In a bench trial for partition, an owelty award of $450,000 was rendered in personam against Mapco, Inc. The owelty award resulted from a suit for equitable partition of a mineral estate. The surface estate was not involved. The trial chancellor filed original Findings of Fact and amended and supplemental Findings of Fact but declined to make certain additional Findings of Fact as requested by the Appellants.
In March of 1988, the District Court signed a modified decree ordering partition and appointing commissioners. The plaintiffs, Clarence Carter, James Ross Carter and Clyde Carter, were awarded an in personam money owelty judgment against Mapco, Inc., in the above amount. The Carters owned important royalty and mineral interests. Mapco, Inc., and Mapco Underground Storage of Texas, Inc.'s (M.U.S.T.'s) live trial pleadings were the Defendants' First Amended Original Answer and a First Amended Cross-Action.
Mapco, Inc. Pleadings Mapco, Inc. (Mapco) alleged and petitioned that if the trial court found that the underground storage cavern in question constituted a part of the mineral estate then the Cross-Plaintiff, Mapco, Inc., requested that the court order a partition so that the cavern would be set aside to the Cross-Plaintiff, Mapco, Inc.
The District Court ordered that the property be partitioned and awarded a certain 15.797 acre tract of mineral land, wherein the underground storage facility — a cavern — was located, to one Gordon Speer, who was the successor in interest to Mapco, Inc. The $450,000 in money owelty *Page 374 award, made to the Carters, was done to equalize the disparity in the value between the several partitioned tracts. Appellants, in the latter part of the trial, conceded owelty was an equalizer.
The Decree Ordering Partition This appeal, sub judice, had its genesis in the district judge's Modified Decree Ordering Partition. In that modified decree, the trial court partitioned a 126.378 acre tract of mineral lands owned by the co-tenants thereof. One, and only one, underground storage facility, or cavern, was located under the large tract of 126.378 acres. The underground storage cavern was developed for the purpose of storing natural minerals, such as natural gas and liquid petroleum gas. No underground storage facility or underground cavern had been formed under the other partitioned tracts that were awarded to Clarence Carter, James Ross Carter and Mrs. Clyde Carter.
The Underground Storage Cavern The underground storage cavern was formed by leaching out its area from the underground mineral salt deposit. The bottom of the cavern was located at a depth of approximately 4300 feet and the top of the same cavern was at a depth of approximately 2,505 feet. The storage capacity therein was 644,000 barrels. The cavern was capable of storing natural gas and liquid petroleum products and other products compatible with a contact with salt. $9,300,000 was expended by Mapco to develop the cavern in an effort to enter into the underground storage facility business.
A well designated as Well No. 1 was begun by drilling operations on or about September 1, 1981. The Appellants, Mapco, Inc., and M.U.S.T. commenced this drilling which they completed on or about February 15, 1982. On or about February 15, 1982, Mapco, Inc., and M.U.S.T. started leaching operations through Well No. 1 for the purpose of constructing a cavern inside of the salt dome.
The Notice to Appellants A certain notice, dated December 9, 1981, was visited and served upon Mapco, Inc., by the Plaintiffs/Appellees demanding that the leaching operations cease and desist and all operations and drillings, in effect, cease and desist. The leaching operations were continued and were completed at sometime in May of 1982. Mapco, Inc., and M.U.S.T. necessarily disposed of about 6,175,000 cubic feet of salt in order to create the cavern. M.U.S.T. admitted that it commenced the salt removal operations without the consent of all the owners and commenced salt disposal operations, as well, without the consent of all the mineral owners.
The Unique Cavern Noteworthy is the consideration that the action for partition below was unusual and, in a sense, unique in character. Gordon Speer, the successor in interest to Mapco, Inc., was ultimately awarded the only existing underground storage facility cavern to the exclusion of the other cotenants. The other cotenants were merely awarded certain unimproved, unexcavated, mineral salt interests. Some evidence of ample probative value and force exists that the underground cavern is unique in its nature, having a significant value of about $1,750,840.
This $1,750,840 value takes into consideration the location of the cavern in relation to certain existing and operating petroleum pipelines and the ability of the cavern to store both natural gas and liquid petroleum products. The approximate cost necessary to develop a similar cavern would be $800,000.00. These salient factors, having to do with uniqueness, value, location, ability to store and replacement costs, were the basis for determining a gross disparity in value between the various tracts which were partitioned out to the various parties litigant.
A live pleading exists stating this:
*Page 375". . . In the alternative, if the Court finds that the underground storage cavern constitutes part of the mineral estate then the Cross-Plaintiff, Mapco, Inc., requests that the Court order a partition so that the cavern is set aside in the
minerals awarded to the Cross-Plaintiff, Mapco, Inc." (Emphasis added)"IV.
