text:
    C. H. LANGDEAU, Receiver of Franklin American Ins. Co., Petitioner, v. BURKE INVESTMENT COMPANY, Respondent. C. H. LANGDEAU, Receiver of Franklin American Ins. Co., Petitioner, v. HIGHLAND HILLS, INC., Respondent. C. H. LANGDEAU, Receiver of Franklin American Ins. Co., Petitioner, v. E. J. BURKE, Jr., Respondent.
    Nos. [ A-XXXX-XXXX ]-8812.
    Supreme Court of Texas.
    June 20, 1962.
    Rehearing Denied July 25, 1962.

      Cecil C. Rotsch, Horace Wimberly, Kerns B. Taylor and Harold G. Kennedy, Austin, for petitioner.
    John Peace, San Antonio, for respondent.
   WALKER, Justice.

The San Antonio Court of Civil Appeals has held that the venue of an action in trespass to try title against the receiver of an insurance company is governed by Exception 14 of Article 1995, Vernon’s Ann. Tex.Civ.Stat, rather than by Section 4(f) of Article 21.28, V.A.T.S. Insurance Code. 351 S.W.2d 287. We have jurisdiction under Subdivision 2 of Article 1728, because such holding is in conflict with the decision of the Austin Court of Civil Appeals in Bennett v. Langdeau, 348 S.W.2d 179.

It is well settled that Exception 14 is mandatory where the privilege is properly claimed by any party to a suit which falls within its terms. South Texas Development Co. v. Williams, 130 Tex. 217, 107 S.W.2d 378; Pena v. Sling, 135 Tex. 200, 140 S.W.2d 441, 128 A.L.R. 1223; Thomson v. Locke, 66 Tex. 383, 1 S.W. 112. The purport of the words used by the Legislature in Section 4(f) is quite different. It does not provide that the actions mentioned therein shall or must be brought in the county where the receivership is pending. Venue to hear and determine the proceedings is conferred upon the courts of that county, but there is nothing to suggest that the lawmakers intended for such courts to have exclusive venue of all suits by or against the receiver. Exception 28a, which contains language of similar import, has been held to be permissive and not mandatory. Mutual Fire & Automobile Ins. Co. v. Kirkman, Tex.Civ.App., 231 S.W.2d 459 (no writ). As pointed out by the court in that case, a declaration that “venue shall lie” in a certain county is not equivalent to a command that the suit “must be brought” in that county. It merely signifies an intention to give the plaintiff the legal right, if he chooses, to maintain such a suit there. This, it seems to us, is the meaning which should be attributed to the provisions of Section 4(f).

Petitioner contends that Section 4(f) is mandatory and exclusive in effect even though couched in language which would generally be regarded as permissive. He says that in the absence of statutory authorization, leave of the appointing court must be obtained before a receiver may sue or be sued in any other court. Under the provisions of Article 2310, an ordinary receiver may sue or be sued in any court having jurisdiction of the cause of action without leave of the appointing court, and Article 2311 deals with the venue of actions against such receivers. Section 4(e) provides that these two statutes shall not apply to insolvent insurance companies being administered under Article 21.28 of the Insurance Code. Petitioner argues that it is only by virtue of Articles 2310 and 2311 that the general venue statute ever applied to' receivers. Since they have no efficacy in the present case and consent of the appoint--ing court has not been obtained, petitioner reasons that the action cannot properly be maintained in Bexar County, that Exception 14 has no application, and that venue is necessarily controlled by Section 4(f). We do not agree.

The necessity for obtaining leave of the appointing court before maintaining an action in another court and the proper court in which to institute the suit under our statutes relating to venue are separate problems which are dealt with separately by Articles 2310 and 2311. The absence of express statutory authority for the prosecution of suits by or against receivers of insurance companies without the consent of the receivership court does not indicate that Section 4(f) is intended to be exclusive. It does not give a plaintiff the freedom of choice allowed by Article 2311, but we think the Legislature has simply laid down a different permissive venue rule for actions involving an insurance company receiver.

There is no conflict between the mandatory provisions of Exception 14 and the permissive terms of Section 4(f), and Section 16 does not require that the former yield to the latter in a case like the present. Petitioner also directs our attention to Exception 30. While that subdivision is expressed in mandatory terms, it does not convert a merely permissive venue provision, wherever it may he found, into a mandatory prescription. McDonald, Texas Civil Practice, Vol. 1, § 4.37, p. 420. A permissive statute applicable to actions of a particular kind must always yield to a mandatory provision of Article 1995. See Mitchell v. Porter, Tex.Civ.App., 194 S.W. 981 (reversed on other grounds, Com. App., 223 S.W. 197). We agree with the Court of Civil Appeals that Exception 14 governs the venue of an action which falls within its terms even though the suit is brought by or against the receiver of an insurance company.

By his fourth point of error, petitioner • says that even if Exception 14 is applicable to actions against an insurance company receiver, his pleas of privilege should have been sustained because the present suits are mere subterfuges. An additional statement is necessary. On June 17, 1960, petitioner instituted suit against respondents and others in the 126th District Court of Travis County, seeking to set aside certain releases, notes, deeds and deeds of trust affecting the title to two tracts of land in Bexar County and to foreclose a deed of trust lien thereon. Respondents filed pleas of privilege which were overruled by the trial court. It was this ruling which was appealed to and affirmed by the Austin Court of Civil Appeals in Bennett v. Langdeau, supra.

About three months after such action was instituted in Travis County, respondents as plaintiffs filed the present suits in Bexar County. Each petition contains the formal allegations required for an action of trespass to try title, and prays that the plaintiff have judgment for title and possession of part of the land involved in the Travis County suit, for the removal of encumbrances therefrom and for the quieting of the plaintiff’s title thereto. Petitioner filed his pleas of privilege in the Bexar County suits, and the same were duly controverted.

Petitioner answered the controverting affidavits, alleging that the present suits are not good faith actions to recover or remove encumbrances from the title to land, but are mere subterfuges used in an effort to confer upon the District Court of Bexar County jurisdiction and venue over matters already before and under the jurisdiction of the 126th District Court of Travis County. Pleas in abatement based on the pendency of the prior action in Travis County had previously been filed.

At the hearing on the pleas of privilege petitioner adduced evidence tending to show that the three suits were instituted in Bexar County for the purpose of litigating there the issues involved in the Travis County suit. That does not make the suits fraudulent for venue purposes but is a matter which must be reached by the pleas in abatement. If respondents are actually seeking to recover or clear the title to Bexar County land, venue under Exception 14 is not defeated by establishing that their suits were brought in an effort to litigate matters over which the court of another county had already acquired jurisdiction. There is nothing in the record to support the conclusion that respondents were guilty of any bad faith in filing trespass to try title suits rather than some other form of action. Venue under Exception 14 is determined by the location of the land and the nature of the relief sought, and it does not appear that the allegations of the petitions were fraudulently made to take advantage of a venue exception which would not be applicable if the true character of the suits were disclosed. We hold that the trial court did not err in overruling petitioner’s pleas of privilege.

The judgments of the Court of Civil Appeals are affirmed.

      . Tlie provisions of Article 21.28 of the Insurance Code are cited by section number, and those of Article 1995 by exception number. Other statutes are referred to by the article number under which they appear in Vernon’s Ann.Tex. Civ.Stat.

      . “14. Lands. — Suits for the recovery of lands or damages thereto, or to remove incumbrances upon the title to land, or to quiet the title to land, or to prevent or stay waste on lands, must be brought in the county in which the land, or a part thereof, may lie.”

      .“(f) New Lawsuits. The court of competent jurisdiction of the county in which the delinquency proceedings are pending under this Article shall have venue to hear and determine all action or proceedings instituted after the commencement of delinquency proceedings by or against the insurer or receiver.”

      .“28a. Fraternal benefit societies and statewide mutual assessment companies. —In all actions brought against Fraternal Benefit Societies and/or Statewide Mutual Assessment Companies, regardless of the plan upon which they operate and whether incorporated or not, growing out of or based upon any alleged right or claim or loss or proceeds due, arising from or predicated upon any policy or contract issued or made by such Fraternal Benefit Society and/or Statewide Mutual Assessment Companies, venue shall lie in the county where the policyholder or beneficiary instituting such suit resides or in the county of the principal office of such association or where such cause of action arose.”

      . “Sec. 16. Conflicts of Law. In the event of conflict between the provisions of this Article and the provisions of any existing law, the provisions of this Article shall prevail, and all laws, or parts of law, in conflict with the provisions of this Article, are hereby repealed to the extent of such conflict.”

      . “30. Special venue. — Whenever in any law authorizing or regulating any particular character of action, the venue is expressly prescribed, the suit shall be commenced in the county to which jurisdiction may be so expressly given.”


source: Caselaw Access Project

author: NORVELL, Justice. SMITH, Justice WALKER, Justice

license: Public Domain

text:
    Leon GAINES, Petitioner, v. Blake HAMMAN, Respondent.
    No. A-8462.
    Supreme Court of Texas.
    June 13, 1962.
    Rehearing Denied July 18, 1962.

