Gulf Refining Co. v. Harrison

• Decision Date: 14 April 1947
• Docket Number: 36369.
• Citation: 30 So.2d 44,201 Miss. 294
• Court: Mississippi Supreme Court
• Parties: GULF REFINING CO. et al. v. HARRISON et al.

30 So.2d 44

201 Miss. 294

GULF REFINING CO. et al. v. HARRISON et al.

No. 36369.

Supreme Court of Mississippi

April 14, 1947

Suggestion of Error Overruled June 9, 1947.

See 30 So.2d 807.

Wells, Wells, Newman & Thomas C. C. Richmond, I. W. Coleman and Green & Green, all of Jackson, Welch, Cooper & Welch, of Laurel, John E. Green Jr., of Houston, and Wilbourn, Miller & Wilbourn, of Meridian, for appellants.

Butler & Snow, of Jackson Buchanan & Harper, of Laurel, Jackson & Young and Joe Daniel, all of Jackson, and Gillespie, Minniece & Nettles, of Meridian, for appelles.

McGEHEE, Justice.

This appeal involves two separate and distinct controversies: (1) One of which is between the appellant Gulf Refining Company and the appellee Wallace Harrison, the appellee Ray M Walker, and the various vendees of the latter, and which involves the question of whether or not the decree appealed from should be reversed in so far as it subordinates the rights of the said appellant under its lease of October 8, 1943, from George F. Taylor for an undivided three-fourths interest in the oil, gas and other minerals in 268 acres of land to the rights of the appellees, who claim one-half of the said three-fourths undivided interest through a conveyance of October 11, 1943, from the said George Taylor to the said Ray Walker, and through certain mesne conveyances, as innocent purchasers thereof; and (2) the other is between the appellants, American Liberty Oil Company, Blue Bird Investment Company, and G. G. Stanford, who claim the other one-fourth undivided interest in said minerals through a foreclosure of a deed of trust executed on August 4, 1939, by ike Ulmer et ux., as owners of the 268 acres of land, in favor of Mrs. J. A. Lyon, as beneficiary, but which was not filed for record until December 18, 1939, and the heirs at law and devisees of A. J. Broderick and George Calvert, respectively, who claim under a mineral deed from the said Ike Ulmer et ux.

Then too, Kirby Petroleum Company asserts its claim to a 40-268 interest in the said minerals by virtue of a mineral deed to it from the said Ray Walker, but the said company recognizes, and correctly so, that its rights thereto are 'subject to any valid and subsisting oil, gas and mineral lease' on said lands, and therefore makes no adverse claim to that of the appellant Gulf Refining Company, and its rights to the said interest is not contested by any of the other parties to either of these controversies, and no complaint is made here in regard thereto.

The first question then is whether or not the Gulf Refining Company was entitled under its bill of complaint and that proof to have its lease from George Taylor to the undivided three-fourths interest in the oil, gas and other mincrals under the 268 acres of land confirmed and quieted as against the above-mentioned appellees to the controversy in regard thereto, who claim one-half of the said three-fourths interest, free of the said lease. Those appellees contend, and the trial court so found, that the conveyance from the said George Taylor to Ray Walker of October 11, 1943, has priority over the lease executed by the said George Taylor on October 8, 1943, in favor of the appellant Gulf Refining Company, on the ground that Ray Walker had neither actual nor constructive notice of the lease of the said appellant at the time he obtained and recorded his conveyance from the said Taylor. The appellee Wallace Harrison, and the other appellees to this particular controversy, all claim through the said Ray Walker, as heretofore stated.

The conveyance executed by Taylor to Walker on October 11, 1943, is on Form R-101, known as a 'Mineral Right and Ryalty Transfer.' Taylor thereby conveyed to Walker for a consideration of $500, and other good and valuable considerations, one-half of the three-fourths undivided interest in the minerals which the said Taylor had theretofore acquired from Ike Ulmer, et ux.; and had leased to the appellant on October 8, 1943; and this conveyance contains a provision reading as follows: 'This conveyance is made subject to any valid and subsisting oil, gas or other mineral lease or leases on said land, * * * but, for the same consideration hereinabove mentioned, grantor has sold, transferred, assigned and conveyed and by these presents does sell, transfer, assign and convey unto grantee, his heirs, successors and assigns, the same undivided interest (as the undivided interest hereinabove conveyed in the oil, gas and other minerals in said land) in all the rights, rentals, royalties and other benefits accruing or to accrue under said lease or leases from the above described land; * * *'. (Italics ours.)