"The Cross-Plaintiff would show that the Court should appoint commissioners and a surveyor to make a report on a fair and equitable [sic] in kind." (Emphasis added)The Relationship of Mapco, Inc. to other Corporations This question and answer was posed to, and given by, Mr. Ralph Ball. Mr. Ralph L. Ball, at the time of his testimony, was employed by Mid America Pipeline Company. Mr. Ball was asked:In the record we find:
"Q. [By Appellants' attorney]: Would you want to or ask in the event of a partition that the cavern be set aside to Mapco in this partition?
"A. That would be my desire, yes."
The Crucial Findings of Fact The district court, through its chancellor sitting in equity, granted the requested relief that was asked by Mapco, Inc. The careful and complying chancellor found certain original Findings of Fact. Several of the governing, paramount and ultimate ones were:"Q. Okay. Does Mid America Pipeline Company own Mapco, Inc.?
"A. No, it is wholly-owned subsidiary of Mapco, Inc. Mapco, Inc. is a holding company that is the corporate cover for several corporations.
"Q. All right. And is Mapco Underground Storage, Inc. also one of those corporations that is owned by Mapco, Inc.?
"A. Mapco Underground Storage?
"Q. Yes.
"A. Yes.
"Q. And Mapco Underground Storage is the corporation that was designated to kind of handle this project of the Moss Bluff project?
"A. No, sir.
"Q. Who was designated to handle that?
"A. A corporation that was known as Mapco Underground Storage of Texas.
"Q. Okay. That's —
"A. That's a separate corporate entity.
"Q. Owned by Mapco, Inc.?
"A. Owned by Mapco and operated by Mid America Pipeline Company."
*Page 376"6. That MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS, owned by MAPCO, INC., supervised the creation and development of an underground storage facility which was located within that property described in Exhibit 1, 2, 3, 1-A, 2-A, 3-A, 5, 6, and 7, which property was subject to the ownership interests created by said exhibits at the time of the creation and development of the underground storage facility.
"7. That MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS leached an underground storage facility, within a salt formation, which was to be used for the underground storage of natural gas and/or liquified petroleum gas.
"8. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS were advised on or about December 9, 1981 by the TURKEY CREEK MINERALS TRUST to cease and desist operations with respect to the drilling and creation of the well and underground storage facility.
"9. MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS knowingly disregarded the request of TURKEY CREEK MINERALS TRUST to cease and desist, but instead continued its development and creation operations for the well and underground storage facility.
"10. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS drilled and developed the underground storage facility in bad faith and is not entitled to recoupment of its costs.
"11. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS have never recognized the ownership rights of CLARENCE CARTER, JAMES ROSS CARTER,
CLYDE CARTER, or the TURKEY CREEK MINERALS TRUST with respect to the salt in the land made the basis of this litigation, either in place or removed.*Page 377"12. That MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS, through its operations to create the underground storage facility, removed and disposed of 644,000 barrels of salt brine with a fair market value of $1,515,712.00.
"13. That the fair market value at the time of judgment of the surface of the 126.378 acres made the basis of this lawsuit is $900 per acre.
"14. That the fair market value at the time of judgment of the mineral estate of the 126.378 acres made the basis of this lawsuit is $200 per acre.
"15. The fair market value of the underground storage facility, the mineral salt walls, and sufficient mineral support, as of the date of judgment, is the sum of $1,750,840.00.
"16. That MAPCO, INC. held a 1/8 ownership interest in the minerals in the 126.378-acre tract of land made the basis of this suit until same was conveyed to GORDON SPEER on or about December 28, 1987.
"17. That TURKEY CREEK MINERALS TRUST filed a lis pendens in this lawsuit, and the property conveyed by MAPCO, INC. to GORDON SPEER is subject to the jurisdiction of this Court.
"18. That GORDON SPEER paid to MAPCO, INC. the sum of $1,000,000.00 for the purchase of MAPCO, INC.'s ownership of 608 acres which includes MAPCO, INC.'s ownership interest in the 126.378 acres made the basis of this litigation, which consisted of the ownership of all the surface and 1/8 undivided interest in minerals.
"19. MAPCO, INC. and MAPCO UNDERGROUND FACILITY STORAGE OF TEXAS plugged and abandoned the well and underground storage facility on or about July, 1987.
"20. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS received notice from TURKEY CREEK MINERALS TRUST before it plugged and abandoned the well, to cease and desist its efforts to plug and abandon the well and underground storage facility.
"21. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS knowingly disregarded the request of TURKEY CREEK MINERALS TRUST to cease and desist its efforts to plug and abandon the well and the underground storage facility.
"22. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS plugged and abandoned the well in bad faith.
"23. That the property is subject to a partition in kind but the disparity of value should be made up by way of a money owelty judgment in the amount of $450,000.00 enforceable by execution and charged as a lien against the property, taking into account and adjusting the equities between the parties under the facts and circumstances of this case, which owelty judgment should be in the form of a personal in personam money judgment against MAPCO, INC. because MAPCO, INC. failed to demonstrate it is unable to make payment at time of division; because MAPCO, INC. conveyed title to the subject property and is no longer the legal owner; and because an in personam judgment is necessary under the facts of this case, to formulate an effective judgment of this Court which adjusts the equities of the parties incident to partition.
