Atlas Petroleum Corporation v. Galveston, H. & S. A. Ry. Co.

• Decision Date: 22 March 1928
• Docket Number: (No. 2124.)
• Citation: 5 S.W.2d 215
• Parties: ATLAS PETROLEUM CORPORATION v. GALVESTON, H. & S. A. RY. CO. et al.
• Court: Texas Court of Appeals

5 S.W.2d 215

ATLAS PETROLEUM CORPORATION v. GALVESTON, H. & S. A. RY. CO. et al.

(No. 2124.)

Court of Civil Appeals of Texas. El Paso.

March 22, 1928.

Rehearing Denied April 12, 1928.

Appeal from District Court, Bexar County; Robert W. B. Terrell, Judge.

Action by the Galveston, Harrisburg & San Antonio Railway Company and others against the Atlas Petroleum Company. Judgment for plaintiffs, and defendant appeals. Affirmed.

Morriss & Morriss and Arthur V. Wright, all of San Antonio, E. G. Senter, of Dallas (Will A. Morriss, of San Antonio, of counsel), for appellant.

Templeton, Brooks, Napier & Brown and Wm. Aubrey, all of San Antonio and Baker, Botts, Parker & Garwood, of Houston, for appellees.

WALTHALL, J.

We adopt the statement of the nature and result of the suit made in the brief of appellees San Antonio Compress Company, William and Herman Gee, as a fair and sufficiently comprehensive statement of the matters here in controversy.

The Galveston, Harrisburg & San Antonio Railway Company, hereinafter styled Railroad Company, brought suit in the court below against appellant, Atlas Petroleum Corporation, hereinafter styled Atlas Company, and Service Dealers' Supply Company, Inc., hereinafter styled Supply Company, to recover the possession of block 2510, in the city of San Antonio, Tex.

The Atlas Company appeared and filed four original and amended answers, one supplemental answer, and one trial amendment.

The Railway Company alleged:

That by instrument in duplicate, dated November 15, 1923, it had leased to the Atlas Company said block of land for the term of 3 years, for an annual rental of $250, payable in advance at the office of the Railway Company at Houston, Tex., and that said lease was made subject to the following terms and conditions, viz.:

"Upon the happening of a breach of any one or all of them or at any time thereafter, or for a failure to make the payments herein provided for, this lease may be terminated on written notice to the lessee."

That said lease contained the following conditions, viz.: The lessee shall not sublet the said premises, or any part thereof, without first obtaining the consent, in writing, of the lessor so to do, and the lessee shall occupy the leased premises and continue to occupy and use the same continuously until the termination of the lease for "oil refining" and no other purposes.

That the Atlas Company had breached the conditions of the lease by failing and refusing to pay, as and when the same became due, the said rental; that it had sublet the premises pending its lease to said Supply Company; and that it had caused and permitted the premises to be used for purposes other than oil refining, and to be occupied and used by others than itself, and that it had not continuously used the premises for oil refining or for any other purposes.

That the Railway Company, by reason of said breaches, had terminated said lease, had given the Atlas Company proper notices of the termination of that contract, and had made three demands for the possession of the leased premises, but that the Atlas Company had failed and refused to restore the possession of the leased premises to the Railway Company, and that the leased premises were of the reasonable rental value of $200 per month.

The Railway Company prayed for the restoration of its property and the recovery of judgment for its damages.

The Atlas Company in its fourth amended answer alleged that it had and held possession of the leased premises under an oral lease made in the early part of 1923 by the Railway Company, acting through L. B. McDonald, superintendent of its San Antonio division, thereunto duly authorized; that pursuant to and relying upon said oral agreement, it had purchased valuable improvements located on the premises from a refining company which previously owned the same, took possession of the leased premises, and constructed thereon permanent and valuable improvements in an amount not less than $15,000; that said oral lease provided for a term of 30 years. It further alleged that it had not paid the rental alleged to be due because it did not expect the Railway Company to take advantage of its default in that respect and tendered the amount of said rental; that it had actually delivered a check covering said rental to an agent of the Railway Company authorized to receive the same, but that said check had been returned to it by the Railway Company with the statement that the lease had been terminated and that the rental thereof would, accordingly, not be received; that the subletting of the leased premises to the Supply Company had been made pursuant to the consent of the Railway Company first had and obtained; and that the Railway Company was estopped, by reason of the facts so alleged, from terminating the lease or recovering the possession of the leased premises.

