Mecom v. Mobil Oil Corp.
| Citation | 299 So.2d 380 |
| Decision Date | 28 June 1974 |
| Docket Number | No. 4544,4544 |
| Parties | Mary Elizabeth MECOM, wife of/and John W. Mecom, Plaintiffs and Appellants, v. MOBIL OIL CORPORATION et al., Defendants and Appellees. |
| Court | Court of Appeal of Louisiana (US) |
Camp, Carmouche, Palmer, Carwile, & Barsh, by A. J. Gray, III, Lake Charles, for plaintiffs-appellants.
Gordon, Arata and McCollam, by John McCollam, New Orleans, and J. B. Jones, of Jones and Jones, Cameron, Scofield, Bergstedt & Gerard, by John B. Scofield, Lake Charles, Anderson, Leithead, Scott, Boudreau & Savoy, by Richard L. Savoy, Lake Charles, for defendant-appellee.
Before FRUGE , HOOD and DOMENGEAUX, JJ.
This is an action brought by certain landowners to partially cancel a mineral lease for alleged failure to timely make production royalty payments. Defendants filed a number of exceptions, including vagueness, non-joinder of necessary parties, no cause of action, and prematurity. They also filed a motion for summary judgment. The District Court sustained defendants' motion for summary judgment as well as the dilatory exception of prematurity but dismissed the other exceptions. Plaintiffs have prosecuted this appeal from the dismissal of their suit.
The following pertinent facts are based primarily upon sworn affidavits of two Mobil Oil Corp. (hereinafter referred to as Mobil) attorneys, Walter J. Morrison and Roy M. Talley, and extensive depositions taken by Mobil of Albert G. Reynolds and Claude W. Duke, trustee and attorney respectively for certain of plaintiffs' companies involved in bankruptcy proceedings out of which this case arose.
This action involves extremely valuable properties located in the Mud Lake Field of Cameron Parish. The lease in question was initially executed by the Lutcher and Moore Cypress Lumber Co., as lessor, to S. P. Benckenstein. Said lease was thereafter acquired from Benckenstein by Mobil Oil Corporation's predecessor, Magnolia Petroleum Co., in February, 1944. In January, 1947, production was established in paying quantities and the lease, with the exception of portions thereafter voluntarily released over the ensuing twenty-five years, has since been maintained by production royalty and delay rental payments. Immediately prior to November, 1970, fee title to the lands subject to the mineral lease was owned by two limited partnerships, U.S. Oil of Louisiana, Ltd. (hereinafter referred to as USOLA-Ltd.) (2/3) and Four M. Properties, Ltd. (1/3). Due however to the existence of a production payment owned by Simec Corporation, the one-eighth (1/8) lessor's royalty was paid fifty percent (50%) to USOLA-Ltd. and fifty percent (50%) to Simec Corporation. The lessor's royalty due Simec has been continuously paid prior to and since this suit was filed. However, commencing late December, 1970, Mobil suspended payment of royalties to USOLA-Ltd.
The background and events occurring shortly before this suspension took place are important. USOLA-Ltd. was one of several separate entities controlled by the John W. Mecom family. Other Louisiana based Mecom entities were U.S. Oil of Louisiana, Inc. (hereinafter referred to as USOLA-Inc.) and Lake Washington, Inc. USOLA-Ltd. was a partnership in commendam, with USOLA-Inc. as its general partner owning two and one-half percent (2 1/2%) of its assets and Mr. and Mrs. John W. Mecom, individually, as limited partners owing ninety-seven and one-half percent (97 1/2%) of the assets.
Because of an accumulation of debts in excess of Seventy-Five Million Dollars ($75,000,000), owed in various proportions by several of these aforesaid entities and by the Mecoms personally, reorganization proceedings under Chapter X of the Federal Bankruptcy Laws were instituted on behalf of USOLA-Inc. and Lake Washington, Inc. in the United States District Court, Eastern District of Louisiana, New Orleans Division, on November 24, 1970. Shortly thereafter Albert G. Reynolds was appointed trustee of the debtor corporations and Claude W. Duke was employed as his attorney.
Additionally, on December 3, 1970, John and Mary Mecom instituted arrangement proceedings under Chapter XI of the Federal Bankruptcy Laws in the United States District Court, Western District of Louisiana, Lake Charles Division, placing their personal assets and debts and the control of that court. Ike Hoskins was appointed as receiver and Richard B. Sadler, Jr. as his attorney.