"24. The underground storage facility for gas is comprised of walls composed of mineral salt, which mineral salt is owned in co-tenancy, with GORDON SPEER, as successor of MAPCO, INC., owning 1/8, and Plaintiffs, and LANDMARK TRUST owning 7/8, in accordance with their respective ownership interests, as reflected by Exhibit 1, 1-A, 2, 2-A, 3, 3-A, 5, 6, 7, 34, and 35.
"25. The 253rd Judicial District Court, under Cause Number 34,323, styled Volney R. Hylton, et al. v. Mapco, Inc., et al., did not adjudicate the partition rights between the parties, including
entitlement to partition in kind, accountings pertaining thereto, or owelty incident thereto."26. That plaintiffs filed their Application for Temporary Restraining Order in good faith and diligently prosecuted same, and plaintiffs and their surety, if any, should be released from their bond." (Emphasis theirs)
Each finding has ample support in the record. McGalliardv. Kuhlmann, 722 S.W.2d 694, 696-697 (Tex. 1986);State v. Arnold, 778 S.W.2d 68 (Tex. 1989).
The Nature of a Partition Suit A partition suit has been declared an equitable proceeding with appropriate relief reposing in the clear, clean conscience of the chancellor sitting in equity. One of the proudest boasts of Texas law and jurisprudence is that our District Courts sit as both judges at law and chancellors in equity in a perfectly blended system of law and equity. The trial court was well within its prerogatives and powers to apply the rules of equity when it adjusted the respective rights, duties and obligations between the parties. Indeed, the Chancellor had a duty so to do. Historically, the king's chancellor was to keep the king's conscience clear and to see to it that justice was done and that right dealing and fair dealing existed between and amongst the parties. Historically and traditionally, the equity side of the court acts in personam. The Conclusions of Law Acting as chancellor sitting in equity, the District Judge made the following Conclusions of Law:
*Page 378"4. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS wrongfully removed and disposed of mineral salt belonging to TURKEY CREEK MINERALS TRUST, CLARENCE CARTER, JAMES ROSS CARTER and CLYDE CARTER, under the facts and circumstances of this case.
"5. That the 126.378-acre tract of land is subject to a partition in kind; and that the underground storage facility and a 15.797-acre parcel of property in as nearly as possible in a conformation of a square with the well located at the center consisting of 100% of the minerals should be set aside and awarded to GORDON SPEER, subject to a compensating owelty in personam money judgment, against MAPCO, INC., adjusting the relative equities between the parties under the facts and circumstances, in favor of CLARENCE CARTER, CLYDE CARTER, and JAMES ROSS CARTER, in accordance with their ownership interest in the amount of FOUR HUNDRED FIFTY THOUSAND DOLLARS AND 00/100 CENTS ($450,000.00), against MAPCO, INC., which owelty judgment is to be secured by a lien against said 15.797-acre tract of land. The property remaining after the 15.979-acre tract of land is partitioned from the 126.378-acre tract of land (110.581), is to be partitioned first to LANDMARK TRUST, comprised of a 31.582-acre tract, and then to CLARENCE CARTER, JAMES ROSS CARTER, and CLYDE CARTER, into THREE (3) equal 26.333-acre tracts of land, subject to the outstanding mineral leases with respect to same in favor of TURKEY CREEK MINERALS TRUST.
"6. That at the time of the partition, TURKEY CREEK MINERALS TRUST, LANDMARK TRUST, CLARENCE CARTER, CLYDE CARTER, JAMES ROSS CARTER and GORDON SPEER, as successor to MAPCO, INC., are co-owners and/or lessees of the mineral salt forming the walls and necessary lateral support of the underground storage facility in accordance with their respective ownership rights.
"7. That MAPCO, INC. and MAPCO UNDERGROUND STORAGE FACILITY OF TEXAS abandoned the storage facility on or about July, 1987, and any rights, title, and interest they had acquired in the mineral salt, forming the walls or as necessary lateral support for the storage facility, by judgment or otherwise, reverted back to the original mineral owners in accordance with their respective ownership interest.
"8. That the judgment rendered in Case Number 34,233 in the 253rd Judicial
District Court on or about the 11th day of May, 1983, does not constitute res judicata or collateral estoppel to plaintiffs' causes of action asserted herein for partition, entitlement to owelty, or accounting incident to partition."9. That plaintiffs and their sureties, if any, should be discharged from their bond filed and made in this cause incident to the filing and prosecution of their application for injunctive relief." (Emphasis added)
The Conclusions of Law are correct in view of the amply supported Findings of Fact. McGalliard v. Kuhlmann, supra;State v. Arnold, supra.
