Humble Oil & Refining Co. v. Luling Oil & Gas Co.

• Decision Date: 01 March 1944
• Docket Number: No. 11591.,11591.
• Citation: 192 S.W.2d 315
• Parties: HUMBLE OIL & REFINING CO. v. LULING OIL & GAS CO.
• Court: Texas Court of Appeals

192 S.W.2d 315

HUMBLE OIL & REFINING CO. v. LULING OIL & GAS CO.

No. 11591.

Court of Civil Appeals of Texas. Galveston.

March 1, 1944.

Rehearing Denied April 20, 1944.

On Motion for Entry of Final Judgment March 8, 1945.

On Motion for Rehearing April 12, 1945.

Rehearing Denied May 2, 1945.

Appeal from District Court, Harris County; Norman Atkinson, Judge.

Action by Luling Oil & Gas Company against Humble Oil & Refining Company, for accounting for proceeds of oil and gas. From a judgment for plaintiff, defendant appeals.

Affirmed in part, and remanded for new trial in part, conforming to opinion in 182 S.W.2d 700.

Affirmed in 191 S.W.2d 716.

W. J. Howard and K. W. Gilmore, both of Houston (Rex G. Baker and R. E. Seagler, both of Houston, of counsel), for appellant.

George Cannon, of San Antonio, and E. H. Suhr, Chester M. Fulton, and Chas. W. Bell, all of Houston (Fulbright, Crooker, Freeman & Bates and Bryan, Suhn & Bering, all of Houston, of counsel), for appellee.

GRAVES, Justice.

This suit was filed by the appellee, Luling Oil & Gas Company, against Humble Oil & Refining Company, appellant, on the 13th day of November, 1940. The suit was in the nature of one for an accounting for the proceeds of oil and gas alleged to have been produced by appellant from several leases in Caldwell County, Tex., located in what is known as the Salt Flats Oil Field, under a written contract between the appellant and appellee, a copy of which was attached to appellee's petition and made a part of same. It was stipulated in court on this trial, on October 21 of 1942, that both parties recognized this contract as being then a valid, subsisting agreement between them, and appellee, without seeking to cancel, reform, or modify it, sued on the contract for over $400,000 out of such proceeds alleged — in extended detail — to have been received and appropriated to its own benefit by appellant from appellee's rightful share thereof.

In answer, the appellant pleaded:

1. General denial.

2. A special denial, under oath, of any partnership between appellant and appellee.

3. A stated, settled, paid account in full.

4. The specific terms of such contract under which, it admitted, the parties were so still operating, declaring its full compliance with all of them when correctly construed and applied.

5. The two and four year statutes of limitations, respectively, as applied to the various claims sued on.

6. Laches, estoppel, and stale demand, as against all the items thereof.

On the conclusion of the evidence, both parties moved for peremptory instructions, which motions the court overruled.

The court submitted to the jury issues on the following claims asserted by appellee:

1. The issue involving the Joe D. Hughes claim.

2. The issue involving charges to "District Expenses".

3. The issue involving the 2% and 1% tank-table strappage deductions made by the pipe-line common carrier.

The issues involving the Joe D. Hughes claim and the charges for "District Expenses" were answered in favor of appellant, and, on the jury's verdict, judgment was rendered in favor of appellant thereon.

On the issue of tank-table strappage deductions made by the common carrier pipe-line (Humble Pipeline Company) running the oil, the court ignored the findings of the jury, and rendered judgment for the deductions that had been made during the year 1929 in favor of appellee in the sum of $25,198.52, as principal, and $19,654.85, as interest, totaling $44,853.37.

The court also withdrew them from the consideration of the jury and rendered judgment in favor of appellee and against the appellant in the aggregate sum of $82, 973.93, upon the following detailed claims:

1. One-half of the alleged profits made by the appellant on fresh water furnished by it and charged to the joint account of appellee and appellant in the principal sum of $12,200.05, and interest of $8,871.95.

2. One-half of the alleged profit made by the appellant on "Breaxit" and lubricating oil, manufactured and furnished by it and charged to the joint account, in the principal sum of $9,300, and interest thereon of $6,352.92.

3. One-half of cash discounts received by the appellant and allocable to equipment and supplies, purchased by it and used on the jointly owned properties and not credited to the joint account, in the principal sum of $9,263.12, together with interest of $6,152.87.

