Cherokee Water Co. v. Advance Oil & Gas Co.

• Decision Date: 27 October 1992
• Docket Number: No. 6-91-126-CV,6-91-126-CV
• Citation: 843 S.W.2d 132
• Parties: CHEROKEE WATER COMPANY, et al., Appellants, v. ADVANCE OIL & GAS COMPANY, et al., Appellees.
• Court: Texas Court of Appeals

Page 132

843 S.W.2d 132

CHEROKEE WATER COMPANY, et al., Appellants, v. ADVANCE OIL & GAS COMPANY, et al., Appellees.

No. 6-91-126-CV.

Court of Appeals of Texas,

Texarkana.

Oct. 27, 1992.

Rehearing Denied Nov. 24, 1992.

Charles Clark, Offices of Charles H. Clark, Tyler, Ron Adkison, Wellborn, Houston, Adkison, Mann, Henderson, for appellants.

Charles W. Sartain, Godwin, Carlton & Maxwell, Dallas, for appellees Advance Oil & Gas Co., et al.

Lu Pham, Vinson & Elkins, Houston, for appellee Texas Eastern Transmission Corp.

Bradley W. Hoover, Mayer, Brown & Platt, H. Bruce Golden, Buck, Rouner, Golden, Keenan, Ballard, Houston, for appellee United Gas Pipe Line Co.

Dan Miller, McElroy & Sullivan, Austin, for appellee Graham-McCormick Operating Partnership, et al.

Before CORNELIUS, C.J., and BLEIL and GRANT, JJ.

OPINION

CORNELIUS, Chief Justice.

Cherokee Water Company and others appeal from adverse summary judgments. They brought actions against Advance Oil & Gas Co. and Graham-McCormick Operating Partnership, seeking damages and recovery on theories of unjust enrichment, money had and received, conversion, trespass, and constructive trust. They also sought damages from United Gas Pipe Line and Texas Eastern Transmission Corporation for conversion. Because we find that all of these claims are barred by the statute of limitations, we affirm the judgments.

Joining Cherokee in the suit are Ray B. Power, Jr., Les Kroeger, John D. Gourley, and The Sovereign Corporation (sometimes referred to collectively as "the Cherokee group"). To understand the arguments on appeal, it is necessary to review the previous litigation involving Cherokee and some of the other parties.

In 1947, Cherokee purchased the surface of a 59.71 acre tract in Rusk County for the purpose of constructing a lake. The sellers reserved all mineral rights but gave Cherokee and its assigns a right of first refusal to purchase the minerals. After several oil and gas leases had been executed by the mineral owners and production was obtained, Cherokee attempted to exercise its right of first refusal to obtain a lease on the tract. After extended litigation, the Supreme Court held that Cherokee was entitled to the lease, and affirmed a trial court judgment ordering the mineral owners to execute the lease to Cherokee. Cherokee Water Co. v. Forderhause, 641 S.W.2d 522 (Tex.1982) (Cherokee I ). The effect of that judgment was to void the existing lease (Boase-Woods lease) and place title to the leasehold estate in the 59.71 acres in Cherokee. The Supreme Court denied motion for rehearing in that case on October 20, 1982.

The mineral owners had included in the Cherokee I litigation a plea that, if the preferential right to purchase held by Cherokee included oil and gas leases, their deed to Cherokee be reformed to exclude oil and gas leases from its effect. The reformation action was severed by the trial court and proceeded as a separate action from Cherokee I. Ultimately, the Supreme Court held for Cherokee in the reformation action. Cherokee Water Co. v. Forderhause, 741 S.W.2d 377 (Tex.1987) (Cherokee II ). The motion for rehearing was denied on January 20, 1988.

During the pendency of Cherokee I, the lessees of the contested mineral lease were E.S. Boase and Neal Woods. Advance Oil & Gas and Graham-McCormick Operating Partnership are assignees of Boase and Woods. In 1981, the Boase-Woods lease on the 59.71 acres was pooled into the Paul Gas Unit. The lease to Cherokee resulting from the decision in Cherokee I has never been pooled into the Paul Gas Unit. Texas Eastern and United purchased gas from the Paul Gas Unit. Cherokee seeks in this suit to recover an interest in the gas sold from the Paul Gas Unit and to recover damages for conversion, unjust enrichment, money had and received, and trespass.

The Cherokee group contends first that the court erred in granting summary judgment on the basis of limitations. This suit was filed April 29, 1988, and Cherokee argues that its causes of action did not accrue until January 20, 1988, the date on which the Supreme Court's decision in the reformation suit, Cherokee II, became final. The trial court disagreed and found that the causes of action accrued at least in 1982, when the Supreme Court's decision in Cherokee I, establishing Cherokee's title to the lease, became final and the last year the appellees purchased gas from the Paul Gas Unit.

Cherokee contends that the pendency of Cherokee II prevented the statute of limitations from running because its title to the disputed mineral interest depended on the decision in that case. It relies on the general rule that where a right of action depends on an adjudication in another suit, the statute of limitations does not run as long as an appeal in that case is pending. That proposition is inapposite here. Cherokee II was not an appeal from Cherokee I. In all the cases Cherokee cites in its support, an appeal was necessary to determine title to the injured property, and the appeal tolled the statute of limitations. That is not the situation in this case.

Cherokee held good title to its lease on the 59.71 acres when Cherokee I was finally decided. Cherokee I could not be appealed after October 20, 1982, and nothing prevented the Cherokee group from bringing its claims for damages at that time. The fact that parties other than these appellees were contesting Cherokee's title in another, separate suit for reformation did not operate to suspend the limitation statutes for wrongs these appellees allegedly committed with Cherokee's full knowledge. The severed reformation action, Cherokee II, was an independent suit. See Kansas University Endowment Ass'n v. King, 162 Tex. 599, 350 S.W.2d 11 (1961). It did not toll limitations for wrongs done by appellees to Cherokee's interest any more than any separate challenge to a landowner's title by a third party would suspend limitations against another who trespasses on the landowner's property. Indeed, Cherokee could have brought its damages claims in Cherokee I, the action in which it claimed title to the mineral interest. See Salinas v. Crown Central Petroleum, 647 S.W.2d 384 (Tex.App.-San Antonio 1983, writ ref'd n.r.e.).

In cases with facts similar to these, courts have held that the statute of limitations on a property damage claim begins to run even before the claimant held legal title to the property. McGuire v. Baker, 421 F.2d 895 (5th Cir.), cert. denied, 400 U.S. 820, 91 S.Ct. 37, 27 L.Ed.2d 47 (1970); Jones v. Hunt Oil Co., 456 S.W.2d 506 (Tex.Civ.App.-Dallas 1970, writ ref'd n.r.e.). In McGuire, the Fifth Circuit found the statute of limitations to have run from the date the wrong was committed, even though title to the injured property had not been settled. Both Jones and McGuire were oil and gas cases in which the claimants sought damages for the pooling of and production from contested mineral interests. And both the...