Simmons v. Wilson

• Decision Date: 06 January 1949
• Docket Number: No. 2824.,2824.
• Citation: 216 S.W.2d 847
• Parties: SIMMONS v. WILSON et al.
• Court: Texas Court of Appeals

Page 847

216 S.W.2d 847

SIMMONS v. WILSON et al.

No. 2824.

Court of Civil Appeals of Texas. Waco.

January 6, 1949.

Appeal from District Court, Kleberg County; Paul A. Martineau, Judge.

Consolidated suits by Sam E. Wilson, Jr. and others against Jay Simmons, for an accounting under a constructive trust involving certain overriding royalty interests asserted in and to a mineral leasehold estate covering oil producing land. From a judgment in favor of certain of the plaintiffs, the defendant appeals.

Judgment reformed and, as reformed, affirmed.

Kemp, Lewright, Dyer & Sorrell, of Corpus Christi, Thompson, Knight, Harris, Wright & Weisberg, of Dallas, and Gus L. Kowalski, of Kingsville, for appellant.

Tarlton, Ogden & Hale, of Corpus Christi, Walter Koch, of Austin, Graves & Graves, of Houston, James M. Easterling, of Corpus Christi, and Ralph B. Shank, of Dallas, for appellees.

HALE, Justice.

This suit is based upon an accounting under a constructive trust. It involves certain overriding royalty interests asserted in and to a mineral leasehold estate covering 160 acres of oil producing land designated as Survey No. 43 in Kleberg County, Texas. Appellant, Jay Simmons, is the legal holder of the leasehold in controversy and as such is alleged to be the equitable trustee for the benefit of appellees under the asserted trust.

The suit was originally instituted on June 15, 1945, by appellees H. A. Potter, Wm. E. Ramsey, Woodie Craig and Guy I. Warren (hereafter referred to as Potter et al.) against appellant. Thereafter, appellees N. G. Landrum, John L. Cottingham, Mrs. Hayden Tucker, surviving wife of C. R. Tucker, and others (hereafter referred to as Landrum et al.), joined by Sam E. Wilson, Jr. and S. E. W. Oil Corporation (hereafter referred to sometimes as the Corporation), instituted their suit against appellant. On January 6, 1947, after John W. Rawlinson and wife, his brother and sister (hereafter referred to as the Rawlinsons) and others had become parties to the proceedings, the court below ordered a consolidation of the two suits.

The consolidated suit was tried before a jury. Upon the conclusion of the evidence Potter et al., Landrum et al., Wilson and the Corporation severally moved the court for a peremptory instruction in their favor against appellant. Each of these motions was overruled. The case was then submitted to a jury on certain special issues but the jury was unable to agree upon answers to some of the issues so submitted and was discharged. Thereupon, Potter et al., Landrum et al., Wilson and the Corporation severally moved for judgment in their favor against appellant on the undisputed evidence. The court overruled the motions of Wilson and the Corporation for judgment in their favor, severed the causes of action asserted by them from the causes of action asserted by the other complaining parties, granted the motions of Potter et al., and of Landrum et al., for judgment in their favor against appellant on the undisputed evidence and rendered judgment accordingly.

Under appropriate points in his brief, appellant says in effect that the trial court erred (1) in severing the causes of action asserted against him by Wilson and the Corporation from the causes of action asserted against him by appellees and (2) in rendering judgment against him in favor of appellees after severance.

The undisputed evidence shows that appellant produced a total of 285,007 barrels of oil from the leased premises during the period from August 11, 1945 to July 31, 1947, which was of the total value of $466,553.22. These totals were broken down so as to show the amount and value of the oil produced and sold during each month in the period of time covered. The undisputed evidence further shows that the overriding royalty interests of appellees, if any, in the leasehold estate are held as follows: by Landrum et al. an undivided 1/16 of the total production; and by Potter et al. an undivided 1/8 of 7/8 of the total production.

The trial court rendered judgment on February 27, 1948, establishing the respective overriding royalty interests asserted by appellees in the leasehold estate, awarding recovery to Landrum et al. in the proportions of their several interests for the total sum of $29,159.57 and awarding recovery to Potter et al. in the proportions of their several interests for the total sum of $51,029.26, together with interest on each of such sums at the rate of six per cent per annum from the date of the judgment until paid. Potter and his associates excepted to the judgment and gave notice of appeal therefrom in so far as the same did not allow them any interest as damages on their respective shares of the oil produced during the period of time from August of 1945 to July of 1947 and under an appropriate cross-point in their brief they say the court below erred in refusing to allow them any recovery for such interest as damages.

