Gibson v. Turner

• Decision Date: 25 July 1956
• Docket Number: No. A-5165,A-5165
• Parties: Margaret G. GIBSON et vir, Petitioners. v. Fred TURNER, Jr., et al., Respondents.
• Court: Texas Supreme Court

Page 781

294 S.W.2d 781

156 Tex. 289

Margaret G. GIBSON et vir, Petitioners. v. Fred TURNER, Jr., et al., Respondents.

No. A-5165.

Supreme Court of Texas.

July 25, 1956.

On Rehearing Oct. 31, 1956.

Rehearing Denied Nov. 28, 1956.

Charles L. Krueger, Dan Moody, Austin, for petitioners.

Stubbeman, McRae & Sealy, Midland, Cox, Patterson & Smith, san Antonio, Neill, Blanks, Lewis & Logan, San Angelo, Graves, Dougherty & Greenhill, Austin, for respondents.

GRIFFIN, Justice.

All previous opinion of this Court are hereby withdrawn; the motion of petitioners for a rehearing is granted, and the following is the opinion of the Court.

This suit involves the construction of the royalty clause of an oil and gas lease. On February 18, 1947, petitioner, Margaret G. Gibson, her mother, and her two sisters and a brother were owners of an undivided 9/40ths fee interest in the minerals in, on, and under Survey 14, Cert. No. 3802, Blk. 4 1/2, G. C. & S. F. Ry. Co. Survey, containing 922 acres of land in Upton County, Texas. Margaret Gibson owned an undivided 1/40th interest in said 922 acres of land. On said date respondent Fred Turner, Jr., and other respondents owned the leasehold mineral interest in the remaining 31/40ths of said land. Respondents were also aware that the Gresham lessors (Mrs. Gibson being a daughter of Mrs. Gresham) only owned 9/40ths of the minerals. On February 17, 1947, the petitioner, Mrs. Gibson, and the other owners of the 9/40ths mineral interest made, executed and delivered to Fred Turner, Jr., an oil, gas and other minerals lease on the whole of the oil, gas and other minerals under the whole of Survey 14, and upon a printed form in common use. The granting clause, among other things, provided that 'lessor in consideration of ten and No/100 dollars ($10.00), in hand paid, of the royalties herein provided, and of the agreements of the Lessee herein contained, hereby grants, leases, and lets exclusively unto the Lessee, * * *.' Thereafter follows a provision for an oil payment of $5,186.25 (this figure being the exact equivalent of 9/40ths of 922 acres at $25 per acre) out of 'the first oil and gas produced, saved and sold from said premises under this lease * * *.' Paragraph 3 of the lease provided that 'the royalties to be paid lessors are: (a) on oil, one-eighth of that produced and saved from said land, * * * (b) on gas * * * produced from siad land * * * the market value * * * of one-eighth * * *.' (Emphasis ours.) The stipulated delay rental was $207.45 (this sum being the exact equivalent of 9/40ths of 922 acres at $1 per acre). Paragraph 9 states 'lessor hereby warrants and agrees to defend the title to said land * * *.' The original lease was introduced in evidence and following the above quoted provision of the paragraph was printed a proportionate reduction of royalty clause, which was eliminated prior to signature by the lessors, by running typewritten 'x' through it.

Margaret G. Gibson, joined by her husband, Ben D. Gibson, brought this suit agaisnt her co-lessors in said land and Fred Turner, Jr., lessee, and his assignees and co-owners of the total leasehold interest seeking a declaratory judgment construing the lease to provide and mean that Fred Turner, Jr., his assigns and co-owners of the working interest under the lease, are by its terms obligated to pay to Margaret G. Gibson as royalty 1/72nd of the oil and gas or the value thereof produced and saved from the lands described in said lease, that is, that she should be paid that proportion of 1/8th of the oil produced and saved from the land described in the lease, and that proportion of 1/8th of the gas sold or used off said premises which the interest (1/40th) owned by Margaret G. Gibson in the mineral estate in the land bore to the total interest (9/40ths) owned by her and her co-lessors in such mineral estate.

It was urged in the pleadings of the defendants, Fred Turner, Jr., and his assignees, that, although the lease executed by Margaret G. Gibson and her co-lessors purported to cover the entire mineral interest in the tract described and warranted the title thereto, the grantors in said lease actually owned only 9/40ths of the minerals therein and Margaret G. Gibson owned only 1/40th of such total mineral interest; that the lease provided as part of the consideration therefor, that lessors should receive 1/8th of all the oil produced from the land covered by the lease; that since the title had failed except as to 9/40ths of the mineral interest purported to be conveyed, the consideration should be abated in proportion to the part of the title that had failed; that Margaret G. Gibson was therefore entitled to receive only 1/40th of the 1/8th royalty provided by the lease, or 1/320th of the oil and gas so produced and saved.

