335 McCammon v. Ischy

Richard F. Brown

 
The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
 
McCammon v. Ischy, No. 03-06-00707, 2010 WL 1930149 (Tex. App.—Austin May 12, 2010, pet. denied) (mem. op.), held that to prevail in trespass to try title, a plaintiff lessee must establish superior title to a common source of title, which requires a complete chain of title by documents, or establish title by prior possession, which requires some proof of actual possession.  In 2000, Ischy acquired leasehold title under leases that covered both producing and non-producing tracts.  In 2003, McCammon acquired a lease on a certain 169.1-acre tract of land, which he believed was open because there was no production on the tract.  In 2004, McCammon obtained a drilling permit and a drilling title opinion.  The title examiner called for releases or an affidavit of non-production for the land covered by two 1989 leases which covered the 169.1‑acre tract and other lands.  In the summer of 2004, viewing these title issues as mere formalities, McCammon drilled a producing well on the 169.1‑acre tract.  In August 2004, McCammon discovered that one of the two 1989 leases, which included McCammon’s 169.1‑acre tract, also included a tract on which Ischy had a producing well.  That is, both Ischy’s lease and McCammon’s lease covered the 169.1-acre tract.
 
The case was tried in a trespass to try title action in which Ischy was aligned as plaintiff.  Ischy won in the trial court, and the jury found that McCammon had not acted in good faith.  The trial court ordered McCammon to turn over operations, all of the equipment, and almost $1,000,000 held in suspense.
 
To prevail in a trespass to try title action, a plaintiff must do one of the following: (1) prove a regular chain of conveyances from the sovereign, (2) establish superior title out of a common source, (3) prove title by limitations, or (4) prove title by prior possession coupled with proof that possession was not abandoned.
 
Ischy sought to preserve his win on appeal under either (2), superior title out of a common source, or (4), prior possession.
 
It was established that a certain 1951 deed was a common source of title for both Ischy and McCammon, but Ischy put on no documentary evidence to establish the subsequent chain of title.  Ischy tried to rely on testimony from McCammon’s title attorney.  A plaintiff in trespass to try title is required to establish the chain of title to the common source by documents, and gaps in the chain of title cannot be filled by testimony.  Witnesses may be called to explain the documents but not to fill gaps in the chain.  Because documentary evidence is required, Ischy failed to establish superior title to McCammon from a common source.
 
The issue submitted on prior possession asked “Was Noel Ischy lawfully in possession of the subject property when [McCammon] entered upon same?”  “Subject property” was defined as the 169.1-acre tract.  Thus, the issue as submitted did not ask about Ischy’s producing tract but only about the 169.1‑acre tract.  McCammon argued that possession of oil or gas requires actual drilling and production of oil or gas, and, because there was no evidence that Ischy had ever produced any oil or gas from the 169.1‑acre tract, Ischy had failed to prove possession.  McCammon relied upon Natural Gas Pipeline Co. v. Pool, which held that actual drilling and production was required to prove possession in the context of adverse possession of minerals.  The Austin Court of Appeals in this case did not clearly adopt this reasoning but recited it in the process of holding that there was no evidence to support Ischy’s claim of prior possession.  There was no evidence of anything except Ischy’s record title.  This leaves open the question of exactly what is required to show prior possession in the context of leasehold interests in trespass to try title.
 
The court reversed and rendered, which is a dramatic change in circumstances for the parties, essentially turning on the formalities of proof required in an action for trespass to try title.  “If the plaintiff fails to establish his title, the effect of a take nothing judgment against him is to vest title in the defendant.”  Title and possession of the 169.1‑acre mineral estate, including all equipment and improvements, was vested in McCammon.  Presumably, Ischy could have preserved his trial court victory if the evidence had included an abstract of title.  The significance of the case is the technical nature of the decision, which has always been a part of this statutory proceeding, and the case highlights the unresolved question of what constitutes possession of oil and gas when there are multiple tracts and the issue is ownership of oil and gas.