Ortiz Oil Co. v. Railroad Commission, 4526.

• Decision Date: 29 June 1933
• Docket Number: No. 4526.,4526.
• Citation: 62 S.W.2d 376
• Parties: ORTIZ OIL CO., INC., v. RAILROAD COMMISSION.
• Court: Texas Court of Appeals

62 S.W.2d 376

ORTIZ OIL CO., INC., v. RAILROAD COMMISSION.

No. 4526.

Court of Civil Appeals of Texas. Texarkana.

June 29, 1933.

Rehearing Denied July 3, 1933.

Appeal from District Court, Gregg County; Renne Allred, Jr., Judge.

Suit by the Railroad Commission against the Ortiz Oil Company, Inc. From an interlocutory order appointing a receiver, defendant appeals.

Reversed, and appointment of receiver dissolved.

The appeal is from an interlocutory order appointing a receiver in the cause, entered by the judge of the court upon the filing of the petition and before issuance of notice to defendant. The Railroad Commission of the state of Texas, through the Attorney General of the state, on May 22, 1933, filed a petition or complaint in the district court of Gregg county, naming the Ortiz Oil Company, a corporation, and its president and vice president as defendants. The petition sets out generally the statutory duties of the Railroad Commission in respect to the conservation of oil and gas, and the violation of its orders and regulations by the defendant respecting the keeping of records and making reports of oil produced, and respecting the allowable daily production of oil. The Ortiz Oil Company owns and operates six oil wells in the East Texas oil fields, located in Rusk and Gregg counties. The acts which the defendant is charged in the petition with committing, and in defiance and in daily violation of the regulations and orders of the Railroad Commission, are namely: (1) In allowing and permitting the oil produced or flowing from the wells to lease tanks to pass or run out of the company's possession and control into possession and control of another without gauging or measuring the amount of such oil, and without making and preserving a record thereof; and using methods and devices to prevent obtaining an accurate measurement of the oil produced from the oil wells; and (2) in daily producing and running oil from the wells in excess of the prorated amount allowed to be produced daily from such oil property and oil wells under the order of the Railroad Commission in respect thereto promulgated and in force at the time.

The petition sets up and claims as due and owing the state of Texas, as the legal consequence of the alleged violation of the regulations and orders of the Railroad Commission, "a penalty of not more than one thousand dollars per day for each and every day of violation of the orders of the Railroad Commission of Texas," etc. The petition further sets up and seeks to recover, namely: "That said defendants have failed to account for the gross production tax that is levied on the production of oil that said defendants have produced, and that there is now owing and due the State of Texas $4,234.58 in gross production tax, which defendants have failed and refused to pay and still fail and refuse to pay; that it has a valid lien for and on behalf of the State of Texas upon all the properties of the defendants, and each of them, within this State to secure payment of such gross production tax; that the plaintiff has been damaged in the sum of $4,234.58."

The petition sets up in full detail the alleged necessity and the urgency of the obedience to its orders and regulations by owners and operators of oil wells, and for the appointment of a receiver for defendant's oil wells because of its violations of the orders and regulations and of wrongful operation of the oil wells. The prayer reads: "Wherefore, plaintiff prays that a Receiver for the properties hereinabove specifically described be immediately appointed by this Honorable Court, with authority and instructions to forthwith and immediately take over such property and operate the same in accordance with the laws of the State of Texas, and the orders, rules and regulations of the Railroad Commission of the State of Texas; that defendants be served with process and that upon a hearing hereof plaintiff have judgment for its debt and damages aforesaid. Plaintiff prays for a foreclosure of its lien. And for such other and further orders, judgments and decrees as are necessary in the premises, and for such other and further relief, general and special, legal and equitable, including costs of court, to which plaintiff may be justly entitled as it will ever pray."

Fischer & Fischer and R. E. Prothro, all of Tyler, for appellant.

James V. Allred, Atty. Gen., and A. R. Stout, Willis E. Gresham, B. D. Shepperd, and Neal Powers, Asst. Attys. Gen., for appellee.

LEVY, Justice (after stating the case as above).

