Atlantic Refining Co. v. Beach

• Decision Date: 08 January 1968
• Docket Number: 8341,Nos. 8049,s. 8049
• Citation: 436 P.2d 107,78 N.M. 634,1968 NMSC 3
• Parties: The ATLANTIC REFINING COMPANY, a corporation, Plaintiff-Appellee, v. C. J. BEACH, Edna Beach, Helen H. Bellows, Ben Graham, Ethel Graham, Floyd B.Graham, G. T. Hall, W. C. Hubbard, W. S. Montgomery, Louise Wright Simpson andElwood Roy Wright, heirs and devisees of Gladys Louise Price, Deceased, HerbertC.Maxwell and Alva L. Maxwell, Defendants-Appellees. W. B. Price and H. J. Loe, Defendants-Appellants.
• Court: New Mexico Supreme Court

Page 107

436 P.2d 107

78 N.M. 634

The ATLANTIC REFINING COMPANY, a corporation, Plaintiff-Appellee, v. C. J. BEACH, Edna Beach, Helen H. Bellows, Ben Graham, Ethel Graham, Floyd B.Graham, G. T. Hall, W. C. Hubbard, W. S Montgomery, Louise Wright Simpson andElwood Roy Wright heirs and devisees of Gladys Louise Price, Deceased HerbertC.Maxwell and Alva L. Maxwell, Defendants-Appellees W. B. Price and H. J. Loe, Defendants-Appellants.

Nos. 8049, 8341.

Supreme Court of New Mexico.

Jan. 8, 1968.

Hinkle, Bondurant & Christy, Michael R. Waller, Roswell, for Atlantic Refining Co.

Harvey C. Markley, Lovington, for C. J. Beach and Edna Beach.

Heidel, Swarthout & Samberson, Lovington, for Hubbard, Montgomery and Bellows.

A. D. Solsbery, Roswell, McCormick, Lusk, Paine & Feezer, Carlsbad, for Floyd Graham, Ben Graham and Ethel Graham.

Robert W. Ward, Lovington, for Simpson and Wright.

John F. Russell, Roswell, for Herbert C. Maxwell and Alva L. Maxwell.

Girand, Cowan & Reese, Hobbs, for appellants.

OPINION

NOBLE, Justice.

Atlantic Refining Company (hereafter referred to as Atlantic) brought suit to quiet title to its lease and mineral interest in certain real estate. The suit required construction of a conveyance denominated 'Mineral Deed' as to whether it conveyed a 1/16 of the minerals in place, or 1/2 of the usual 1/8 royalty. This appeal is from a judgment interpreting the instrument as one conveying a royalty interest, construing the reservation in the grantor, and quieting the title to the various mineral interests based upon these constructions.

After the appeal, a motion was filed and an order entered in Cause No. 8049, on the Supreme Court docket, making Alva Love Maxwell and Herbert C. Maxwell, Jr., parties as appellees to the appeal from the judgment in the suit to quiet title. Cause No. 8049, on the docket of this court, has been consolidated with No. 8341 and the disposition of Cause No. 8341 will likewise dispose of No. 8049.

It is agreed that the land involved in this appeal was owned in fee simple to T. L. Price, as his separate estate. Price, during his lifetime, executed an instrument conveying to L. W. Kitchen certain interests and reserving to himself certain interests. There followed other deeds and leases covering the mineral interests in these lands, but the parties agree that all transfers stem from the Price ownership of the land and the interests conveyed to Kitchen and those retained by Price. Questions concerning the effect of the Price will and of a pretermitted child were resolved by Price v. Johnson, 78 N.M. 123, 428 P.2d 978.

The Price-Kitchen instrument conveyed an undivided 1/16 interest in 'all the oil, gas and other minerals, in and under, or that may be produced from' forty acres of land 'together with the right of ingress and egress at all times for the purpose of developing the same.' The granting clause was then followed by the intention provision:

'This conveyance is intended only as a Mineral Deed and to convey only an undivided one half of the Royalty on the above described Forty Acres of land to wit: An undivided one sixteenth of said Minerals thereunder or which may be produced therefrom, but not so as to affect in any way the title in fee simple to said lands nor to convey any interest whatever in or to any rentals or future rentals of Oil, or Gas minerals in under or that may be produced from said lands, but same is reserved unto grantor, specifically, and in (sic) the intention of this mineral deed is to convey, and it is so understood, and (sic) undivided one half of the Royalty, or an Undivided one sixteenth (1/16) of the Minerals thereunder.'

and the habendum which warranted the title 'in so far as it covers and includes an undivided one sixteenth (1/16) interest in and to said above described Forty acres of Minerals in and to said lands hereinabove described.'

Appellants, Price and Loe, argue that the instrument is a mineral deed conveying to Kitchen and his grantees an undivided 1/16 interest in the minerals in place, and that they are, accordingly, entitled only to 1/16 of the 1/8 royalty. The appellees, on the other hand, contend that a proper construction of the whole instrument makes it apparent that it was intended to grant an undivided 1/2 of the royalty.

