Opinion ID: 411279
Heading Depth: 2
Heading Rank: 3

Heading: Severance-Tax Deduction

Text: 29 After computing the award for unpaid market-value gas royalties due to the Flowers under Vela from 1977 through 1980, the district court entered an award decreeing that the sum of 7.5% should be deducted from these awards representing production and severance taxes levied upon the gas produced. The district court apparently reduced the royalty owner's recovery under authority of Amoco Production Co. v. Alexander, 594 S.W.2d 467, 481 (Tex.Civ.App.1979), aff'd 622 S.W.2d 563 (Tex.1981) (severance tax payable out of royalty owner's interest, although collected from the purchaser). 30 On appeal, the Flowers contend that Shamrock is only entitled to this deduction as offset if the severance taxes so levied are actually paid, relying on Exxon Corporation v. Jefferson Land Company, Inc., 573 S.W.2d 829, 832 (Tex.Civ.App.1978). It contends that the deduction thus may constitute a windfall for Shamrock, if the latter does not in fact pay the tax or if, for instance, collection of it is time-barred. No evidence was taken in the trial judge's post-verdict calculation, from jury determinations of market value, as to the correct amount of royalties due. 31 Under all of the circumstances, we feel it to be appropriate to vacate that portion of the order allowing the deduction, and to remand for that issue to be considered and determined upon such showing of additional authority or (if required) evidence as may be appropriate.