This form of conveyance was selected and agreed upon when the same was executed at a conference between Taylor and his attorney, his grantee Walker, and his brother, both of whom are attorneys, and they either knew, or should have known, as investors in mineral rights that the same was being used to limit or qualify the warranty of title given by Taylor to the mineral interest therein conveyed. And, if we should hold that the abovequoted provision did not have the effect of doing so, we would not be construing the same, but rather we would be expunging it, and this we are not authorized to do under the well-established principles of law for the construction of contracts and the requirements that all of the valid provisions thereof shall be given some effect, unless meaningless. Dunn v. Stratton, 160 Miss. 1, 133 So. 140; Southern Ry. Co. v. Anderson, 158 Miss. 543, 130 So. 743; Shapleigh Hardware Co. v. Spiro, 141 Miss. 38, 106 So. 209, 44 A.L.R. 393; Harris v. Townsend, 101 Miss. 590, 58 So. 529; 12 Am.Jur. 774; 16 Am.Jur. 534. Moreover, the presumption is that the grantor Taylor did not intend to unqualifiedly warrant unto Walker that which he had conveyed by lease to the appellant Gulf Refining Company three days prior thereto for a substantial cash consideration. It is not to be presumed that this qualification of the warranty was used for that purpose.

Moreover, on November 30, 1943, Walker made conveyances for fractional interests in these minerals to his various vendees and used this same form of conveyance.

In the case of Cummings v. Midstates Oil Corporation, 193 Miss. 675, 9 So.2d 648, 651, this Court held a conveyance 'subject to any valid and subsisting oil, gas or other mineral lease or leases on said land', etc. (Form R-101) made by Cummings to Lutz to be subject to a prior existing lease to Pendleton, stating: 'The only existing lease on the lands was the Pendleton lease. * * * Therefore, while the Pendleton lease is not expressly described in the Lutz conveyance, the reference therein to existing lease could mean only the Pendleton lease.'

It is true that the Pendleton lease was then of record, but there is nothing to prevent parties from using this form to protect the grantor on his warranty as against any outstanding lease. It is a matter of contract. And, in the Cummings case, the Court on its own motion, took notice that Form R-101 was generally used in this State, to denote that a mineral transfer is subject to an existing lease.

This form for conveyance of rents and royalties under an existing lease together with a proportionate interest in the minerals in fee upon the expiration of the existing lease has been approved not only by Summers, in his work on Oil and Gas, Section 1466 et seq. (except that his form is drawn for a term of years), but also by such eminent text-writers as Glassmire in his Law of Oil & Gas Leases & Royalties, page 410; Mills and Willingham in their Law of Oil & Gas, page 648, Nos. 18 and 19; Nichols in his Encyclopedia of Legal Forms, 7th Ed., page 46, Sec. 7.213 and [30 So.2d 47] page 103, Sections 7.344 and 7.347; and Thornton in his Oil & Gas, Section 3113.

However, it is contended by the said appellees (1) that the lease of the appellant Gulf Refining Company, of October 8, 1943, was not a valid and subsisting lease on the 11th day of October, 1943; (2) that if it was, then that on account of the said lease not being then of record the above-quoted provision in the conveyance from Taylor to Walker is ineffectual to bind the grantee therein since it fails to identify any particular lease to which it was made subject; and (3) that the grantee Walker had neither actual nor constructive notice of the said lease, same not having been filed for record and recorded on or prior to the execution and recordation of this conveyance from Taylor on October 11, 1943.

But, in view of the quoted stipulation in this conveyance from Taylor to Walker, we deem it unnecessary to discuss the facts relating to the contention last mentioned as to whether or not Walker had actual notice of the appellant's lease from Taylor when Walker obtained his conveyance from Taylor on October 11, 1943, for the reason that if the appellant's lease of October 8, 1943, was valid and subsisting on the said October 11, 1943, contrary to the contention first above stated, the rights of the appellees are, as a matter of contract, subordinate to the said lease of the appellant, unless the second contention is sound.

The proof discloses without dispute that on October 8, 1943, when George Taylor, the common source of title of the said appellant and the appellees, was the owner of the three-fourths undivided interest in the minerals under the said 268 acres of land, he executed and delivered to G. D Bilberry, a representative of the Gulf Refining Company, the lease in favor of said company covering the said entire interest; that he was then paid therefor the sum of $1,005, on a $5 an acre basis, covering the entire 268 acres, by a draft for the said amount, and that this draft was deposited...