Court Opinion

ID: 9772487
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:19:36.114984+00
Date Added: 2024-06-11T07:31:44.830421
License: Public Domain

On Motion for Rehearing.
WALKER, Justice.
Our original opinion directed that judgment be entered granting Courseview, among other relief, specific performance of its right to purchase an interest in the Bookout and Overley tracts and certain overriding royalty interests referred to by the parties as the Thompson royalty. In their motions for rehearing, Phillips and Courseview raise for the first time a number of questions regarding the interest which the latter is entitled to acquire in these properties and the former’s duty to account for production therefrom. A detailed discussion of all their contentions would serve no purpose except to lengthen this opinion, but our views on some of the questions must be stated for the guidance of the trial court.
Phillips argues that since leases on the Bookout and Overley tracts were assigned to it by paragraph 2 of the 1939 contract, it was entitled under the terms of the contract to acquire and hold an undivided ⅞ mineral interest in each of these tracts free and clear of the purchase rights created by paragraph 7. It takes the position that Courseview may now purchase only ¡4 of J4 of the Bookout tract and Ys of %2 of the Overley tract, the latter having been acquired by Phillips subject to a ⅛2 nonparticipating royalty outstanding in persons who are not parties to this suit. After reviewing all the provisions of the contract, it is our opinion that Courseview is entitled to purchase one-eighth of all the title, interest and estate which Phillips acquired in each of the two tracts.
Courseview requests us to instruct the trial court to require Phillips to file a verified statement disclosing any purchases, other than the Bookout, Overley and Andrau tracts and the Thompson royalty, in the area specified in paragraph 7 of the contract. An order requiring such disclosure was entered by the trial court in 1951, but Courseview through its attorneys wrote Phillips that it would accept a letter signed by a responsible official of the latter company and would not insist upon the filing of a verified statement. It went on to say, however, that this was without prejudice to its right to sworn disclosures and full accounting in the event it was successful in this suit. Phillips thereupon furnished a letter stating that it had not acquired any mineral interest in the designated area except the Bookout and Overley tracts and a royalty interest theretofore conveyed by it to Burch. Courseview then advised Phillips that the letter was accepted as substantial compliance with the order of the trial court and would “serve the purpose until after the trial is completed.”
Since Courseview expressly accepted the letter as sufficient for the purposes of the *210present suit, it is in no position to insist upon further disclosure in this proceeding. Its right to seek and the power of the trial court to order the same in another action are not prejudiced by this suit or by the correspondence mentioned above.
We are also requested to instruct the trial court to require Phillips to account to Courseview for the latter’s share of all production and income from the Bookout and Overley tracts and Thompson royalty from the time each was acquired by Phillips. The latter insists that since the cause of action for specific performance did not arise until the option was exercised, the right to an accounting should date from that time.
This is not a case in which the optionor has had the use of or received the income from the optioned property at a time when the optionee had no right to or simply failed to exercise his option to purchase. Here the parties were in a fiduciary relationship and Phillips has produced minerals from the land during a period when, through Phillips’ own default, Beaty and its successors did not even know that they were entitled to acquire an interest under the terms of the 1939 contract. Under such circumstances, Phillips is chargeable in equity as a constructive trustee and held Beaty’s share of the production and other income and revenues from the property for the benefit of the latter in the event the option was exercised. When the option agreement was converted under a bilateral contract of sale, therefore, Course-view became entitled to an accounting for its share of all production and income from the respective properties from and after the date each was acquired by Phillips.
It should also be noted that the ⅜2 overriding royalty, which was accepted by Beaty in lieu of its net profits interest under the 1939 contract and which was later purchased by Midcoast, plays no part in the accounting between Phillips and Courseview. This royalty interest represents the consideration for the original' assignment'of the leases by Beáty to Phillips and does not affect the purchase rights under paragraph 7 of the contract or the interest which Courseview is entitled to acquire in the Bookout and Overly tracts. The money paid to Beaty and its successors by virtue of their ownership of such royalty will not be charged to Courseview in the accounting with Phillips.
Courseview’s motion for rehearing is granted to the extent that the trial court is directed, in addition to the instructions set out in our original opinion, to require Phillips to account to Courseview for the latter’s share of all production, income and revenues derived from or credited to the Bookout and Overley tracts and the Thompson royalty from the date each was acquired by Phillips. In all other respects, the several motions for rehearing filed herein are overruled.