The Prior Suit for Injunctive Relief
The judgment rendered in No. 34,323, styled Volney R.Hylton, et al v. Mapco, et al, in the 253rd Judicial District Court of Liberty County, Texas, concerned itself with an application for temporary injunction and also petitioned for a declaratory judgment decreeing that the cross-action was a controversy that met the requirements ofTEX.REV.CIV.STAT.ANN. art. 2524-1 (1965) (repealed 1985), and decreeing, generally, that the mineral owner, or the lessees of the mineral owner, actually owned the salt in question. But this prior proceeding was not a partition suit in any sense. That judgment, signed May 11, 1983, simply did not address, or deal with, the rights, obligations and duties of the parties relevant and incident to the partition suit.The parties were different and, subsequent to May 11, 1983, certain new, additional facts and changed circumstances (which arose much later) necessarily altered the rights and the relationships of the parties. The Court sitting in equity arrived at a conclusion of law that the judgment entered in case No. 34,323 did not constitute res judicata or collateral estoppel to the plaintiffs in the case before us, because new and different causes of action were asserted for partition, for the entitlement of owelty and for an accounting incident to the equitable partition suit. Consequently, the judgment in 34,323 did not constitute res judicata or collateral estoppel to the modified decree ordering partition and appointing commissioners which was signed in the present cause on March 14, 1988, some four or five years after the judgment of May 11, 1983. Nor was res judicata or collateral estoppel a ban to the decree below.
The "WARNING, NO TRESPASSING" Signs Plaintiffs below further demanded that the operations on the property cease. "WARNING, NO TRESPASSING" notices at the entrance to the property were actually placed and posted; further, notice was given that violators would be prosecuted to the limit of the law if the violators continued to leach out the salt from the underground salt formation to form any caverns. The cavern leached out had a capacity to store about 644,000 barrels of hydrocarbons. By completion time, the market for underground hydrocarbon storage facilities had completely and unfortunately collapsed. Efforts to rent the storage facility were unsuccessful. Then seeking an income tax write-off to diminish its substantial losses, M.U.S.T. obtained a permit from the Texas Railroad Commission to plug the "jug" well to the cavern with concrete.
The record clearly reflects that the Appellants had actual notice of the claimed trespasses and the fact that any violators or trespassers would be prosecuted to the fullest extent of the law, if any violators leached out salt from the underground salt formation in order to form any caverns. Turkey Creek and the two individuals, Hylton and Rhodes, attempted to prevent the plugging of the hole.
The Later Additional Findings of Fact Of paramount significance are certain additional or supplemental findings of fact. They are:
*Page 379"1. That MAPCO, INC. as equitable owners of the subject property utilized MAPCO UNDERGROUND STORAGE OF TEXAS, INC. as a part of an unfair device to achieve an inequitable result, which inequitable result can only be
remedied by awarding Plaintiffs a personal in personam judgment against MAPCO, INC.The Public Policy Declaration by the Legislature The Texas Legislature has enacted a declaration of public policy regarding natural gas and hydrocarbons storage in underground facilities and declaring underground storage of natural gas promotes conservation of that natural resource and promotes, in addition thereto, the public interest and welfare of Texas. There are certain statutorily required prerequisites and steps with respect to the creation and use of natural gas and hydrocarbons storage facilities. The Act,TEX.NAT.RES.CODE ANN. sec. 91.171 et seq. (Vernon Supp. 1 989) entitled "Underground Natural Gas Storage and Conservation Act of 1977", establishes certain relative and correlative rights and duties between the surface owners, the mineral owners, and the storers of these natural resources. Query: Did Mapco ever comply with these statutory requirements? The record shows Mapco, Inc., did not comply."2. That the mineral salt comprising the underground storage cavern's lateral support is a part of the mineral estate made the basis of this lawsuit.
"3. That MAPCO UNDERGROUND STORAGE OF TEXAS, INC. is a wholly owned subsidiary of MAPCO, INC.
"4. That MAPCO, INC. directed and controlled the acts, omissions and activities of MAPCO UNDERGROUND STORAGE OF TEXAS, INC. with respect to the creation, operation and abandonment of the underground storage facility made the basis of this suit.
"5. That the title that MAPCO UNDERGROUND STORAGE OF TEXAS, INC. held in the surface, minerals, or with respect to the underground storage facility made the basis of this suit, was as the agent and nominee of MAPCO, INC., who was the true party in interest and equitable owner of the subject property.
"6. That GORDON SPEER holds title as the successor in interest to MAPCO, INC., who was the equitable owner of the property deeded to GORDON SPEER made the basis of this suit."
The rule of statutory construction in our state has been established for a long duration. The rule declares that a statute should be given a sensible, fair construction and a construction that would carry out the purposes of the Act. No court should construe the Act in a mode to nullify the Act or to defeat its purposes. Brazos River Conservation and R.Dist., et al. v. Costello, 135 Tex. 307, 143 S.W.2d 577 (Tex. 1940); Walker v. City of Houston, 466 S.W.2d 607 (Tex.Civ.App. — Houston [14th Dist.] 1971, no writ). The majority has ignored this Act and the public policy it enforces.
