Court Opinion

ID: 9833458
Source: CourtListenerOpinion
Date Created: 2023-09-01 22:44:38.77706+00
Date Added: 2024-06-11T07:44:03.244758
License: Public Domain

GRAVES, Justice.
This suit was filed by the appellee, Luling Oil & Gas Company, against Humble Oil & Refining Company, appellant, on the 13th day of November, 1940. The suit was in the nature of one for an accounting for the proceeds of oil and gas alleged to have been produced by appellant from several leases in Caldwell County, Tex., located in what is known as the Salt Flats Oil Field, under a written contract between the appellant and appellee, a copy of which was attached to appellee’s petition and made a part of same. It was stipulated in court on this trial, on October 21 of 1942, that both parties recognized this contract as being then a valid, subsisting agreement' between them, and appellee, without seeking to cancel, reform, or modify it, sued on the contract for over $400,000 out of such proceeds alleged — in extended detail — to have been received and appropriated to its own benefit by appellant from appellee’s rightful share thereof.
In answer, the appellant pleaded:
1. General denial.
2. A special denial, under oath, of any partnership between appellant and appellee.
3. A stated, settled, paid account in full.
4. The specific terms of such contract under which, it admitted, the parties were so still operating, declaring its full compliance with all of them when correctly construed and applied.
*3175. The two and four year statutes of limitations, respectively, as applied to the various claims sued on.
6. Laches, estoppel, and stale demand, as against all the items thereof.
On the conclusion of the evidence, both parties moved for peremptory instructions, which motions the court overruled.
The court submitted to the jury issues on the following claims asserted by appellee:
1. The issue involving the Joe D. Hughes claim.
2. The issue involving charges to “District Expenses”.
3. The issue involving the 2% and 1% tank-table strappage deductions made by the pipe-line common carrier.
The issues involving the Joe D. Hughes claim and the charges for “District Expenses” were answered in favor of appellant, and, on the jury’s verdict, judgment was rendered in favor of appellant thereon.
On the issue of tank-table strappage deductions made by the common carrier pipe-line (Humble Pipeline Company) running the oil, the court ignored the findings of the jury, and rendered judgment for the deductions that had been made during the year 1929 in favor of appellee in the sum of $25,198.52, as principal, and $19,-654.85, as interest, totaling $44,853.37.
The court also withdrew them from the consideration of the jury and rendered judgment in favor of appellee and against the appellant in the aggregate sum of $82, 973.93, upon the following detailed claims:
1. One-half of the alleged profits made by the appellant on fresh water furnished by it and charged to the joint account of appellee and appellant in the principal sum of $12,200.05, and interest of $8,871.95.
2. One-half of the alleged profit made by the appellant on “Breaxit” and lubricating oil, manufactured and furnished by it and charged to the joint account, in the principal sum of $9,300, and interest thereon of $6,352.92.
3. One-half of cash discounts received by the appellant and allocable to equipment and supplies, purchased by it and used on the jointly owned properties and not credited to the joint account, in the principal sum of $9,263.12, together with interest of $6,152.87.
4. One-half of quantity or volume purchase-discounts, received by appellant and allocable to materials and equipment purchased by appellant and used on the jointly owned property and not credited to the joint account, in the sum of $1,113.71, and interest thereon of $835.53.
5. One-half of the alleged profits, made and received by appellant on its wholly owned trucks and tractors, which were used in the operation of the jointly owned properties and charged at the prevailing rate per hour, and not credited to the joint account, in the principal sum of $8,603.44, and interest of $5,012.98.
6. One-half of overassessment by appellant and charged to appellee, by reason of salt water disposal in the sum of $6,419.-68, with interest accrued of $4,622.17.
7. One-half of the amount of cost of transporting second-hand material from the jointly owned leases to other leases, or locations, where such second-hand material was sold and was to be delivered, in the sum of $3,009.85, and interest of $1,215.66.
The overall judgment in appellee’s favor was, therefore, $127,827.30, all its other claims having been denied.
As indicated, the appellant, while admitting itself bound by the terms of the contract, and stipulating both that there had been no cessation of the dealings between the parties thereunder and that it was still being operated under by both sides at the time of the trial, interposed the bar of the 4-year statute of limitation, R.S. Article 5527, to all the sued-upon claims of the ap-pellee, which by specific averment represented “appellee’s one-half interest in the net profits received from the sale of oil during said period from January 8, 1929, to September 1, 1940,” especially those enumerated ones for which the court so gave it judgment.
In answer to that plea, alleging that a partnership relation existed between the two parties by virtue of their contract, the appellee adduced subdivision 3 of R.S. article 5527, as rendering appellant’s limitation claim without merit, reading as follows: “3. Actions by one partner against his co-partner for a settlement of the partnership accounts, or upon mutual and current accounts concerning the trade of merchandise between merchant and merchant, their factors or agents; and the cause of action shall be considered as having accrued on a cessation of the dealings in which they were interested together. Acts 1841, p. 163; P.D. 4604; G.L. vol. 2, p. 627.”
