Chicago Corporation v. Wall
| Decision Date | 03 October 1956 |
| Docket Number | No. A-5678,A-5678 |
| Citation | 293 S.W.2d 844,156 Tex. 217 |
| Parties | The CHICAGO CORPORATION, Petitioner, v. Mrs. Irma WALL et al., Respondents. |
| Court | Texas Supreme Court |
Small, Small & Craig, C. C. Small, Jr., Austin, for petitioner.
Turner & Bankhead, Tom Bankhead, Carthage, for respondents.
Mrs. Irma Wall, a widow, and her son, William Thomas Wall, brought this suit against The Chicago Corporation, seeking judgment for royalty on gas production from a gas unit in the Carthage Gas Field in Panola County, Texas. Mrs. Wall and her son alleged that The Chicago Corporation as operator of Carthage Gas Unit No. 17-Wall had failed and refused to properly account and pay to them royalties due them on gas produced from such Unit. The trial court's judgment for the plaintiffs, based on jury findings, was reversed and remanded by the Court of Civil Appeals, not yet officially published.
In 1941 Mrs. Wall owned a 5/8 interest and her son, William Thomas Wall, owned a 3/8 interest in a 77.9 acre tract, a ten acre tract and a 30 acre tract of land in Panola County, Texas. These tracts of land were conveyed to M. H. Smith and Seth E. Smith in 1941, with Mrs. Wall and her son reserving 1/2 of their royalty interest in the oil, gas and minerals therein, with the Smiths and their assigns having the right to execute oil and gas leases. That same year, the Smiths executed an oil and gas lease which covered the three tracts and contained appropriate pooling provisions. In 1945 the lessee in conjunction with The Chicago Corporation executed a Gas Pooling Agreement which was ratified by the various royalty owners, including the Walls. Division orders were executed and signed by all interested parties.
The division orders provided that the signers thereof were the legal owners of, and they warranted the title to their respective interests set out therein 'in all gas produced and sold from, and all condensate, natural gasoline, and residue gas allocated to the Carthage Gas Unit No. 17-Wall, consisting of 656.48 acres of land, out of the Samuel Duncan Survey in Panola County, Texas, under all the terms and conditions of that certain Gas Pooling agreement dated the 1st day of September 1945, by and between The Chicago Corporation, et al., as Lessee and T. T. Wall, et al., as Royalty owners, * * *.' That 'effective first production you are hereby authorized to receive, process and sell all gas produced from and all condensate, natural gasoline, and residue gas produced from or allocated to the above described Gas Unit and to give credit for and pay over the interests of the undersigned in the proceeds, as directed below:'
The interest of Mrs. Wall as stated in the signed division order was 1/8 X 5/8 X 19.29/656.48 amounting to a 12.0563-acre royalty interest; that of her son was 1/8 X 3/8 X 19.29/656.48 or 7.2337-acre royalty interest. The Court of Civil Appeals reversed and remanded this case to the trial court for further development of the facts on the question of whether or not the 77.9-acre tract was within the Carthage Gas Unit No. 17-Wall.
Acting on the executed division order the petitioner set upon its books a decimal interest of .00229562 for Mrs. Wall and .00137737 for William Thomas Wall. All other royalty owners in the Unit signed the division order during the year 1946 accounting for 100% of the royalty interest in the Unit.
The Chicago Corporation paid royalties according to the interests stated in the division orders to the son until 1948 and to Mrs. Wall until 1950. On November 19, 1948, William Thomas Wall executed and delivered to petitioner a transfer order wherein he stated that he had transferred 1/8 X 7.2337/656.48 in Carthage Gas Unit No. 17 Wall to B. W. Reed. The Chicago Corporation upon receipt of such transfer order stopped all royalty payments to Wall. On April 1, 1950, Mrs. Wall signed and delivered to petitioner a transfer order in favor of Simmons, which purportedly transferred a five-acre royalty interest in Carthage Gas Unit No. 17-Wall. Mrs. Wall testified and The Chicago Corporation stipulated that Mrs. Wall's royalty payments were decreased in amount after April 1950.
Both transfer orders are in the same terms. The one executed by Mrs. Wall reads:
'To The Chicago Corporation:
'The undersigned Transferors have sold and transferred the interests shown below in all gas produced from and all condensate, natural gasoline and residue gas produced from or allocated to the Carthage Gas Unit No. 17-Wall as created and described in that certain Gas Pooling Agreement, dated the 1st day of Sept., 1945, by and between The Chicago Corporation, et al., as Lessee, and T. T. Wall et al., as Royalty Owners, said Agreement being filed for record in the Office of the County Clerk, Panola County, Texas, under County Clerk's File No. 4373.
To Whom Transferred
Unit Rate
1/8 X 5.00/656.48 James W. Simmons, Jr.
'You will therefore give credit for and pay over any sums accruing to the above described interests from and after 7:00 A.M. on the 1st day of April, 1950, to the party or parties named above as their interest appears.
'Witness:
B. W. Reed /s/
'Transferors:
Mrs. Irma Wall /s/'
The Walls brought this suit on the theory that they owned one-half of the royalty under the ten and thirty-acre tracts of land when they signed division orders in 1945 and that, having made no conveyances out of these two tracts, they still own the same interests they did when the pooling agreement was made; but that The Chicago Corporation has not paid according to the Walls' ownership since 1948 when all payments to the son were stopped, and 1950 when all payments to Mrs. Wall were reduced. The Walls alleged that they sold royalty under a 77.9-acre tract and signed transfer orders for the interest conveyed, and that The Chicago Corporation through mistake, error, or bad judgment, took the royalty due the Walls under the ten and...
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