Mapco and M.U.S.T. had failed to acquire the necessary percentage of ownerships in the minerals and the royalty interests. If these interests could not have been obtained through voluntary means, further steps should have been taken through eminent domain. Hence, the Appellants' creation of this particular storage cavern for natural resources, especially natural gas, was unlawful. Therefore, Appellant acted unlawfully and in bad faith; the Chancellor so found. Traditionally, a court of equity must not permit a party to benefit by his unlawful conduct. Grohn v. Marquardt,657 S.W.2d 851 (Tex.App. — San Antonio 1983, writ ref'd n.r.e.).
The Effect of the Findings of Fact and Conclusions of Law Findings of fact made in a bench trial, especially in an equitable partition proceeding, are entitled to the same force, dignity, and consideration on appeal as a jury verdict based on answers to certain special issues. If these findings of fact are supported by some competent evidence of probative force, they must not be disturbed or reversed on appeal unless these findings of fact are so against the great weight and preponderance of the evidence as to be clearly unjust and manifestly wrong. See Houston Natural Gas Corporationv. *Page 380 Pearce, 311 S.W.2d 899 (Tex.Civ.App. — Houston 1958, writ ref'd n.r.e.).
Under this record, my opinion is that this intermediate court cannot overthrow the findings of fact and conclusions of law made below. An intermediate court reviewing the trial bench's findings of fact must review the record to see if the findings of fact are supported by any evidence of probative force and value giving credence and consideration only to the evidence favorable to the findings and the reasonable inferences from that evidence. If findings of fact are susceptible to different constructions, then they are to be interpreted and construed as being in harmony with the judgment and as supporting the judgment. See Brown v. Frontier Theatres, Inc., 369 S.W.2d 299 (Tex. 1963).
The Current Standard for Piercing Corporate Veils as Between Corporations in a Contract Setting The trial court found that Mapco was the owner and the real party at interest in the property. Castleberry v.Branscum, 721 S.W.2d 270 (Tex. 1986) enunciated the standards for the piercing of corporate veils between corporations in a contract setting. The current test can be defined (exercising common sense and justice, while recognizing the legalistic separate corporate existencies) as a standard bringing about an equitable result. In Castleberry,supra, the Supreme Court pronounced a flexible approach requiring the factfinder to decide whether the result is equitable or inequitable. The record before us reflects that there is ample evidence and testimony of probative value and force showing Mapco, Inc., was the beneficial and equitable owner of the property in litigation; that Mapco, Inc., directed and controlled the acts, activities, omissions and commissions of M.U.S.T.; that the title that M.U.S.T. held in the underground storage cavern was a title held by M.U.S.T. as an agent and/or nominee of Mapco, Inc., which was the true party at interest and the real equitable owner of the subject property. See Thomas v. Southwestern Settlement andDevelop. Co., 132 Tex. 413, 123 S.W.2d 290 (Tex. 1939);City of Dallas v. Wright, 120 Tex. 190, 36 S.W.2d 973 (1931).
A Cardinal Principle of Equity Furthermore, a cardinal principle of equity is that the chancellor will not suffer a right to be defeated by the lack of a reasonable, practical remedy. See Miers v.Brouse, 153 Tex. 511, 271 S.W.2d 419 (1954). Thus, inasmuch as there was a sale of the property in question — the cavern — from Mapco, Inc., to Gordon Speer and inasmuch as Mapco, Inc., contracted to receive amillion dollars in consideration for the sale of the subject property and cavern; then a decree in equity providing only that the owelty allowed would be secured by a lien against the property without also a personal in personam money judgment against Mapco would eviscerate and disembowel the equity powers and duties of the chancellor and would put the original plaintiffs, Appellees here, to the frustration and practical defeat of suffering a right without a remedy.
The right of equitable partition has been declared paramount and superior to the occupying cotenants' claim of homestead. Owelty, having been assessed in adjusting equities in an equitable partition proceeding has been recognized as being in the nature of purchase money, being very similar to purchase money as secured by a first vendor's lien note. Such first vendor's lien notes are personal obligations of themakers as well as being secured by the usual deed of trust. Courts in equity have plenteous power to award owelty as a necessary incident to an equitable partition.
Each cotenant has a right to demand partition; that is, equitable partition of the real estate. Upon the dissolution of the cotenancy and upon the actual partition, the parties are vested with certain rights. Examples are that one tenant may have to account to another cotenant for rents or profits received, any waste committed, any monies fraudulently obtained, any betterments made or for the payment of taxes. These are all matters incident to a partition suit. Sayersv. Pyland, 139 Tex. 57, 161 S.W.2d 769 (1942). *Page 381
The power to award owelty has from olden times been regarded as a necessary power to the act of partitioning real property.Sayers, supra. Certainly the holding inSayers is compatible with a chancellor adjusting all the equities; and, if necessary (as here), to fix a lien to secure the actual payment of the owelty. Moreover, the bench in a partition proceeding, according to the nature of the property, may necessarily have to divide the property into unequal shares of unequal values; but, nevertheless, fix a lien or award owelty against the larger share in favor of the parties or cotenants receiving the smaller shares, which award for the difference thereof is known and recognized as owelty.
