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CHARLES H. WILKINSON, JR., ET AL. v. MERCANTILE NATIONAL BANK AT DALLAS (NOW MBANK DALLAS

JULY 13, 1988

CHARLES H. WILKINSON, JR., ET AL.
v.
MERCANTILE NATIONAL BANK AT DALLAS (NOW MBANK DALLAS, N.A.)



BEFORE HAWKINS, P.J., PRATHER AND ANDERSON, JJ.

HAWKINS, PRESIDING JUSTICE, FOR THE COURT:

Charles H. Wilkinson and others have appealed from a decree of the chancery court of Marion County dismissing their complaint against the defendant Mercantile National Bank at Dallas, a banking corporation with principal offices in Dallas, Texas, because the court found it did not have jurisdiction. For this error, we reverse and remand for trial on the merits.

FACTS

 Mercantile National Bank at Dallas (MBank) is a national banking association organized under the laws of the United States of America, with its principal place of business in Dallas, Texas. MBank is not registered to do business in Mississippi. MBank has no offices, telephones or agents in Mississippi, and owns no property in this.

 Charles Wilkinson and over 100 other appellants are, for the most part, residents of Mississippi, though residents of many other states are numbered among the appellants. *fn1 The appellants own interests in the gas and wells in the East

 Morgantown Field in Marion County, Mississippi. Appellants eventually sold gas to Tennessee Gas Pipeline Company. Tomlinson Interests, Inc., was a corporation organized under the laws of Texas and was owned, directly or indirectly, by Prentis B. Tomlinson, Jr., a resident of Houston, Texas. Tomlinson is qualified to do business in Mississippi. Tomlinson owned a working interest in gas wells in the East Morgantown Field.

 MBank, leading a consortium of banks, loaned $108,000,000 to Tomlinson to finance Tomlinson's development and operation of the gas field in Mississippi. Tomlinson executed a deed of trust and security agreement to MBank covering Tomlinson's interest in certain wells as well as Tomlinson's production from these wells in the East Morgantown Field. Tomlinson granted to MBank a security interest in Tomlinson's share of the field and granted MBank the right to an assignment of Tomlinson's share of production from the field. The negotiation for and execution of the loan occurred in Texas. MBank alleged that it never exercised its right of assignment and never received any of the production from the East Morgantown Field.

 Tomlinson and other owners of interests in the wells sold gas to Transcontinental Gas Pipeline Company. Transcontinental began purchasing gas from Tomlinson and others prior to the time that Tennessee Gas was able to hook up to the wells and begin purchasing gas from Wilkinson and the other appellants. Tomlinson sold a large quantity of gas prior to Wilkinson being able to sell any gas. Wilkinson and other plaintiffs (now appellants) filed suit against the interest owners who were selling gas to Transcontinental, alleging that pursuant to operating agreements and a Gas Balancing Agreement, defendants were classified as overproduced. Therefore, appellants were entitled to be brought into balance.

 The suit, filed on August 2, 1984, sought a declaratory judgment against all defendants, including MBank, that Wilkinson and the other appellants were under-produced and entitled to all gas remaining in the ground until they were brought back into balance with the defendants. If the pool of gas became depleted before the appellants produced and sold enough gas to be brought back into balance, then the appellants sought a judgment requiring Transcontinental to pay back in-kind the amount of gas over-produced. In the event in-kind recovery could not be had, the appellants asked for a money judgment against all defendants (except MBank) to achieve cash balancing. Appellants alleged MBank received monies paid by Transcontinental to Tomlinson. Appellants

 requested that MBank be required to disgorge all monies attributable to over-production from the pool in order to provide a fund for any cash balancing. Appellants also prayed for a judgment against MBank in the amount of all money received from over-production of the pool in the event they were unable to recover their share of gas prior to the pool's depletion.

 Appellants' amended complaint alleged that MBank had refused to recognize the appellants' interest in the over-produced gas and in monies received by MBank attributable to over-production, and accused MBank of wilfully converting to its own use and wrongfully appropriating money MBank knew did not belong to it or to the other defendants but which belonged to the plaintiffs.

 MBank specially appeared and filed a motion to dismiss for lack of jurisdiction. The chancellor sustained its motion, dismissing MBank as a party defendant to the suit. Wilkinson appeals, arguing that the Marion County Chancery Court possesses jurisdiction because MBank has entered a contract with a resident of Mississippi to be performed in whole or in part in this state, because MBank has committed a tort in whole or in part in this state against a Mississippi resident, because MBank is doing business in Mississippi, and because MBank's contacts with Mississippi are sufficient to meet the constitutional limitations placed on state power to subject non-residents to the in personam jurisdiction of its courts.

 LAW

 A state court enjoys jurisdiction over a non-resident defendant to the extent permitted by the state's long-arm statute and the 14th amendment's due process clause. Brown v. Flowers ...


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