Atwood v. Kleberg

• Decision Date: 06 April 1943
• Docket Number: No. 10055.,10055.
• Citation: 133 F.2d 69
• Parties: ATWOOD et al. v. KLEBERG et al.
• Court: U.S. Court of Appeals — Fifth Circuit

133 F.2d 69 (1943)

ATWOOD et al. v. KLEBERG et al.

No. 10055.

Circuit Court of Appeals, Fifth Circuit.

January 27, 1943.

Rehearing Denied April 6, 1943.

Thomas Hart Fisher, of Chicago, Ill., and Brady Cole, of Houston, Tex., for appellants.

Robt. W. Stayton, of Austin, Tex., Leroy G. Denman, of San Antonio, Tex., Leroy G. Denman, Jr., of Houston, Tex., B. D. Tarlton, and Marcellus G. Eckhardt, both of Corpus Christi, Tex., Felix A. Raymer, R. E. Seagler, and Robert F. Campbell, all of Houston, Tex., and Jacob S. Floyd, of Alice, Tex., for appellees.

Before SIBLEY, HUTCHESON, and HOLMES, Circuit Judges.

HUTCHESON, Circuit Judge.

Appellants are three of the legatees under Mrs. King's will. Appellees are the other legatees, the trustees under her will, and the Humble Oil Company, holding an oil and gas lease executed by them.

An action to quiet title to all the minerals in the 1,000,000 acre King ranch, the suit had two branches or aspects, each relating to, but not identical with, the other. One of these was to establish the existence of a trust of the minerals, fix plaintiffs' undivided interest therein and secure the appointment of a successor trustee. The other was to cancel the lease.

On the first branch of the case, the claim was: that Mrs. King had by an instrument¹ creating a mineral trust and conferring large powers on the grantee, severed all the minerals from her lands, conveying 29/32 of them in trust for the benefit of herself and the other beneficiaries designated in her will; that by such instrument, the trustee became vested with both the legal and the equitable title to the minerals with powers enabling him to completely convert the mineral interests of the beneficiaries, their only right in them being the cash from such conversion; that these severed interests passed under the provisions of Mrs. King's will in undivided interests; that the devisees of specific tracts of land and the distributees under the residuary trust clause thereof took their devises and distributions burdened with an undivided mineral interest outstanding under the trust; that Kleberg, the named trustee, remained until his death trustee of these interests; and that since his death, though no trustee has been named, the severance of the minerals from the land and the trust as to them has continued. There was a further claim that plaintiffs' interest under the will instead of being 9/64 as contended by the defendants, was 3/16, and the still further claim that the 3/32 mineral interest conveyed to Kleberg had lapsed, and plaintiffs were entitled to their proportionate part of that 3/16.

On the second branch of the case, the claim was: (1) that the minerals having been severed and placed in a mineral trust, the trustees under Mrs. King's will had no title to them which would support the lease they made to the Humble Oil & Refining Co.; (2) that if they did have title, the lease was invalid because they had no power under the will to make a lease of property lasting beyond the ten year term for which they were appointed trustees, and (3) the lease was so grossly improvident in its terms and conditions as to amount to an abuse of their trust.