The trial was had upon an agreed statement of facts before the court without a jury and judgment was entered in accordance with the defendants' contention that Margaret G. Gibson was entitled to receive only 1/40th of the rull 1/8th royalty interest in the land described. On appeal the Court of Civil Appeals affirmed the trial court's judgment. 274 S.W.2d 916.

All parties agree that the lease is unambiguous, and we also agree that there is no ambiguity in the lease; therefore, it is a question of the construction to be given to the lease. It must be given the legal effect resulting from a construction of the language contained within the four corners of the instrument. Benge v. Scharbauer, 152 Tex. 447, 259 S.W.2d 166 (1). All parties, both petitioners and respondents, agree that the royalty under this lease, like the oil payment to be made under it, was reserved by the lessors (one of whom is petitioner herein) from the rights granted by the lease. Sheffield v. Hogg, 124 Tex. 290, 77 S.W.2d 1021, 1028, 80 S.W.2d 741; Hager v. Stakes, 116 Tex. 453, 294 S.W. 835; Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 517, 19 S.W.2d 27; Frost v Standard Oil Co. of Kansas, Tex.Civ.App., 107 S.W.2d 1037, no writ history.

What royalty does the lease in question purport to reserve in the grantors? The language of the lease is: '3. The royalties to be paid lessor are: (a) on oil, one-eighth of that produced and saved from said land, * * *; (b) on gas, * * * produced from said land, * * * the market value at the well * * * of the gas so sold or used, provided that on gas sold at the wells the royalty shall be one-eighth of the amount realized from such sale.' (Emphases ours.) The provision is made for royalty on other minerals, etc. This is clearly a provision for a royalty payment of 1/8th of 40/40ths of the production from the 'said land' which is 'all of Survey No. 14, Upton County, Texas, containing 922 acres more or less.' There are no words in the lease modifying or changing the above construction of the lease.

This case is controlled by the court's reasoning and judgment in the following cases: King v. First Nat. Bank of Wichita Falls, 144 Tex. 583, 192 S.W.2d 260, 163 A.L.R. 1128; R. Lacy, Inc., v. Jarrett, Tex.Civ.App.1948, 214 S.W.2d 692, wr.ref.; Clemmens v. Kennedy, Tex.Civ.App.1934, 68 S.W.2d 321, wr.ref.; McElmurray v. McElmurray, Tex.Civ.App.1954, 270 S.W.2d 880, wr.ref.

In the King case (144 Tex. 583, 192 S.W.2d 261) an owner of an undivided one-half interest in two tracts of land in Young County, Texas, conveyed by warranty deed such undivided one-half interest "in and to the following described land situated in Young County, Texas, to-wit: * * *" and here follows a description of two tracts of land, aggregating 240 acres, more or less. The deed contained the following reservations:

"* * * The grantor hereby reserves unto himself, his heirs, successors and assigns for a period of ten (10) years only from this date an undivided one-eighth (1/8) of the usual and customary one-eighth royalty interest reserved by the land-owners in oil and gas and other minerals that may be produced from the hereinabove described land; * * *."

Grantee King contended that since only a one-half interest was conveyed in the land, the grantor, Duncan, reserved only one-eighth of one-half of the usual 1/8th royalty in the entire 240 acres. The Bank, which had succeeded to the rights of grantor, Duncan, contended that the reservation covered and included one-eighth of the usual 1/8th royalty in the entire 240 acres. Judgment in the trial court for the Bank's contention was affirmed by the Court of Civil Appeals. This Court affirmed the judgments of both courts below. The Court held that by the language "minerals that may be produced from the hereinabove described land" was meant the total production from the whole of said land rather than from the grantor's one-half interest therein. Such holding requires our holding in this case that the reservation of production 'from said land' in our lease covers 1/8th of 40/40ths, or total production from Survey No. 14 in its entirety, and not from the 9/40ths owned by the grantors in the lease.

We can see no distinction in principle between the case of R. Lacy, Inc., v. Jarrett, Tex.Civ.App.1948, 214 S.W.2d 692, wr.ref., and the present case. In the Lacy case, one Durham owned only a 7/12ths undivided interest in three adjacent lots in the townsite of Hawkins, Texas, and one Leona Guy owned the remaining 5/12ths interest in said lots. In 1943 one Breeding took an oil and gas lease from Leona Guy covering all these lots. In 1945 Breeding took an oil and gas lease from Durham upon the same three lots. This lease purported to convey the entire title or whole interest in the three lots. The granting clause of the Durham lease was to all intents and purposes in the same wording as the granting clause in our lease. Following the description in the Durham lease was reserved 'a production payment of $15,000.00 out of 1/8th of 7/8ths of the oil, if, as and only when produced, saved and marketed from said land under this lease.' (Emphasis added.) R. Lacy, Inc., having...