Fleming v. Ashcroft

• Decision Date: 10 November 1943
• Docket Number: No. 8085.,8085.
• Citation: 175 S.W.2d 401
• Parties: FLEMING v. ASHCROFT et al.
• Court: Texas Supreme Court

175 S.W.2d 401

FLEMING v. ASHCROFT et al.

No. 8085.

Supreme Court of Texas.

November 10, 1943.

Rehearing Denied December 15, 1943.

Error from Court of Civil Appeals of Sixth Supreme Judicial District.

Action by J. V. Fleming against E. L. Ashcroft and others. Judgment for plaintiff was reversed and rendered in part and affirmed in part by the Court of Civil Appeals, 168 S.W.2d 304, and plaintiff brings error.

Judgment of the Court of Civil Appeals affirmed.

Clower & Wilson, Potter & Bezoni, and J. V. Fleming, all of Tyler, J. C. Jackson, Jr., and Tom S. Williams, both of Sulphur Springs, Black, Graves & Stayton, and Ireland Graves, all of Austin, for plaintiff in error.

J. K. Brim, of Sulphur Springs, and W. H. Sanford and Conan Cantwell, both of Dallas, for defendant in error Ashcroft & Hager.

T. J. Ramey, of Sulphur Springs, for defendant in error Douglas and others.

Goggans & Ritchie and J. W. Crosland, Jr., all of Dallas, for defendants in error Cox and Crossland.

Bromberg, Leftwich, Gowan & Schmucker and H. L. Bromberg, all of Dallas, for defendant in error Talco Pipe Line Co.

TAYLOR, Commissioner.

February 4, 1924, Mrs. Susan B. Pierce leased to Leon F. Russ four tracts of land in Hopkins county aggregating about 620 acres. The consideration to Mrs. Pierce was the usual one-eighth of the oil and gas that might be produced from the land by the lessee under the terms of the lease. A short time after leasing the lands to Russ she conveyed by deed to R. M. Loving, subject to the terms and provisions of the lease as to the production of oil and gas, what purported to be an undivided one-half interest, for a period of fifteen years from the date of the sale, in the royalty oil and gas under the lands. The next day Loving transferred to the FWC Corporation the portion thereof that lay under 175 acres of the first of the four tracts, title to which, as a result of assignments, rested in December, 1936, in J. V. Fleming to a 116/256 and in R. H. Waller to a 12/256. In 1933 Mrs. Pierce conveyed to what is designated as the Buchanan-Douglass group, certain undivided royalty interests in the entire first tract, and in 1936 sold an undivided interest to E. L. Ashcroft and D. S. Hager jointly. It is the respective claims to portions of the one-half royalty oil and gas interests in the 175-acre tract that are in controversy. No controversy is involved as to the ownership of any leasehold estate.

Fleming in 1940 filed suit, asserting title to his alleged 116/256 interest, naming as defendants Waller and several others not necessary to be named here. Waller asserted by cross-action against the other defendants title to his alleged 12/256 interest. Both Fleming and Waller alleged they acquired their respective interests (which collectively comprised the one-half interest sold to Loving) under the royalty deed from Mrs. Pierce to Loving, referred to above. Their interests were claimed in severalty and in nowise conflicted.

It is a sufficient statement to make here of the result of the trial and the appeal by defendants Ashcroft and others from the judgment rendered, to say that the trial court's judgment was in favor of Fleming and Waller, awarding to each respectively an interest in the one-eighth of the royalty in controversy, as well as respective recoveries of the value of royalty oil produced and sold; and that the Court of Civil Appeals reversed and rendered in part, and affirmed in part, the trial court's judgment. 168 S.W.2d 304.

The royalty deed from Mrs. Pierce to Loving is copied in full in the opinion of that court. The deed stipulated it was subject to the Russ lease as to the production of oil and gas. The clause of the lease relating to production is, in its entirety, as follows: "This lease shall remain in force for a term of five years from its date, and as long thereafter as oil or gas * * * is produced from said land by the lessee." Reference is here made (before stating the holding of the Court of Civil Appeals) to its opinion, for convenience in considering the terms of the deed in connection with the lease clause.

