Federal Crude Oil Co. v. Yountlee Oil Co.

• Citation: 73 S.W.2d 969
• Decision Date: 20 June 1934
• Docket Number: No. 2591.,2591.
• Parties: FEDERAL CRUDE OIL CO. v. YOUNTLEE OIL CO. et al.
• Court: Court of Appeals of Texas

Page 969

73 S.W.2d 969

FEDERAL CRUDE OIL CO. v. YOUNTLEE OIL CO. et al.

No. 2591.

Court of Civil Appeals of Texas. Beaumont.

June 20, 1934.

Rehearing Denied June 30, 1934.

Appeal from District Court, Jefferson County; J. D. Campbell, Judge.

Suit by the Federal Crude Oil Company against the Yount-Lee Oil Company and another. Judgment for defendants, and plaintiff appeals.

Affirmed.

Nelson Phillips, of Dallas, and W. D. Gordon, E. E. Easterling, and S. H. German, all of Houston, for appellant.

Beeman Strong and Orgain, Carroll & Bell, all of Beaumont, F. A. Williams, of Galveston, R. L. Batts, of Austin, S. M. King, of Beaumont, and R. A. Shivers, of Port Arthur, for appellees.

COMBS, Justice.

On January 12, 1928, appellant, Federal Crude Oil Company, instituted this suit in the Sixtieth district court of Jefferson county against appellees, Yount-Lee Oil Company, a corporation, and B. E. Quinn, as an action in trespass to try title and to recover the value of oil which had been extracted by appellees from the land in controversy, aggregating in value more than $12,000,000. The land in controversy is 13.8 acres, being lots 5 and 7 out of the Chaison-Hebert subdivision in the John Douthitt survey in Jefferson county.

Appellant was duly chartered as a corporation for the purpose of drilling for and producing oil on April 24, 1901, with a capital stock of $450,000, divided into 1,500,000 shares. It acquired fee-simple title to the land in controversy in 1901 for a consideration of $140,000, and proceeded to drill a well for oil on lot 5 to a depth of 2,300 feet. Oil was not found in this well. In 1903 or 1904 appellant ceased to function as a corporation and abandoned its business, but all its debts were paid except the state and county taxes, which were not paid for the year 1903 and the subsequent years; also the state franchise tax was not paid, and on July 1, 1905, its right to do business was forfeited by the secretary of state, and due entry thereof made upon the proper records in the manner required by law. No steps were taken to renew its franchise until June 5, 1928, when appellant paid to the secretary of state the sum of $10,500, being the full amount of its delinquent franchise tax up to that date with interest and costs, whereupon the secretary of state issued to it a certificate reciting such payment and that its corporate powers to sue and defend had been restored to it. It then instituted this suit.

Upon the first call of the case for trial the trial court sustained defendants' plea in abatement, which challenged appellant's right to maintain the suit holding in effect that payment of the delinquent franchise tax did not revive its right to sue and defend suits, because not paid within six months after its right to do business was forfeited. From the judgment sustaining the plea in abatement an appeal was prosecuted to this court, and the Supreme Court held, by opinion filed the 20th day of June, 1932, answering questions duly certified to it from this court, that the payment of the delinquent franchise tax by appellant and the issuance to it by the secretary of state of the certificate certifying such payment restored to it its original corporate right to sue and to defend actions brought against it. See Federal Crude Oil Co. v. Yount-Lee Oil Co., 122 Tex. 21, 52 S.W.(2d) 56. After the return to the lower court of the mandate from this court reversing the judgment of the lower court and remanding the cause for a new trial [see opinions of this court, Federal Crude Oil Co. v. Yount-Lee Oil Co., 53 S.W.(2d) 1119; Federal Crude Oil Co. v. Quinn, 53 S.W.(2d) 1119], appellees filed their first amended original answer, upon which they went to trial. The answer consisted of the general demurrer, plea of not guilty, special pleas of the several statutes of limitation, and a plea that certain proceedings theretofore had involving the title and possession of the land now in controversy were stare decisis and res judicata of the title in favor of appellees against all claims asserted by appellant. Appellee Yount-Lee Oil Company claimed title to lot 5, containing 6.9 acres, and appellee Quinn claimed title to lot 7, containing 6.9 acres. The issue of limitation, as it related only to lot 5, was submitted to the jury by the following questions, and answered as indicated:

(1) "Do you find from the preponderance of the evidence that the boarded-up pit on Lot 5 is a pit used by Chenault, the Nearens, Cruse, Blanchette and the Wilkersons in the operation of the waste oil business conducted by them?" The answer to that question was "Yes."

