TXO Production Corp. v. Prickette
| Decision Date | 31 May 1983 |
| Docket Number | No. 10-83-007-CV,10-83-007-CV |
| Citation | 653 S.W.2d 642 |
| Parties | TXO PRODUCTION CORPORATION, Appellant, v. Eugene PRICKETTE, Appellee. |
| Court | Texas Court of Appeals |
This is an appeal from an order overruling Appellant's plea of privilege to be sued in Dallas County.
On May 6, 1977, Appellee (lessor) executed an oil and gas lease with Enserch Exploration, Inc. (lessee) covering 68.6 acres of land in Freestone County. The evidence shows this lease was subsequently assigned by Enserch to Paragon Resources, Inc. On December 21, 1979, Paragon executed a pooling agreement which placed the 68.6 acre tract in a unitized tract of 692.734 acres called the Teague Gas Unit. The working interests in the gas unit had theretofore entered an operating agreement with Appellant on July 20, 1979, designating Appellant as the operator of the unit. The evidence shows that a gas well was completed on acreage in the pooled unit (on acreage other than the 68.6 acre tract in question) on November 29, 1979, which came into production in January, 1980. Appellee (lessor) signed a division order with Appellant (operator) on March 16, 1982, which contained a property description of the 692.734 acres included in the gas unit and which also referred to a gas purchase contract, dated October 15, 1981, between Paragon and Delhi Gas Pipeline Corporation.
Thereafter, on or about June 8, 1982, Appellant mailed its check in the sum of $19,908.64 to Appellee for royalties on gas produced in the unit from January, 1980 (the date of first production and sale in the unit); however, Appellant stopped payment on this check before Appellee could negotiate it. Later, on or about June 18, 1982, Appellant mailed another check to Appellee which was for payment of royalties on gas produced from October 15, 1981 (the date of first sale of gas from the unit by Paragon). Appellant's position is that the first royalty check to Appellee was prepared in error, since Appellee was not entitled to recover royalties from first production of gas in the unit (January, 1980), but was only entitled to recover royalties from the first sale of gas from the unit by Paragon (October 15, 1981). Appellee sued Appellant in McLennan County alleging, among other causes of action, breach of the division order.
In response to Appellant's plea of privilege, Appellee filed a controverting plea alleging venue was proper in McLennan County under Subdivisions 5, 7, 9 and 23 of V.A.C.S. art. 1995. After a hearing, the trial court overruled Appellant's plea of privilege without designating the particular subdivision of art. 1995 under which the court found venue proper in McLennan County.
Appellant appeals on four points, separately alleging the trial court erred in holding venue is sustainable in McLennan County under any of the four subdivisions of art. 1995 relied on by Appellee. Appellant's second point of error, which asserts that venue is not sustainable in McLennan County under Subdivision 23 because Appellee failed to prove a cause of action against Appellant by a preponderance of the evidence, will be dealt with at the outset.
Subdivision 23 provides for venue in suits against private corporations "in the county in which the cause of action or part thereof arose". The law is well settled that a "cause of action" consists of the factual propositions which establish the plaintiff's primary right of recovery (in other words, the defendant's duty) and the defendant's act or omission which violates such right. The plaintiff must prove by a preponderance of the evidence all elements of a cause of action against the corporate defendant whose plea of privilege is being contested, which must be the same cause of action alleged and relied upon in the petition and controverting plea, and, in addition, plaintiff must show that part of the transaction creating the primary right or part of the transaction involving the breach, or both, occurred in the county of suit. 1 R. McDonald, Texas Civil Practice § 4.30.2 (1981) and cases cited thereunder.
Appellee's right as a royalty owner had its inception in the 1977 oil and gas lease, which contained a standard 1/8th gas royalty clause and a standard pooling provision. The pooling agreement creating the gas unit and the operating agreement designating Appellant as operator of the unit do not purport to change Appellee's rights as a royalty owner under his lease, and Appellant does not contend otherwise. Passing for the moment the question of whether the division order signed by Appellee on March 16, 1982, altered Appellee's rights as a royalty owner under his oil and gas lease, we shall initially examine the extent of Appellee's rights under his lease.
According to the pooling provision of Appellee's lease, production from any part of the pool unit "shall be considered ... as production ... of gas on land covered by this lease". Furthermore, the pooling provision provides that, for the purpose of computing royalties, the production of gas from the pooled unit shall first be prorated among the various tracts of land covered by the leases contributed to the unit, and "royalties ... shall be computed on the portion of such production ... so allocated to the land [68.6 acres] covered by this lease and included in the unit just as though such production were from such land".
The clear and unambiguous language of Appellee's lease makes production and sale of gas in the unit...
To continue reading
Request your trial
-
Beard v. Endeavor Natural Gas, L.P, No. 01-08-00180-CV (Tex. App. 12/19/2008)
...checks and deposit of those checks in the bank in Smith County further contributes to Smith County venue. Beard relies on TXO Production Corporation v. Prickette for his contention. See TXO Prod. Corp v. Prickette, 653 S.W.2d 642 (Tex. App.-Waco 1983, no pet.). In TXO, the court held that a......
-
Puckett v. First City Nat. Bank of Midland
...shows an express intent not to effect a cross conveyance as to payments of royalty. The Pucketts also rely upon TXO Production Corporation v. Prickette, 653 S.W.2d 642 (Tex.App.--Waco 1983, no writ), and assert that the court adopted the "weighted average" approach. TXO was a venue case. Th......
-
CHAPTER 15 FEDERAL ROYALTY ACCOUNTING FOR DISPROPORTIONATE SALES FROM FEDERAL UNITS AND CORRESPONDING STATE ISSUES (TAKES vs. ENTITLEMENTS)
...Corp., 136 So.2d 55 (La. 1961) 15-50Superior Oil Co. v. Cox, 307 So. 2d 350 (La. 1975) 15-5TXO Production Corp. v. Prickette, 653 S.W.2d 642 (Tex. Civ. App. 1983) 15-58-59, 15-72Tara Petroleum Corp. v. Hughey, 630 P.2d 1269 (Okla. 1981) 15-61Tenneco Oil Co. v. District Court of Twentieth Ju......
-
WELLHEAD IMBALANCES
...The M.L. Bath Companies). [108] 130 So.2d 501 (La. App. 2d Cir. 1961). [109] Id. at 503-04. [110] Id. at 508. [111] Id. at 505. [112] 653 S.W.2d 642 (Tex. Ct. App. 1983). [113] Id. at 646. [114] See Lansdown, supra note 106, at 20. [115] Shell Oil Co. v. Corporation Comm'n, 389 P.2d 951 (Ok......
-
CHAPTER 11 RELATIONSHIPS BETWEEN CO-OWNERS IN MARKETING NATURAL GAS
...to units based on forced pooling. See Smith, "The Texas Compulsory Pooling Act, Part II," 44 Tex. L.Rev. 387, 414-416 (1966). [112] 653 S.W.2d 642 (Tex. App. 1983). [113] 702 S.W.2d 232 (Tex. App. 1985, writ ref'd n.r.e.). [114] For a discussion of current issues relating to the market valu......
-
CHAPTER 9 TAKING GAS IN KIND ABSENT A BALANCING AGREEMENT
...case adopting the "weighted average" approach to the royalty payment problem). [124] Compare TXO Production Corp. v. Prickette, 653 S.W.2d 642 (Tex. Ct. App. 1983) (weighted average approach) with Puckett v. First City Nat'l Bank of Midland, 702 S.W.2d 232 (Tex. Ct. App. 1985) (adopting tra......