Furthermore, an intermediate appellate court, in reviewing a no evidence challenge to a bench trial, must disregard all evidence contrary to the trial court's findings. If there remains any evidence which would support the judgment below, then the trial court's judgment must be upheld. McGalliardv. Kuhlmann, 722 S.W.2d 694, 696, 697 (Tex. 1986). Furthermore, testimony constituting more than a scintilla of evidence will support the trial court's findings in a non-jury proceeding. See State v. Arnold, 778 S.W.2d 68 (Tex. 1989).
The Texas Natural Resource Code The "Underground Natural Gas Storage and Conservation Act"TEX. NAT. RES. CODE ANN. sec. 91.171 (Vernon Supp. 1989), originally became effective the latter part of 1977. The subchapter F became effective in June of 1979. The Natural Gas Storage and Conservation Act contains a specific declaration of policy in Section 91.172 thereof. The diktats of the policy read:
"Sec. 91.172. Declaration of Policy
"The underground storage of natural gas promotes the conservation of natural gas, permits the building of reserves for orderly withdrawal in periods of peak demand, makes more readily available natural gas resources to residential, commercial, and industrial customers of this state, provides a better year-round market to the various gas fields, and promotes the public interest and welfare of this state."
I think a fair construction of the Act is applicable to this appeal. The Act certainly gives the Railroad Commission of Texas an important, paramount, administrative role. Appellants obtained a permit from the Railroad Commission of Texas to plug the Well No. 1 permanently with cement. At least, the Appellants must have thought that the Railroad Commission of Texas was the proper agency to approach for the permit to permanently plug the well.
Common Law Ownership of Minerals Texas adopts the view that interest in minerals, such as oil, gas, salt and other minerals are susceptible of ownership in place in the ground prior to production of the minerals at or on the surface. The Texas rule is that this interest in minerals is interest in real property. Thus, the mineral owners retain a property ownership, right and interest after the underground storage facility — here, a cavern — has been created. These same mineral owners are vested with ownership rights, including, of course, entitlement to compensation for the use of the cavern. Stamm, "Legal Problems in the Underground Storage of Natural Gas", 36 TEXAS L. REV. 161 (1958). Thus, Texas law would recognize the continuing ownership interest of the mineral estate owners in the cavern if the natural gas storage act is inapplicable.
An outright reservation or grant of ownership and title of minerals in and under land is a fee simple absolute estate in the minerals in place. Appellees have shown their fee simple title in an undivided, majority interest. See Alford v.Krum, 671 S.W.2d 870 (Tex. 1984). In this record, the mineral owners clearly owned the salt in place, as is shown by the exhibits admitted into evidence. Salt has been recognized as a mineral in Texas. See State v. Parker, 61 Tex. 265, at 268 (1884). The court wrote:
*Page 382"It has been apprehended that by no one in any way familiar with the elementary principles of chemistry and mineralogy, would salt be classed otherwise than as a mineral substance. . . ."
The chancellor was then eminently correct in finding as a fact and concluding as a law that the walls of the underground storage cavern belonged to the mineral interest owners. See First Amended Finding of Fact No. 24, First Amended Conclusion of Law No. 6 and Supplemental Finding of Fact No. 2.
Furthermore, the majority simply, in my opinion, miscalculated the damage issues and the elements of damage, failing to consider or reckon with the fact that there was an existing cavern with its location and capabilities. The majority figures that the value of the mineral estate was $200 per acre and then reached the conclusion that the total value of the mineral estate was about $25,275, failing to consider the existence of the cavern. Then the majority insists that the trial court failed to consider the cost of creating the cavern even though the chancellor specifically ruled out Appellants' right to do so on a sufficient basis. The majority consistently refuses to recognize that the chancellor was balancing the equities. In some manner, the court says that there is, first, no evidence and then insufficient evidence to support the owelty award out of an estate valued at $25,275.
The majority holds:
"Appellees cannot be entitled to owelty under the findings of fact in this case."
The findings of fact below are directly to the contrary, as are the conclusions of law.
Then, the majority reasons that a cotenant producing minerals and creating an improvement, has a duty to account to its non-consenting cotenants for the minerals produced, less the necessary and reasonable costs of producing those minerals, citing Cox v. Davison, 397 S.W.2d 200 (Tex. 1965). But then the majority illogically holds that the record shows that the cost of production was far greater than the value of the minerals produced; that is simply not the issue here. The present issue here is not the value of the minerals produced but, rather, the value of the cavern. The majority has simply misjudged the owelty issue in this case because it used the value of the minerals produced rather than the value of the cavern. The majority, becoming majoritarians, keep insisting that the salt strata was uniform throughout. That may, or may not, be so. But it is glaringly clear that the cavern was not uniform throughout the entire 126. plus acre tract because it existed under a 15-plus acre tract of land awarded, at the specific request, to Mapco, Inc., and to its successor in interest, Gordon Speer. He bought the same clearly subject to a proper and timely recorded lis pendens notice. It is also abundantly clear, from the cases cited by the majority for the proposition that the improvements erected at the expense of a cotenant are not owned by the other nonjoining cotenants — these cases do not fit the record here. Those cases do not involve a cavern capable of storing gas and oil.
