Smith v. Rampy

• Decision Date: 02 December 1946
• Docket Number: No. 5754.,5754.
• Citation: 198 S.W.2d 592
• Parties: SMITH v. RAMPY et al.
• Court: Texas Court of Appeals

198 S.W.2d 592

SMITH v. RAMPY et al.

No. 5754.

Court of Civil Appeals of Texas. Amarillo.

December 2, 1946.

Rehearing Denied January 6, 1947.

Appeal from District Court, Cochran County; Daniel A. Blair, Judge.

Suit by L. R. Rampy against O. R. Smith and others to recover damages because of alleged breach of development contract, in trespass and to remove cloud from plaintiff's realty, and for damages to the realty, wherein certain of defendants filed a cross-action to recover, from O. R. Smith and Frank Griggs, debts evidenced by respective liens held by those filing the cross-action. O. R. Smith filed pleas of privilege as to the plaintiff's cause of action and also as to the cause of action asserted by the cross-plaintiffs. From judgment overruling the pleas of privilege, O. R. Smith appeals.

Judgment reversed and cause remanded with instructions to sustain pleas of privilege and order case removed.

Thomas B. Duggan, Jr., of Lubbock, and McGown, McGown, Godfrey & Logan, of Fort Worth, for appellant.

Herbert Marshall, of Dallas, J. Orville Smith, Nelson, McCleskey & Howard, and F. D. Brown, all of Lubbock, Allison & Chandler, of Levelland, and Bryan, Stone, Wade & Agerton, of Fort Worth, for appellees.

STOKES, Justice.

On October 18, 1944, appellee L. R. Rampy executed and delivered to Frank Griggs as lessee two oil and gas mining leases covering approximately 222 acres of land in Cochran County. At the same time, Rampy and Griggs entered into a development contract concerning the character of drilling operations and development of the leases that would be prosecuted by Griggs, including the drilling of a well to a depth of 5000 feet unless oil or gas in paying quantities were discovered at a lesser depth, and if oil or gas were produced, the development of the leases to the extent permitted by law. On May 4, 1945, appellee Rampy instituted this suit in which he asserted an action for damages by reason of the alleged breach of the development contract. He also pleaded an action in trespass and to remove cloud from his title to the 222 acres, and an action for damages to the land, which he alleged had accrued from the loss of rentals and revenue. The petition named appellant O. R. Smith and fifteen other parties and corporations, not necessary here to identify, as defendants. He alleged that Smith was a mining partner with Griggs in the development of the leases and that the other defendants held mechanic's and materialman's liens and deeds of trust against the property. He prayed for cancellation of the development contract and the oil and gas leases; that they be removed as clouds upon his title; and that he recover damages for loss of rents and profits. The defendant lienholders answered by the general issue and, by cross-action, sought to recover from Griggs and appellant Smith the debts evidenced by the respective liens held by them under allegations that appellant Smith was a mining partner with Griggs in the drilling of two wells in an effort to produce oil or gas from the land covered by the leases. Appellant Smith filed pleas of privilege as to Rampy's cause of action and also as to each cause of action asserted by the respective cross-plaintiffs, alleging his residence to be in Ector County and praying that the cause of action as against him be transferred to the District Court of that county. Controverting affidavits were filed to each plea of privilege. At a hearing involving the issues presented by the pleas of privilege and the controverting affidavits, it was stipulated that if the pleas of privilege were sustained as to Rampy's cause of action, the order of the court transferring Rampy's cause of action against Smith should include the transfer of each cross-action of the other appellees. The issues relating to the pleas of privilege were submitted to the court without the intervention of a jury and resulted in a judgment overruling the pleas of privilege upon the theories, (1) that after the execution of the oil and gas leases by Rampy, appellant Smith and Frank Griggs undertook the drilling of wells thereon in such manner as to constitute them joint adventurers or mining partners in the development of the leases under the development contract executed by Griggs, which provided that it should be performable in Cochran County, and that, although Smith had not signed the development contract, being a mining partner with Griggs, he was a necessary party to the suit; (2) that the suit was for the recovery of land or damages to land and to remove encumbrances upon the title and venue was, therefore, properly laid in Cochran County. The holdings were based upon the provisions of Subdivisions Numbers 5, 12, 14 and 29a of Article 1995, Vernon's Revised Civil Statutes.

