Court Opinion

ID: 8870447
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:24:59.74309+00
Date Added: 2024-06-11T17:06:09.445560
License: Public Domain

GARZA, District Judge
(concurring in part and dissenting in part);
I concur in the opinion of the majority with the exception of that part of the opinion under Section II where the majority fails to give credit to Southwestern Life for the $100,085.18 which it did not keep but turned over to others. With regard to this part of the District Court judgment, I would reform it to give Southwestern Life credit for this amount and reduce the judgment accordingly.
In Harrington v. Texaco, Inc., 339 F.2d 814, I concurred in that part of the opinion making Harrington responsible for all of the money received from the sale of oil from the slanted oil well because Harrington was the designated operator and as such he was charged with duties and responsibilities that are not present in the case of Southwestern Life. It is conceded that there is no question involved as to the good faith of Southwestern Life; and there is neither intimation nor indication that Southwestern Life was in any way connected with or had any knowledge of operator Long’s slant drilling.
The majority seems to lay great stress on the fact that the covenants, the assignment of runs and the division orders give great powers to Southwestern Life, and even allowed them to go in and operate the well; but the fact remains that Southwestern Life never did use the extraordinary powers that the majority refers to in the instruments involved in the loan transaction.
All the powers retained by Southwestern Life were to protect its loan, and I believe it would be against public policy for this Court to hold, under the circumstances, that Southwestern Life will have to lose not only its loan but also pay money that it did not keep, because of actions by borrowers of which they had no knowledge. It shocks my conscience to make an innocent party pay for money it never kept.
Under the facts of this case, I can see no difference in limiting the liability of Southwestern Life only to the extent that it has benefited, and the holding of this Court in Gulf Oil Corporation v. Lone Star Producing Co., 322 F.2d 28, at page 33, in which Judge Rives held that the Defendant Lone Star Producing Company was responsible for money which it had been overpaid by Gulf only to the *227extent that it had been benefited from such overpayment.
The covenants, the assignment of runs and the division orders, to my mind, are what make Southwestern Life a converter, but they cannot be extended to make them liable for all the money received by them whether kept by it or not. The good faith of the converter, Southwestern Life, should mitigate the recovery against it and make it responsible only to the extent that it benefited by the payments to it.
It is common knowledge that most of the present oil and gas development is made on borrowed funds. If those that have money available for this purpose are to be subjected to losing not only what they lend but also be responsible for money received by others acting in bad faith, when the lender itself acts in good faith, to my mind makes the decision of my brethren one which is against public policy.
I would, therefore, reform the judgment as indicated above.