Court Opinion

ID: 9834119
Source: CourtListenerOpinion
Date Created: 2023-09-01 23:18:45.014662+00
Date Added: 2024-06-11T07:44:11.790587
License: Public Domain

On Motion for Rehearing.
In its motion for rehearing, appellant prays that we sustain the appellant’s original assignments, and reverse and render the judgment of the district court, or modify and reform the judgment of that court and .order a remittitur as a condition to the affirmation of that judgment, to the end that appellant will not be required to pay as a royalty more than one-eighth royalty based upon a price of 10 cents per thousand cubic feet for easing-head gas; that being the price which was received by appellant under its contract with the Skelly Oil Company which appellant claims was the best price obtainable therefor, and which contract with the Skelly Company was made in good faith for the benefit of the lease and which has resulted in mutual advantage to appellant and appellee. To support such prayer, it presents, among many others, the following grounds, to wit:
That this court erred in holding that- casing-head gas is a constituent of oil, as the term “oil” is used in the written contract; that such holding is dicta and not essential to the determination - of the issues in this case.
This suit was filed by Waggoner to recover for the wrongful appropriation by defendant of casing-head gas of the reasonable market value of $5,000. His claim was based upon the pleading that the lease contract provided that the defendant was to deliver to his credit, the equal one-eighth part of all oil produced and saved from the leased premises, and that by virtue of said lease there is agreed to be delivered to the plaintiff the equal one-eighth part of what is known as casing-head gas; said casing-head gas being a product of the oil and a part of the oil. Under this allegation, evidence was introduced, and we held that casing-head gas was a .constituent of oil and that plaintiff was entitled to recover his one-eighth royalty therefor. The contention of the defendant that the recovery should be limited to the one-eighth it received under the contract with the Skelly Company cannot be sustained. The contract provided for the delivery of the oil, and. under our holding, of the casing-head gas, to Waggoner. There was no provision, express or implied, that the defendant had- the right to exercise any judgment in the disposition of such oil and easing-head gas they were bound under the contract to deliver the same to Waggoner. The contract with the Skelly Company, therefore, under no rule of law, can furnish a measure of recovery for Waggoner; such contract having been executed without his knowledge or consent, and without authority, express or implied. Waggoner was entitled to the delivery of the casing-head gas to him, and, in the event of failure of the defendant to comply with its contract by which he suffered the loss of his one-eighth royalty in the casing-head gas, the measure of his recovery was the reasonable market value of said casing-head gas at the time it should have been delivered to him. This is solely by virtue of the contract.
The fact that the contract with the Skelly Company was made in good faith does not alter the rule. There was no question of good faith in the performance of the terms of the contract between Waggoner and defendant — defendant’^ duty was to deliver the oil and easing-head gas. That it resulted in the advantage and benefit to both parties in increasing the flow of oil does not. prevent a recovery by plaintiff for such casing-head gas .produced. As stated in the original opinion, it was defendant’s duty under the contract to produce as much oil as possible, and if by the use of all reasonable expedients it did increase the production of the oil, such production could not be offset against plaintiff’s contractual right to recover his one-eighth of the casing-head gas. It might as well be said that, having pro*908duced an excess of oil by this vacuum pro-t cess, tbe defendant would be entitled to all such excess of oil.
The easing-bead gas, in place, was a part of the realty. As to the action of the Skelly Company in buying casing-bead gas, any act of dominion over the property of another constitutes a conversion. Gaw v. Bingham (Tex. Civ. App.) 107 S. W. 931, 932; Henderson v. Beggs (Tex. Civ. App.) 207 S. W. 565.
It is not true that under the facts in this case there could be no conversion of the realty. The rule that when an owner of real estate is dispossessed by a trespasser, be cannot abandon bis claim to the property and sue for its value, has no application to a case where a party has, been deprived of the title to realty, by a severance and sale or sale by the wrongdoer. In such case the person injured may sue for the value of the property, and such deprivation of the owner of the realty which results in its . loss to him is in effect conversion. Phillips v. Herndon, 78 Tex. 378, 14 S. W. 857, 22 Am. St. Rep. 59; Boothe v. Feist, 80 Tex. 141, 15 S. W. 799; Id. (Tex. Sup.) 19 S. W. 398; Espey v. Boone, 33 Tex. Civ. App. 83, 75 S. W. 570. But when such oil or casing-bead gas is vaporized, brought to the .surface, and delivered to Skelly Company, it certainly became subject to conversion in that form. Any other construction would defeat a recovery of plaintiff as against any third party who bad appropriated it without right so to do.
It will be seen from the foregoing Statement that the question was presented to us to decide whether or not casing-bead gas was a constituent of oil, and that it was necessary for us to decide the very question. Our decision may be wrong, but certainly we were required to decide the matter both by the pleáding and evidence and, on that point, our decision is not dicta.
In our original opinion we state that a certified copy of the opinion of the United States Circuit Court of Appeals at New Orleans in the case of Gilbreath v. States Oil Corporation bad not been furnished us. After the preparation of our opinion, but before its announcement, such certified copy was filed in this court, and we now add same to the decisions which .support our bolding that casing-bead gas is a part of the oil. This case will be now found published in 4 F.(2d) 232.
We believe we have held correctly that easing-bead gas is a constituent element of oil, and have decided the very question presented to us. We also feel that under the facts of this case the owner of land who has leased bis land for the development of its oil and gas possibilities, and who provides for the payment of lease rentals by requiring tbe payment to him by delivery of one-eighth of the oil aud a money obligation for the payment for tbe gas produced, should not be deprived of compensation for any part thereof by reason of a strained construction which would separate tbe constituent elements of oil while in place and refuse such owner payment for tbe very substance that be contracted be should be paid for.'
Having decided that casing-bead gas is a constituent of 'oil, that Waggoner is 'entitled under his contract to demand tbe delivery to him by tbe Livingston Oil Company of one-eighth thereof as bis royalty, that in lieu thereof he is entitled to recover the reasonable market value thereof, that the duty of tbe defendant was to deliver such casing-head gasoline to Waggoner, that tbe defendant Livingston' Company bad no right or authority to make tbe contract of sale with the Skelly Company to dispose of Waggoner’s casing-bead gas, and it being immaterial that defendant conceived it to be to the benefit of tbe lease to make tbe contract with Skelly, we bold that each and every finding of fact that appellant requests us to. make is absolutely immaterial to the disposition of this case, and we refuse such request, for additional findings for that reason.
We therefore overrule appellant’s motion for rehearing.