The Atlas Company further alleged, among other things, that the Railway Company was not the owner of the land sued for or entitled to the possession thereof for the reason that that Company had purchased the land in the year 1881; that it had never been used nor reserved for railroad purposes or for the purposes of its creation as a railway corporation under the laws of this state; that the land had been held by the Railway Company for speculative purposes and for profit derived from leasing and renting the same and inducing the location of industrial and other corporations; that, in violation of the provisions of the Constitution or statutes requiring alienation thereof, the Railway Company had never alienated nor conveyed the same, and said lands had thereby become forfeited to the state of Texas; that said Atlas Company knew nothing of these facts when it leased the premises, but relied upon the representation of the Railway Company that it was the owner thereof and authorized to lease the same; that after said lease had been made to the Atlas Company, one Lee Howell made application to the state for the purchase of the premises as a part of the public lands of the state and had applied to have the same surveyed and appraised as such; that said application was on file with the land commission of the state, and that thereby said Howell had acquired the prior right to the same and the prior right to purchase and become the owner thereof, and that the Atlas Company, being informed of the Railway Company's want of title to the premises, had secured and then had and held an agreement in writing from said Howell for the use and occupancy of said premises for the remaining period of its lease from the Railway Company; and finally alleged that "defendant now pleads said outstanding title and says it is not bound by reason of the lease from plaintiff nor bound to surrender same to plaintiff at the termination of its lease."

By one of its pleadings, the Atlas Company alleged that the San Antonio Compress Company and Herman and William Gee had conspired with the Railway Company to break said lease; that the action of the Railway Company was pursuant to said conspiracy, and that the Atlas Company had been damaged thereby in a very large sum of money, prayed for citation against the Compress Company and said Gees and for judgments against the plaintiff and the new defendants for its said damages.

The Compress Company and said Gees appeared and filed their answer in the case and interposed exceptions to a portion of the pleading of the Atlas Company which were sustained by the court. The Supply Company made no appearance in the case.

The facts were submitted to a jury, and, upon the close of the evidence, the Atlas Company filed its motion requesting the court to instruct the jury to return a verdict in its favor and, also, submitted to the court a special charge whereby the jury was instructed to return a verdict in its favor, with the request that said charge should be given by the court. The Railway Company, Compress Company, and defendants Gee also filed their motion requesting the court to instruct the jury to return a verdict in their favor. The trial court granted this motion, and the jury returned a verdict accordingly.

A judgment for plaintiff for the recovery of the leased premises against the Atlas Company and the Supply Company and in favor of the Compress Company and the Gees against the Atlas Company was thereupon rendered by the court. From this judgment the Atlas Company has prosecuted this appeal.

Opinion.

Appellant, Atlas Company, presents the following propositions:

"(1) It is a violation of law and public policy in this state for a railway corporation to own and hold lands adjacent to its right of way, not used nor held for its corporate purposes, but for the purpose of leasing same to industrial enterprises and thereby to augment freight traffic over its railroad; and our courts will not lend their aid to such an illegal enterprise on the part of such railway company.

"(2) It appearing that appellee Railway Company had for many years held the land sued for, along with other lands, adjacent to its railway, they forming no part of its land held for corporate purposes, for the purpose of leasing same for and to industrial enterprises and to induce, foster, and augment traffic revenues over said railway, and that on such consideration and for such purposes it made the lease in question, our courts will not lend their aid to such unlawful enterprise to recover back premises thus illegally held and leased.

"(3) A lessee is not estopped from denying his landlord's title where the leased premises are part of the public domain, and not owned by lessor, of which fact lessee was ignorant and relied on lessor's representations as to its title at time of making the lease; hence paragraph 15 of defendant's fourth amended original answer set up a valid defense, and the trial court erred in striking out said paragraph on appellees' exception thereto.

"(4) The evidence was sufficient to take the case to the jury, and the...