Brown v. Smith
| Decision Date | 07 July 1943 |
| Docket Number | No. 8095.,8095. |
| Citation | 174 S.W.2d 43 |
| Parties | BROWN et al. v. SMITH et al. |
| Court | Texas Supreme Court |
Respondents Ector Smith and Floyd Smith and their wives sued petitioners H. L. Brown and W. R. Wheeler and escrow agent, Security State Bank & Trust Company of Beaumont, to recover $6,275, representing the consideration or bonus for an oil and gas lease which had been executed and deposited in the bank, together with the said consideration or bonus and a written contract between respondents and petitioners. The suit is by the vendors or lessors against the purchasers or lessees for the specific performance of the contract. The defense made by petitioners is that the abstracts of title delivered to them by respondents did not show good title as required by the contract and that respondents did not cure the defects in the title which were pointed out to them.
The case was tried by the court without a jury and judgment was rendered in favor of respondents against petitioners for $6,275 and in favor of the bank for $125 as its attorney's fees, to be taxed as costs, the clerk of the court being directed to apply the sum of $6,275, which had been paid by the bank into the registry of the court, first to the payment of costs and then to the judgment rendered in favor of respondents. The Court of Civil Appeals affirmed the trial court's judgment. 168 S.W.2d 513.
The substance of the written contract is as follows: The attached oil and gas lease made a part of the contract and executed on the same date, June 15, 1939, by Ector Smith and wife and Floyd Smith and wife as lessor to H. L. Brown and W. R. Wheeler as lessee, together with a cashier's check for $6,275, is deposited in the bank in escrow, subject to specified terms and conditions. These are that lessor shall forthwith prepare and deliver to lessee for examination a complete abstract of the title to the land described in the lease, allowing ten days for examination of the title by lessee's attorneys; that if title to the land is shown by the abstract to be good, the lessee shall accept the lease and it shall be delivered to lessee and the check shall be delivered to lessor; that if the title is not good as shown by the abstract, the lessor shall have a reasonable time, not to exceed six months, in which to cure the defects in the title pointed out to him, and that if the defects are cured within that time the lease shall be consummated by delivery; and that if the title is not good and cannot be made good in the six months specified, the contract shall be at an end and the check shall be returned to the lessee.
The lease accompanying the contract and deposited in the bank contains, with the exception of a single paragraph hereinafter quoted, the terms and conditions usually appearing in oil and gas leases of Texas land. It designates Ector Smith and wife and Floyd Smith and wife lessor, and H. L. Brown and W. R. Wheeler lessee, is for a term of five years and as long thereafter as oil, gas or other mineral is produced from the land, obligates the lessee to pay to the lessor the usual one-eighth royalties and provides for an annual rental of $313.75 for deferring commencement of drilling operations. The land described in the lease is a tract of 62.75 acres in Jefferson County described by metes and bounds. Immediately after the description by metes and bounds, the lease contains the following paragraph:
"Of the acreage above described, the said Floyd Smith and wife, Bertha Smith, own twenty (20) acres and the said Ector Smith and wife, Ada Smith, own 42.75 acres, and it is understood and agreed as between Lessors, that the rents and royalties hereinafter stipulated to be paid on said 62.75 acre tract are to be pooled and shared by said Lessors in proportion to acreage owned."
Petitioners' attorneys prepared several title opinions, which were submitted to respondents, pointing out defects in the title shown by the abstracts delivered to them by respondents for examination, the opinions being dated June 15, 1939, September 15, 1939, December 15, 1939, and March 16, 1940. Many of the defects were cured by instruments appearing in additional abstracts which were prepared by respondents and submitted to petitioners' attorneys. In their opinion dated September 15, 1939, petitioners' attorneys, as one of the objections to the title, called attention to the fact that Mrs. C. B. Lee was shown by the abstracts to be the owner of a one-thirty-second royalty interest in 20 acres of the 62.75 acre tract described in the lease and they required that she join in the execution and delivery of the oil and gas lease to petitioners. In their opinion dated December 15, 1939 and in their final opinion, disapproving the title, dated March 25, 1940, the attorneys pointed out that this defect in the title had not been cured.
Petitioners, under several assignments, insist that there remained other material defects in the title, but because of the conclusions hereinafter expressed we discuss only the question presented as to the royalty interest owned by Mrs. Lee.
The record shows, as the lease recites, that of the 62.75 acres described in the lease Ector Smith is the owner of 42.75 acres, the east part of the 62.75 acres, and that Floyd Smith is the owner of 20 acres, the west part of the 62.75 acre tract. Floyd Smith's ownership of the 20 acres, however, is subject to a one-thirty-second royalty interest owned by Mrs. Lee. The lease, which is the subject of the escrow agreement and was to be delivered to petitioners if good title was shown by the abstracts, is executed by Ector Smith and his wife and Floyd Smith and his wife "lessor, whether one or more" to petitioners as "lessee". It provides for the payment of royalties to lessor or to the credit of lessor, and the obligations, convenants and undertakings of the parties are, according to the terms of the lease, those of lessor and lessee. The lease contains the paragraph quoted above, the...
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