Another misconception that the majority has is that they base their opinion on this point on the premise that Mapco and M.U.S.T. were primarily interested in producing rock salt or brine. Not so. They were interested in producing an underground storage cavern. Then, finally, the majority holds that (if the cavern was considered as an improvement) M.U.S.T. created the cavern and is entitled to its improvement without regard to the enhancement of the value of the estate partitioned. No so again. The majority fails to recognize the incidents to a suit for partition.
Although the chancellor made extensive findings of fact and conclusions of law, he did not (nor was it necessary for him to) set out the equitable principles or theories of equity upon which he reached his justified conclusions. It seemed obvious that the chancellor was applying the clean-hands doctrine and also the balancing-of-the-equities doctrine.
The majority agrees that there was sufficient evidence that the salt had value. However, the majority calculates that since the value of the mineral estate was $200 per acre, making an approximate total of $25,275, that this $25,275 figure should be the top value for the entire mineral estate. What the Court totally overlooks is the fact that there was in existence a cavern and storage facility within the mineral estate *Page 383 that was not in existence before and that the $200 per acre value of the mineral estate was without calculating the value of the cavern. The majority arrived at the $25,275 by multiplying $200 per acre times 126.375 acres, equaling $25,275 for the mineral estate prior to the time that the cavern was excavated and formed. Then, the majority holds that $900 per acre for the entire surface estate, plus the $25,275, would be less than the amount awarded as owelty. The surface estate was not involved in the suit.
Then the Court holds:
"The $450,000 owelty award is in fatal conflict with the uncontested finding of the value of the partitioned mineral estate."
In that holding, the majority totally ignores the existence of a complete underground storage cavern capable of storing gas, oil and other hydrocarbons. The Appellees, Plaintiffs below, owned an undivided, but majority, interest in the fee title and fee estate to the minerals in place and, as such, they had a fee estate in the caverns after the minerals were extracted.See Alford v. Krum, 671 S.W.2d 870 (Tex. 1984). As an appurtenance or incident to this fee estate, the Plaintiffs/Appellees had the right to participate in lease benefits and the right of a fractional interest, being a majority fractional interest, of any possibility or probability of a reverter. Alford v. Krum, supra.
The excavation, or the formation, of the cavern does not defeat the title of the owners of the fee estate in the minerals. Hence, the Plaintiffs/Appellees owned an undivided but majority fraction of the ownership and title to the cavern. The Appellants recognize this ownership right because they asked that the cavern be set aside to Mapco, Inc., which, in turn, had conveyed it to Gordon Speer. If Mapco, Inc., Ralph Ball and Gordon Speer had felt that the cavern was totally valueless or that the Plaintiffs/Appellees had no interest whatsoever in it, why would they request that the Chancellor, acting in equity in a partition suit, specifically set the cavern aside to Mapco, Inc.? The fact that Mapco, Inc., specifically asked for this relief is shown by pleadings and the brief of Appellants. That pleading is set out above in this dissent.
". . . [I]f the Court finds that the underground storage cavern constitutes part of the mineral estate then the Cross-Plaintiff, Mapco, Inc., requests that the Court order a partition so that the cavern is set aside in the minerals awarded to the Cross-Plaintiff, Mapco, Inc."IV.
"The Cross-Plaintiff would show that the Court should appoint commissioners and a surveyor to make a report on a fair and equitable [sic] in kind."
In the prayer of that live pleading, the Cross-Plaintiff, Mapco, Inc., prays that the Court decree a partition of the oil, gas and other minerals and set aside the part that contains the cavity to the Cross-Plaintiff and that the Cross-Plaintiff have this relief in equity as well as in law. The significant testimony of Ralph Ball on this issue is recited above.
The majority then holds:
"There is insufficient evidence to support the $450,000 award of owelty out of an estate valued $25,275. Appellees cannot be entitled to owelty under the findings of fact in this case."
Not so. The majority repeatedly, totally disregarded the value of the cavern, itself.
The underground storage cavern was formed out of the underground mineral salt, being the mineral estate. Appellees had a fee estate in the mineral salt. Notice that the majority takes the position that owelty cannot be awarded under the findings of fact. This is simply inaccurate. The findings of fact signed by the chancellor disprove this holding. The Carters, for example, own a large, undivided interest in the minerals in, on and under the tracts of land involved together with all other rights and appurtenances to the said fee ownership. Among many other findings, there is a specific finding that Mapco, Inc., and M.U.S.T. drilled and developed the underground storage facility in bad faith. Therefore, neither one is entitled to recoup *Page 384 the costs thereof. There is ample and sufficient evidence of strong probative valuation to support this finding as well as the other findings of fact. Another finding exists that neither Mapco, Inc., nor M.U.S.T. ever recognized the ownership rights of the Carters or the Turkey Creek Mineral Trust with respect to the salt, either in place or the salt as removed.