There were voluminous pleadings and, in addition to the two controlling documents, the mineral trust and Mrs. King's will, a mass of evidence, oral and documentary. The district judge, because the same matters were at issue in another suit then pending in the same court, reserved all questions as to whether the trustees under Mrs. King's will had fairly selected and distributed the particular properties partitioned under the residuary clause of her will, and decided all of the other questions against plaintiffs. They have appealed and here present two primary and eight subordinate questions for decision.² To an understanding of the questions thus raised, two instruments are of prime importance, the mineral trust, summarized in the note above, and Mrs. King's will. The important provisions of the will executed in 1918, and probated in 1925, when she died at the age of 92 years, are (1) a provision appointing executors and providing for the payment of debts and expenses of administration; (2) specific devises and bequests of lands; (3) a residuary devise of all the rest and residue of her estate, real, personal and mixed, consisting of approximately 1,000,000 acres, cattle, ranch houses, equipment, etc., to eight trustees, R. J. Kleberg, Sr. and seven others, for a period of ten years from the date of her death, and until the final partition and distribution by them of all of her residuary estate. Directed to make due provision for the payment of taxes and expenses, and if they have sufficient funds left, to make the monthly payments provided for in the will, the residuary trustees were granted the broadest powers: to possess, hold, have, conduct, manage and control, lease, bargain, sell, convey and deliver or exchange the trust estate, or any of the properties, and to invest their proceeds as in their judgment they deem best; to borrow any monies upon and execute and deliver all necessary notes, mortgages and deeds of trust to secure the payment of same; to have, receive, collect, hold, disburse or invest the trust estate; and generally do any and all things in the premises which Mrs. King would or could do if living and personally present and acting. They were particularly authorized to keep up and make all necessary improvements or changes in the lands, to employ any and all necessary persons to carry on the business and do all such acts in reference to the trust estate or any part of it as an owner similarly situated might do, not inconsistent with the provisions of the will. Upon the expiration of the trust period, the residuary trustees were mandatorily directed to partition and distribute the entire residuary trust estate to her children and grandchildren, as follows: To her son, Richard King, and to her daughter, Alice Kleberg, or their descendants, if deceased, each, the whole, and to her granddaughter, Henrietta Welton Page, or if deceased, to her descendants, and to her grandchildren, the children of Nettie King Atwood, or if deceased, to their descendants, each, one-half, of (a) certain specifically devised lands and property, (b) one equal one-fourth of all other personal or mixed property not otherwise devised or bequeathed which at the final partition of her estate remained in the hands of the trustees subject to partition and (c) one equal one-fourth of all other property, real, personal or mixed, not otherwise specifically enumerated, devised or bequeathed, then subject to partition. Robert J. Kleberg, Sr., was given a controlling voice in the management of the trust and upon his death, the majority of the trustees were to control. The will appointed Robert J. Kleberg, Sr., and three others of the trustees as executors. Captain and Mrs. King had four children, all but one of whom, Alice Kleberg, predeceased their mother. Mrs. King's descendants on the date of her death were (1) the children of her son, Richard King, (2) Henrietta Welton Page, the child of Ella King Welton, her daughter, (3) the children of Nellie King Atwood, her daughter, of whom three are plaintiffs and one is a defendant, and (4) her daughter, Alice Kleberg.

In addition to these two documents, plaintiffs offered Captain King's will in support of their claim that as to one-half of the property, they took by inheritance from him and Mrs. King could not limit their interest, as the trustees had construed her will as doing. A mass of evidence was offered by plaintiffs and defendants in support of the construction each claimed for the documents and in support of the contentions each made in regard to the validity and unimpeachability of the lease. This evidence covered a wide range; as to mineral leases made by Kleberg, as mineral trustee and deeds made by him, as agent, during Mrs. King's lifetime; as to the controversy over the lease made by Richard King to the Texas Company after Mrs. King's death in view of the existence of the mineral trust and of the 3/32 interest it conveyed to Kleberg personally; as to the settlement of that controversy by recognizing Kleberg as the owner of the 3/32 interest, and King, as owner of the land, as owning the balance of the mineral interest; as to the surrender to Kleberg, as mineral trustee, of the mineral leases he had executed; as to deeds made by Mrs. King's executors and residuary trustees; as to litigations in which Kleberg had intervened and had had adjudicated to him, as mineral trustee, certain of the lands, including particularly what is known as the Tule partition decree; as to the deed Kleberg, as mineral trustee, made to the trustees under the will to the 29/32, retaining 3/32 for himself; as to the financial straits the estate found itself in; as to the efforts the trustees made to extricate themselves by leasing the mineral interest; and as to the negotiations with, and final making of the lease to, the Humble Oil Company, including a mass of evidence as to the value of the minerals, and whether the lease was, as plaintiffs contended, grossly unwise, imprudent and a breach of trust, or, as defendants contended, wise and prudent and within the powers of the trustee. Finally, there was evidence that the trustees divided the residuary estate in the following proportions: 35/64 to King Ranch, the assignee of Mrs. Kleberg, Mrs. Page and Mrs. Baldwin, one of the Atwoods, 20/64 to Richard King and his sisters, and 9/64 to the plaintiffs, three of the four Atwoods, the partition being made subject to the Humble lease and subject to the Kleberg 3/32 mineral interest. The result of this was that plaintiffs and all of the other legatees received all of the minerals in the specific lands they got under the distribution instead of, as plaintiffs claimed they should, because of the mineral trust have gotten, a fractional interest in all the minerals in...