The principal question to be determined, as the ultimate end and object of the proceeding, is that of the appointment of a receiver on the application of the Railroad Commission of Texas, moving therefor to take over and operate the oil well in order for the enforcement of the orders and regulations of the Railroad Commission. There is no feature of relief or remedy afforded by the courts of a higher value than that of acting directly upon the person or property of the party who would deliberately violate his contracts or do an act wrongful in special circumstances. The appointment of a receiver is an important head of the preventive jurisdiction of courts of equity, being founded on the inadequacy of the remedy at law, although this remedy is now the subject of express statutory provision in certain class of cases. It becomes necessary to consider the nature and class of the present proceeding, and who may maintain it, in order to determine whether or not it be one of the class in which the statute provides a receiver may be appointed. Considering alone the allegations in the petition, taking the facts as true, the controversy is thus initiated: The Railroad Commission of Texas, through the Attorney General of the state, instituted the proceeding in the nature of a complaint against the appellant framed upon the definite theory that the appellant, a corporation, engaged in the production of oil, acting through its president and vice president, was deliberately and defiantly daily violating the regulations and orders of the Railroad Commission, promulgated and in force, providing for and fixing the method of gauging or measuring and of making and keeping a complete record of the daily production of oil, and providing for and prorating the permissible daily production of oil. By the prayer of the petition, relief at the hands of the court was asked, not against a particular person, but against the oil well and property, "to forthwith and immediately take over such property and operate the same in accordance with the laws of the State of Texas, and the orders, rules and regulations of the Railroad Commission of the State of Texas." The prayer is deemed an essential part of the petition, and determines the character of the decree which the court acting within its jurisdiction over the subject-matter is called upon to render. Article 2003, R. S.; Jordan v. Massey (Tex. Civ. App.) 134 S. W. 804.

It is believed that the proceeding, according to nature and purpose, must be classed and be so considered as one of rights and remedy created and existing purely by statute, to enforce and to prevent the continuing violations of the orders and regulations of the Railroad Commission of Texas promulgated pursuant to the statute. The Railroad Commission is specially clothed by the statute with jurisdiction over oil wells and the corporations and persons drilling and operating the same. Article 6023, R. S. It is specially clothed with the authority to establish regulations and make orders, and enforce the same, in the operation of oil wells and production of oil. Article 6029, R. S. (as amended by Acts 1931, 1st Called Sess., c. 26, § 15 [Vernon's Ann. Civ. St. art. 6029]). The statute expressly creates the right and duty in the Railroad Commission, distinctively as such, and in its name as the Railroad Commission to "institute suits * * * and sue out such writs and process as may be necessary for the enforcement of its orders, and punish for contempt or disobedience of its orders as the district court may do." Article 6024, R. S. And proceedings in the courts by the Railroad Commission is by the wording of the statute restricted to and not enlarged beyond the "enforcement" of its orders and regulations, and the "violations" thereof. It is not clothed with authority otherwise to institute and maintain proceedings in its name in respect to conservation of oil, or production thereof. The legal effect is clear that a proceeding for the enforcement and prevention of violation of its orders and regulations may be deemed as one, not in effect by the state of Texas, but purely by the Railroad Commission, distinctively as such, as a legal entity clothed with special statutory authority to maintain the same. Although an agency of the state, yet in virtue of the authority conferred by the statute, the Railroad Commission becomes a special legal entity, having an individuality separate from the state, with respect to the institution and maintenance of suits for the enforcement and prevention of violation of its orders and regulations. The present proceeding presents a different situation from, and is without the ordinary rule in the case of, State Highway Commission v. Utah Const. Co., 278 U. S. 194, 49 S. Ct. 104, 73 L. Ed. 262.

Although the petition is also framed in the view of a suit or cause of action for the items of penalty and the gross production tax, the Railroad Commission suing as such would not be authorized to institute and maintain a suit therefor. It has no inherent right and is not clothed with authority by statute to sue in its name, for itself or for the state, to recover the items mentioned. The "penalty" imposed for violation of the regulations and orders of the Railroad Commission by express terms of statute can only be recovered by suit "instituted and conducted in the name of the State of Texas, by the Attorney General of the State of...