Colonial Royalties Co. v. Keener

• Decision Date: 22 December 1953
• Docket Number: 35007,Nos. 35006,s. 35006
• Citation: 266 P.2d 467
• Parties: COLONIAL ROYALTIES CO. et al. v. KEENER et al. MIDSTATES OIL CORP. v. KEENER et al.
• Court: Oklahoma Supreme Court

Page 467

266 P.2d 467

1953 OK 385

COLONIAL ROYALTIES CO. et al. v. KEENER et al.

MIDSTATES OIL CORP. v. KEENER et al.

Nos. 35006, 35007.

Supreme Court of Oklahoma.

Dec. 22, 1953.

Rehearing Denied Feb. 2, 1954.

Syllabus by the Court.

1. The intention of the parties to a conveyance of mineral rights must be deduced from the provisions thereof considered as a whole, and every provision must be construed, if possible, so as to be consistent with every other provision and to give effect to all such provisions.

2. Generally, the term 'royalty' in conveyances of mineral rights with a further specification of the exact amount of the production thereby contemplated, is not ambiguous and will be construed in its popular sense in which the term, unless otherwise specified, does not include the right to the bonus and delay rentals received in consideration for an oil and gas lease of the premises.

3. In these cases, where the trial court adjudged that the only mineral interest in perpetuity conveyed the grantee by the deed in question was an undivided 1/8th nonparticipating royalty interest, Held: Said judgments were not error.

Steele, Daugherty & Downey, Mildred Brooks Fitch, Hulette F. Aby, and Charles W. Barnes, Tulsa, for plaintiffs in error.

Otey, Johnson & Evans, Ardmore, for defendants in error.

BLACKBIRD, Justice.

These cases which have been presented and briefed as consolidated will be so considered herein. They both involve, and the correctness of the trial court's judgments therein hinges upon, the question of what rights and interest were conveyed by a certain instrument denominated 'Royalty Deed' executed and delivered February 1, 1922, by John G. Miller and his wife, Theodocia Miller, owning two forty-acre tracts of land described therein, as grantors, to Walter Neustadt, as grantee. The land was already covered by an oil and gas lease dated February 16, 1921, that was not released until December 28, 1925.

The parties who were plaintiffs in both cases, and will hereinafter be referred to as such, deraign their title by mesne conveyances from Neustadt. In these actions, filed long after the release of the above-mentioned lease, and without any new or other lease of the land having been executed, plaintiffs sought to quiet their title to all of the mineral rights in one of the forties against the defendants, who in both actions are the executrices of the estates of the original fee owners and grantors, Mr. and Mrs. Miller, now deceased. Upon the trial of the causes, the trial court determined that the above-mentioned 'Royalty Deed' executed by the Millers conveyed to Neustadt in perpetuity only an undivided one-eighth nonparticipating interest in said minerals. From said judgments, plaintiffs have appealed.

The body of the instrument in question reads as follows:

'Know All Men By These Presents: That, we John G. Miller and Theodocia E. Miller, husband and wife of the County of El Paso and State of Texas, hereinafter called grantor (whether one or more) have granted, bargained, sold and conveyed, and by these presents, do grant, bargain, sell and convey unto Walter, Newstadt, hereinafter called grantee, whether one or more, all interest in and to all of the oil, petroleum, gas, coal, asphalt and all other minerals of every kind or character in and under and that may be produced from certain lands situated in the County of Carter and State of Oklahoma, and being

* * *

* * *

'(Other lands not here involved.)

'The northeast Quarter of the southeast quarter and the northwest quarter of the northeast quarter of Section Twenty-nine (29) Township One (1) South, Range Three (3) West, containing eighty (80) acres and being same land described in deed from Department of Interior to Theodocia E. Miller recorded in Deed record in the County Clerks office in said County in Vol. 19, page 381 references to which is here made on both tracts together with the right of ingress and egress at all times for the purpose of mining, drilling and exploring said lands for said minerals and removing the same therefrom, and with the eight-of-way, easements and servitude for pipe lines, telephone and telegraph lines, for tanks, power houses, stations, gasoline plants and fixtures for producing, treating and caring for such products and housing and boarding employees and all other rights and privileges necessary, incident to or convenient for the economical operation of said lands for the production of said minerals, and the right of removing at any time all and any property and improvements placed or erected on the premises by the grantee or his assigns, including the right to pull all casing.