There is a definite finding that the fair market value of the underground storage facility, as of the date of judgment, was the sum of $1,750,840. Further, the record clearly proves that Mapco, Inc., and M.U.S.T. received notice, before plugging and abandoning the "jug" well, to cease and desist plugging and abandoning the well. The chancellor found the plugging and abandoning of the well was done in bad faith. There are a number of other findings which support the judgment. To recite them all, here, would unduly lengthen this opinion. There are numerous, specific findings of fact upon which to properly base the money owelty judgment in the amount of $450,000 as well as specific findings why the owelty judgment should be made a personal in personam money judgment against Mapco, Inc. There is a specific finding that the walls of the underground storage cavern are composed of mineral salt, which mineral salt is owned in cotenancy by the parties.
The conclusions of law possess forceful declarations to support the judgment. Significant and crucial are the requested findings of fact and conclusions of law proffered by the Defendants/Appellants. These the chancellor refused to sign, thereby clearly indicating his disapproval of the same and his failure to find the same.
In addition, the Supplemental Findings to the First Amended Findings of Fact and the Supplemental Conclusions of Law filed herein clearly support the decree below.
Dr. Clarence O. Durham, Jr. testified. He was a graduate geologist. He received his undergraduate degree from the University of Texas. He did graduate work at the University of Texas and completed his doctorate at Columbia University. He had studied extensively the bed sediments, regional geology and economic geology of the Gulf Coast.
This Ph.D. had been elevated to a full professorship at L.S.U. He had made extensive studies of salt domes and the geology pertaining thereto along the Gulf Coast. He had actually observed the mining of salt in underground formations. He testified about two salt domes located in Texas; one, the Pierce Junction salt dome near the Astrodome in Houston. These facilities were selling their brine. He testified that there was a market for brine salt. He testified that the market price for brine ranged from about $5.86 per short ton of salt to about $6.21. He testified that the price of the brine taken from the 644,000 barrels would equal about $1,308,247. This Ph.D. geologist calculated the interest of Appellees to be about $1,212,570. Upon cross-examination, the geologist did agree that there were some impurities in the salt, approximately 8 or 9 percent, which would reduce the fair market value 10 percent.
Another expert witness was proffered by the Appellees. His name was G. Mac Riley. He was a certified public accountant. He had extensive background and experience in oil and gas evaluations. He had worked for Texaco. In fact, he had experience and had done work in a similar situation involving similar litigation. He had experience in doing evaluations of oil and gas facilities, including salt dome storage cavities, as well as other types of storage facilities and cavities. He testified that he was familiar with the evaluation processes for a salt dome storage facility and for other types of storage facilities.
It must be kept in mind that the majority has stated there is no evidence of the value of the cavern. This expert, Riley, was asked specifically what the fair market value of the cavern, itself, was, separated from any other facilities that surround it. He had an expert opinion. His expert opinion was that the fair market value of the cavern was $1,750,840. Among other matters, he based his expert opinion on comparable sales of similar properties. He explained thoroughly and in detail how he arrived at this fair market value figure and *Page 385 the chancellor had a right to weigh its value and his credibility.
The majority further insists and finds that the cost of production of the minerals was "far greater than the value of the minerals produced". But that is simply not the issue. This is a partition suit, to partition the mineral estate, including the cavern. At least that is the case on appeal. This appeal, as presented, is not to decide the value of the minerals produced in relationship to the cost of their production. The majority further disallows owelty because the Court states that "the overwhelming weight and preponderance of the evidence supports the finding the salt is of uniform value throughout the partitioned estate". Again, the court simply overlooks entirely the existence of the completed cavern.
The First Amended Findings of Fact and Conclusions of Law, coupled with the Supplemental Findings to First Amended Findings of Fact and Conclusions of Law, sustain and support the in personam owelty judgment against Mapco, Inc. The record, the evidence and the testimony all support these findings, both the First Amended and Supplementary. Hence, the Court's sustaining the Appellant's Sixth Point of Error is, in my opinion, clearly wrong under the state of the entire record before us.
Furthermore, the Court totally disallows owelty but, nevertheless, in part, sends back the partition suit on remand. Apparently, then, the chancellor will have to divide the cavern into specific, separate parts and make a partition in kind of the cavern itself. This result no party now desires. Since the Court sustains Appellants' Point of Error No. 1 and Point of Error No. 6, I must respectfully file this dissent.
But the majority's paramount error is their refusal to acknowledge and follow McGalliard v. Kuhlmann, supra, and State v. Arnold,supra.