 400, 1975 Tex. App. LEXIS 2555, Counsel Stack Legal Research, https://law.counselstack.com/opinion/portwood-v-buckalew-texapp-1975.