DUVALL v. STONE

• Decision Date: 31 December 1949
• Docket Number: No. 5217,5217
• Citation: 54 N.M. 27,213 P.2d 212
• Parties: DUVALL v. STATE et al.
• Court: New Mexico Supreme Court

54 N.M. 27

213 P.2d 212

DUVALL

v.STATE et al.

No. 5217.

Supreme Court of New Mexico.

Dec. 31, 1949.

[213 P.2d 212, 54 N.M. 28]

Reese & Reese, Roswell, for appellants.

James T. Jennings, Roswell, for appellees.

Brice, Chief Justice.

This is an action to quiet title to real estate, brought by plaintiffs (appellants)against the defendants and others. The defendants (appellees) answered, claiming an interest in the 160 acres of the land hereinafter described; and be cross-complaint sought to quiet title as against the cross-defendants (plaintiffs and appellants herein), to 'an undivided one-half interest in and to all the oil, gas and other minerals in and under, and that may be produced from the E 1/2 NE 1/4 of Sec. 10, and the W 1/2 NW 1/4 of Sec. 11, Twp. 12 South, Rge. 25 E., N. M. P. M.' All situated in Chaves County, New Mexico. This is the same land in which defendants claimed an interest by their answer.

The trial court made its decision as follows:

'1. That the defendants E. Garnet Stone and Maud Lee Stone were the grantors in a certain quit claim deed dated March 16, 1942, recorded January 18, 1943, in Chaves County, New Mexico, conveying to J. G. Gantz the following described property, to-wit: E 1/2 of the NE 1/4 of Section 10; W 1/2 of the NW 1/4 of Section 11; All in Township 12 South Range 25 East, N. M. P. M. That said deed contained the following recitation: 'It is expressly understood that one-half of the one-eighth royalty interest is retained by the grantors.'

'2. That the Court has jurisdiction over the parties and the subject matter of this action.

'3. That it was the intention of the grantors by the instrument above set out to except and reserve unto said grantors a pereptual undivided one-half interest in and to all of the oil, gas and other minerals in and under said above described lands.

'4. That the use of the words 'royalty' by said grantors in said deed was intended by them to and did describe a perpetual mineral interest in fee and all benefits accruing therefrom.

'5. That any rights which plaintiffs had in said land were acquired through conveyances under J. G. Gantz and his successors in title to said property.

'From the foregoing Findings of Fact the Court makes the following Conclusions of Law.

'That the defendants and cross-complainants E. Garnet Stone and Maud Lee Stone are the owners of an undivided one-half interest in and to all of the oil, gas and other minerals in and under and that may be produced from the following described land, to-wit: E 1/2 of the NE 1/4 of Section 10; W 1/2 of the NW 1/4 of Section 11; all in township 12 South Range 25 East, N. M. P. M.

'2. That the minerals interests of said defendants and cross-complainants is a perpetual mineral fee interest.

'3. That the defendants E. Garnet Stone and Maud Lee Stone are entitled to a decree quieting their title to an undivided one-half interest in and to all of the oil, gas and other minerals in and under and that may be produced from the lands above described against the plaintiff E. R. Duvall and Charlotte M. Duvall, his wife:

'4. That the plaintiffs are entitled to recover the relief prayed for in the complaint and have their title quieted in the land as against each of the defendants named in the complaint except E. Garnet Stone and Maud Lee Stone, and that as to said defendants plaintiffs are entitled to a decree quieting their title in and to said above described lands with the exception of interests above found to exist in said lands in favor and for the benefit of the defendants E. Garnet Stone and Maud Lee Stone.'

Findings of Fact Nos. 3 and 4 are attacked because as it is asserted, neither of them is supported by substantial evidence.

The following are undisputed evidentiary 'facts which defendants claim support the findings of fact':

On December 23, 1937, a tax deed was issued to defendant E. Garnet Stone by the county treasurer of Chaves County,conveying to him tax title to the described 160 acres of land. Stone and wife, for the recited consideration of $1.00 executed an oil lease in the form generally used in this country, known as the 88 Producer's Lease, to Charles F. Tarkington, covering the 160 acres of land. It contained the usual provision for paying lessor's one-eighth of all oil and gas produced from the land duringthe existence of the lease. It provided: 'If no well be commenced on the above land, or within one mile of said land, on or before June 1, 1940, this lease will be null and void as to both parties.' The lease expired by its terms on June 1, 1940, because of default in commencing the drilling of a well by that date.

