Lyle Cashion Co. v. McKendrick, 40124

• Decision Date: 07 May 1956
• Docket Number: No. 40124,40124
• Citation: 87 So.2d 289,227 Miss. 894
• Parties: LYLE CASHION COMPANY v. Charles S. McKENDRICK.
• Court: Mississippi Supreme Court

Page 289

87 So.2d 289

227 Miss. 894

LYLE CASHION COMPANY v. Charles S. McKENDRICK.

No. 40124.

Supreme Court of Mississippi.

May 7, 1956.

M. J. Peterson, Jackson, Brunini, Everett, Grantham & Quin, Vicksburg, Corban & Corban, Fayette, Thomas J. Mallette, Jackson, for appellant.

O. B. Triplett, Jr., Frank Mize, Forest, Laub, Adams, Forman & Truly, Natchez, Teller & Biedenharn, Vicksburg, for appellee.

GILLESPIE, Justice.

This is an appeal from a decree of the Chancery Court of Jefferson County, Mississippi, confirming in appellee, McKendrick, title to a working interest in certain oil, gas and mineral leases and cancelling as clouds upon the title of appellee the claims of the appellant, Lyle Cashion Company.

Appellant and appellee entered into a written agreement on April 29, 1950, for the drilling of a test well under certain oil, gas and mineral leases situated in Jefferson County, Mississippi, which agreement contained the following provision:

'Should any party hereto acquire any leases, royalty, etc., within a radius of ten (10) miles of the well site within six months following May 1, 1950, the other party hereto may have an option of purchasing, within said six months' period, one-half (1/2) of the other party's purchase, at its net cash cost (exclusive of traveling, meals, or hotel expenses).'

The oil well was drilled. Within the six months' period provided in the contract the leases involved in this litigation were acquired in the name of appellant, and a well drilled on one of these leases was productive.

A dispute arose between appellant and appellee as to whether the latter had exercised his option to acquire a one-half interest in the leases acquired by appellant.

Shortly after the expiration of the six months' period, and on October 13, 1950, appellant filed a complaint in the United States District Court for the Eastern District of Louisiana, in which district appellee lived, seeking a declaratory judgment as to the rights and other legal relations under the agreement of April 29, 1950, as between appellant and appellee, and for judgment that appellee had no interest in the leases acquired by appellant within six months following March 1, 1950, within a radius of ten miles of the well site mentioned in the agreement of April 29, 1950. Appellant alleged that the value of the matter involved in the litigation was in excess of $3,000, exclusive of interest and costs, and diversity of citizenship between appellant, a corporation organized and existing under the laws of the State of Delaware and appellee, a resident of New Orleans, Louisiana. Appellee answered and admitted that an actual controversy existed between the parties and that both parties were entitled to have the court declare their rights and other legal relations under the agreement. Appellee contended in his pleadings that he had exercised his option under the contract and was entitled to participate therein as part of a joint venture between appellant and appellee, and under his counterclaim, appellee contended he should be adjudged the owner of an undivided one-half of the leases acquired by appellant within a ten-mile radius of the well site mentioned in the contract of April 29, 1950.

A full hearing was held in the United States District Court and the judge rendered a written opinion, 97 F.Supp. 1008, sustaining the contentions of appellee's counterclaim, and specifically held that appellee had exercised the option under the April 29, 1950, contract, and on August 17, 1951, entered a judgment declaring appellee to be the owner of an undivided one-half of the right, title and interest of appellant under various oil, gas and mineral leases acquired in the name of appellant within the six-months' period provided in the contract dated April 29, 1950.

Stipulations were entered during the course of the trial as to the percentage of working interests in dispute and for certain drilling operations to be carried on by appellant pending the litigation. The judgment was 'approved as to form as being in conformity with reasons for judgment rendered herein,' by appellant's attorney.

Appellant appealed to the United States Circuit Court of Appeals, 5th Circuit, where the judgment of the lower court was affirmed. 204 F.2d 609.

The present suit was brought by appellee for confirmation of title of the working interests above referred to, and for the cancellation of any claims of appellant, and it was alleged that appellant had refused to recognize the rights of appellee declared by the judgment of the United States District Court for the Eastern Division of Louisiana, in the oil, gas and mineral leases involved. Attached to the bill was the judgment of the United States District Court for the Eastern Division of Louisiana. At the trial, the entire record and proceedings of the suit in the District Court was introduced over the objection of appellant. No other evidence was received.

The substance of appellant's answer was that the proceedings in the prior Federal Court case were ineffectual and the judgment void for lack of jurisdiction over the property. He made his answer a cross-bill seeking confirmation of his title and cancellation of the claims of appellee.

The question for our decision is whether a declaratory judgment of Louisiana Federal District Court declaring the rights and other legal relations of the parties to a contract involving interests in land in this State is effective and binding on the parties and their privies so as to preclude relitigation in a subsequent suit in this State of the specific question actually litigated and determined by and essential to the prior judgment.

To arrive at the answer to the question, we must consider (1) whether the United States District Court, Eastern District of Louisiana, had jurisdiction of the parties and the subject matter of the suit; (2) whether the question sought to be litigated in the Chancery Court of Jefferson County, Mississippi, was litigated and determined by the Federal Court in the prior suit; (3) the conclusiveness of a judgment under the Federal Declaratory Judgment Act; (4) whether the judgment of the Louisiana Federal Court was void under the rule that a decree of a foreign court cannot directly operate upon land in another State; and (5) sufficiency of the evidence to establish title in appellee.

The venue, or locality of the lawsuit, was proper; the federal venue statute provides that suits between citizens of different states may be brought in the district of the residence of either the plaintiff or defendant. The value of the matter involved exceeded $3,000. That the District Court for the Eastern District of Louisiana had jurisdiction of the parties is not open to question. Appellant filed the suit and invoked the jurisdiction of the court, and appellee was a resident of the district and acquiesced in the jurisdiction by filing a counterclaim.

In that suit, the power to hear and determine cases of the general class to which the suit belonged, the nature of the suit and the relief sought or grantable under it, determined the question of jurisdiction of the subject matter. Duvall v. Duvall, Miss., 80 So.2d 752; Griffith, Mississippi Chancery Practice, 2d Ed., Section 104. The property, the interests in Mississippi lands, was involved, and its ownership was the ultimate object of the law suit, but it was not the subject matter. The power to adjudicate and declare rights and other legal relations of the litigants in cases of actual controversies was granted the Federal Courts by Congress. 28 U.S.C.A. Sec. 2201. Every jurisdictional...