Arkansas Val. Royalty Co. v. Arkansas-Oklahoma Gas Co.

• Decision Date: 25 May 1953
• Docket Number: No. 5-101,ARKANSAS-OKLAHOMA,5-101
• Citation: 222 Ark. 213,258 S.W.2d 51
• Parties: ARKANSAS VALLEY ROYALTY CO. v.GAS CO. et al.
• Court: Arkansas Supreme Court

Page 51

258 S.W.2d 51

222 Ark. 213

ARKANSAS VALLEY ROYALTY CO. v. ARKANSAS-OKLAHOMA GAS CO. et al.

No. 5-101.

Supreme Court of Arkansas.

May 25, 1953.

Lee Seamster, Don Trumbo and E. J. Ball, all of Fayetteville, for appellant.

Daily & Woods, Ft. Smith, Moore, Burrow, Chowning & Mitchell, Little Rock, for appellees.

ROBINSON, Justice.

The principal issue is whether a certain instrument conveys a one-eighth royalty to an undivided interest in the oil, gas, and other minerals that may be produced from the described property; or is it a deed to the fee in an undivided interest in such minerals. The Chancellor held it to be a conveyance of a one-eighth royalty. We agree with the Chancellor.

At the time of his death in the latter part of August, 1927, J. A. Kelley owned and occupied as a homestead 120 acres on which was outstanding an oil and gas lease in favor of the Southern Union Gas Company. Kelley died intestate, survived by a widow and seven sons and daughters. On March 26, 1931, the widow Mary E. Kelley, two of the daughters with their husbands, and one son with his wife executed and delivered to the Arkansas Valley Royalty Company, a corporation, an instrument prepared by H. H. Ball on a printed form entitled 'Mineral Deed'. The blank spaces in the form were filled in with pen and ink by Mr. Ball, president of the grantee corporation. That part of the deed which is in Ball's handwriting is indicated by italics; the pertinent part of the conveyance is as follows:

'Know All Men by These Presents, That Mary E. Kelley, a single woman, John H. Kelley, Lana Kelley, Will Triplett and Anna Triplett, of Franklin County, State of Arkansas for and in consideration of the sum of One and no/100 Dollars ($1.00) cash in hand paid by The Arkansas Valley Royalty Company, hereinafter called Grantee, and other good and valuable considerations, the receipt of which is hereby acknowledged, have granted, sold, conveyed, assigned and delivered, and by these presents do grant, sell, convey, assign and deliver unto said Grantee an undivided All full Royalty interest in and to all of the oil, gas, and other minerals in and under, and that may be produced from the following described land situated in Franklin County, State of Arkansas, to-wit: All of our 1/8 interest, Each, in the following land: The Northeast 1/4 of the Northeast 1/4 of Sec. 26, and the Southeast 1/4 of the Southeast 1/4 of Sec. 23, and the Southwest 1/4 of the Southwest 1/4 of Sec. 24, all in Twp. 9 North of Range 29, West, containing 120 acres. This Deed is made for 1/8 interest to Each one owning an interest in said land. Which is 1/8 Interest to each one signing deed all Heirs of Mrs. M. E. Kelley of Section 23-26-24 Township 9 Range 29 containing 120 acres more or less, together with the right of ingress and egress at all times for the purpose of mining, drilling, and exploring said lands for oil, gas, and other minerals and removing the same therefrom. Said land being now under an oil and gas lease executed in favor of Southern Union Gas Company, it is understood and agreed that this sale is made subject to the terms of said lease, but covers and includes full Royalty of all of the oil royalty, and gas rental or royalty due and to be paid under the terms of said lease insofar as it covers the lands above described. It is understood and agreed that all full royalty of the money rentals which may be paid to extend the term within which a well may be begun under the terms of said lease is to be paid to the said Grantee and in the event that the above described lease for any reason becomes cancelled or forfeited, then and in that event, an full royalty, All of our Interest of the lease interests and all future rentals on said land for oil, gas and other mineral privileges shall be owned by the said Grantee now owning Full Royalty, All of all oil, gas and other minerals in and under said lands, together with _____ interest in all future events. To have and to hold the above described property, together with all and singular the rights and appurtenances thereto in any wise belonging unto the said Grantee herein, their heirs and assigns forever; and Grantor do hereby bind selves our heirs, executors and administrators to warrant and forever defend all and singular the said property unto the said Grantee herein, their heirs and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof.'

The lease held by Southern Union Gas Company, referred to in the Arkansas Valley Royalty Company instrument, was cancelled and forfeited and no well was ever drilled pursuant to that lease.

On October 5, 1943, all seven of the children of J. A. Kelley and Mary E. Kelley, his widow, executed an Oil and Gas Lease to Arkansas-Oklahoma Gas Company, and on the 29th day of December, 1949, that company conveyed to Arkansas-Louisiana Gas Company an undivided 1/2 interest in the lease. Land covered by the lease is in the Cecil Gas Field in Franklin County. Gas has been discovered in...