Court Opinion

ID: 9858352
Source: CourtListenerOpinion
Date Created: 2023-09-24 16:20:52.490777+00
Date Added: 2024-06-11T09:53:57.613576
License: Public Domain

Ed. F. McFaddin, Associate Justice (Concurring). From a decree of the Chancery Court ordering a sale of .the properties- of all the parties, there is this appeal, challenging the validity of the order of sale. The appellants are Edna Mae Pasteur, Eddy Adamson, M. H. Harrell and the Farmers & Merchants National Bank of Gilmer, Texas. The appellees are Adma C. Niswanger and Iris Jordan. The appellants and appellees together own a leasehold working interest in the SW14 SW% Sec. 10, Twp. 16' S., R. 24 W., LaFayette County, Arkansas. All the parties herein are agreed: (a) When the original oil and gas leases were executed on the above 40 acres, there was a l/8th interest retained by the landowner and called the “royalty interest”. That interest is not involved herein. The remaining 7/8ths interest in the minerals was called the “leasehold interest”, (b) On the particular 40-acre tract here involved there was carved out of this 7/8ths leasehold interest two overriding royalty interests, and being: T/8 of 1/8 of the 7/8 or leasehold interest held by Carter Oil Company; and 1/16 of 7/8 of the 7/8 or leasehold 'interest held by T. C. Short, (c) The remainder of the leasehold interest (after the over-riding royalty interest in (b)'above) is. the leasehold working interest and is • owned by the appellants and the appellees in these proportions : Appellee, Adma G. Niswanger 1/2 Appellee, Iris Jordan 1/16 Appellant, Edna Mae Pasteur 3/16 Appellant, Eddy Adamson 1/16 Appellant, M. H. Harrell (subject to the mortgage of the Farmers & Merchants National Bank of Gilmer, Texas) 3/16 On August 26, 1952, appellant, Pasteur, owned all of the aforesaid leasehold working interest mentioned in (e) above, and made a contract with appellee, Nis-wanger,. whereby, for the sum of $18,000.00 duly paid, Pasteur assigned to Niswanger 1/2 of the said leasehold working interest owned by Pasteur, and also'agreed to drill a well on the 40 acres of oil and gas. This well was drilled and became a producer; and then it became necessary to drill another well on the. 40-acre lease, for half of the expense of which second well Niswanger beeaihe liable. She was advised by Pasteur that Niswanger’s portion of the expense of the second well was $17,000.00, which amount Niswanger paid. Both wells were producing at the time of the litigation in the lower court. On January 7, 1954, Niswanger filed this suit in the Chancery Court, praying for an accounting and claiming that Pasteur, in the operation of the wells, had overcharged Niswanger on the cost of the second well and had also failed to properly handle the finances of the entire leasehold working interest. Later, by an amendment, Niswanger alleged that the other parties to this litigation (besides Niswanger and Pasteur) had acquired interests in the leasehold working interest from Pasteur, and they were brought in as parties; and then Niswanger, by amendment, prayed that the entire lease-hold working interest of all parties in this litigation, including the machinery and equipment of the two wells, be sold and the proceeds held for partition after the accounting. Iris Jordan joined with Niswanger in seeking sale and-.partition, which was resisted by all the other parties.. ■. The Chancery Court ordered the sale of the lease-hold working interest of appellants and appellees and also the sale of the equipment and machinery of the appellants and appellees at the two wells. All of this was' in ad--vanee of hearing the other questions in the case: it was conceded that there would be a subsequent accounting. - The parties on this appeal have briefed the case on' the question of whether there can be a partition of oil and gas leasehold rights. I do not understand that, to be the vital question. The real questions in this litigar tion are: (1) What was the status of the appellants and appellees between themselves; i.e., were they joint■/adf.. venturers, partners, or what? (2) Whatever their status, did equity have the power to sell the corpus of their holdings in advance of deciding whether there had been a breach of the operating agreement; i.e., could equity sell the corpus until it was first shown that a cause of action existed to justify the winding up of the relationship? I think the present decree should be reversed and the cause remanded to the Chancery Court for trial and decision on the two questions stated in this paragraph.