      Settle & Settle, Fort Worth, for petitioner.
    Hudson, Keltner, Jordan, Smith & Cunningham, Fort Worth, for respondent.
   NORVELL, Justice.

The Court of Civil Appeals affirmed a summary judgment rendered in favor of the defendant Blake Hamman and against the plaintiff Leon Gaines, 346 S.W.2d 186. Being of the opinion, since confirmed by a plenary examination of the record, that the decision of the Court of Civil Appeals is contrary to the decisions of this Court in Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W. 2d 256 and Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401, we granted writ of error and now reverse the judgments of the trial court and the Court of Civil Appeals and remand the cause to the District Court.

In this Court the respondent Hamman raises questions relating to the summary judgment practice under Rule 166-A, Texas Rules of Civil Procedure. Hamman asserts and strongly maintains that Gaines in his deposition which is a part of the summary judgment record, swore to facts which, if true, would defeat his asserted cause of action based upon the theory of a constructive trust. It is also urged that Gaines’ testimony was too vague and uncertain to support a judgment based upon said trust theory.

As this cause must be retried under our holding that issues of fact are indicated by the record, we purposely refrain from making an exhaustive statement. Other and further evidence will undoubtedly be received upon another trial.

Such facts as are disclosed by the record and are necessary to an understanding of our holdings are as follows:

Leon Gaines is a geologist of wide experience in the Texas counties of Palo Pinto, Wise, Jack and Young. He had acquired an extensive collection of oil well logs and other data relating to oil exploration and discovery activities in the counties named. Hamman is an oil and gas lease broker. It appears that from 1954 to 1958 Hamman and Gaines were engaged in numerous transactions together. As a general rule Gaines would work up the geological information upon a particular tract of land upon which they planned to acquire a lease; Hamman would underwrite the expenses incidental to the deal, and generally take a lease upon the property in his own name. He would then interest others in the lease and transfer the same to such third parties, retaining an overriding royalty. After Hamman’s expenses had been recouped, the override would be divided equally between Hamman and Gaines. While the taking of title in Hamman’s name was the usual thing, it was not the invariable practice. In his affidavit counter to Hamman’s motion for summary judgment, Gaines said:

“The agreement which we had was that as to any lease or prospect on which I developed or prepared the geology, and which Hamman, or both of us working together, attempted to sell, we would own an equal interest in the lease or prospect and would share equally in any interest reserved when a lease was turned. It was also understood and agreed between us that In making a trade, Hamman would be entitled to recoup the costs which he had incurred in acquiring it. The original agreement was made in 1954. It was oral, and it was repeatedly reaffirmed from time to time by Hamman and by myself; however, I am unable to state at this time when and with respect to which prospect such statements were made.”

According to Gaines’ affidavit, some four years after the original agreement or understanding was made, he and Hamman became interested in an oil and gas lease on some land in Young County owned by C. H. Rogers. The lease was held in the name of Gaines and one of his employees. It was necessary that a well be drilled to prevent the lease’s termination. Hamman offered to try to turn the lease for a half interest therein. Gaines’ employee ceased to figure in the deal and a short extension of the lease was procured by Gaines. Ham-man then succeeded in working out a deal whereby A1 Addyman, Jess Harwell and Clarke Cummins agreed to pay the costs for drilling a well to the casing point in return for a % interest of the ⅞ working interest of the lease. This left Hamman and Gaines sharing a ¼ of the ⅞ working interest equally, subject to a $1900.00 oil payment held by the lessor. Gaines executed the necessary written instrument to vest Hamman with his part of the working Interest. This transaction was similar to numerous others had between the parties in which Gaines furnished the geology and Hamman secured operators to drill the lease, retaining an override which was divided between the parties. In the case of the Rogers the lease was in Gaines’ name, whereas usually Hamman was the record Iiolder of the lease.

Shortly after the Rogers deal, the transactions and occurrences took place with reference to the Logan lease which gave rise io this lawsuit. Again we refer to Gaines’ affidavit. He stated that a portion of the Logan properties became open acreage because of the expiration of a lease insofar as it covered the particular tract involved. Gaines had done geological work on the tract and discussed with Hamman the advisability of securing a lease upon the open acreage concerned. In the early part of November 1958 both he and Hamman talked to L. M. Logan, the owner of the property. On November 17, L. M. Logan and wife executed an oil and gas lease to Hamman covering some 376.4 acres of land. This lease was placed in a Fort Worth bank with directions that the lease be delivered upon the payment of an attached draft. On November 27, 1958 a successful drill-stem test was made on the Rogers well which brought about a conversation between Gaines and Hamman in which, according to Gaines’ best recollection, Hamman said:

“We have to get a deal for these people (Addyman, Harwell and Cum-mins). They are ready to go on another well, because they have gotten a good well on your geology, on the Rogers. It will be the same deal as the Rogers.”

According to Gaines he met with Ham-man, Addyman, Harwell and the completion engineer on the Rogers well in Jacks-boro, Texas, on November 29, 1958 and “discussed in detail the geological possibilities of the Logan prospect and gave them my interpretation of its subsurface geology.” He thereafter completed a geological report and plat which he delivered to Hamman around the first of December.

On December 22, 1958 Addyman and his associates paid the draft above mentioned and as a consequence, the bank delivered the lease to Hamman. The Addyman group financed entirely the drilling of the initial well to the casing point on the Logan tract, but paid only their proportionate part of the cost of the drilling of the second well thereon. Addyman and associates now hold ¾ of the ⅞ working interest. The remaining ⅛ of the ⅞ working interest now stands in the name of Blake Hamman and it is this interest upon which Gaines seeks to impress an equitable trust to the extent of a Ys interest in and to the -⅞ working interest in the Logan lease.

If Gaines’ statements be credited, we think it reasonable to conclude therefrom that Gaines and Hamman, for a number of years, had been engaged in acquiring oil and gas leases which they were to own jointly. These leases would then be “turned” or transferred to third parties and an override or other mineral interest retained and held jointly by the parties in equal portions, subject to Hamman’s right to recoup his out-of-pocket expenses. Under the arrangement between the parties, Gaines would contribute the “geology” and Hamman would pay the expenses incident to the procuring of the leases and the turning of the deal. Undoubtedly if Gaines’ version of the parties’ dealings be accepted, there existed a confidential relationship between the parties insofar as the Logan lease was concerned. The Rogers transaction had just been completed. Hamman wanted another deal for the Addyman group and said in effect that it would be “the same deal as the Rogers.” Addyman, according to his affidavit, received Gaines geological reports and largely upon the strength thereof decided to enter the Logan venture. Should Hamman keep the entire 54 of the ⅞ working interest after production upon the Logan had been obtained, he would be the recipient of an unjust enrichment resulting from the breach of a confidential relationship. This conclusion is fully supported by Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256; Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 and Peckham v. Johnson, Tex.Civ.App., 98 S.W.2d 408, affirmed, 132 Tex. 148, 120 S.W.2d 786.

It is not a complete answer to Gaines’ asserted cause of action to say that in some of the Gaines-Hamman ventures the procedures followed varied in detail from the general scheme of operation above outlined. Nor was it essential that at the commencement of each particular venture, the parties reiterate verbally the terms of the general agreement under which they had operated in order to make such understanding effective insofar as a new venture was concerned. Of course it is Hamman’s contention that all of his deals with Gaines were separate and independent transactions and there was no general understanding or agreement between them. He says that at most, Gaines was employed to do a certain piece of work, namely provide geological information and was to receive petroleum interests therefor instead of money. It is asserted that Gaines’ remedy, if any, lies in assumpsit and not in equity to establish a constructive trust. These contentions and theories, however, simply raise fact issues. On summary judgment we must accept Gaines’ version which, as above pointed out, clearly supports the theory of a general understanding as to methods of operation. Particularly is this true with reference to the Rogers and the Logan leases.

It is further no objection to the theory of constructive trust that the parties may have contemplated a division of property in the form of overrides or something-similar thereto rather than a division of profits in the form of money. The same-may be said with reference to the general understanding of the parties, that Ham-man was to pay all expenses, subject to his right of recoupment. It was not essential that the parties should agree that losses (unrecouped expenses) should be borne equally. We are not here concerned with the question of the technical existence of a partnership or a joint venture insofar as third persons are concerned. The important circumstance from which the law will raise a constructive trust is the breach of a confidential relationship which may exist, although such relationship may not meet the technical requirements of a partnership or joint venture. Mills v. Gray, 147 Tex. 33, 210 S.W.2d 985. If we consider an agreement to share money losses for example, as a prerequisite to the existence of a joint venture, it is difficult to find this element in the case of MacDonald v. Follett, 142 Tex. 616, 180 S.W.2d 334 in which this Court held that evidence supported the theory of a constructive trust giving rise to an equitable title upon which trespass to try title could be maintained. This Court took a broad view of the equity power and announced that:

“Whether or not joint owners of overriding royalty interests sustain relations of trust and confidence toward each other depends upon the facts and surrounding circumstances. They do not sustain that relationship by virtue alone of their being joint owners. Our question then is whether the facts above recited, viewed in the light most favorable to Follett’s contention, raise an issue for the jury on the question of the existence of a relation of trust and confidence.
“This is a suit in equity and in that realm the conduct of parties is judged by refined standards. No rules can be prescribed and no attempt should be made to formulate rules for the measurement of conduct by courts of equity, but that such conduct must be measured by standards exacting the utmost fidelity between the parties is universally recognized. We experience no difficulty in arriving at the conclusion that the facts above narrated, if found to be the true facts, establish that a relation of trust and confidence existed between Follett and MacDonald prior to the execution of the 1938 top leases.”

