Kirby Exploration Co. v. Mitchell Energy Corp.
| Decision Date | 21 November 1985 |
| Docket Number | No. 01-85-708-CV,01-85-708-CV |
| Parties | KIRBY EXPLORATION COMPANY, Appellant, v. MITCHELL ENERGY CORPORATION, Appellee. (1st Dist.) |
| Court | Texas Court of Appeals |
Jim L. Flegle, Laura B. Herring, Bracewell & Patterson, Houston, for appellant.
Ralph K. Harrison, George W. Lederer, Jr., Mitchell Energy Corp., Woodlands, for appellee.
Before WARREN, DUNN and SAM BASS, JJ.
Suit was instituted by Mitchell Energy Corporation ("Mitchell") against Kirby Exploration Company ("Kirby") for conversion of oilfield pipe. The trial court found that there were no genuine issues of material fact as to the following, and granted summary judgment for Mitchell. See Tex.R.Civ.P. 166-A(c).
1. On March 1, 1982, and at all times relevant hereto, Mitchell Energy Corporation was the owner of 151 joints of 9- 5/8"'' 53.5 lb. P-110 LT & C Kawasaki seamless casing (the pipe) stored at Port Pipe Terminal, Inc., Harris County, Texas.
2. On March 1, 1982, Kirby took possession of the pipe, without the knowledge or consent of Mitchell and exercised dominion, ownership and control over the pipe, to the exclusion of the exercise of the same rights by Mitchell.
3. On April 5, 1982, written demand was made upon Kirby to return the pipe to Port Pipe Terminal and to Mitchell. Kirby responded in writing on April 16, 1982, refusing to return the pipe and by asserting, without qualification, its ownership of the pipe.
4. The fair market value of the pipe in Harris County, Texas, on the date of the conversion of the pipe by Kirby, was $344,022.80.
The trial court also found that Kirby failed to establish the elements of its affirmative defenses of estoppel, negligence, and negligent entrustment, and further found that Kirby failed to show that it had title to the pipe sufficient to defeat Mitchell's motion for summary judgment.
In three points of error, Kirby contends that the trial court erred in granting summary judgment for Mitchell because genuine issues exist as to the following material facts:
1) The ownership of the pipe purchased by Kirby;
2) The identity of the pipe; and
3) Whether written demand was made on Kirby for the pipe.
Kirby fails to direct our attention to specific facts in the record that refute the findings of the trial court. Kirby contends that this is "not the kind of case to which the summary judgment procedure should be applied," because the pipe travelled through the hands of several parties that were involved in the buying and selling of oilfield pipe. For this proposition, Kirby invites comparison with Valley Stockyards Co. v. Kinsel, 369 S.W.2d 19 (Tex.1963), in which the supreme court reversed and remanded a summary judgment procedure in a conversion case. In Valley, the controlling question was whether or not at the time Kinsel delivered 158 head of cattle to another cattle trader, he intended that title should pass. Id. at 20. The Valley court held that this question of whether the sale was conditional or absolute was a genuine issue of material fact and should not have been decided by summary judgment. Id. at 24.
Valley is distinguishable from the present dispute. In the typical conversion case, intent is not material to any issue involved except that of exemplary damages. Killian v. Trans Union Leasing Corp., 657 S.W.2d 189, 192 (Tex.App.--San Antonio 1983, writ ref'd n.r.e.). The act of conversion is complete when a party unlawfully and wrongfully exercises dominion and control over the property of another to the exclusion of the right of possession of the owner or of the party entitled to possession of the property involved. Id.
The record shows that on August 12, 1981, the supervisor of purchasing and storage for Mitchell and its affiliate, Oilworld Supply Company ("Oilworld"), ordered 6700 feet of 9 5/8"'' 53.5 lb. P-110 LT & C Kawasaki seamless casing. Purchase order no. 81-10-12033 was assigned to the pipe, and certificates of inspection showing the heat identification numbers of the pipe were received by Mitchell's supervisor in December of 1981. 1 Oilworld operates as Mitchell's purchasing arm and is a stocking distributor of Kawasaki tubular products.
