HUMBLE OIL & REFINING COMPANY v. Martin

• Decision Date: 29 December 1961
• Docket Number: No. 18579.,18579.
• Parties: HUMBLE OIL & REFINING COMPANY, Appellant, v. Mabel W. MARTIN, Annie M. Kelly, Sue Kelly Mee, W. J. Vollor, Landman Teller, James P. Biedenharn, L. C. Gwin and R. D. Kuehnle, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

298 F.2d 163 (1961)

HUMBLE OIL & REFINING COMPANY, Appellant, v. Mabel W. MARTIN, Annie M. Kelly, Sue Kelly Mee, W. J. Vollor, Landman Teller, James P. Biedenharn, L. C. Gwin and R. D. Kuehnle, Appellees.

No. 18579.

United States Court of Appeals Fifth Circuit.

December 29, 1961.

M. M. Roberts, Joe A. Thompson, W. H. Morrow, Hattiesburg, Miss., for appellant.

Landman Teller, of Teller, Biedenharn & Rogers, Vicksburg, Miss., L. C. Gwin, of Gwin & Kuehnle, Natchez, Miss., for appellees.

Before CAMERON and WISDOM, Circuit Judges, and THOMAS, District Judge.

CAMERON, Circuit Judge.

Appellees Mabel W. Martin, et al¹ filed this action to recover damages for drainage and waste alleged to have been committed by Humble to appellees' one-thirtieth undivided interest in a vested remainder in Berkely Plantation on which appellant had drilled a number of oil wells and had captured and removed large quantities of oil. The court below entered judgment in favor of appellee, finding that she was the owner of the one-thirtieth vested interest in Berkely as remainderman, that the trustees under the will of appellee's mother Anna S. C. Martin, who died December 3, 1942, had no power to execute an oil and gas lease to Humble covering appellee's interest; that appellee had never executed any oil and gas lease or other conveyance to Humble; and that appellee was entitled to recover the value of one-thirtieth of the oil removed by Humble in the past and that to be removed in the future less the actual production cost. By stipulation of the parties the court retained jurisdiction to fix the amount of damages due appellee.

The court below wrote an excellent opinion, now published in 199 F.Supp. 648, and we adopt this opinion as expressive of the views of this Court on the issues raised before the court below and repeated before us. Many of the questions of law and fact presented to the court below had been decided by the Supreme Court of Mississippi in the case of Martin, et al. v. Eslick, et al., 229 Miss. 234, 90 So.2d 635, 92 So.2d 244, this being a suit for construction of the will of Mrs. Anna F. C. Martin brought by the executor-trustee to which all interested persons became parties. The facts are fully set forth in this decision by the Supreme Court of Mississippi, and reference is made to it and to the opinion of the court below for the facts. We will not repeat them, except as they are necessary in the consideration of the points relied upon by Humble which we shall discuss.

At the threshold lies the question arising from appellant's contention that the court below was without jurisdiction by reason of the absence of indispensable parties whose presence would destroy diversity jurisdiction. Appellee Mabel W. Martin was and is a citizen of the State of Florida, and appellant a corporation under the laws of the State of Texas. Appellant claims that by will, Anna F. C. Martin devised to her daughter Mrs. Anna F. B. Eslick and upon her death to her son Frederick Martin Eslick a life estate in Berkely, which interest the testatrix directed be held and managed by her trustees, for these life tenants with the remainder to her direct heirs. The corpus of the estate, under the order of the Supreme Court in Martin v. Eslick, supra, vested as of the date of her death in the children of the testatrix, of which appellee Mabel is one. Appellant claims that the two life tenants and the remainderman other than appellee, all residents of Mississippi, are indispensable parties whose presence would destroy diversity jurisdiction inasmuch as the appellees other than Mabel W. Martin are residents of Mississippi. Appellees insist that said parties are not indispensable, because appellees are asserting no claim against the life tenants or the other remaindermen, but are seeking to recover nothing but a money judgment against Humble, their co-tenant, for the net value of the oil removed by Humble from the one-thirtieth interest in said oil which vested in Mabel W. Martin upon the death of the testatrix.²

Under Mississippi law, as declared in Martin v. Eslick, supra and the cases cited by the lower court in its opinion, oil in place is real property and title to all of the mineral interests of the testatrix in Berkely vested, as of the time of her death, in the remaindermen; and the holders of the life estate and the trustees for them had no interest in the royalties arising from Humble's production of oil from the lands in question beyond any income which might be derived from the investment of this royalty income by the trustees. It was undisputed, and the court below found, that the holders of the life estate, the trustees and all of the remaindermen except appellee Mabel Martin, had executed oil and gas leases to Humble; but that Mabel Martin had never given Humble any lease or other conveyance covering her one-thirtieth interest in these minerals, but had specifically refused to do so.