*318The trial 'court sustained that theory, holding- that the 4-year limitation statute did not so bar any of the claims sued upon by the appellee, on the ground that the relationship between the parties constituted a partnership, hence the quoted subdivision made it inapplicable.
Considering the cause as a whole, this court is unable to approve that disposal of appellant’s pleas of limitation, concluding, rather, that quoted subdivision 3 of article 5527 did not rule the distinctive facts here presented; and that, on the contrary, by the express terms of the continuing contract under which these parties were so operating, all of appellee’s claims, which became due prior to November 13 of 1936, were barred by R.S. art. 5527 that appellant so invoked, in as much as this suit thereon was not filed until November 13 of 1940- — more than four years thereafter.
Since such question of limitation thus lies at the base of the whole controversy, allegedly permeating every item sued upon, it would obviously be beyond the requirements to go into the vast agenda of other questions presented in the briefs, until it is first disposed of.
It is also considered to be unnecessary to explore the much discussed subsidiary inquiries of whether or not the relationship between the parties under the contract in suit was that of a partnership of any character, or a joint adventure, or whether appellant was an independent contractor; because, as this court reads and construes that instrument, it expressly provides upon its face that a cause of action did accrue to appellee for each and all of the items it herein sued for and recovered upon, so long as their dealings thereunder had not ceased, in these provisions :
(1) It required the appellant to furnish the appellee, within one month after the close of each calendar month, a statement of investments and expenses incurred, also of credits and receipts during that "month, further specifying that all exceptions to such statements had to-be made within 45 days after their receipt, otherwise they should be conclusively considered to be correct, to-wit: “Within one month after the close of each calendar month Second Party (Humble) shall furnish to First Party (Luling) a statement of investment and expenses incurred and credited and receipts during such calendar month. Any exceptions to the statement as rendered by Second Party must be made by First Party within forty-five days from the receipt of same; and if no exception is made within such time, then such statement shall be conclusively considered as correct. If such statement is incorrect, First Party shall be credited for any excess payment made, and shall be debited for any excess credit allowed.”
(2) It then also fixed, specifically, the agreed time for the payment of all sums accruing from the appellant to the appellee, as follows: “Second party shall have exclusive charge and control of all the oil and gas produced from said premises and accruing to the parties hereto ■ and shall have the exclusive right to market same. All proceeds received from the sale of the oil and gas produced and saved from the said premises and pertaining to the working interest shall be first credited to joint account; and if any excess remains after the payment of all charges to joint account then accrued, Second party shall pay the First party its one-half of the sums remaining.”
It thus became appellant’s clearly stipulated obligation, upon the recurring dates of all such months, to pay to appellee its contractual one-half of the amounts by which the receipts from production up to such times exceeded the expenses thereof; that is, upon appellant’s failure to so make such payments, the cause of action of the ap-pellee to recover them then arose, and could have been at that time sued upon by it.
Since this suit, as the statement supra has indicated, was only to recover for operations under the contract between the dates of January 8, 1929, when the first well drilled came in, and September 1, 1940, and, by the stipulations, there had never been any cessation of dealings between them thereunder, subdivision 3, upon which the trial court overruled appellant’s pleas of limitation, seems to this court to have clearly been inapplicable; this for the reason that the contract itself validly fixed between the parties a definite time for the accrual of the cause of action, prior to a cessation of their dealings.
Both these parties were private corporations under the laws of Texas, the charter of neither authorizing it to enter into a general partnership, such as the trial court must have thus had in mind in so ruling *319that appellant’s limitation pleas were ineffective.
Considering such origin and legal status, it would have been against the public policy of Texas to have permitted these concerns to enter into any partnership, whatever its kind; wherefore, it is concluded, neither fell within the class the Legislature was dealing with when it enacted such subsection 3 of article 5527. Sabine Tram Co. v. Bancroft, 16 Tex.Civ.App. 170, 40 S.W. 837, error refused; White v. Pecos Land & Water Co., 18 Tex.Civ.App. 634, 45 S.W. 207; Corralitos v. Mackay, 31 Tex.Civ.App. 316, 72 S.W. 624; Vineyard v. Miller Land Co., Tex.Civ.App., 209 S.W. 693; Burton-Lingo Co. v. Federal Glass, etc., Tex.Civ.App., 54 S.W.2d 170, 172; Millers’ Indemnity Underwriters v. Patten, Tex.Civ.App., 238 S.W. 240; Humble Oil & Refining Co. v. Strauss, Tex.Civ.App., 243 S.W. 528.