In his brief respondent places much emphasis upon the oral deposition of Leon Gaines and complains of petitioner’s statements from the record because they refer to Gaines’ affidavit rather than to his deposition. It is asserted that the deposition controls over the affidavit where there is inconsistency or contradiction between them. The thrust of the argument is that Gaines’ deposition evidence does not make out a cause of action but on the contrary demonstrates that petitioner, as plaintiff, cannot recover. As bearing upon this contention, a chronological statement from the record may be helpful.

This suit was filed by Gaines on December 17, 1959. On January 18, 1960 his deposition as an adverse party was taken by Hamman. This deposition is some 105 pages in length and all questions were propounded by Hamman’s attorney. Gaines’ attorney made no attempt to rehabilitate his client or afford him an opportunity to explain his answers in any way, as he evidently preferred to leave this to the actual trial of the cause.

On May 16, 1960 Hamman filed a motion for summary judgment based largely upon petitioner’s deposition asserting, among other things, that Gaines testified in his deposition that he had no expressly stated contract with Hamman relating specially to the Logan lease. It is argued that Gaines’ deposition failed to show an enforceable cause of action.

On June 22, 1960, Gaines, having employed new attorneys, answered the motion for summary judgment and in connection therewith filed affidavits executed by I. B. Beren, Al Addyman and himself.

On July 11, 1960, Gaines filed an additional affidavit which was quite detailed and in content largely supported the allegations of his petition which Gaines had attempted to place in affidavit form by his earlier statement of June 22 wherein he had sworn that he personally knew that all the allegations of his petition were true except those that were made on information and belief. The statement of the facts of the case given in the forepart of this opinion is largely taken from the last affidavit made by the petitioner.

The issue in a summary judgment proceeding is whether or not there is a genuine issue of fact in the case; and in determining this issue, we apply the rule applicable to instructed verdict cases in that the evidence is viewed in the light most favorable to the party opposing the motion. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W. 2d 929; Smith v. Bolin, 153 Tex. 486, 271 S.W.2d 93.

Rule 166-A, Texas Rules of Civil Procedure, provides that a summary judgment “shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” The record of a summary judgment proceedings then consists of the pleading whose office it is to outline the claims and defenses of the respective parties, the depositions and admissions on file and affidavits submitted either in support of or opposing the motion. With the exception of the pleadings it is not essential that any or all of the other possible components of the summary judgment record be present. While admissions on file may be likened to pleadings and considered as written judicial admissions, there is no basis for giving controlling effect to a deposition as compared to an affidavit. Neither does the fact that the deposition is more detailed in some respects than the affidavit vest it with dominant authority, provided of course that the affidavit possesses the necessary requisites prescribed by this Court in Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d 396 wherein it was said that under the provisions of Rule 166-A affidavits to be effective either to support or oppose a motion for summary judgment “must be made by competent affiants with personal knowledge of the statements in them, which statements must be so worded that if given on the witness stand they would be admissible as evidence.” Obviously mere conclusions will not suffice and cases so holding do not support the thesis that in cases of inconsistency or conflict, the deposition prevails over the affidavit. If conflicting inferences may be drawn from the deposition and from the affidavit of the same party, a fact issue is presented. United States Fidelity & Guaranty Co. v. Carr, Tex.Civ.App., 242 S.W.2d 224, wr. ref., New St. Anthony Hotel Co. v. Pryor, Tex.Civ.App., 132 S.W.2d 620, wr. ref. It is not the purpose of the summary judgment rule to provide either a trial by deposition or a trial by affidavit, but rather to provide a method of summarily terminating a case when it clearly appears that only a question of law is involved and that there is no genuine issue of fact. The present record does not disclose a case for summary judgment. In view of the detailed discussion of authorities contained in this Court’s opinions in Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 and Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401, further comment is unnecessary here.

The judgments of the courts below are reversed and the cause remanded to the District Court for further proceedings not inconsistent with this opinion.

GRIFFIN, CULVER and WALKER, JJ., dissent.

SMITH, Justice

(concurring).

I concur in the result reached by the majority only because, in my opinion, there is evidence of probative force other than the evidence which has been rendered ineffective by the Texas Trust Act, Article 7425b-l et seq. which raises a genuine issue of fact as to whether a fiduciary relationship, a relation of trust and confidence, existed between Gaines and Hamman. The facts in this case meet the test contained in my dissent in Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401. Therefore, the case should have been determined by the trier of the facts and the trial court erred in granting Hamman’s motion for summary judgment.

WALKER, Justice

(dissenting).

I respectfully dissent. The majority holding rests entirely on petitioner’s unsupported general statement, made in the affidavit, which is simply his conclusion as to the nature of the agreement and understanding of the parties. This is the ultimate issue to be decided by the trier of fact upon the remand. If the case had been tried in the conventional manner, petitioner’s statement of such a conclusion from the witness stand would be entitled to no weight in the face of his deposition testimony regarding the details of the agreement. I do not think it should be given the effect accorded to it by the majority in this summary judgment proceeding. In the testimony of a witness as in the findings of a jury, the general must always yield to the specific.

Petitioner’s deposition testimony makes it clear that, contrary to the statement made in his affidavit, he was not to own an equal interest in any lease on which he prepared the geology and which was purchased by respondent. It was understood that the lease would be taken in the name of respondent, who would either pay for it or get it financed. The principal details of the agreement are disclosed by the following excerpts from petitioner’s deposition:

“Q. But he would take it in his name and then try to get it financed where he would recoup the money he had put in it and then pay for getting a well drilled.
“A. Yes, sir.
“Q. Now, that was the basic deal?
“A. That was the basic deal.
“Q. And then after that was done you were to get an assignment of half of what he had left?
“A. Yes, sir.
“Q. And if he ended up with nothing but an override, why, you got half of that?
“A. Half of that.
“Q. And if he ended up with a working interest you got half of the working interest?
“A. Yes, sir.
“Q. And if he ended up with nothing—
“A. Why, we just forgot it.”
“Q. And if he was able to turn it and clear it where he retained any interest, whether it was a working interest or carried interest, or an override, you were supposed to get an assignment from him of half of what he had left?
“A. Yes, sir.
“Q. But you weren’t supposed to get the assignment until after it was determined how much he had left?
“A. I believe you stated that right, yes, sir. In other words, he would give me an assignment then.”
“Q. Now, the only thing, the only fraud or only promise that Blake ever has broken, if he has broken any, is his failure to give you an assignment after he got this Logan deal financed and drilled?
“A. Yes, sir, that’s right.”
“Q. Suppose that he turned it and made $50,000 in cash, would you get part of the cash?
“A. That wasn’t the understanding.”
“Q. In other words, getting down to it: If you worked up the geology and he took a deal on that same tract, and if he was able to turn it where he retained any interest in the lease you were to get half of what he retained?
“A. Yes, sir.”

Petitioner did not testify that he was to own a one-half interest in the property as soon as it was purchased by respondent, or that he would be responsible for any of the expenses thereafter incurred. Respondent was at liberty to sell any interest he desired to such persons, for such prices and upon such terms as he deemed proper. If he received all cash and retained nothing in the way of an override, oil payment or working interest, petitioner was to receive nothing.

Both parties testified that there was no character of general partnership between them. Each made deals during the five-year period in which the other did not participate. It is equally clear that they did not agree to engage in a joint venture. Petitioner had no control whatsoever, and there was no agreement that he would share in either profits or losses. When all of the underbrush and window dressing are removed, we have a suit to enforce an agreement that in return for petitioner’s geological services, respondent would, after buying and paying for the lease and selling part of it to other parties, convey to petitioner one-half of whatever interest had been retained. In other words, the action is brought to recover an interest in real estate which respondent promised to convey in consideration for services rendered by petitioner.

In my opinion enforcement of the contract is plainly precluded by the statute of frauds. Sorrells v. Coffield, 144 Tex. 31, 187 S.W.2d 980; Tolle v. Sawtelle, Tex. Civ.App., 246 S.W.2d 916 (wr. ref.). The facts of the Sorrells case are quite similar to those involved here. The plaintiff there testified, and the jury found, that land was purchased in the name of and paid for by the defendant pursuant to a previous agreement that as and when a part of the minerals thereunder were sold sufficient to repay him therefor, the remaining interest in the land, if any, would be owned jointly by the plaintiff and defendant. In holding that the agreement was unenforceable under the statute of frauds, the Court pointed out that the jury’s finding was that the plaintiff would become invested with his equitable title as and when mineral interests were sold sufficient to reimburse the defendant. That is precisely the effect of the agreement which petitioner is attempting to enforce in the present case.

