Atwood v. Humble Oil & Refining Co.

• Decision Date: 13 December 1950
• Docket Number: No. 4764,4764
• Citation: 239 S.W.2d 412
• Parties: ATWOOD et al. v. HUMBLE OIL & REFINING CO. et al.
• Court: Texas Court of Appeals

Page 412

239 S.W.2d 412

ATWOOD et al. v. HUMBLE OIL & REFINING CO. et al.

No. 4764.

Court of Civil Appeals of Texas, El Paso.

Dec. 13, 1950.

Rehearing Denied March 1, 1951.

Thomas Hart Fisher, Chicago, Ill., Black & Stayton, Austin, Taylor, Cox, Wagner & Adams, Brownsville, for appellants.

Felix A. Raymer, Houston, Robert Lee Bobbitt, Jr., Leroy G. Denman, Jr., both of San Antonio, R. E. Seagler, Houston, S. P. Neilson, Jesse G. Foster, S. L. Gill and Roger F. Robinson, all of Raymondville, Jones, Hardie, Grambling & Howell, El Paso, for appellees.

SUTTON, Justice.

This is an appeal from a judgment of the 103d District Court of Willacy County.

Edwin K. Atwood and Alice B. Atwood filed the suit against the Humble Oil & Refining Company and other defendants, but the controversy here is between the plaintiffs and Humble. The suit, as we construe the pleadings, in alternative counts, was primarily to redeem 122,546.2 acres of land owned by plaintiffs from a loan and mortgage. The first and primary count is for redemption of such property with alternative counts for other relief not necessary to notice. The redemption sought is from two certain oil and gas leases executed by the Trustees acting under the will of Mrs. Henrietta M. King, deceased, the source of plaintiffs' title, to Humble, dated September 26, 1933. It is alleged the oil and gas leases were incident to and a part of the consideration for a loan or mortgage and a part of a mortgage transaction entered into between such Trustees and Humble simultaneously with and on the same date the leases were made. It is further pleaded the decision and judgment of the United States Circuit Court of Appeals for the Fifth Circuit at New Orleans in a suit between the same parties held and adjudicated the leases to be a mortgage in opinions reported, Atwood v. Kleberg, 5 Cir., 133 F.2d 69 and Id., 5 Cir., 135 F.2d 452, and that such opinions and judgments are res adjudicata of that issue and the defendants estopped to assert to the contrary.

The defendants answered with pleas of res adjudicata and estoppel predicated on the same judgments and opinions on the ground the relief sought here could have and should have been sought there. The plaintiffs say on the one hand the issue of whether or not the leases are mortgages was raised and determined and the defendants are bound by it, while the defendants say on the other, it was not presented or raised but could have and should have been and the issue has been adjudicated against plaintiffs. The defendants made other answers but they are not material here.

The trial court separated out the pleas of res adjudicata and estoppel and tried them alone and determined each of such in favor of the defendants, holding the pleas asserted by the defendants are good because the relief sought in the instant suit could have and should have been raised and determined in the Federal suit. We, therefore, are not concerned here with the merits of the case and are not called upon to determine whether or not the leases are mortgages and the plaintiffs entitled to redeem therefrom, but are concerned only with two questions already suggested.

In the Federal litigation the plaintiffs sought to establish a trust of the minerals, fix their interests therein and secure the appointment of a successor trustee; and secondly to cancel the leases as void on three grounds: (1) that the minerals having been severed and placed in trust the trustees had no title to the minerals to support the Humble leases; (2) if they did have title the leases were invalid because they had no power under the will to make a lease to extend beyond the ten-year period of their trust more than eight years of which had elapsed on the date of the leases, which were made for a primary term of twenty years, and so long thereafter as oil and gas is produced; and (3) because the leases were so grossly improvident in terms and conditions as to amount to an abuse of their trust, Atwood v. Kleberg, supra, 133 F.2d loc.cit. 70-71. We need notice the second claimed ground of invalidty only.

The trustees were vested with broad and comprehensive powers under the terms of the will: 'to possess, hold, have, conduct, manage and control, lease, bargain, sell, convey and deliver or exchange the trust estate or any of the properties * * *; to borrow money and execute and deliver all necessary notes, mortgages and deeds of trust to secure the payment of same, * * * and generally to do any and all things in the premises which Mrs. King would or could do if living and personally present and acting.' Atwood v. Kleberg, supra, 133 F.2d loc.cit. 72. The will further authorized the trustees 'to carry on any such business as they may deem it proper to carry on, on or in connection with the lands or personal property or any part thereof which they are empowered to manage and control and generally to do all such acts in the premises in reference to and with said property or any part thereof as an owner similarly situated might do not inconsistent with the provisions of this will.' The will also gave to Mrs. King's son-in-law, Robert J. Kleberg, Sr., one of the trustees, if living, and to a majority of the trustees, if he was dead, the final decision as to any of their acts and duties, 135 F.2d 453.

The Federal Trial Court found the trustees were fully authorized and emplowered under the provisions of the will to make the Humble leases and that there was no bad faith or lack of business judgment nor fraud nor duress practiced in the making of the leases and concluded they were valid and so adjudged them to be. The Circuit Court of Appeals affirmed that conclusion and judgment without any extended discussion of the reasons therefor in its original opinion.

On the motion for rehearing the plaintiffs urged upon the Court a proposition the Supreme Court of Texas in Avis v. First National Bank of Wichita Falls had held the trustees in a will containing a power to sell but no express power to make a mineral hlease have no power to do so, which holding was on motion for rehearing reversed, Avis v. First National Bank, etc., 141 Tex. 489, 174 S.W.2d 255. The Court on the motion for rehearing wrote the opinion in 135 F.2d 452, 453, wherein it is said the motion raised but two matters that may be said to be new, one of which was the holding just noted. In discussing the Avis opinion then before them the Court noted in its opinion the language used in the will there construed, the circumstances surrounding the execution of the will and the execution of the powers by the trustees were wholly dissimilar to those in the matter of the King will, and that the decision there was not different from what it had held, and proceeded to point out the differences. The provisions heretofore...