(2) "Do you find from the preponderance of the evidence that the cypress tanks used by Chenault, the Nearens, Cruse, Blanchette and the Wilkersons in the waste oil business conducted by them were on Lot 5?" The answer to that question was "Yes."

(3) "Do you find from the preponderance of the evidence in this case that the defendant, Yount-Lee Oil Company and those under whom it claims, prior to the 12th day of June, 1928, have been in peaceable and adverse possession of Lot 5 of the Chaison Subdivision of the Douthitt Survey and described in plaintiff's petition, using or enjoying the same for a period of ten consecutive years, exclusive of the one hundred sixty-five days M. F. Yount was absent from the state?" The answer to that question was "Yes."

(4) "Do you find from the preponderance of the evidence in this case that the defendant, Yount-Lee Oil Company, and those under whom it claims, subsequent to January 1, 1923, and prior to the 12th day of June, 1928, has been in peaceable and adverse possession of Lot 5 of the Chaison Subdivision of the Douthitt Survey described in plaintiff's petition, using or enjoying the same and paying all taxes thereon and claiming under a deed or deeds duly registered for a term of five years, exclusive of the thirty-seven days M. F. Yount was absent from the state in 1923?" The answer to that question was "Yes."

No other issues were submitted to the jury.

On the verdict of the jury and the undisputed evidence, which the trial court construed as sustaining the pleas of stare decisis and res judicata, judgment was entered against appellant that it "take nothing in this suit against the defendant Yount-Lee Oil Company, or the defendant B. E. Quinn, or either of them, and that the defendants recover of the plaintiff, Federal Crude Oil Company, all costs in this behalf expended, for which they may have their execution." From that judgment the plaintiff, Federal Crude Oil Company, has duly prosecuted its appeal to this court.

This case has been extensively and ably briefed on both sides. So many propositions of law have been advanced which merit consideration that a discussion of them, with the recital of the essential facts necessary to an understanding of the points involved, make it next to impossible to confine this opinion within reasonable length. It may be helpful to state in the outset that, except for certain assignments complaining of the admission of evidence and of the court's charge, there are basically only two issues involved. One is the issue of limitation, which applies only to lot 5, claimed by the appellee Yount-Lee Oil Company; and the other, which affects title to both tracts, involves the question of whether appellees have acquired appellant's title by virtue of a receiver's sale to J. F. Guilmartin in 1908, in a receivership then pending in the Fifty-Eighth district court of Jefferson county. The latter issue involves an attack on the validity of the receivership sale, and also the questions of stare decisis, res judicata, and innocent purchaser pleaded as defenses by appellees.

The following preliminary statement is necessary to an understanding of appellant's propositions: On the 26th day of September, 1907, after appellant's right to do business had been forfeited on July 1, 1905, J. F. Guilmartin, one of its stockholders, filed suit in the district court of Jefferson county, being cause No. 6398 on the docket of the Fifty-Eighth district court, styled J. F. Guilmartin v. Federal Crude Oil Company, alleging that the defendant's right to do business had been forfeited, with prayer for the appointment of a receiver to take charge of and dispose of its properties. On October 7, 1907, the application for receiver was heard and granted and C. L. Rutt was duly appointed receiver. On December 11, 1907, the receiver filed his report that he could sell the property of appellant, which consisted only of the land now in controversy and of one other small tract, to J. F. Guilmartin for $50, subject to all outstanding liens, which were for the taxes, upon which suit had been filed. According to recitals in the judgment, the case thereupon proceeded to trial upon its merits, and judgment was entered directing the receiver to sell the land to Guilmartin on the terms stated in his report. Under this order the receiver conveyed the land to Guilmartin for the consideration and upon the terms stated in the report, which deed was placed of record on January 23, 1908. On the 22d day of January, 1908, Guilmartin, for the consideration of $60, by warranty deed sold lot 7 of the land in controversy to R. W. Wilson. The Wilson title, through a series of several deeds, passed to appellee B. E. Quinn, by deed dated the 17th day of October, 1917. Quinn purchased the land in good faith on the advice of his attorneys that he was acquiring a good title, and paid therefor $700. On February 13, 1917, M. F. Yount, for appellee Yount-Lee Oil Company, purchased lot 5 of the land in controversy from J. F. Guilmartin for a consideration of $690. He purchased the land in good faith on the advice of his attorneys, believing he was acquiring a good title thereto. When Quinn and Yount purchased the land, they paid its full value as of the date of their respective purchases. The increase in value from 1907 to the dates when Quinn and Yount...