According to petitioner’s testimony, he was entitled to no specific interest in the property unless and until respondent had disposed of a part on such terms as enabled him to recoup his investment and expenses. Then and only then could the interest which petitioner was to receive be determined. Then and only then was respondent obligated to convey an interest to petitioner. If respondent sold the entire property for cash, petitioner was entitled to nothing. How can it be said then that petitioner was invested with the equitable title at a time when the nature and extent of the interest he would receive was unascertained and unascertainable ? Under the agreement of the parties, respondent necessarily became the legal and equitable owner of the property when it was purchased. His promise was that he would thereafter convey an interest to petitioner in consideration of the latter’s services. This is nothing more nor less than a contract for the sale of real estate.

The term “constructive trust” is not a magic phrase that makes the statute of frauds go away when it is uttered. It does not refer to a substantive relationship, legal or equitable, but to a remedial device which courts of equity use when they decide to compel a person holding title to property to convey it to another on the ground that the former would be unjustly enriched if permitted to retain it. In the words of Judge Cardozo, it “is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that-the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.” See Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 122 N.E. 378. “He is not compelled to convey the property because he is a constructive trustee; it is because he can be compelled to convey it that he is a constructive trustee.” Scott on Trusts, 2nd ed. 1956, Vol. IV, § 462, p. 3103. It seems to me, therefore, that courts should be somewhat slow to compel a conveyance, in situations where the Legislature has declared that the defendant shall not be compelled to convey. Bogert says that when the fiduciary obligation happens to be identical with the obligation required to be manifested by writing under the statute, the fact that it is a fiduciary obligation should not exempt it from obedience to the statute any more than if it were a nonfiduciary contract. Bogert, Trusts and Trustees, 1960 ed., § 488, p. 188. In such a situation, enforcement of the promise on the “constructive trust theory” does not render the statute of frauds inapplicable; it is simply a polite way of saying that the court will not abide by the statute.

It is no answer to say that compelling performance of the contract in the present case is merely an extension of the holdings in Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256; Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401; Mills v. Gray, 147 Tex. 33, 210 S.W.2d 985; and MacDonald v. Follett, 142 Tex. 616, 180 S. W.2d 334. Omohundro and MacDonald were “reacquisition” cases. The parties in Fitz-Gerald had entered into a joint venture for the acquisition, development and operation of an oil and gas lease, and the defendant took the lease in his own name in violation of such agreement. In all three of these cases the defendants were compelled to convey interests which they had wrongfully acquired in breach of a fiduciary duty owing by them to the plaintiffs. Mills was a pure restitution case in which the constructive trust was predicated on a confidential relation that was in no way dependent upon the agreement sought to be enforced. These four decisions should not now be homogenized so as to justify a decree requiring performance of an oral promise to convey where there is no relationship of trust and confidence apart from the agreement made the basis of the suit and no acquisition by the defendant of an interest in the land in breach of a duty owing by him to the plaintiff.

A person in petitioner’s position who has made a contract that is unenforceable under the statute of frauds is entitled, of course, to restitution. Alworth v. Ellison, Tex.Civ. App., 27 S.W.2d 639 (wr. ref.). But restitution could not give petitioner an interest in land he had never owned. It would entitle him to the reasonable value of the services rendered. Respondent acquired no interest in the land by breaching a fiduciary duty owing by him to petitioner. His only obligation was to convey to petitioner one-half of whatever interest remained after the lease had been sold to others. By enforcing that obligation, the Court gives to petitioner the full benefit of a contract which the statute of frauds declares shall not be enforced. If this trend continues indefinitely, the statute will finally become meaningless. It is my opinion that the present case opens an avenue which should remain closed. Petitioner has not sought restitution of that to which he is entitled, and I would affirm the judgments of the courts below.

GRIFFIN and CULVER, JJ., join in this dissent.

      . By express provision, constructive trusts are not affected by the Texas Trust Act. Article 7425b-2, Vernon’s Ann.Tex.Stats. Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256.

      . Gaines’ statement in regard to losses was not clear. He said that he supposed that if Hamman had given him a bill of half the losses on an unsuccessful deal, he would have paid it. He gives no instance where he had done so.

      . Cf. Cartwright v. Minton, Tex.Civ.App., 318 S.W.2d 449, wr. ref., n. r. e. wherein it was said that:
      “ ‘The term “fiduciary” is derived from the civil law. It is impossible to give a definition to the term that is comprehensive enough to cover all cases. Generally speaking, it applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contemplates fair dealing and good faith, rather than legal obligation, as the basis of the transaction. The term includes those informal relations which exist whenever one party trusts and relies upon another, as well as technical fiduciary relations.’ ”
      Also see, Holland v. Lesesne, Tex.Civ.App., 350 S.W.2d 859 in which it was said that:
      “Since the decision of the Supreme Court in Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 261, it has been well established that such strict and technical relationships as trustee and cestui que trust, principal and agent, attorney and client, are not indispensable, but that such informal relationships, such as moral, social, domestic, or merely personal ones where one person trusts in and relies upon another, are sufficient.”

      . Such cases as Bliss v. City of Fort Worth, Tex.Civ.App., 288 S.W.2d 558, wr. ref. n. r. e.; Mugrage v. Texas Employers Ins. Co., Tex.Civ.App., 304 S.W. 2d 189, wr. dism.; Farmers State Bank v. First State Bank, Tex.Civ.App., 317 S.W.2d 768, no wr. hist.; Duffard v. City of Corpus Christi, Tex.Civ.App., 332 S.W.2d 447, no wr. hist, are not authority for giving dominant effect to detailed deposition statements upon motion for summary judgment. These cases, and those of like holdings, simply support the well recognized rule that mere statements of legal conclusions in an affidavit are insufficient to raise fact issues.


author: STEAKLEY, Justice. CALVERT, Chief Justice. SMITH, Justice.

text:
    COLOMA OIL & GAS CORPORATION, Petitioner, v. RAILROAD COMMISSION of Texas et al., Respondents.
    No. A-8625.
    Supreme Court of Texas.
    June 6, 1962.
    Rehearing Denied July 11, 1962.
    Wood & Boykin, Corpus Christi, for petitioner.
    Will Wilson, Atty. Gen., Houghton Brownlee, Jr., Linward Shivers, and B. H. Timmins, Jr., Asst. Attys. Gen., Perkins, Floyd, Davis & Oden, Alice, for respondents.
   STEAKLEY, Justice.

This case reaches us in an exceptional status and under unusual circumstances; in view of its disposition the facts will be noted only briefly.

Respondent Railroad Commission granted Respondent Appell Petroleum Corporation a permit to drill a first well on the tract in question as an exception to Rule 37. The recited basis for the permit to drill was to prevent waste and confiscation. Petitioner, Coloma Oil & Gas Corporation, was a protestant before the Commission and prosecuted its appeal pursuant to Article 6049c, Sec. 8, Vernon’s Annotated Civil Statutes. The trial court and the Court of Civil Appeals sustained the order of the Commission. Tex.Civ.App., 348 S.W.2d 390.

The Commission defended its order in the trial court and before the Court of Civil Appeals, and defends it here, on the proposition that the tract in question was entitled to “its first well as a matter of law” because it is “separate and non-contiguous,” a voluntary subdivision not being involved. This is apparent in the series of special exceptions filed by the Commission to the pleadings of petitioner, e. g., “Defendant excepts to the balance of paragraph III for the reason that common ownership of the tracts is immaterial and irrelevant since the tract in question is a separate, non-contiguous tract and is entitled to a first well as a matter of law.” Pursuant to its exceptions, the Commission stated the following to the trial court with respect to the offer of evidence by petitioners:

“Your honor, for the sake of the record, we would like the record to show that so far as this evidence is concerned, we object to it insofar as the Rule 37 permit is concerned. We do not require him to prove it up, but we object to it as being immaterial and irrelevant as to this case.”

The following excerpts from the brief of respondents states the same position in this Court:

“Counsel for Appellees timely objected to any evidence offered by Coloma with respect to alleged common underlying reservoirs, costs of operations, quantities of production, conditions of the underlying strata of oil and gas sands and geology with regard to the leases in question, for the reason that such evidence so offered was irrelevant and immaterial to any issue in the case, since such tract was entitled to its first well as a matter of law.
“Under its present rules, the Commission is obliged to grant a permit to drill one well (the first well) as an exception to Rule 37 as a matter of law, in the absence of a voluntary subdivision and in order to prevent confiscation * * * So far as we can determine this rule has not been changed, modified, altered or amended.
“Throughout Appellant’s brief, great stress is placed upon a comparison between the production from the existing Appell well and the existing Coloma well. An attempt is made to draw a comparison between the proposed well, and the existing Appell and Coloma wells. Appellees took the position in the trial court, the Court of Civil Appeals, and take the position here, that such matters are entirely and completely irrelevant and immaterial, since this tract of land in question is unquestionably entitled to its first well as a matter of law and this case in no way involves allocation, but only a well permit.”

