Court Opinion

ID: 9643520
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:31:59.164033+00
Date Added: 2024-06-11T18:11:01.160574
License: Public Domain

On Motion for Rehearing
NORVELL, Justice.
The respondents in their motion for rehearing say that our original opinion tends to leave the impression that the rule announced therein is one of long standing, whereas this case is actually one of first impression. Particular emphasis is laid upon the statement that the “measure (of accountability) in its present form does not include interest and we decline to rewrite the formula*'. It is urged that this Court has never held that interest is not a recoverable cost of production and consequently it would not be a rewriting of the formula to now say that interest is a recoverable cost of production.
To allow interest as a part of the production costs would constitute a variance from the established formula to the extent of going contrary to the general rule that interest will not be allowed in the absence of an obligation to pay money owed by the person sought to be held upon an interest charge. This is the rule supported by the Texas cases. Of course the essential obligation to pay may be either expressed or implied by law. The argument urged here and accepted by the Court of Civil Appeals, as evidenced by the cases cited in its opinion, is that under the factual situation presented by the record, the law has in effect implied an obligation binding the non-consenting cotenants to pay interest charges to the operating cotenant. But, here the obligation runs the other way. The operating cotenant has taken and sold petroleum products belonging to the non-consenting cotenant. However, because of the peculiar legal relationship existing between the parties, — they being cotenants of oil producing property, the usual rule of conversion is not applied. The problem is one of accounting and we have held that in accounting the operating cotenant is entitled to a credit for his necessary and reasonable cost of producing and marketing the same. This, of course, does not mean that the non-consenting cotenant owed an obligation of any kind to the operating cotenant. This case is not analogous to one involving the payment of taxes or the discharge of any other legal obligation owed by the non-consenting co-tenant. No implied obligation can arise upon the theory that the operating cotenant has with the consent or upon the implied request of petitioners, expended money for the mutual benefit of the estate held in common by the parties. The petitioners here are non-consenting cotenants. For these reasons we say that interest is not a part of the accounting formula. Invariably, the reports of the Texas decisions which allow a claim of reimbursement asserted by one cotenant against another, will disclose that some obligation of the nonpaying cotenant was lessened or discharged, or that the non-paying cotenant expressly or impliedly consented to an expenditure for the mutual benefit of the estate from *204which an obligation to repay could be implied. Such is not the situation here.
Respondents’ motion for rehearing is overruled.