Cockrell v. Texas Gulf Sulphur Co., A-5554

• Decision Date: 12 December 1956
• Docket Number: No. A-5554,A-5554
• Citation: 299 S.W.2d 672,157 Tex. 10
• Parties: Dula Dashiell COCKRELL et al., Petitioners, v. TEXAS GULF SULPHUR COMPANY, Respondent.
• Court: Texas Supreme Court

Page 672

299 S.W.2d 672

157 Tex. 10

Dula Dashiell COCKRELL et al., Petitioners, v. TEXAS GULF SULPHUR COMPANY, Respondent.

No. A-5554.

Supreme Court of Texas.

Dec. 12, 1956.

Concurring Opinion March 20, 1957.

Rehearing Denied March 20, 1957.

Fulbright, Crooker, Freeman, Bates & Jaworski, John M. Jamison, Houston, for petitioners.

H. F. Montgomery, H. W. Strickland, Williams, Lee & Kennerly, Houston, for respondent.

GRIFFIN, Justice.

This is a suit by petitioner for an accounting and recovery of royalties payable out of sulphur produced by respondent. The petitioners were plaintiffs in the trial court, and the respondent was the defendant. On July 27, 1925, Mrs. Ruth Sergent owned in fee simple 729.7 acres of land in Liberty County, Texas. On that date she, joined by her husband, executed an oil, gas and mineral lease on the whole of this land. Erwin W. Smith was the lessee in said lease. Later the south one-half of the 729.7 acres was released from Smith's mineral lease. Afterwards and on April 12, 1926, Ruth Sergent, joined by her husband, executed an oil and gas mineral lease to A. R. Miller covering this south one-half of the tract of land. These two leases were in all things of the same wording, and for the purposes of this case, we can proceed as if there were only one lease on the entire tract of 729.7 acres. Where there are varying interests in each tract we will set them out at appropriate places in our opinion. The leases provided for royalty payments on sulphur of 50 cents per long ton. Sulphur is the only mineral with which we are concerned. Subsequent to the execution of the leases, but prior to September 28, 1931, Mrs. Sergent had sold and conveyed portions of her minerals and royalties until on the above date she owned, subject to the outstanding leases, 1/8th of the mineral fee interest under the west 400 acres of the 729.7 acres and one-half of the mineral fee interest on the east 329.7 acres of the tract. Each of the leases contained the following provisions:

'It is further agreed that all the conditions and terms herein shall extend to the heirs, executors, legal representatives, successors in interest and assigns of the parties hereto; but no change of ownership of the land, or part thereof, shall impose any additional obligations or burden on the Lessee, and to that end Lessors hereby covenant for themselves, their heirs, assigns and successors in interest, that in case of any change of ownership of said land, or part thereof, whether by conveyance, will, inheritance, partition or otherwise, all rentals and royalties accruing hereunder shall be paid to the new owners in proportion to their ownership of the whole of the land hereby leased so that no owner of a segregated part of said land shall be entitled to the whole royalties accruing from developments on said segregated tract, but only to such part of such royalty as the acreage in his tract is to the whole acreage embraced in this lease; this covenant shall be taken and construed as a covenant running with the land and binding on all successors in interests to Lessors herein.'

On September 28, 1931, and both leases being in full force and effect, and owned by others than Gulf Production Company, Mrs. Ruth Sergent and husband conveyed to Gulf Production Company the 729.7 acres of land by warranty deed. The pertinent portions of the deed are as follows: that Ruth W. Sergent and husband, called grantor, for a consideration of Ten Dollars and other good and valuable considerations paid by Gulf Production Company 'and subject to the mineral and/or royalty reservations and exceptions hereinafter set out' has granted, sold and conveyed, etc. to Gulf Production Company the 729.7 acres of land in Liberty County, Texas, describing same by metes and bounds. Immediately following the description and before the habendum clause we find the following, 'Subject, however, to the terms and conditions of each and all of the existing oil, gas and mineral leases and mineral and/or royalty conveyances, and grantor hereby expressly reserves and excepts unto herself, her heirs, executors, administrators and assigns' seven numbered reservations covering oil, gas and sulphur royalties. Those dealing with sulphur are numbers 5 and 6 and are as follows:

'5. 6 1/2 cents per ton 2240 pounds on all sulphur produced and marketed from the West 400 acres of said above described premises.'

'6. 25 cents per ton of 2240 pounds on all sulphur produced and marketed from the East 329.7 acres of said above described permises.'

It was further provided:

'It is expressly understood and agreed that the reservations and exceptions hereinabove enumerated shall be perpetual and shall apply whether such oil, gas, cashinghead gas and/or gasoline, sulphur and/or other mineral or minerals is produced under the existing or any future lease or leases by the lessee or lessees therein or by the grantee herein, its successors and assigns, or otherwise.'