We add parenthetically that in view of the foregoing it is not unreasonable to conclude that the hearing before the Railroad Commission was upon the same basis, i. e., that Appell was entitled to the permit as a matter of law and no evidence of waste and confiscation was required.

The decision of this Court in Railroad Commission v. Williams, Tex., 356 S.W.2d 131, intervened after the decision of the Court of Civil Appeals in the instant case, and, indeed, after the filing of the application for writ of error herein. Thereupon petitioner filed a supplemental brief asserting the controlling effect of Murel Williams, to which respondents did not reply; moreover, counsel for respondent Commission in oral argument before us urged that Murel Williams was incorrectly decided and should be overruled and that the position of the Commission in the trial court and before the Court of Civil Appeals in the case at bar is still correct. At no time have respondents contended before us that the permit in question is sustainable upon any basis except as a matter of law in the fact that the tract in question is separate and non-contiguous and a voluntary subdivision is not involved. The decision in Murel Williams settled this to the contrary and is now final.

Our problem is the proper disposition of the case at bar in the light of the circumstance that petitioner here, Coloma, offered evidence in the trial court (although over the objection of respondents that “We do not require him to prove it up” and that the evidence was “completely irrelevant and immaterial”), consisting, in brief, of the relative locations and proximity of an existing Appell well on a separate tract, the second well granted Appell by the permit in question, and an existing Coloma well, together with the fact that all three wells would be in a common reservoir of oil and gas bearing sands of substantially uniform thickness and character and with free communication between the wells. Respondents offered no evidence.

In view' of the circumstance that except for the one-tract one-well theory, neither the Commission nor Appell attempted to question Coloma’s evidence tending to show that the second Appell well was not necessary to prevent either waste or confiscation, we are constrained to hold that Coloma has discharged the burden placed upon it by Article 6049c, Section 8, V.A.C.S. In other words, we hold that the uncon-tradicted evidence in the trial court establishes that the order of the Railroad Commission granting Appell a permit to drill on Lot 9, Block 81, is not supported by substantial evidence.

While the majority of the Court is of the opinion that the evidence offered by Coloma was sufficient to overcome the statutory presumption of validity in a case of this nature, there is a minority who is strongly of the view that Coloma did not meet the minimum standards of proof under the substantial evidence rule, although this point was not raised or argued by the parties. The asserted defect in proof lies principally in the supposed failure to establish that there were not other wells which would drain — and thus confiscate — the minerals underlying the Appell tract for which the permit in question was granted.

In view of all the circumstances of the case we are hesitant to reverse and render judgment. In Murel Williams this Court disapproved the so-called one-tract one-well theory, and we adhere to that holding. We feel, however, that the parties should have further opportunity for development of the facts in the light of the principles of law declared in Murel Williams, and that the judgments below should be reversed and the cause remanded for this purpose. Precedent for this logical disposition under the unusual circumstances before us is found in Cook Drilling Co. v. Gulf Oil Corp., 139 Tex. 80, 161 S.W.2d 1035, in which this Court took action, when confronted with a somewhat similar problem, as follows:

“Apparently the parties misunderstood the character of trial contemplated by the provisions of Vernon’s Ann.Civ.St. Article 6049c, Section 8, wherein interested parties are authorized to test the validity of an order of the Railroad Commission under the oil conservation act. Upon the trial of the case the only material evidence introduced consisted of the file and transcript of the hearing before the Railroad Commission for the permit, and this was introduced for the limited purpose only of showing what evidence the Commission heard at the time it granted the permit. The defendant introduced no evidence whatever. It was upon this record that the trial court entered judgment cancelling the permit.
“From what has been said it is apparent that the district court did not have before it sufficient evidence to overcome the prima facie presumption of the validity of the order in question. It is also apparent that the case has not been fully developed.
“For these reasons the judgments of the trial court and of the Court of Civil Appeals are reversed, and the cause is remanded for a new trial.”

The judgments of the courts below are accordingly reversed and the cause is remanded to the trial court for further proceedings in accordance herewith.

CALVERT, C. J., and GRIFFIN, SMITH and WALKER, JJ., dissenting.

CALVERT, Chief Justice.

I dissent.

I agree that the validity of the Commission’s order granting the Appell permit may not be upheld on the ground that the tract on which it was granted is entitled to separate development as a matter of law. Our decision in Railroad Commission v. C. Murel Williams, Tex., 356 S.W.2d 131, destroys that theory for the granting of drilling permits as exceptions to Rule 37.

The real issue remaining in the case is this: Does the evidence introduced in the trial court discharge Coloma’s burden of proving that the order of the Railroad Commission granting the permit is not supported by substantial evidence? The burden included in the issue is imposed on Coloma by Art. 6049c, Sec. 8, V.A.T.S.C., which expressly provides that the order of the Commission “shall be deemed prima facie valid" and that on appeal to the district court “the burden of proof shall be upon the party complaining” of the order. See also Railroad Commission v. Magnolia Pet. Co., 130 Tex. 484, 109 S.W.2d 967; Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73; Brown v. Humble Oil & Refining Co., 126 Tex. 296, 83 S.W. 2d 935, 87 S.W.2d 1069, 99 A.L.R. 1107, 101 A.L.R. 1393; Cook Drilling Co. v. Gulf Oil Corp., 139 Tex. 80, 161 S.W.2d 1035; Thomas v. Stanolind Oil & Gas Co., 145 Tex. 270, 198 S.W.2d 420. That the issue is to be tried under the substantial evidence rule is settled by Trapp v. Shell Oil Co., 145 Tex. 323, 198 S.W.2d 424. And that the burden imposed in substantial evidence rule cases is one of proving that the order is not supported is also settled by our decisions. Board of Firemen’s Relief, etc. v. Marks, 150 Tex. 433, 242 S.W.2d 181, 183, 27 A.L.R.2d 965; White v. Bolner, Tex.Civ.App., 223 S.W.2d 686, 689, writ refused; Collins v. Board of Firemen, etc., Tex.Civ.App., 319 S.W.2d 174, writ refused.

The majority do not quarrel with those rules. Apparently they recognize them as well established and sound. But in their application the majority desert all precedent in ordering a reversal of the judgments of the courts below.

Most of the majority opinion is concerned with the erroneous theory on which the Commission defended the case in the trial court and has sought to sustain the trial court’s judgment on appeal. No doubt recognizing, however, that defense of the suit on an unsound theory is no more a ground for reversing an errorless judgment than is action of the Commission in granting the permit for a wrong reason, Railroad Commission v. Magnolia Petroleum Co., 130 Tex. 484, 109 S.W.2d 967, 970; Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73, 84, or the giving of a wrong reason by the Court of Civil Appeals for sustaining the order, Gulf Land Co. v. Atlantic Refining Co., supra; 4 Tex.Jur.2d 248, Appeal and Error, § 750, the majority, without examination of any of the-myriad of Rule 37 cases heretofore decided, simply announce the conclusion “that the uncontradicted evidence” in the record establishes that the Commission’s order is not supported by substantial evidence. I shall deal only with that conclusion as it relates to the issue of confiscation.

While, as indicated, much attention is given by the majority to the fact that the Commission has defended the case on a wrong theory, none is given to the fact that Coloma has prosecuted it on a right theory. Coloma’s petition in the trial court sought to set aside the Commission’s order on the ground that the permit was not necessary to prevent either waste or confiscation and therefore the order granting it was illegal and arbitrary. It is a standard petition for trying the validity of the Commission’s orders under the substantial evidence rule. Coloma’s offer of evidence was on a substantial evidence theory. When the trial court sustained the validity of the order, Coloma presented but one point of error in the Court of Civil Appeals, and that was that the evidence showed that the Commission’s order was not reasonably supported by substantial evidence of either waste or confiscation. A similar point of error is contained in the application for writ of error. In other words, Coloma has correctly recognized throughout the course of the litigation that it was not entitled to a favorable judgment unless it established by proof that the Commission’s order was not supported by substantial evidence. The fact that the Commission had a different theory of the issue to be tried and has consistently stood by that theory has no bearing on the true issue and should not be held to supply proof which was essential to Coloma’s case.