Upon notification of the arrival of the pipe at the Port of Houston in January of 1982, Mitchell's supervisor instructed Audas-Martin Port Trucking, Inc., to transport the pipe to Port Pipe Terminal, a storage yard in Harris County. In February of 1982, Mitchell's supervisor received an invoice and five bills of lading from Audas-Martin for their hauling of 159 joints of the above-specified pipe. The invoice referenced purchase order no. 81-10-12033. Port Pipe Terminal sent Mitchell's supervisor a "materials received" report indicating that 159 joints of this particular pipe had been stored on rack J105 in their facility. Mitchell paid the invoice for the 159 joints of pipe in February of 1982.
Also in February of 1982, Kirby contracted with Petroleum Tubulars, Inc. ("PTI") for the purchase of approximately 11,000 feet of 9 5/8"'' 53.5 # P-110 LT & C pipe. The record also shows that PTI sent Kirby an invoice requesting payment for 6,500 feet, or 151 joints, of 9 5/8"" 53.5 # P-110 LT & C Kawasaki pipe. The remainder of Kirby's order was filled by Sumitomo pipe, and the invoice was paid on March 8, 1982.
On March 9, 1982, Port Pipe Terminal was unable to locate certain pipe belonging to Mitchell. Following an inventory by Mitchell and Oilworld personnel, it was found that 151 joints of 9 5/8"'' 53.5 lb. LT & C Kawasaki seamless casing, plus other sizes and grades of pipe, were missing from Mitchell and Oilworld stock. The Special Crimes Division of the Houston Police Department was contacted by Mitchell's supervisor, and an investigation ensued. Subsequently, it was discovered that a Cayman Island Company named Pharoah, Ltd. had been selling pipe from Port Pipe Terminal without the knowledge or consent of the owners, and indictments against a former vice-president and inventory manager of Port Pipe Terminal for felony theft were issued.
On March 24, 1982, Oilworld employees Hawkins and Zinn investigated a report that missing Oilworld pipe had been stored at the Gator Hawk Pipe Plantation. At Gator Hawk, Hawkins found 151 joints of 9 5/8"'' 53.5 lb. Kawasaki pipe, mixed in with other pipe. He examined each joint of Kawasaki pipe and observed the numbers 81-10-12033 stencilled in white paint on each one. Hawkins also compared the "heat numbers" on the pipe with those shown on the Kawasaki inspection certificates and found them to be the same. Photographs taken by Hawkins at Gator Hawk clearly show the Mitchell purchase order number and the identifying Kawasaki "heat numbers," as well as a number referencing a Kirby purchase order.
Uncontested evidence shows that Oilworld, acting for Mitchell, ordered and paid for the pipe, and at no time authorized or consented to its sale or transfer. The identity of the pipe is likewise uncontested, and we reject Kirby's assertion that the pipe constituted "fungible goods." The 151 joints of pipe found at Gator Hawk Plantation were stencilled with the same purchase number and "heat numbers" as the 151 joints of Oilworld pipe missing from Port Pipe Terminal. The fact that stencilling on the pipe showed a number referencing a Kirby purchase order negates Kirby's contention that no direct testimony identified the pipe as that purchased by Kirby from PTI.
Kirby argues that the Port Pipe Terminal inventory card that shows the pipe to have been stored on rack I-103B, rather than on rack J-105, as indicated on the materials received report, raises a genuine issue of material fact as to the pipe's identity. This minor discrepancy, when viewed in light of the other evidence of the pipe's identity, does not raise a genuine issue of fact sufficient to preclude summary judgment for conversion.
We hold Kirby's contentions that genuine issues of material fact exist as to the ownership and identity of the pipe to be without merit.
Kirby's assertion that there is a genuine issue of fact as to whether written demand for the pipe was made is unsupported by the record. By letter dated April 5, 1982, the president of Port...
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