Based upon the rules of construction applied to the language and provisions of the deed in the light of the facts, the Court of Civil Appeals held that the term for which the royalty oil and gas conveyance to Loving and those holding under him, was for fifteen years and no longer; and held that this construction was inescapable because the deed was subject to the stipulation of the Russ lease as to the production of oil and gas.

It is noted, before considering the contentions on which the foregoing holding was made, that no production was had under the Russ lease and that it expired by its own terms on February 4, 1929; also that in 1935 and 1936 Mrs. Pierce executed oil and gas leases which collectively covered the 175-acre tract involved, and that it was under these leases that production on the tract was had in 1937, which still continues.

The contention made by appellees Fleming and Waller, in response to which the above holding of the Court of Civil Appeals was made, was that the effect of the reference in the deed to the clause of the lease relating to production had the effect to make the deed subject to, or to read into it, that portion and only that portion thereof reading "and as long thereafter as oil or gas is produced from said land." They disregarded, in arguing their contention, the further words of the clause, "by the lessee." They took the position that oil having been produced on the tract in 1937, within the fifteen-year term of the deed, the term was thereby extended for so long thereafter as oil was being produced from said land. The court pointed out that the deed, when the phrase in its entirety was incorporated therein, stipulated that the grant should remain in force only as long thereafter as oil was produced "from said land by the lessee" (or his assigns). The court pointed out further that the provisions as to extending the five-year primary term of the Russ lease being conditioned to become operative only if the lessee (or his assigns) was producing oil from the tract at the expiration of such term (which they were not, no production being had at any time under the Russ lease), the extension of the time of the royalty grant beyond the fifteen-year period never became operative; and that when the entire provision of the phrase as to production was incorporated into the deed, the language afforded no support to extend its fifteen-year term beyond its termination, February 19, 1939. The court held that since there was no production of oil by Russ or anyone holding under him, the lease granted to him terminated at the end of its primary term of five years. The Court of Civil Appeals thus conclusively showed the fallacy, as against the contention of the appellees stated above, of the trial court's holding to the contrary.

Application for writ of error was filed by appellees Fleming and Waller, and was granted. The petitioners advanced in their application for the writ a theory materially different from that stated above, consequently the Court of Civil Appeals was without opportunity to consider the contentions on which the application for the writ as to the first point of alleged error was predicated. This court, being of the view tentatively when the application was considered that the contentions urged by petitioners in support of their new theory were persuasive that the holding of the Court of Civil Appeals might be erroneous, granted the writ. As will presently be shown our tentative view was not correct.

The first of the two points of error contained in the application presents the question as to whether the royalty interest conveyed by Mrs. Pierce to Loving by her deed, terminated at the end of the fifteen-year period. Petitioners now contend in support of the first point, that the meaning of the deed is that if production had been had under the Russ lease, Loving and those holding under him would have been entitled to share in the royalty oil and gas under that lease until February 19, 1939; and that their right to the royalty under the Russ lease having been suspended until that date on account of discovery of oil on the tract in 1937 under another lease, was subject to be reasserted by them at the end of the fifteen-year period. In other words, stating petitioners' contention as to the deed's meaning in the light of subsequent facts, it is that the parties understood from the terms of the deed when it was executed (two weeks after the Russ lease was executed) that it meant that if production was had under the Russ lease the grantee (in the deed) would be permitted to take a royalty interest under that lease for so much of the fifteen years as remained after discovery of oil on the tract; but that after expiration of the fifteen-year period Loving, and his assigns, owned an undivided one-half interest in the royalty oil in and under and that might be produced from the land. Using the exact language of petitioners in finally stating their contention, without its inescapable implications, it is that "viewing the deed as an integrated document, it means that if production is had under the Russ lease the grantee (in the deed) will be permitted to take a royalty interest under the lease for a period of fifteen years and no longer. After the expiration of the Russ lease the grantee will own an undivided one-half interest in the royalty under any other lease that may be executed in the future."

It will be of convenience, before considering the contentions on which the new theory was based, to set out in connection with the granting clause of the deed the agreements which serve to make clear the quantum of royalty interest granted by Mrs. Pierce to Loving. The numbering herein of the agreement clauses and the italics employed therein, as well as all italics in this opinion, are ours.

The deed follows the form ordinarily used in making...