Considering the majority’s approach to the real problem before us, one wonders if the desire to reverse, based on an individual concept of abstract justice, is not father to their conclusion. If so, it is not amiss to recall at this point the philosophy expressed by Oran M. Roberts, a great former Justice of this Court, when, in writing on rehearing in Duncan v. Magette, 25 Tex. 245, with both parties “strongly demanding the claims of justice in its behalf, abstractly considered,” he took occasion to present his views “upon the foundation and force of this appeal to the sense of justice of the court, whether used as an influencing consideration, in interpreting and enforcing the rules of law, or directly urged as a basis of judicial action.” After defining “Justice” and “Law” and allocating to each its proper place in the decision of legal controversies, Justice Roberts continued :

“The act of moulding justice into a system of rules detracts from its capacity of abstract adaptation in each particular case; and the rules of law, when applied to each case, are most usually but an approximation to justice. Still, mankind have generally thought it better to have their rights determined by such a system of rules, than by the sense of abstract justice, as determined by any one man, or set of men, whose duty it may have been to adjudge them.
“Whoever undertakes to determine a case solely by his own notions of its abstract justice, breaks down the barriers by which rules of justice are erected into a system, and thereby annihilates law.
“To follow the dictates of justice, when in harmony with the law, must be a pleasure; but to follow the rules of law, in their true spirit, to whatever consequences they may lead, is a duty. This applies as well to rules establishing remedies, as to those establishing rights. * * *”

If that philosophy be not sound, we had as well amend the rules of procedure which govern our conduct as a court to authorize those of us who happen at the moment to compose it to affirm or reverse judgments on the basis of our personal reactions to their abstract justice.

There was, of course, no burden on the Commission in the trial court to introduce “contradicting” evidence. The question before us is strictly a question of law. Thomas v. Stanolind Oil & Gas Co., 145 Tex. 270, 198 S.W.2d 420; Board of Firemen’s Relief, etc. v. Marks, 150 Tex. 433, 242 S.W.2d 181. It is our duty, as it was the duty of the trial court, to decide the question on the evidence which was introduced, whether by one or by both parties, and not on whether evidence introduced by one was contradicted by evidence introduced by the other. If the evidence introduced overcomes the statutory presumption, the judgments of the courts below should be reversed. If it does not, the judgments should be affirmed. This should require, at the very least, an analysis of the evidence and of decided cases for the purpose of discovering what has been required of other litigants in Coloma’s situation. Neither is to be found in the majority opinion.

The majority’s holding is that the un-contradicted evidence in the trial court establishes that the order of the Commission is not supported by substantial evidence. In so far as that evidence is reflected in the majority opinion it is this: “ * * * the relative locations and proximity of an existing Appell well on a separate tract, the second well granted Ap-pell by the permit in question, and an existing Coloma well, together with the fact that all three wells would be in a common reservoir of oil and gas bearing sands of substantially uniform thickness and character and with free communication between the wells.” Considered as a guide to courts and future litigants the majority opinion on its face thus lays down a rule (and courts and litigants have no other place to look) that evidence that a drilling permit is granted as an exception to a field-wide spacing rule; that the permit is granted to one who has an existing well on a separate tract; that another operator who protests the permit has an existing well; that all three wells are in a common reservoir with producing sands of substantially uniform thickness and character, and that there is free communication between the sands, overcomes the statutory presumption that the permit is necessary to prevent confiscation. It is difficult to believe that the majority can seriously intend what they say. The holding gives no weight to the order of the Commission charged primarily with proper administration of the law, all but nullifies the presumption of validity expressly created by statute, and puts all of the burden of developing material evidence in the trial court on the issue of confiscation on the holder of the permit.

The very nature of the burden imposed by the statute should require, as a minimum, that a protestant-appellant of a Rule 37 permit introduce readily available evidence negativing the existence of facts and circumstances which reasonably could form the basis for the order. In a free communication reservoir confiscation occurs through drainage. Although an operator may have a well on another tract in the reservoir, whether the oil and gas underlying the separate tract on which a Rule 37 permit is sought will be drained by other operators will ordinarily turn on the density and location of wells in the surrounding area. The granting of the permit by the Commission raises the statutory presumption that the well is needed to prevent drainage and thus confiscation of the oil and gas underlying the tract. The inference from the Commission’s action is that other wells in the surrounding area are so located that they will drain the oil and gas underlying the tract. If the presumption and the inference are false, their falsity is easy to establish by readily available evidence of the number and location of other wells in the surrounding area and the direction of drainage. Coloma offered no such proof m this case.

The flimsy character of the evidence on which the Commission’s order is being invalidated is brought into sharp focus by looking at the attached plat introduced in evidence by Coloma:

The only lot in Block 81 owned by Emma Huddleston and others, on which Appell has a lease, is Lot 9. All of the other lots in the block are owned by James E. Jacks. Whether any of these lots are drilled and producing, or whether permits have been granted therefor, we do not know because the evidence does not show. All of the lots in Block 80, separated from Lot 9, Block 81 by a 60-foot street, are owned by others. Whether they, or any of them, are drilled and producing, or whether permits have been granted therefor, we do not know because the evidence does not show. There is no evidence with respect to drilling and producing activities on the north 8 lots in Block 92. Evidence of drilling and producing activities on these thirty-nine lots is of vital and controlling importance on the issue of whether the minerals under Lot 9, Block 81, will be confiscated if the permit for drilling that lot is invalidated. A great majority of the lots are much closer to the proposed drilling site on Lot 9, Block 81 than is the existing Appell well. Coloma’s producing well is also much closer to Lot 9, Block 81 than is the existing Appell well. As a matter of fact, we have no way of knowing, except by purest surmise, that Lot 9, Block 81 is not completely surrounded by producing wells.

I have commented on the fact that the majority have cited no Rule 37 case to support the conclusion reached in this case. The case was submitted on oral argument and written briefs on November 22, 1961. If there are any decided cases supporting the majority theory of resolving the issue of confiscation I assume they would have been found in the briefs on file or by independent research by now. None is to be found in Coloma’s briefs or in a brief filed by amicus curiae. The only cases cited in the majority opinion are Murel Williams and Cook Drilling Co. v. Gulf Oil Corp., 139 Tex. 80, 161 S.W.2d 1035. Neither is cited in support of the majority’s conclusion that Col-onia discharged its burden of proving that the Commission’s order is not supported by substantial evidence and they do not support it.

In Cook the Commission granted a Rule 37 permit. The trial court set the order aside even though the contestant introduced no evidence in court on the issues of waste and confiscation. The judgment was obviously erroneous and had to be reversed. The party having the statutory burden had not discharged it. The fact that the case had been tried on a wrong theory was used not as a basis for reversing but strictly as a basis for remanding the cause for retrial.

Murel Williams was the exact opposite of this case. In that case the Commission denied the permit and the applicant had the burden in the trial court of proving confiscation. In our opinion in the case we pointed out substantial evidence in the record supporting the Commission’s action, not as indicating that the burden rested on the Commission to offer proof in support of its order but for the purpose of showing that Williams had not discharged his burden of proving that the order was not supported by substantial evidence. But the test of confiscation announced in Murel Williams is pertinent here. We said the test was whether the permittee “has been accorded a fair and equal opportunity with other producers of surrounding tracts within the drainage area to recover his fair share of the oil in place beneath his tract.” The Commission having granted the permit in this case, the law presumes that Appell must have the permit to have equal opportunity with other producers of surrounding tracts to recover the oil and gas beneath its tract. There is no proof in the record which overcomes that presumption. The only other cases which have ever been suggested by independent research as supporting the majority’s holding on the issue of confiscation are Railroad Commission v. Shell Oil Company (The Trem Carr case), 139 Tex. 66, 161 S.W.2d 1022, Stanolind Oil & Gas Co. v. Midas Oil Co., Tex.Civ.App., 123 S.W.2d 911, writ dismissed, and Gulf Oil Company v. Smith, Tex.Civ.App., 145 S.W.2d 280, writ refused, cited in Murel Williams. Analysis discloses that none of them support the majority conclusion in so far as the issue of confiscation is concerned.

In Gulf Oil Corp. v. Smith, the Commission granted a Rule 37 permit to Smith. The Court of Civil Appeals invalidated the order. On the issue of confiscation the court observed that the uncontroverted testimony showed that Smith had already extracted a greater proportion of his estimated reserves than owners of adjoining tracts had extracted of theirs, and gave particular weight to proof of density of wells in the area. With respect to this factor the court said:

“ * * * The uncontroverted proof in the instant case shows * * * that Smith’s density with four wells was greater than that of any of the surrounding tracts, and greater than the eight times surrounding area whether delineated by a square, rectangle, or circle.”

Emphasis was thus placed on well density and estimated reserves in the area.

In Stanolind Oil & Gas Co. v. Midas Oil Co., Rule 37 permits granted to Midas were invalidated. It is of particular interest that in that case the Court of Civil Appeals recognized a difference in the type of proof which was held to negative waste and that which was held to negative confiscation. With respect to the issue of waste, the court said (123 S.W.2d 916) :

“ * * * And when the contestant made proof that no underground conditions obtained in this area which would differentiate the tract in question from the surrounding area; in brief, that no conditions existed which would afford a factual basis for an exception to the general rule to prevent waste, we think appellant rebutted the presumption in favor of the validity [of the] order; and, absent any other evidence to the contrary, made prima facie proof, under the rule itself, and our repeated interpretations of it, that the drilling and operation of such well would tend to cause, rather than to prevent, waste.”