It thus appears to us that the appeal presents three ultimate questions of law for decision, viz: Were the facts established by the undisputed evidence in the court below sufficient to impress appellant's leasehold estate in Survey No. 43 with a constructive trust for the benefit of appellees? If so, did the trial court err in severing the causes of action asserted by Wilson and the Corporation from the causes of action asserted by appellees? And, if not, were Potter and associates entitled to recover interest as damages on their claims against appellant?

The basic theory out of which a constructive trust arises is stated in 26 R. C. L. 1236 as follows: "It is a well settled general rule that if one person obtains the legal title to property, not only by fraud, or by violation of confidence of fiduciary relations, but in any other unconscientious manner, so that he cannot equitably retain the property which really belongs to another, equity carries out its theory of a double ownership, equitable and legal, by impressing a constructive trust upon the property in favor of the one who is in good conscience entitled to it, and who is considered in equity as the beneficial owner."

Constructive trusts are purely creatures of equity. Their forms and varieties are practically without limit. Their classification is dependent upon the circumstances surrounding the acquisition of the legal title to property in each particular case. Being remedial in character, however, their broad function in all of their varied forms and classifications is to redress wrong or unjust enrichment, in keeping with established principles of equity and justice. Tex. Jur. vol. 42, p. 649, Secs. 45-47; Am. Jur. Vol. 54, p. 167, Sec. 218; C. J., Vol. 65, p. 454, Sec. 215; Restatement of the Law of Trusts, Part I, pp. 5-6; 3 Bogert on Trusts and Trustees, § 471; Pomeroy's Eq. Jur., (5th Ed.) Vol. 1, p. 209, Sec. 155; 1 Perry on Trusts, (6th Ed.) Par. 186.

The leased premises here in controversy are surrounded by a large body of land known as the King Ranch, formerly owned by Robt. J. Kleberg. On November 13, 1896, Robt. J. Kleberg executed a deed to Wm. and Ida Rawlinson by the terms of which he purported to convey to them 160 acres of land, more or less, in Kleberg County, Texas, designated as Survey No. 44. However, the grantees did not enter into possession of Survey No. 44 but they did immediately take possession of Survey No. 43, containing 160 acres adjoining Survey No. 44. Ever since that time Wm. and Ida Rawlinson and their heirs have had possession of Survey No. 43, claiming the same as their own, and Robt. J. Kleberg and his successors in title have had possession of Survey No. 44, claiming the same as their own.

Prior to 1940 the King Ranch, a corporation, had granted a mineral lease to Humble Oil & Refining Company, hereafter referred to as the "Humble", covering its lands in Kleberg County. Among the lands specifically described in this lease was the tract designated as Survey No. 43, then in possession of the Rawlinsons as heirs of Wm. and Ida Rawlinson, but it did not specifically include Survey No. 44.

On February 21, 1940, the Rawlinsons executed an "unless" oil and gas lease in usual form to Chas. F. Heman and Woodie Craig, hereafter referred to as the "H-C Lease", covering 160 acres of land designated as Survey No. 44 in Kleberg County. Following the description of the land covered in this lease was the following language: "This lease also covers and includes all of the land owned or claimed by Lessor adjacent or contiguous to the land particularly described above, whether the same be in said survey or section or in adjacent surveys or sections, although not included within the boundaries of the land particularly described above." The primary term of this lease was for five years. In addition to the usual 1/8 royalty provision contained in the lease, a cash bonus of $800.00 was paid by lessees for the same. The lease also provided for delay rentals, in the absence of drilling operations, of $800.00 to be paid at the expiration of six months after its date, $800.00 at the expiration of twelve months, and $800.00 at the end of each year thereafter throughout the remainder of the primary term.

Simultaneously with the delivery of the H-C lease and as a part of the same transaction the lessees therein executed and delivered to the Rawlinsons a separate instrument, hereafter referred to as the "Water Well Agreement", by the terms of which lessees obligated themselves to drill a water well upon the leased premises to a depth of 475 feet and to drill a well for oil to a depth of 7,000 feet. The leased premises were therein referred to as 160 acres in Kleberg County, Texas, "same being known as the old Rawlinson homestead."

The H-C lease was thereafter assigned from its respective owners by successive written instruments dated as follows: (1) on March 8, 1940, to H. A. Potter, Inc.; (2) on June 28, 1940, to S. E. W. Oil Corporation; (3) on August 8, 1940, an undivided 1/4 interest...