The court below was correct in holding, therefore, that this controversy was solely between appellees and Humble and that appellees were not claiming anything at all against the life tenants or the remaindermen who had conveyed their mineral interests to Humble. All concede that Humble had the right to produce oil and gas from Berkely subject to its duty to account to Mabel Martin and her assignees for the portion of the minerals owned by them.

The court below discussed the Mississippi cases laying down the rule that the life tenants and the other remaindermen were not indispensable parties to this action. It was right and proper that this be done, because the character of the ownership by the parties of the minerals involved is determined by Mississippi law. The trial court also adverted, in passing, to some of the cases decided by this Court on the question of indispensable parties. We think it would be helpful if we would amplify that aspect of the problem by listing additional cases by this Court on the subject inasmuch as this is basically a federal question, 3 Moore's Federal Practice, pp. 2152-2153.

In the case of Estes v. Shell Oil Co., 1956, 234 F.2d 847, we analyzed a number of Fifth Circuit cases and, based upon them, reversed the judgment of the lower court granting a motion to dismiss for absence of indispensable parties. The case there was much stronger in favor of holding the absent parties indispensable than is this one. Estes claimed to own an interest in lands from which Shell had been, for many years, producing oil, refusing to account to him for his portion of the production. In its motion to dismiss and the affidavits attached thereto, Shell showed that there were many asserted owners of mineral and royalty interests in the land who were not joined as defendants with Shell, some of whom were residents of the same State as Estes. It was not disputed that their claims of ownership of the mineral interests involved did clash with those of Estes — a claim not made here. But we held that the trial court should hear the case brought by Estes and so mold its decree as to grant him whatever relief the facts might show him to be entitled to, while at the same time protecting the interests of the parties not before the court. We distilled the rule from the other cases mentioned and stated it in general terms (234 F.2d 852):

"It Shell would like to have before the Court all parties to whom it conceives it may be called upon to answer if plaintiff is successful; or to have the action dismissed because that cannot be done without destroying diversity jurisdiction. It does not lie with a defendant so to take hold of plaintiff\'s litigation and conduct it according to defendant\'s ideas and to suit its purposes. The choice of a forum belongs primarily to a plaintiff and it is our duty to sustain a chosen jurisdiction unless there is some legal reason why this should not be done. Certainly no valid reason has been brought forward here.

"It is clear that the complaint sets forth facts and prays for relief touching a controversy between plaintiff and defendant with respect to which the others mentioned are not shown by the proof to be indispensable. * * *"

The whole question of indispensable parties in actions involving oil royalties and the land from which the oil had been taken was exhaustively discussed by Judge Sibley in his opinion in Hudson, et al. v. Newell, et al., 1 Cir., 1949, 172 F.2d 848. The Hudsons, citizens of Texas and Louisiana, asserted that they were the owners of a large body of land in Mississippi on which oil had been found. They brought four actions against residents of Mississippi who were claiming to own the fee and against some of their royalty assignees. Gulf Refining Company was the lessee of the oil, gas and mineral rights by conveyances from all of the individual parties sued. The Hudsons sought by their actions to cancel all of the conveyances, including those supporting the title of the parties claimed to be indispensable whose presence would destroy diversity jurisdiction. This Court held that such actions could not be maintained as against those parties on the ground that no action to cancel a cloud upon title to real estate could be maintained unless all claiming to own an interest therein were made parties defendant to the action.

But we there reversed a ruling of the court below dismissing the entire bill of complaint, because we held that the action for a money judgment against Gulf Refining Company, mineral lessee of all of those mentioned in the last paragraph, for the value of the oil extracted from these lands, was maintainable. We discussed a large number of cases including many from this Court and based the decision upon them, holding that there was no conflict between them and the cases relied upon by appellant here.

This Court considered many decisions from this Circuit arising in Mississippi and relied upon by both litigants here as well as cases from the Supreme Court of the United States, in...