Appellants further argue that because the instrument is entitled 'Mineral Deed'; because it refers to the right of ingress and egress for purposes of development; because it contains language 'an undivided one sixteenth of said Minerals thereunder'; and because the habendum warrants 'an undivided one sixteenth (1/16) interest in and to said above described Forty acres of Minerals,' it grants an interest in the minerals in place.

The proof in this instance consists of documentary evidence and depends upon a proper construction of the language of the Price-Kitchen deed. In such circumstances, we are in as good a position as was the trial court to determine the facts and are, accordingly, not bound by the trial court's findings. Newbold v. Florance, 56 N.M. 284, 243 P.2d 597; State ex rel. Reynolds v. Sharp, 66 N.M. 192, 344 P.2d 943; Garry v. Atchison T. & S.F. Ry., 71 N.M. 370, 378 P.2d 609. As in Jones v. Int'l Union of Operating Eng'rs, 72 N.M. 322, 383 P.2d 571, and Jernigan v. New Amsterdam Cas. Co., 69 N.M. 336, 367 P.2d 519, the question of whether an uncertainty or ambiguity exists is one of law for the courts to determine. See Southwest Motel Brokers, Inc. v. Alamo Hotels, Inc., 72 N.M. 227, 240, 382 P.2d 707.

Canons and rules of construction are but aids in determining the intention of the instrument and all rules of construction must yield to the expressed intention of the parties. Davis v. Hardman, 148 W.Va. 82, 133 S.E.2d 77. In this case, the parties offered no testimony in support of any claimed construction of the language of the instrument. We must, accordingly, interpret the intention from the language of the instrument itself. Under such circumstances, we are committed to the rule that the intention of the parties 'as gathered from the four corners of the deed is the polestar of construction and that all parts of the deed must be examined together for the purpose of ascertaining the intention.' Sharpe v. Smith, 68 N.M. 253, 360 P.2d 917; Price v. Johnson, supra. Applying these rules, we agree with the appellees that the deed granted a royalty interest.

While some diversity of opinion exists concerning the effect of the title of an instrument on its construction, the title does not appear to have ever been given a conclusive effect in construction. At 1 Williams & Meyers, Oil & Gas Law, § 304.1, we find:

'* * * Never does the title prevent a construction that the court thinks is correct and rarely does it impel a court to a construction it would not otherwise make. * * *'

Thus, the title 'Mineral Deed' is of little aid in construing the effect of this instrument. See Rutland Sav. Bank, etc. v. Steele, 155 Kan. 667, 127 P.2d 471.

The creation of exploration and development easements in the instrument, such as the right of ingress and egress, is not controlling in determining whether it conveys minerals in place or transfers royalty only. See 1 Williams & Meyers, Oil & Gas Law, § 304.13; McDonald v. Bennett, 112 W.Va. 347, 164 S.E. 298. Where the instrument as a whole has been considered, and other more persuasive provisions outweigh those of development easements, a number of courts have construed the interest transferred to be royalty, despite the grant or reservation of express easements. Arkansas Valley Royalty Co. v. Arkansas-Oklahoma Gas Co., 222 Ark. 213, 258 S.W.2d 51; Colonial Royalties Co. v. Keener, 266 P.2d 467 (Okl.). The intention clause of the deed before us commences:

'This conveyance is intended only as a Mineral deed and to convey an undivided one half of the Royalty on the above described forty acres of land to-wit:'

The intention clause then continues:

'An undivided one sixteenth of said Minerals thereunder or which may be produced therefrom, but not so as to affect in any way the title in fee simple to said lands nor to convey any interest whatever in or to any rentals or future rentals of Oil, or Gas minerals in under or that may be produced from said lands, but same is reserved unto grantor, specifically * * *.'

The intention to reserve unto the grantor and not to grant minerals in place is apparent. The intention clause then, in unmistakable language, continues:

'and in (sic) the intention of this mineral deed is to convey, and it is so understood, and (sic) undivided one half of the Royalty, or an Undivided one Sixteenth (1/16) of the Minerals thereunder.'

We defined a royalty interest in Duvall v. Stone, 54 N.M. 27, 213 P.2d 212, as:

"Royalty' interest in oil and gas reserved in a deed or provided for in an oil and gas lease, is a share of the product or profits (ordinarily 1/8) reserved by the owner for permitting another to develop his property for oil and gas, usually without expense to the property owner.'

Thus, the language repeated in the intention clause that it is the intention to convey only an undivided 1/2 of the royalty means a grant of 1/2 of the usual 1/8 royalty.

Appellants particularly rely upon the words 'thereunder' and 'in and under' as determinative of the interest granted and requiring a construction that the instrument granted a mineral interest rather than a royalty interest. We cannot agree.

It is true that ordinarily a conveyance of 1/16 of the minerals 'in and under' or 'thereunder' without further provision has been construed as creating a mineral interest. Prairie Oil & Cas Co. v. Allen, 2 F.2d 566, 40 A.L.R. 1389 (8th Cir. 1924); Smiley v. Thomas, 220 Ark. 116, 246 S.W.2d 419; Rutland Sav. Bank, etc. v. Steele, supra, but additional language in the instrument can change this result. Thus, a reservation of 'an...