Following the habendum clause, and at the beginning of the warranty clause, we find the following: '* * * and subject to the aforesaid oil, gas and mineral leases and mineral and/or royalty conveyances, grantor does hereby bind herself, her heirs, etc.'

Plaintiffs hold all the rights of Mrs. Sergent under this deed by proper conveyance from her. Gulf Production Company sold and transferred all of its rights in this land to Texas Gulf Sulphur Company in December, 1931. Sulphur has been produced from the west 400 acres, but the east 329.7 acres has been nonproductive. Defendant has paid to plaintiffs a royalty of 6 1/2 cents per long ton on the sulphur production under their construction of reservation 5 set out above. Plaintiffs claim that the entirety clause contained in the lease entitles them to a royalty of 14.72180347 cents per ton on the sulphur produced on the west 400 acres. This suit was by plaintiffs against the defendant to collect the difference between the 6 1/2 cents paid, and the 14 plus cents claimed as due them by virtue of the entirety clause in the leases.

The entirety clause is recognized as a binding, enforceable and valid provision is a lease, and this court so held in the case of Thomas Gilcrease Foundation v. Stanolind Oil & Gas Co., 153 Tex. 197, 266 S.W.2d 850.

The case of Gypsy Oil Co. v. Schonwald, 107 Okl. 253, 231 P. 864, was cited by this Court in the Gilcrease case. The Oklahoma court in discussing the validity and binding effect of an entirety clause in an oil and gas lease says that the lessor has a right to place in his lease any provision which he deems to his or a subsequent purchaser's advantage. 32 Tex.Law Rev. 660; 671 et seq.

Defendants do not attack the validity of the entirety provision. They contend that the reservations and exceptions in Mrs. Sergent's deed to Gulf Production Company are unambiguous, clear and certain, and that as to the west 400 acres such reservation specifically provides for a royalty of 6 1/2 cents per long ton, and that this royalty has been paid, and that the deed does not contain any entirety clause providing for a payment of royalty on an apportionment basis. Therefore, it is contended the entirety clause in the lease does not govern the rights of the parties to the deed and this suit. On the other hand, plaintiffs claim that the wording of the deed wherein it is provided 'subject, however, to the terms and conditions of each and all existing oil, gas and mineral leases and mineral and/or royalty conveyances' expressly recognizes and brings forward into the deed, the entirety clause providing for apportionment of the royalty in accordance with the fractional mineral ownership in the whole 729.7 acre tract.

We take it that no authority need be cited for the proposition that a deed can pass no greater estate than that owned by the grantor. Likewise it is fundamental that a warranty deed will pass all of the estate owned by the grantor at the time of the conveyance unless there are reservations or exceptions which reduce the estate conveyed. Harris v. Currie, 142 Tex. 93, 176 S.W.2d 302; Alfrey v. Ellington, Tex.Civ.App., 1955, 285 S.W.2d 383, n.r.e. Also that the property excepted, or the estate reserved is never included in the grant. Benge v. Scharbauer, 152 Tex. 447, 259 S.W.2d 166; King v. First National Bank of Wichita Falls, 144 Tex. 583, 192 S.W.2d 260(1), 163 A.L.R. 1128.

What royalty interest in sulphur did Mrs. Sergent own on September 28, 1931, when she executed her deed to Gulf Production Company? She was bound by the entirety clause in her leases to the apportionment of her royalty with those to whom she had theretofore sold and conveyed mineral interests in the 729.7 acres. Out of the west 400 acres she had conveyed 7/8ths mineral interest, leaving her only the owner of an undivided 1/8th interest therein. The royalty of 50 cents per long ton on production had been reduced as to her 1/8th ownership to that proportionate part of her 1/8th ownership in the west 400 acres as it bore to the total acreage of 729.7 acres. In other words, by virtue of her ownership of royalty under the west 400 acres, and by virtue of the entirety clauses in the leases, she owned a royalty from the production on the west 400 acres of 400/729.7 X 1/8 X 50 cents. This figures out to be a royalty per ton from production of sulphur anywhere on the 729.7 acres of 3.42606551 cents. Under the entirety clause, and by virtue of her ownership of royalty under the 329.7 acres, she was entitled to additional royalty from any production on the 729.7 acre tract. She had conveyed one-half of her minerals on the 329.7 acre tract, thus leaving her owning only one-half of the minerals. The minerals being leased, she was entitled to receive a royalty proportionate to her ownership in the east 329.7 acres as a part of the total 729.7 acre tract. That is, her royalty interest at that time was 329.7/729.7X1/2X50cents. This figures out to be a royalty of 11.29573796 cents from...