4. One-half of quantity or volume purchase-discounts, received by appellant and allocable to materials and equipment purchased by appellant and used on the jointly owned property and not credited to the joint account, in the sum of $1,113.71, and interest thereon of $835.53.

5. One-half of the alleged profits, made and received by appellant on its wholly owned trucks and tractors, which were used in the operation of the jointly owned properties and charged at the prevailing rate per hour, and not credited to the joint account, in the principal sum of $8,603.44, and interest of $5,012.98.

6. One-half of overassessment by appellant and charged to appellee, by reason of salt water disposal in the sum of $6,419.68, with interest accrued of $4,622.17.

7. One-half of the amount of cost of transporting second-hand material from the jointly owned leases to other leases, or locations, where such second-hand material was sold and was to be delivered, in the sum of $3,009.85, and interest of $1,215.66.

The overall judgment in appellee's favor was, therefore, $127,827.30, all its other claims having been denied.

As indicated, the appellant, while admitting itself bound by the terms of the contract, and stipulating both that there had been no cessation of the dealings between the parties thereunder and that it was still being operated under by both sides at the time of the trial, interposed the bar of the 4-year statute of limitation, R.S. Article 5527, to all the sued-upon claims of the appellee, which by specific averment represented "appellee's one-half interest in the net profits received from the sale of oil during said period from January 8, 1929, to September 1, 1940," especially those enumerated ones for which the court so gave it judgment.

In answer to that plea, alleging that a partnership relation existed between the two parties by virtue of their contract, the appellee adduced subdivision 3 of R.S. article 5527, as rendering appellant's limitation claim without merit, reading as follows: "3. Actions by one partner against his co-partner for a settlement of the partnership accounts, or upon mutual and current accounts concerning the trade of merchandise between merchant and merchant, their factors or agents; and the cause of action shall be considered as having accrued on a cessation of the dealings in which they were interested together. Acts 1841, p. 163; P.D. 4604; G.L. vol. 2, p. 627."

The trial court sustained that theory, holding that the 4-year limitation statute did not so bar any of the claims sued upon by the appellee, on the ground that the relationship between the parties constituted a partnership, hence the quoted subdivision made it inapplicable.

Considering the cause as a whole, this court is unable to approve that disposal of appellant's pleas of limitation, concluding, rather, that quoted subdivision 3 of article 5527 did not rule the distinctive facts here presented; and that, on the contrary, by the express terms of the continuing contract under which these parties were so operating, all of appellee's claims, which became due prior to November 13 of 1936, were barred by R.S. art. 5527 that appellant so invoked, in as much as this suit thereon was not filed until November 13 of 1940 — more than four years thereafter.

Since such question of limitation thus lies at the base of the whole controversy, allegedly permeating every item sued upon, it would obviously be beyond the requirements to go into the vast agenda of other questions presented in the briefs, until it is first disposed of.

It is also considered to be unnecessary to explore the much discussed subsidiary inquiries of whether or not the relationship between the parties under the contract in suit was that of a partnership of any character, or a joint adventure, or whether appellant was an independent contractor; because, as this court reads and construes that instrument, it expressly provides upon its face that a cause of action did accrue to appellee for each and all of the items it herein sued for and recovered upon, so long as their dealings thereunder had not ceased, in these provisions:

(1) It required the appellant to furnish the appellee, within one month after the close of each calendar month, a statement of investments and expenses incurred, also of credits and receipts during that month, further specifying that all exceptions to such statements had to be made within 45 days after their receipt, otherwise they should be conclusively considered to be correct, to-wit: "Within one month after the close of each calendar month Second Party (Humble) shall furnish to First Party (Luling) a statement of investment and expenses incurred and credited and receipts during such calendar month. Any exceptions to the statement as rendered by Second Party must be made by First Party within forty-five days from the receipt of same; and if no exception is made within such time, then such statement shall be conclusively considered as correct. If such statement is incorrect, First Party shall be credited for any excess payment made, and shall be debited for any excess credit allowed."

(2) It then also fixed, specifically, the agreed time for the payment of all sums accruing from the appellant to the appellee, as follows: "Second party shall have exclusive charge and control of all the oil and gas produced from said premises and accruing to the parties hereto and shall have the exclusive right to market same. All proceeds received from the sale of the oil and gas produced and saved from the said premises and...