'It is understood, however, that this conveyance is made subject to any valid oil and gas lease now on the said premises, but covers and includes all interest in and to all of the oil royalty, gas rentals delay rentals, or royalty due and to be due under the terms of said lease but in the event the said lease for any reason becomes cancelled, forfeited or inoperative, then and in that event all of said minerals in and under said land, and that may be produced therefrom, and all of the money derived from the sale of same shall be owned jointly by the grantor and grantee herein, the grantor owning a seven-eighth (7/8th) working interest and the grantee owning a one-eighth (1/8th) royalty interest. (Emphasis ours).

'This sale is made for and in consideration of the sum of one dollar cash in hand paid and other valuable considerations the receipt of which is hereby acknowledged by the grantor.

'To Have And To Hold the above described property together with all and singular, the rights and appurtenances thereunto and in anywise belonging unto the said grantee, his heirs and assigns, forever free, clear and discharged of and from all former grants, taxes, judgments mortgages and other liens and excumbrances of what nature and kind soever and warrant the title to the same and we do hereby bind outselves, heirs, executors, administrators, to Warrant and forever defend all and singular, the title to same unto the said Walter Neustadt, his heirs and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof. Witness, our hand at El Paso Texas this 1st day of February 1922.'

The rule to be followed, in cases of this kind, was clearly stated in the case of Sullivan v. Gray, 182 Okl. 487, 78 P.2d 688, and reiterated in the recent case of Iskian v. Consolidated Gas Utilities Co., 207 Okl. 615, 251 P.2d 1073, as follows:

'The intention of the parties must be deduced from the entire agreement, and every provision must be construed so as to be consistent with every other provision if possible, and that construction adopted which gives effect to every part of the contract.'

That the instrument is labeled 'Royalty Deed' has no bearing upon the intention of the parties, expressed in the body of the instrument. As was said by the Kansas Court in the case of Rutland Sav. Bank of Rutland v. Steele, 155 Kan. 667, 127 P.2d 471, 472, 'The terms of an instrument and not its name determine its nature and character.'

In support of their position, plaintiffs say that the recital in the emphasized paragraph of the above-quoted deed is repugnant to the first or 'granting' clause which conveyed all of the minerals to Neustadt and under the rules of construction properly applicable to such a deed, it must be held void and of no effect, citing Reed v. Whitney, 197 Okl. 199, 169 P.2d 187, and 16 Am.Jur. Sec. 241, p. 575. In the cited case this court referred to rules that the habendum clause of an instrument of conveyance cannot be used to enlarge the estate described in the granting clause and that the covenants therein merely refer to the interest of the grantor, and its application is limited thereto. However, plaintiffs are incorrect in arguing that a reservation cannot be inserted in a deed following the granting or conveying clause (such as in the habendum clause) to diminish the interest or estate first described. The old or 'ancient' rule was that such reservation was repugnant to the grant and was therefore a nullity, but the better and more modern rule is the one followed in Westcott v. Bozarth, 202 Okl. 149, 211 P.2d 258, and quoted from Breidenthal v. Grooms, 161 Okl. 74, 17 P.2d 688, as follows:

'Where the intention of the parties is clearly expressed by an explanatory clause incorporated in the habendum clause, or in a separate clause, the latter may control over the granting clause of the deed.'

See other authorities cited and discussed in First Nat. Bank & Trust Co. of Tulsa v. Price, 204 Okl. 243, 228 P.2d 623, and the Annotations, 131 A.L.R. 1239 and 157 A.L.R. 485.

But plaintiffs contend that the intention of the parties to this deed is not clearly expressed in the clause in question. They quote the latter part thereof, to wit:

'* * * the grantor owning a seven-eighths (7/8ths) working interest and the grantee owning a one-eighth (1/8th) royalty interest.'

and say: 'Until this point is reached, the language of the deed is entirely clear, but the quoted and italicized phrase is far from clear.' They argue that the use of the...