3. The burden of proof for determining the ownership of a commingled mass is on the Commingler once it has been factually determined that a commingling of like personal property has taken place. 4. If the commingled mass is so confused that a proper and accurate division of same cannot be made, the loss falls on the Commingler. “Stated differently, since Humble is responsible for, and is possessed with peculiar knowledge of the gas injection, it is under the burden of establishing the aliquot shares with reasonable certainty …” Humble Oil & Refining Co. v. West , 508 S.W.2d 812, 818 (Tex. – 1974) emphasis added Thus, the burden of proof fell on Humble to show, with reasonable certainty¸ the volume of native gas upon which the Wests were entitled to receive their royalty share absent the injection of the storage gas. This shift in the burden of proof occurred upon proof by the Wests:
Exxon Corp. v. West , 543 S.W.2d 667 (Tex.Civ.App.
- 1976)
This portion of the case arose after remand where the appeals court addressed the evidence introduced by Humble (now Exxon) in an attempt to satisfy its burden of proof as outlined by the Supreme Court. This court is attempting to determine if the gas reserves (native and stored) were computed with reasonable certainty , thus discharging Exxon’s burden of proof. This appeal takes place after a second trial on the merits.
The court set out the Supreme Court rule of the case which it believed the trial court should have followed:
“. . . (I)t is our view that the act of commingling native and extraneous gas did not impose upon Humble the obligation of paying royalties on all gas thereafter produced from the reservoir, if the evidence establishes with reasonable certainty the volume of gas reserves upon which the Wests would have been entitled to royalties, absent injection of extraneous gas. The burden of this showing devolves upon Humble after proof by the Wests of their royalty interest, together with proof of Humble’s commingling of extraneous and native gas. The threshold question for determination is whether the requisite computation of reserves is capable of establishment with reasonable certainty ; and, if so, the further question to be resolved is whether the burden defined above is discharged by Humble under the evidence . . .” Exxon Corp. v. West , 543 S.W.2d 667,669 (Tex.Civ.App. - 1976) emphasis added Exxon again relied on the testimony of two witnesses: a geologist and a petroleum engineer. The two Exxon witnesses testified as experts on the maximum amount of gas that was in place as of the date gas storage operations commenced. The Wests did not present any witnesses to rebut Exxon’s expert testimony. After Exxon’s expert testimony was concluded, both sides rested. The trial court found for the Wests, requiring Exxon to pay royalties on all gas produced from the West lease, be it native or stored gas. It further found, as the trier of fact, that Exxon had not established, with reasonable certainty, the maximum volume of recoverable gas in the reservoir nor the total amount of gas in the reservoir as of the date
1.That Humble had commingled native gas and storage gas and
2. Proof of the Wests’ royalty percentage in the native gas.
The issue thus became whether Humble could accurately prove the percentage of native/stored gas reserves with reasonable certainty. If so, the burden of proof would have been discharged by Humble by such evidence and the burden of proof transferred back to the Wests to prove otherwise. “The threshold question for determination is whether the requisite computation of reserves is capable of establishment with reasonable certainty ; and, if so, the further question to be resolved is whether the burden defined above is discharged by Humble under the evidence. We have concluded that the cause should be generally remanded to the trial court for determination of these issues at the trial level, as well as for consideration of any other issues the parties may raise in the light of our rulings.” Humble Oil & Refining Co. v. West , 508 S.W.2d 812, 819 (Tex. – 1974) emphasis added
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
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