Shell Oil Company v. State

442 S.W.2d 457, 33 Oil & Gas Rep. 156, 1969 Tex. App. LEXIS 2773
CourtCourt of Appeals of Texas
DecidedApril 30, 1969
Docket244
StatusPublished
Cited by18 cases

This text of 442 S.W.2d 457 (Shell Oil Company v. State) 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
Shell Oil Company v. State, 442 S.W.2d 457, 33 Oil & Gas Rep. 156, 1969 Tex. App. LEXIS 2773 (Tex. Ct. App. 1969).

Opinion

TUNKS, Chief Justice.

Pursuant to Article 3272a, Vernon’s Ann.Tex.Civ.St., the statute relating to “Personal property subject to escheat” enacted in 1961, the appellant, Shell Oil Company, in 1962, 1963 and 1964 duly filed its reports listing certain properties in its possession which were derived from mineral proceeds. Each of the items so reported was described as cash from production income. As to each item it was listed as having accumulated during a period not less than seven years previously. Each of the items so listed was “subject to escheat” as that term is defined in Section 1, paragraph (c) of Art. 3272a.

On March 27, 1965, the State of Texas filed suit in the district court of Harris County, Texas, asking an adjudication that such properties so reported by the appellant by declared escheated to the State and that appellant be directed to deliver them to the Treasurer of the State of Texas. The appellant’s answer included an allegation that the cause of action to recover the property of each owner listed in its report had accrued more than four years previously and was barred by the four-year statute of limitations and that, since the cause against it alleged by the State was derived from the causes of action of such owners, the State’s cause of action was also barred.

Numerous interrogatories were propounded by the State. Those interrogatories and the answers to them occupy almost all of the 197 page transcript filed. Through such procedure all fact questions were eliminated. There remained before the trial court the sole question of law as to whether the statute of limitations had barred the causes of action of the owners of those claims listed on the reports filed by Shell Oil Company. It clearly has been established that when the reported claims were barred by limitations, the right to plead such a bar was vested and the State could not divest the appellant of such rights by escheat. Southern Pacific Transport Co. v. State, Tex.Civ.App., 380 S.W.2d 123, err. ref. That is to say, even though the properties of the various reported owners, which properties constitute claims to certain portions of cash derived from the production of oil and gas, were subject to es-cheat, those claims escheated subject to the right, if any, of the appellant to plead that the right to recover them was barred by limitations.

The State does not deny that the holding of Southern Pacific Transport Co. v. *459 State, supra, is the established law. It is the State’s contention, rather, that Shell Oil Company and each of the parties to whom it became obligated to pay a portion of the value of the oil and gas produced or purchased stood in the relationship of tenants in common and that a tenant in common may not mature title by limitation against his co-tenant until after he has repudiated the title of the co-tenant. The record showed that Shell Oil Company had not at any time communicated to the various owners of the listed claims that it, Shell Oil Company, denied liability thereon nor had it done any other thing that would constitute a repudiation of a co-tenancy, if any there existed.

Shell Oil Company, on the other hand, has taken the position that the claims of those owners listed on its reports, and which claims are the subject matter of this litigation, are not claims arising out of a co-tenancy relationship. Most of the listed claims are claims arising out of written contracts, leases or division orders specifying in each case that portion of the value of the oil and gas produced or purchased which the signer of the lease or the division order was entitled to receive, so that the four-year statute of limitation is alleged to be applicable.

Each party filed motion for summary judgment. The trial court granted the State’s motion and rendered summary judgment that Shell Oil Company pay to the treasurer of the State of Texas the sum of $3,215.37, which sum represents the total of the claims listed on the reports filed by Shell. Shell has appealed.

Where oil and gas are produced pursuant to some written contractual agreement between the producer or the purchaser from the producer and an owner of an interest therein, by which agreement provision is made that the producer or purchaser from the producer shall make a specified payment to the contracting owner of such other interest, the contracting owner’s right to recover from the producer or its purchaser is contractual and the cause of action asserting that right is subject to the four-year statute of limitations.

Luling Oil & Gas Co. v. Humble Oil & Refining Co., 144 Tex. 475, 191 S.W.2d 716, involved a situation wherein Luling sold to Humble one-half interest in certain oil and gas leases under an agreement whereby Humble was to conduct the production operation and to account to Luling monthly for Luling’s portion of the proceeds from such production. The Supreme Court held that Luling’s causes of action to recover its shares of the proceeds from production accrued as of the date of the monthly accounting required by the contract and that those causes of action were subject to the four-year statute of limitations.

In Ortiz Oil Co. v. Geyer, (Comm.App., opinion adopted), 138 Tex. 373, 159 S.W.2d 494, royalty owners sued the holder of the J^ths working interest to recover unpaid royalties. The producer pleaded the two-year statute of limitation. The Court said, at p. 497, “Since the action is upon a breach of contract the four-year statute of limitation is applicable and the lower courts properly overruled the plea of the two-year statute of limitations urged by the oil company.”

The appellee argues that even though a lease contract specifies a royalty payable, a lessor could, as co-tenant, sue for an accounting for profits made rather than sue for contractual royalties. We do not agree. In Texas Oil & Gas Corp. v. Vela, (Tex.Sup.Ct.), 429 S.W.2d 866, the Supreme Court held that the royalties payable to lessors of an oil and gas lease must be determined by the terms of the lease itself, not on the basis of a percentage of the amount for which the production was sold.

In Humble Oil & Refining Co. v. Fantham, Tex.Civ.App., 268 S.W.2d 239, err. dismd., where recovery of royalties payable under an oil and gas lease was sought, the *460 Court said, at p. 244, “The four-year statute of limitations applies insofar as appel-lees were seeking to recover payments due them under the mineral lease more than four years prior to the filing of their action.”

In a number of cases the Fifth Circuit Court of Appeals has held that the four-year statute of limitations is applicable to claims of the nature of those here under consideration. Among those cases are: Foster v. Atlantic Refining Co., 329 F.2d 485; Phillips Petroleum Co. v. Williams, 158 F.2d 723

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Bluebook (online)
442 S.W.2d 457, 33 Oil & Gas Rep. 156, 1969 Tex. App. LEXIS 2773, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shell-oil-company-v-state-texapp-1969.