The defendants entered into a contract with one J. G. Gantz, dated March 16, 1942, wherein and whereby the defendants agreed to sell to Gantz, and Gantz agreed to purchase the 160 acres of land described. One of the provisions in the contract is as follows: 'It is understood and agreed, between the parties that the parties of the first part shall retain and reserve 1/2 of the royalty in the oil and gas in and under and to be produced from said land; that said 1/2 royalty being equal to the 1/16 royalty in all the oil and gas produced from said lands; that said lands now being under an oil and gas lease in favor of the Roxana Petroleum Company wherein the lessors are entitled to 1/8 royalty in the oil and gas produced from said land.'

On March 16, 1942, the same day the contract was made, Stone and wife conveyed the 160 acres to J. G. Gantz by quitclaim deed, which contained the following: 'It is expressly understood that one-half (1/2) of the one-eighth royalty interest is retained by the grantors.'

The trial court found and decreed title to the 160 acres and to other lands to be in plaintiffs, except as to an outstanding one-half interest in and to all of the oil, gas and other minerals in and under the 160 acres, which he found and decreed to be in the defendants.

(It should be stated here that we find no evidence in the record that the plaintiffs have any interest in the 160 acres of land in controversy. But as the trial court found that they did have an interest therein and so decreed, and no objection is made to the decree except as to its disposition of the underlying minerals, we will assume that it is otherwise correct.)

The plaintiff have assigned many alleged errors, and have argued them under many points. But we are of the opinion that there is but one question, and that is the meaning of the reservation expressed in the deed, to-wit: 'It is expressly understood that one-half of the one-eighth royalty interest is retained by the grantors.'

The meaning of this and similar language in deeds has been the subject of judicialconsideration by a number of courts, with a lack of harmony in the decisions.

At the time this deed was made an oil lease previously made to one Tarkington as grantee, had become null and void, as hereinbefore stated; although it was recited in the contract made between the same parties on the same day, that there was an oil lease in force in favor of the Roxana Petroleum Company. The record discloses that this was the Tarkington lease, which had previously become invalid by its terms.

There is some contention that the contract to convey and the deed made on the same day should be construed together. But we will assume that the deed was executed after the contract, which provided for its execution, and that the contract with respect to the mineral interest granted merged in the deed.

'The general rule with regard to merger in such cases was stated in Norment ex ux. v. Turley et al., 24 N.M. 526, 174 P. 999, 1000, as follows: 'It is a well-established rule of law that prior stipulations are merged in the final and formal contract executed by the parties, and this rule applies to a deed or a mortgage based upon a contract to convey. When a deed is delivered and accepted as performance of the contract to convey, the contract is merged in the deed. Though the terms of the deed may vary from those contained in the contract, the deed alone must be looked to to determine the rights of the parties. Devlin on Real Estate, § 850a. The rule is followed in practically all the cases.' Also see annotation in 84 A.L.R. 1008 et seq.

'An exception to this general rule is likewise stated in the Norment Case in the following language: 'There is an exception to the rule stated, which is that the contract of conveyance is not merged upon executionof a deed where under the contract the rights are conferred collaterally and independent of the deed; there being no presumption that the party in accepting the deed intends to give up the covenants of which the deed is not a performance or satisfaction. Where the right claimed under the contract would vary, change, or alter the agreement in the deed itself, or inheres in the very subject-matter with which the deed deals, a prior contract covering the same subject-matter cannot be shown as against the provisions of the deed.' Also see annotation, 84 A.L.R. division IV, p. 1017 et seq.' Continental Life Ins. Co. v. Smith, 41 N.M. 82, 64 P.2d 377, 380.

Obviously the exception does not apply here.

The deed in question provides 'that one-eighth royalty interest is retained by thegrantors.' Whether the royalty reserved is a one-eighth of oil and gas, coal, any...