Moreover, by another well-settled rule, the courts will not give contracts between litigating parties such a construction as renders them illegal, if they are reasonably susceptible of another that will leave them valid and enforceable. 10 Tex. Jur., Contracts, pars. 106 to 113, inclusive, also paragraph 181, and cited authorities under footnotes 1 to 8, inclusive.
Neither of the parties here contends that this contract, in whole or in part, is invalid or unenforceable — indeed, as already indicated, the appellee declares upon it in toto for its claims, and appellant, • in turn, neither denies that it is bound by its terms, nor even asserts any of its contractual obligations thereunder to have been ultra vires as to it.'
 It should not, therefore, be construed to constitute a partnership, it being at least susceptible of the view that it is valid and was so intended to be by its makers. Even were it held that a joint adventure resulted, still there would have been no partnership, since those two relationships are legally distinct, when applied to such facts as these. Subdivision 3, art. 5527; Gardner v. Wesner, Tex.Civ.App., 55 S.W.2d 1104; Munsey v. Mills, 115 Tex. 469, 283 S.W. 754; Ferguson v. Rhoades, Tex.Civ.App., 271 S.W. 155; Indiahoma Ref. Co. v. Wood, Tex.Civ.App., 255 S.W. 212; Adams v. Texahoma Oil & Ref. Co., Tex.Civ.App., 262 S.W. 139; Randall v. Meredith, 76 Tex. 669, 13 S.W. 576.
Appellant does sayj however, — especially by so pleading the 4-year statute of limitation against the whole thereof — that if ap-pellee had any cause of action against it under the mutually acknowledged written undertaking between them, which it denies entirely, that the greater part thereof at any rate accrued more than four years before appellee filed its suit thereon on the 13th day of November of 1940.
It is, therefore, thought that subdivision 3 of article 5527 in no way prevents appellant from so urging the 4-year statute of limitation against these claims, and that, since the charters of both corporations impliedly negatived their power to legally enter into the claimed partnership, the burden lay upon the appellee both to plead and to prove the contrary against the appellant, which it failed to do. Sabine Tram Co. v. Bancroft, 16 Tex.Civ.App. 170, 40 S.W. 837; White v. Pecos Land & Water Co., 18 Tex.Civ.App. 634, 45 S.W. 207.
Undoubtedly, it is thought, as the concluding sentence of the last-quoted paragraph from this contract plainly recites, appellee was given an immediate cause of action to recover from appellant the former’s share of the net proceeds resulting from the production and sale of the minerals accrued at the time of each of such specified monthly accountings therefor; no reason is perceived, therefore, as to why the 4-year limitation prescribed by article 5527 did not begin to run from the time such right of action upon each partial accounting successively accrued; in other words, the money was made to be due when and as each of such statements was rendered, appellant was under express obligation to pay it at that time, and if it refused or neglected to do so, appellee could have then sued to recover thereon.
It may be that there is extant no reported case considering the application of such subdivision 3 of article 5527 to the legal equivalent of the facts here existing— that is, where a partial accounting at stated intervals is provided for in the contract, with further provision that the amount shown to be owing on such periodical ac-countings shall immediately become payable; indeed, the reported cases dealing with that statutory subdivision appear to be instances where there was plainly no obligation to pay on anything until after the transactions in their entirety between the parties ceased.
*320However that may be, under this distinctive contract, it is thought appellee’s cause of action immediately accrued on appellant’s refusal to pay all appellee claimed to be due at the time of such periodical accountings. Port Arthur Milling Co. v. Beaumont Rice Mills, 105 Tex. 514, 143 S.W. 926.
Under these conclusions, since the undisputed evidence seems to show that appellant did — with reasonable promptness— furnish appellee with what it tendered as the monthly statements provided for in their contract, all that portion of appellee’s sued-upott claims which in fact accrued as much as four years prior to the filing of its suit — that is, those which became due prior to November 13 of 1936, or four years before the filing of the suit on November 13 of 1940 — are barred by the statute of limitation.
The question, however, of what sued-for items were so barred, in whole or in part, is not readily susceptible of a determination — satisfactory to this court — from the record; since the trial court, under its holding that appellant’s 4-year plea of limitation was inapplicable, excluded evidence it tendered as showing all the underlying facts.
While appellant urges “the claim for quantity discounts, the claim for over-assessment for disposing of salt water on the jointly owned leases, and the claim for one-half of the 2 per cent deducted by the pipe line company running the oil, as tank table strappage, during the year 1929, in their entirety, all accrued or became due and payable more than four years prior to the filing of appellee’s suit; the greater portion of the other claims asserted by the appellee accrued, or became due and payable, more than four years prior to the filing of said suit”, this court concludes that, in the absence of the evidence referred to, as well as of any findings of fact by the trial court touching the issue of limitation, the cause as a whole should be sent back there for another trial on that question only.
It will be so ordered.
Reversed and remanded, with instructions.