But the court did not use those reasons for holding that the presumption of confiscation had been rebutted. Instead, it commented that the presumption of confiscation had been rebutted by evidence that “showed a tract of 2.76 acres with 2 wells thereon, not including the well here involved, a per acre density much greater than surrounding tracts; that under the circumstances the wells already thereon afforded opportunity to recover an amount of oil equal, if not in fact much greater, than the quantity of oil originally in place beneath such tract.”

In Railroad Commission v. Shell Oil Co. (The Trem Carr case), 139 Tex. 66, 161 S.W.2d 1022, it is stated in the very beginning of the opinion that the issue of confiscation had already been decided and that the sole issue in the case is that of waste. It is of more than passing interest that confiscation as a basis for the permit in the Trem Carr case was denied on well density in the drainage area and that two other Rule 37 permits granted to the same applicants to prevent confiscation were upheld on well density in the drainage area. Richey v. Shell Pet. Corp., Tex.Civ.App., 128 S.W.2d 898, writ dismissed, correct judgment.

It will be seen from the only cases suggested as bearing on the issue that proof on the issue of confiscation which was held to rebut and overcome the presumption of validity of the permits was well density in the area and consequent recovery of, or opportunity to recover, one’s own reserves. So far as I can discover, no Rule 37 permit, granted to prevent confiscation, has ever been invalidated on the type of evidence introduced in this case. Proof of proximity of the tract to Appell’s other well and that there is free communication of minerals in the underlying sands is proof of nothing except that the factual situation was such as to call into play the Commission’s power to grant or deny the permit as an exception to the spacing rule to prevent drainage or confiscation by other operators of wells on surrounding tracts. Proof of proximity and of free communication, and no more, is yet used by the majority in this case as evidence that the Commission was wrong in its determination. That is indeed a strange holding!

The simple fact is that Coloma misjudged the character of proof required to meet minimum standards for rebutting and overcoming the statutory presumption in a confiscation case. We should not now lower those standards or emasculate rules heretofore regarded as sound when applied to other litigants in order to afford Coloma relief from its own failure. We are confronted constantly with cases in which we know that abstract justice would require reversal of the judgment to permit a litigant to retry his case and offer additional evidence, but we have steadfastly adhered to the rule heretofore that an errorless judgment will not be .reversed for that purpose. Sometimes adherence to the rule saddens us. Application of the rule has often resulted in far greater injustice than would result in this case from permitting Appell’s permit to stand. Its application here should not be avoided through a figmented conclusion of error where none exists.

I would affirm the judgments of the courts below.

GRIFFIN and WALKER, JJ., join in this opinion.

SMITH, Justice.

I respectfully dissent. I cannot accept the theory adopted by the majority in the case of Railroad Commission v. C. Murel Williams, Tex., 356 S.W.2d 131, which completely destroyed the effect of the holdings in many Texas cases, including Halbouty v. Darsey, Tex.Civ.App., 326 S.W.2d 528, 331 S.W.2d 835, Foster v. Railroad Commission, Tex.Civ.App., 326 S.W.2d 533, and Atlantic Refining Company v. Railroad Commission. Tex., 346 S.W.2d 801. Those cases stand for the proposition that the owner of an involuntarily segregated tract is entitled to drill at least one well on his tract, however small the tract may be. We do not have a situation where just a theory has been destroyed, but we have the incongruous situation where it is now, in effect, held by the majority that the Williams case overruled the above cases and many others without even mentioning such cases. The disposition of this case by the majority is far more unusual than the case itself. We find this Court so determined to uphold the fantastic Charles Meyers’ theories lifted out of context and adopted in Williams that it is now willing to go further and hold that Coloma has discharged its burden and established that the order of the Railroad Commission granting Appell a permit to drill on Lot 9, Block 81, is not supported by substantial evidence. In other words, the majority is now saying that the holding in the Williams case demonstrates conclusively that the order of the Railroad Commission granting Appell a permit to drill on Lot 9, Block 81, is not supported by substantial evidence.

The Railroad Commission et al., in its application for writ of error in the Williams, case, did not rely upon the Law Review Article, C. J. Meyers, “Common Ownership' and Control in Spacing Cases,” 31 Tex.L. Rev. 18 at 22, quoted in a footnote by the majority in Williams. The only quotation from Meyers was in connection with the Commission’s argument that after Smith Price entered the Addie Stephens unit, the development rights of H. P. Williams became exactly the same in the 3.3 acres as-they were in the 42.5 acres and the two interests merged. The Commission et al. made the further argument that “Once merged, any attempt to repart them would plainly constitute an illegal subdivision under the spacing rules then in effect.” My concurring opinion was based largely upon the argument advanced by the Attorney General, Will Wilson, and the many attorneys representing the American Petro-fina Company of Texas, and the Southern National Gas Company. The argument was this:

“Viewed from the standpoint of Railroad Commission administration, the proposition becomes perfectly clear. When Smith Price joined the Addie Stephens unit the Commission had to grant the unit an allowable based in part upon Smith Price’s interest. If it gave the unit an allowable based upon 3.3 acres and was proper in doing so, then the entire tract was thereby protected from confiscation and could not properly be awarded further exceptions to the spacing rules. If the Commission gave the unit an allowable based upon 1.65 acres, then the interest of H. P. Williams was rendered entirely free and separate from the Smith Price interest and became identical to H. P. Williams’ interest in the 42.5 acres, with which it could have been fairly developed under the Commission’s rules.
“If the cotenancy between H. P. Williams and Smith Price represents an ownership entity entitled to development separately from the 42.5 acres, then it has been so developed as a part of the Addie Stephens and Reynolds units and no spacing exceptions are necessary or proper. If H. P. Williams’ development rights in the 3.3 acres are independent of Smith Price’s, then H. P. Williams’ rights are the same in the 3.3 acres and in the 42.5 acres and the two tracts must be developed together under the Commission’s rules. Stated another way, H. P. Williams (and respondent as his successor) is not entitled to further protection against confiscation because his cotenancy interest in the 3.3 acres has been developed by the activities of cotenant Smith Price or, if not, then because his interest, being thereby free and clear of Smith Price, could have been developed along with and on the same basis as the 42.5 acres.
“It may be that the case can be soundly decided on either of these grounds, but it ought to be decided on one of them. Accordingly, the judgments of the Court of Civil Appeals and of the district court should be reversed.”

My concurring opinion in Williams is in harmony with this view. Williams was not entitled to a permit to drill the reconstructed 3.3 acres in view of the fact that Mrs. Price, by her lease and unitization agreement had, in legal effect, secured a permit from the Railroad Commission to drill one well on the tract. Since the tract was entitled to only one well, and in view of the undisputed facts, Williams failed to discharge his burden of proving that the order of the Railroad Commission was lot supported by substantial evidence. For these reasons, I concurred in the result reached by the Court in Williams, but, at the same time, I dissented and disagreed with the reasoning expressed by the Court. My only regret is that I did not at the time fully discuss my reasons for disagreeing with the action of the Court on lifting from the Meyers’ Article one statement, which, when considered in context, was entirely foreign to the factual situation in Williams. Nevertheless, such was made all controlling in the disposition of the question before the Court in the Williams case. Under the circumstances, I have ample precedent to support my contention that it is my duty and it is the Court’s duty to review the principles of law announced by the majority in any given case, when the question later arises in other litigation. Federal Royalty Co. v. State, 128 Tex. 324, 98 S.W.2d 993.