The appellant O. R. Smith duly excepted to the judgment, perfected an appeal to this court and presents the case here upon four assignments of error, in which he contends the judgment should be reversed first, because the court erred in overruling his pleas of privilege, for the reason that the evidence wholly failed to establish a mining partnership between Griggs and appellant; secondly, because appellee Rampy's petition failed to show a cause of action in trespass to try title or to remove encumbrances and clouds from title insofar as appellant was concerned and, thirdly, because the cause of action asserted by appellee Rampy for lost rents and profits by reason of being excluded from the land was not an action for damages to land within the meaning of Subdivision 14, Article 1995.

It is well settled by many decisions of the courts of this State that a mining partnership, sometimes referred to as a joint adventure, may be created by express contract and it may also be created as a matter of law, without an express contract, by the joint ownership and joint operation of the enterprise. In order to create a mining partnership by the latter method, there must be present the elements of joint ownership, joint operation, the sharing of profits, community of interests and mutual agency in the management of the lease or properties involved. Gardner v. Wesner, Tex.Civ.App., 55 S.W.2d 1104; Wright v. Terry, Tex.Civ.App., 78 S.W.2d 1043; Clayton v. Bridgeport Mach. Co., Tex.Civ. App., 33 S.W.2d 787; Wagner Supply Co. v. Bateman, 118 Tex. 498, 18 S.W.2d 1052; Roberts v. McKinney, Tex.Civ.App., 187 S. W. 976; Mayfield v. Key, Tex.Civ.App., 260 S.W. 926; Templeton v. Wolverton, et al., 142 Tex. 422, 179 S.W.2d 252.

Appellees do not challenge the proposition we have posed but they contend, first, that the finding by the trial court of the existence of a mining partnership between Griggs and Smith was supported by the evidence to the effect that they were joint owners and jointly operated the leases; secondly, that the suit was one of trespass to try title and to remove clouds and encumbrances from the title to land; and, thirdly, that Griggs was sued upon a written contract performable in Cochran County pertaining to land upon which the lien-holding appellees sought to foreclose liens and that appellant, being a necessary party thereto, venue was properly laid against him in Cochran County.

The record shows that on the 4th of November, 1944, Griggs desired to begin the drilling of a well on the land in an effort to produce oil or gas but that he was not possessed of sufficient funds and he procured appellant Smith to accompany him to the First National Bank of Fort Worth, where he contemplated borrowing enough money to discharge the expenses of drilling the first well. The negotiations resulted in the bank advancing to Griggs the sum of $30,000 upon Griggs' note, signed by appellant as surety. A deed of trust covering the leases was drawn in the bank at that time and executed by Griggs, whereby he secured appellant upon his surety obligation. An official of the bank advised Smith to take from Griggs an assignment of the leases as additional security for his suretyship but Griggs and Smith repaired to Smith's office, where they discussed the matter further, and Griggs then executed an assignment to Smith of an undivided one-half interest in the leases. It is undisputed that this assignment was executed as additional security for Smith's obligation upon Griggs' note at the bank. On the same day, Griggs and appellant entered into a written contract under which it was provided that Griggs, at his own expense and without any responsibility or expense of appellant, should proceed at once to drill a well upon the Rampy leases and complete the same to the depth of 5,000 feet or to paying production, as provided by Griggs' development contract with Rampy. It further provided that, if and when Griggs had done so, appellant would then pay to Griggs $15,000 and receive therefor an assignment of an undivided half interest in the leases. The record further shows that, before the execution of the last mentioned contract, Griggs had attempted to induce appellant to pay $15,000 upon the drilling expenses of the first well, which appellant declined to do. It is further shown that Griggs then made all necessary arrangements and proceeded with the drilling of the first well on the Rampy leases and it was...