Upon first learning of these proceedings from local newspapers in mid-December, 1970, Mobil retained Walter J. Morrison, a Houston attorney, to represent it is these bankruptcy proceedings and to collect an amount allegedly due Mobil on certain notes signed by the debtors. At this time Lake Washington, Inc., USOLA-Inc., and John Mecom individually were indebted to Mobil on two notes aggregating One Million Five Hundred Thousand Dollars ($1,500,000) for interests purchased in the Lake Washington Field in Plaquemines Parish, Louisiana. USOLA-Ltd. in its own name was not indebted in any way to Mobil.
On November 27, 1970, U.S. District Judge Edward J. Boyle, Sr. in the reorganization proceedings of USOLA-Inc. and Lake Washington, Inc., in the Eastern District Court, entered an order prohibiting interference with the possession, management or operation of the aforesaid entities (in addition to the parent USOLA-Ltd.) by the trustee. In addition it was required that all creditors of said debtors involved file their proofs of claim in the reorganization proceedings prior to January 15, 1971.
Subsequently, on December 14, 1970, Mobil received a letter dated December 12th from R. Sadler, the attorney representing the receiver in the Western District Arrangement Proceedings, advising that the partnership USOLA-Ltd. had been dissolved by virtue of the filing of the reorganization proceedings and as a result ninety-seven and one-half percent (97 1/2%) of all royalties formerly due to USOLA-Ltd. were to be remitted through the Western District Arrangement receiver to the estate of John and Mary Mecom, this being their proper share. On December 14th, 1970, Referee Leroy Smallenberger in the Western District proceedings entered an order confirming the instructions of Sadler.
Mobil learned of the aforementioned order by Judge Boyle in late December, 1970, or early January, 1971, and a proof of claim for the aforementioned One Million, Five Hundred Thousand Dollar ($1,500,000) debt was prepared and filed in the Eastern District Proceedings. Included in said proof of claim was the following language:
'That no setoffs or counterclaims have been mdae to the above described indebtednesses; however, Mobil is holding in suspense certain amounts for royalties on gas attributable to interests held by U.S. Oil of Louisiana, Ltd., a limited partnership of which USOLA is the general partner, for the month of December 1970, aggregating approximately $25,000 and Mobil will be holding in suspense other and additional amounts for such royalties for January 1971, and for subsequent months, and Mobil may have or may hereafter accrue other accounts receivable from the Debtors or either of them and Mobil is claiming its right and privilege to offset all such royalties and other accounts receivable on the above described indebtednesses of the Debtors to Mobil.'
Upon receipt of the proof of claim, the trustee in the Eastern District Proceedings, A. Reynolds, through his attorney C. Duke, on January 26 wrote Mobil a demand letter for all royalties theretofore withheld.
Mobil chose not to comply with either federal court order but instead filed an 'Application to Permit Retention of the Funds Pending Determination of Disputed Rights' on February 10, 1971, in the Eastern District Proceedings. A hearing on the point was scheduled, but continued because of later developments.
During this period representatives of the Western District was Eastern District Proceedings, and creditors of the Mecoms and their controlled entities, were in the process of trying to work out problems concerning the administration and control of USOLA-Ltd.'s assets. As a result, on March 12, 1971, USOLA-Ltd. was placed in a separate Chapter XI Arrangement Proceeding in the Federal Eastern District Court and A. Reynolds was appointed receiver. Reynolds continued to retain C. Duke as his attorney. A few days prior thereto, Referee Smallenberger of the Western District recalled his December 14, 1970, order.
On or about March 15, 1971, the filing of the USOLA-Ltd. Arrangement Proceedings came to the attention of Mobil. Telephone discussions thereafter took place between Mobil's attorney, W. Morrison, and Duke. Morrison subsequently flew to New Orleans on March 18th where a meeting between Morrison, Duke and his associate Hantel, and Reynolds, took place. It was Morrison's testimony that he was advised at the meeting that because of the initial suspension of royalty payments by Mobil Reynolds would not accept payment of the funds without the consent of the Mecoms.
Morrison thereafter returned to his Houston office to work on an 'Application Regarding Rayments Into the Registry of the Court' pursuant to which he intended to deposit the suspended royalties into the Eastern District USOLA-Ltd. Arrangement Proceedings. Said funds representing royalty payments for the months of November, 1970, through February, 1971, were subsequently deposited into the registry of the court of March 29, 1971. Morrison and Reynolds several times prior thereto to and Reynolds several times prior thereto to see if the Mecoms had agreed to accept the suspended royalty payments.
On or about April 21, 1971, prior to the date that the next royalty payments were due Morrison again contacted Duke, this time offering to obtain an order from the Eastern District Court turning over the previously deposited royalties to Reynolds in his capacity as receiver for USOLA-Ltd. Said offer was rejected on...
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