Texas Oil & Gas Corp. v. Moore

630 S.W.2d 450, 1982 Tex. App. LEXIS 4096
CourtCourt of Appeals of Texas
DecidedFebruary 25, 1982
Docket1951
StatusPublished
Cited by10 cases

This text of 630 S.W.2d 450 (Texas Oil & Gas Corp. v. Moore) 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
Texas Oil & Gas Corp. v. Moore, 630 S.W.2d 450, 1982 Tex. App. LEXIS 4096 (Tex. Ct. App. 1982).

Opinion

OPINION

YOUNG, Justice.

This is an appeal of an order overruling pleas of privilege. Hallie Kelley Peareson Moore and three other plaintiffs sued Texas Oil & Gas (TXO) and Delhi Gas Pipeline Corporation (Delhi) for an accounting and recovery of underpaid gas royalties, for the declaration of the rights of the parties under the terms of the leases and for the release of properties due to failure to pay shut-in royalties. TXO and Delhi each filed pleas of privilege to be sued in Dallas County, the place of residence for both. In their controverting plea, appellees alleged that Subdivisions 5, 7, 14, 23, 27, and 29a of Article 1995, Tex.Rev.Civ.Stat.Ann. (Vernon 1964) justified venue in Wharton County. After a hearing, the trial court in one order overruled both pleas. We affirm.

Beginning in 1971, appellees executed four oil and gas leases covering land known as the Peareson field in Wharton County, Texas. When it had completed two wells, TXO made arrangements for sale of all the natural gas produced from the Peareson field for the next 20 years to Delhi, its wholly owned subsidiary. The terms of the sale are embodied in the Gas Purchase Agreement executed on October 1, 1974, by TXO and Delhi. The provisions concerning price established that Delhi would pay 90<t per MCF (thousand cubic feet) for the first year and would have the right to redetermine the price each year or to terminate the agreement. In accordance with the 1974 agreement and subsequent amendments, Delhi repeatedly exercised its right to redetermine the price which it paid to TXO. *452 Each amendment lowered the basis upon which the price would be calculated. The latest amendment permitted sale at 90% of the arithmetical average of the two highest prices paid for gas on a BTU basis in Railroad District No. 3 by a pipeline producer bound by a contract with an initial term of at least two years.

From the wellhead Delhi transports the gas five or six miles, then resells it to United Texas Transmission Company (UTT-CO) as provided by the Gas Purchase and Sales Contract entered into by Delhi and UTTCO on October 6, 1975. Delhi agreed to sell UTTCO all the gas produced from the Peareson field for the next 20 years. In addition to the allowance, which compensates for transporting and treating the gas, Delhi receives a significantly higher price from UTTCO than it pays to TXO.

Appellees’ royalty payments are based on the amounts received from sale of the gas by TXO, which the appellees claim were substantially lower than the market price. They allege that the relationship between TXO and its wholly owned subsidiary is a device which TXO has employed to cause an obvious injustice to appellees. In other words, appellees claim that TXO has breached its implied duty to market gas produced from its leases at a price equal to the market value of the gas and, thus, has committed fraud. They seek a declaration and damages from TXO and Delhi equal to the differences between the amounts they actually received and the amounts of royalties plaintiffs should have been paid based on market value or on the amounts received by Delhi.

An additional cause of action pled in ap-pellees’ amended original petition is for the release of land for failure to pay shut-in royalties. The petition alleges that TXO shut in a well for a period greater than 90 days, but failed to pay the shut-in royalties as specified in the lease. Appellees, therefore, request a release of the 352 acres affected.

The trial judge gave no indication which exception to the general venue provision served as the basis for his decision to overrule the pleas of privilege. Findings of fact and conclusions of law were not filed and need not be filed in a plea of privilege case. Rule 385(b), T.R.C.P. In the absence of findings of fact and conclusions of law, the judgment must be affirmed if it can be upheld on any legal theory that finds support in the evidence. Bishop v. Bishop, 359 S.W.2d 869 (Tex.1962).

We will first discuss the application of subdivision 14. To maintain venue under subdivision 14 two elements must be shown: 1) the nature of the suit and 2) the location of the land. Piazza v. Phillips, 153 Tex. 115, 264 S.W.2d 428 (1954). In this case the parties have stipulated that the land is located in Wharton County, where this suit was brought. Thus, the only issue is whether the nature of the claim falls within subdivision 14.

The nature of the suit is to be determined by examining the facts alleged in the plaintiff’s pleadings, the rights asserted therein and the relief sought. Renwar Oil Corp. v. Lancaster, 154 Tex. 311, 276 S.W.2d 774 (1955); Finder v. O’Connor, 615 S.W.2d 283, 284 (Tex.Civ.App.—Dallas 1981, writ dism’d). Subdivision 14 requires that “Suits for recovery of lands or damages thereto, or to remove incumbrances upon the title to land, or to quiet the title to land, or to prevent or stay waste on lands, must be brought in the county in which the land, or a part thereof, may lie.” Thus, the suit must involve an interest in realty as defined by the statute.

Royalties issuing out of the ordinary oil and gas leasehold estate are interests in land. Tennant v. Dunn, 130 Tex. 285, 110 S.W.2d 53 (1937). And so are rights to future royalty payments interests in land. Clyde v. Hamilton, 414 S.W.2d 434 (Tex.1967). When severed from the land, the minerals and royalties paid for them become personalty. Sabine Production Co. v. Frost Nat. Bank, 596 S.W.2d 271 (Tex.Civ.App.—Corpus Christi 1980, no writ); Lone Star Gas Co. v. Murchison, 353 S.W.2d 870 (Tex.Civ.App.—Dallas 1962, writ ref’d n. r. e.). Thus, claims for past and accrued *453 royalties are properly characterized as claims to recover personalty and, therefore, do not meet the requirements of subdivision 14. Sabine Production Co. v. Frost Nat. Bank, supra at 276. We agree with appellants that the claim for an accounting and damages for failure to pay royalties does not fall within subdivision 14.

Appellants erroneously characterized the second count of appellees’ petition as a suit for specific performance, which could not establish venue under subdivision 14. While it is true that specific performance cases do not fall within subdivision 14, Edgar v. Bartek, 507 S.W.2d 831 (Tex.Civ.App.—Corpus Christi 1974, writ dism’d), this case does not involve specific performance. Appellees’ request for a release of land is clearly within the class of cases contemplated by subdivision 14. In Atlantic Richfield Company v. Trull,

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Cite This Page — Counsel Stack

Bluebook (online)
630 S.W.2d 450, 1982 Tex. App. LEXIS 4096, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texas-oil-gas-corp-v-moore-texapp-1982.