Ferguson v. Steen

• Decision Date: 10 March 1927
• Docket Number: (No. 467.)
• Parties: FERGUSON et ux. v. STEEN, Tax Assessor, et al.
• Court: Texas Court of Appeals

293 S.W. 318

FERGUSON et ux. v. STEEN, Tax Assessor, et al.

(No. 467.)

Court of Civil Appeals of Texas. Waco.

March 10, 1927.

Rehearing Denied April 7, 1927.

Appeal from District Court, Limestone County; J. R. Bell, Judge.

Suit by H. F. Ferguson and wife against R. W. Steen, as tax assessor of Limestone County and others. From a judgment in favor of defendants, plaintiffs appeal. Affirmed.

N. T. Stubbs, of Mexia, for appellants.

Reed & Cannon, of Groesbeck, and Robt. M. Lyles, of Austin, for appellees.

STANFORD, J.

Suit by H. F. Ferguson and wife against R. W. Steen, as tax assessor, and H. F. Kirby, as county judge, J. M. Kennedy, J. R. Dulaney, Earl Leach, and Ed Andrews, as county commissioners, and W. A. Robbins, as tax collector, all being officers of Limestone county; the purpose of said suit being to restrain appellees from collecting or attempting to collect taxes on certain oil royalties of the value of $30,870, owned by appellants. The case was tried before the court without the aid of a jury, and judgment rendered in favor of appellees. At the request of appellants, the court filed findings of fact and conclusions of law. The facts of the case will be more fully stated in the course of this opinion.

Under appellants' first assignment, they contend that, by the execution of the leases in this case, all of the oil and gas under the lands leased became the property of the lessees and should have been assessed against the lessees, and no part of same is assessable against the lessors. The tract of land in question is 120 acres, composed of several small tracts leased to different parties. The leases in question are the usual "88 producer's special-Texas form," and each lease contains the following provisions:

"That the lessor, for and in consideration of $3,393 cash in hand paid, receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of lessee to be paid, kept, and performed, have granted, demised, leased, and let, and by these presents does grant, lease, and let unto the said lessee, for the sole and only purpose of mining and operating for oil and gas and of laying pipe lines and building tanks, power stations, and structures thereon to produce, save, and take care of said products, all that certain tract of land" (describing same).

Also:

"It is agreed that this lease shall remain in force for a term of five years from this date, and as long thereafter as oil and gas, or either of them, is produced from said land by the lessee. In consideration of the premises, the said lessee covenants and agrees: (1) To deliver to the credit of lessor, free of cost, in the pipe line to which he may connect his wells, the equal one-eighth part of all oil produced and saved from the leased premises."

Said lease also contains the usual covenants to commence drilling a well in a certain time, and, on failure to so do, the lessee will pay a certain rental, which shall operate to extend the time for commencing a well for twelve months, etc., and, if a dry hole is found, lessee will commence another well in twelve months, or extend the lease by payment of rentals, etc. The leases and dates covering the several small tracts constituting the 120 acres were as follows: One to Montague July 5, 1924; one to Godley Oil & Gas Company March 7, 1924; one to Megarity December 2, 1920; one to the Gulf Production Company December 3, 1921; and one to A. E. Humphreys October 25, 1924 — all said leases being similar to the one above set out. Appellants sold a one-half interest in the one-eighth royalty, which left them owning the surface of the 120 acres and a one-sixteenth royalty interest in the minerals in and under said 120 acres. On the trial of this case the following agreement was introduced in evidence by counsel for both sides:

"It is agreed by and between the parties plaintiff and defendant herein that the value of plaintiffs' said property situated in Limestone county, Tex., on January 1, 1925, was the sum of $32,700, which included the land and royalty. It is further agreed that within the time and manner contemplated by law, the tax assessor of Limestone county approached plaintiff to render his property, and that plaintiffs did render the surface of the property described in plaintiffs' petition, but did not render the royalty interest, and at the time there was indorsed upon the rendition sheet executed by plaintiffs the words, `Not ready to render royalty'; that thereafter, and within the time and manner provided by law, and after due and proper notice to the plaintiff herein, the commissioners' court of Limestone county, Tex., sitting as a board of equalization, duly and legally organized and qualified and acting as such, came to consider the valuation of plaintiff's property, and assessed the royalty interest owned by plaintiff in the lands described in plaintiffs' petition at $30,870, which added to the land valuation made $32,700 assessed against plaintiffs' said property, and which action by the board of equalization was duly entered on the tax rolls of Limestone county, Tex.; and to which action plaintiffs then and there objected; that the amount for which said property was so assessed represented the true and reasonable market value and the taxable value thereof on the 1st day of January, A. D. 1925; that plaintiffs are and were, on and prior to January 1, 1925, the sole owners in fee...