I sincerely hope that the time will never come when a member of this Court will be deprived by the majority vote of his associates of his right of free and constructive expression and criticism of former opinions of this Court. My dissent in this case is entirely impersonal and my only desire is to get the Meyers statement upon which the majority relies in its proper setting. One might ask, why so much discussion about Williams in this Coloma case. My answer is simply this: When the false premise in Williams is eliminated, this Coloma opinion will have no support in law. On November 6, 1961, after the opinion in Williams was rendered, Coloma filed a supplemental brief in which it was stated that the respondents (Railroad Commission et al.) were relying upon the holding in Halbouty v. Darsey, and a similar holding in other cases, but that “The holding of this Court in Railroad Commission v. Murel Williams should settle any doubt concerning this question. * * * In answer to this contention, Justice Greenhill, speaking for the Court said: ‘ * * * The right to a well on a tract of land, however, is not a vested right in the land itself, but is a right of the owners of the land. Railroad Commission v. Magnolia Petroleum Co., 130 Tex. 484, 109 S.W.2d 967 (1937) * * *_>» TJnS quotation leaves out the Footnote Three contained in the opinion immediately following the Magnolia case citation. The Williams opinion leaves the impression that the Magnolia case is authority for Meyers’ conclusion that “The error springs from the assumption that every tract has a vested right to one well, and that transfers in ownership of the tract cannot destroy that vested right. The mistake in this reasoning is, of course, that it is not the tract, as a parcel of land, that is entitled to a well; it is the owner who has the right. * * * ” I cannot find where Magnolia cites or mentions this Meyers’ theory, nor do I find where Meyers cites Magnolia in support of this particular con-elusion. However, I do find that Meyers cites Magnolia in support of his declaration that one of the basic rules governing the granting of exceptions is: “(3) where, however, a tract has been voluntarily subdivided, so that none of the subdivision thus created is entitled to a well as a matter of right, the tract may be reconstructed as it existed before the subdivision and granted an exception.” This fits perfectly with my theory in the Williams case. The reconstructed 3.3 acres was entitled to only one well, and since a permit had previously been granted on application for a permit which included this tract, the Railroad Commission properly denied the Williams’ application. Meyers says: “Apparently under this [Rule 3], the Rule of the Century Case, the Commission has discretion to locate the well as it sees fit.” We applied this portion of the rule in the case of Ryan Consolidated Petroleum Corp. v. Pickens, 155 Tex. 221, 285 S.W.2d 201 (1955), and held that Ryan Consolidated was charged with notice that the “ * * * Holmes Heirs had executed a lease on Lots 10 and 11 to Smith and Morrison (assigned to Pickens & Coffield) providing for the exclusive right to drill a well thereon and containing a general warranty of title, and further that if the Railroad Commission found that the one well, to which the four lots were entitled to prevent confiscation, should be drilled on Lots 10 and 11, no well could be drilled on Lot 12 or on Lot 13, except to prevent waste.” [Emphasis added.]

The Court of Civil Appeals in the Williams case, 336 S.W.2d 800, refused to follow the rule announced in Ryan v. Pickens, supra, and overturned the Railroad Commission’s order without requiring Williams to show that the Commission acted in an unreasonable, arbitrary and capricious manner. The Court of Civil Appeals refused to follow the Ryan v. Pickens case, stating:

“A harsher, more inequitable result could not be envisioned. * * * We are so distressed by the inequity of Ryan Consolidated Petroleum Corp. v. Pickens that we have concluded that we should not apply it except under identical facts.”

Thus, the Court of Civil Appeals, in effect, overruled Ryan v. Pickens by this Court, and a majority of the members of this Court in the Williams case sidestepped the issue by stating that “We do not here reach the problem raised in the Ryan case, and that opinion has no application to the decision which we have reached.”

By not applying the holding that the Railroad Commission has discretionary authority to locate the well anywhere on a reconstructed tract, the Court of Civil Appeals and this Court have deprived the Commission of the power to perform its duties, especially its conservation efforts in seeking to properly locate the drilling of gas wells in Century doctrine situations.

The majority opinion in Williams is unsound when it is realized that when Meyers said that the error springs from the assumption that every tract has a vested right to one well, and that transfers in ownership of the tract cannot destroy the vested right, he was not speaking of a situation such as we have in the Coloma case, or had in the Williams case. Before making the statement properly attributed to him by Justice Greenhill in Footnote Three, Meyers had stated that several basic principles must be kept in mind. The principle immediately appearing before the quoted language, supra, was as follows:

“Second, the purpose of allowing exceptions to tracts smaller than twenty acres is to give the landowner a reasonable opportunity to recover the oil in place. Thus, whenever the smaller tract could have been developed as part of a larger tract, the exception should be denied. The meaning of the common ownership and control doctrine, then, is this: if the tract for which an exception is sought could have been developed as a part of a larger tract, it was under common ownership and control and is not entitled to an exception. Thus, a segregation of such a tract is a voluntary subdivision.
“Several hypothetical cases are useful in developing the application of the doctrine.
“Assume that oil has not been discovered in the area. A is the owner of a ten-acre tract of land. He acquires an adjoining ten-acre tract. Oil is then discovered and Rule 37 attaches. It is uniformly held that A is not entitled to an exception for the ten-acre tract which he acquired. While the former owner of the ten-acre tract was entitled to an exception (assuming ten acres were his total holdings), A is not, because when the rule attached, A owned twenty acres. The source of his title is immaterial. At the time Rule 37 became applicable, A’s twenty acres could be developed as a single unit, with one well; hence any attempt to develop the two tracts separately, such as leasing ten acres to one operator and ten to another, constitutes a voluntary subdivision.
“Although the cases uniformly support this proposition, there have been occasional instances of judicial language suggesting the contrary. * * ”

Thus, it is seen that Appell is now being deprived of his right to a well permit on a theory that has no application whatever. The Murel Williams case could not have by any stretch of the imagination overruled the case of Halbouty v. Darsey, Tex.Civ.App., 326 S.W.2d S28 (1959), wr. ref. n. r. e., wherein it was held:

“Admittedly the .48 acre tract is not an unlawful subdivision * * * the tract is not of such size and shape to meet the acreage and distance requirements of the spacing rule applicable to the field, however, admittedly it meets the requirements for an exception under Statewide Rule 37a. As such it is entitled to a well. Kraker v. Railroad Commission, Tex.Civ.App., 188 S.W.2d 912, er. ref. w. o. m.; Dailey v. Railroad Commission, Tex.Civ.App., 133 S.W.2d 219, Er. ref.; (Brown v. Humble Oil & Refining Co., 126 Tex. 296, 83 S.W.2d 935, 87 S.W.2d 1069, 99 A.L.R. 1107, 101 A.L.R. 1393,) where Rule 37 and its exceptions were considered and also the rules of ownership, convenience and vested rights. Citation of additional authorities on this well settled question is not deemed necessary.” [Emphasis added.]

For additional authorities, I call attention to: Nash v. Shell Petroleum Corp., Tex.Civ.App., 120 S.W.2d 522, wr. dism.; Railroad Commission of Texas v. Humble Oil & Refining Co., 151 Tex. 51, 245 S.W.2d 488; Wencker v. Railroad Commission, Tex.Civ.App., 149 S.W.2d 1009; Railroad Commission v. Wencker, 140 Tex. 527, 168 S.W.2d 625; Ryan Consolidated Petroleum Corporation v. Pickens et al., supra.

The majority in the present case has, without first finding error, reversed and remanded the cause to the trial court for further proceedings in accordance with its opinion. If this decision becomes final, then I say Appell will be standing before the trial court in the same position as though there had been an unlawful subdivision of his tract. Not only that, the trial court will be called upon to pass upon questions that were not passed on by the Railroad Commission. The Railroad Commission is given the power under the statute to determine primarily all fact issues, that is, all issues that are not established as a matter of law. Railroad Commission v. Wencker, supra. The trial court will be considering irrelevant and immaterial evidence if and when it considers the volumes of evidence going to show a comparison between the proposed Appell well, and the existing Appell and Coloma wells. The evidence discussed in the majority opinion and referred to in the dissenting opinion by Chief Justice Calvert was introduced in evidence in the trial court, but special exceptions were filed and timely objection thereto was made by the Railroad Commission. The special exceptions were not ruled upon but were carried along with the case. The Commission and Ap-pell objected to the introduction of any evidence offered by Coloma with respect to alleged common underlying reservoirs, costs of operations, quantities of production, condition of the underlying strata of oil and gas sands and geology with regard to the leases in question, for the reason that such evidence so offered was irrelevant and immaterial to any issue in the case, since such tract was entitled to its first well as a matter of law. Since it is undisputed that there is no question of a voluntary subdivision in this case, the Commission properly granted the permit and the action of the District Court and Court of Civil Appeals in sustaining the order of the Commission granting the permit was correct.

Coloma should not be sustained in its contention that since Appell has one producing well, then he is not entitled to a second well even though the second well would be located on a separate noncontiguous tract, some 402 feet from the present producing well. The law, as heretofore stated, provides that each tract, regardless of shape, size, or location is entitled to its first well as a matter of law. See Railroad Commission of Texas et al. v. Humble Oil and Refining Company, 151 Tex. 51, 245 S.W.2d 488. The holding of the majority amounts to a confiscation of Appell’s property and destroys his investment in the tract of land involved and the value thereof without a proper judicial determination of the issue of confiscation, all of which amounts to a denial to Appell of his rights under the Fourteenth Amendment to the United States Constitution.

The judgment of the Court of Civil Appeals should be affirmed.

      . Our action in Cook Drilling Co. v. Gulf Oil Corp., 139 Tex. 80, 161 S.W.2d 1035, cited by the majority, is strictly in accord -witli tlie rule that reversal of an errorless judgment may not be ordered.

      . “ * * * Thus, whenever the smaller tract could have been developed as part of a larger tract, the exception should be denied. The meaning of the common ownership and control doctrine, then, is this: if the tract for which an exception is sought could have been developed as a part of a larger tract, it was under common ownership and control and is not entitled to an exception.”

      . “ * * * The error springs from the assumption that every tract has a vested right to one well, and that transfers in ownership of the tract cannot destroy that vested right. The mistake in this reasoning is, of course, that it is not the tract, as a parcel of land, that is entitled to a well; it is the owner who has the right. ⅝ ⅜ * ”