Opinion ID: 1374307
Heading Depth: 1
Heading Rank: 4

Heading: the costs of equitable accounting may be allowed in toto or be apportioned between the parties

Text: The mineral owners challenge the trial court's failure to award them the costs of a court-ordered audit of the operator's accounts. [53] Since the operator had furnished them only three inconclusive documents, the mineral owners invoked the discovery process to compel an accounting. The trial judge ordered the operator to submit its records for an audit by the mineral owners' accountant. [54] The operator does not contest here the mineral owners' account of the operative facts that surround the audit. Rather, it argues that (a) the mineral owners brought no more than an action for damages in which equitable accounting costs are not recoverable and (b) their quest for accounting costs is no more than a futile attempt to recover an expert witness fee. [55] As a matter of ancillary relief (to their action at law for damages) the mineral owners' pressed for an accounting of the oil and gas revenue. [56] Equitable accounting may be decreed in an action which is founded primarily upon other grounds, if it is necessary to afford the parties complete relief. [57] The terms of § 540(A) in force when the claim arose provided that the operator was liable for payment under that section if he had assumed the responsibility of paying those who were legally entitled to the proceeds. [58] Equitable accounting was essential to resolve the issue of how much revenue attributable to the mineral owners' back-in interests had come to the operator for distribution to the rightful owners. [59] Nisi prius taxable costs fall into two categories: (a) ordinary court costs  items that the clerk may tax de cursu [60] and (b) litigation expenses that may have arisen in an equity suit or, as here, in an ancillary equitable proceeding. [61] Equitable litigation expenses (as opposed to ordinary costs taxable de cursu ) are explained in Rand v. Nash. [62] In a stockholder's action for a receivership, the Rand plaintiff sought court appointment of an accountant to audit corporate books and report his findings to the court. The appointed auditor completed the assigned task. After the case had been settled, the trial court taxed the accountant's fees as costs. Rand teaches that under the trial court's equitable powers  and in the absence of a statute to the contrary  audit-related costs are clearly taxable in equity as a litigation expenses. In an equitable setting costs should not be so rigidly confined to specifically enumerated statutory allowances as to exclude any other necessary expenditures. [63] Allowance of equitable costs rests in the discretion of the chancellor. [64] The audit costs in the case here for review clearly fall under the broad rubric comprised within the equity exception to taxable or true costs items; they were neither expert witness fees nor taxable by the clerk de cursu. The accounting fees were subject to assessment as litigation cost allowable in equity. Since equitable costs must be tailored to the equities in the case, the chancellor must be set free to decide on remand whether the audit fee is to be allowed in full or be apportioned between the parties. Our pronouncement in Dulan v. Johnston [65]  that only those expenditures which are taxable by statute fall within the term costs  does not apply here. The nisi prius denial of the mineral owners' accounting costs is hence reversed. The trial court may allow on remand the accounting fees in full or apportion them as the equities are shown to require, taking due consideration of the parties' litigation conduct.