Hager v. Stakes

• Decision Date: 04 May 1927
• Docket Number: (No. 4360.)
• Citation: 294 S.W. 835
• Parties: HAGER et al. v. STAKES, Tax Collector, et al.
• Court: Texas Supreme Court

294 S.W. 835

HAGER et al. v. STAKES, Tax Collector, et al.

(No. 4360.)

Supreme Court of Texas.

May 4, 1927.

Certified Questions from Court of Civil Appeals of Ninth Supreme Judicial District.

Suit for injunction by Lee Hager and another against D. W. Stakes, Tax Collector, and others. From an order sustaining a general demurrer to the petition, plaintiffs appealed to Court of Civil Appeals. On certified questions. Questions answered.

I. S. Handy, of Houston, for appellants.

Thompson & Barwise, of Ft. Worth, as amicus curiæ.

Dan Moody, Atty. Gen., R. J. Randolph, Ass't Atty. Gen., and R. Lee Davis, of Orange, for appellees.

Goggans & Allison, of Breckenridge, amicus curiæ.

GREENWOOD, J.

The certificate of the Honorable Court of Civil Appeals for the Ninth Supreme Judicial District is as follows:

"To the Honorable Supreme Court of the State of Texas:

"This is an appeal from an order of the district court of Orange county, sustaining a general demurrer to appellants' petition. The nature of their petition and the issues involved are thus stated by them in their brief:

"`On January 1, 1923, Lee Hager was the owner of the fee-simple title to certain lands in Orange county, Tex., and the owner of a royalty interest in the oil produced from these lands, and, in addition, was the owner of an interest in the oil produced from certain other lands in which he had no claim to the surface or other title to any of the oil, gas, or other minerals under such land. About December 1, 1923, Lee Hager transferred and assigned all of these interests to the Federal Royalty Company.

"`Subsequent to the 1st of January, 1923, the tax assessor of Orange county assessed to Lee Hager the interests above mentioned; these assessments being for the purpose of assessing the royalties as an interest in the lands designated. Objection was made by Lee Hager before the county board of equalization to those assessments on the ground that the law did not permit the assessment of royalty interest. The equalization board, however, confirmed the assessments as placed upon the tax rolls, and the tax collector demanded payment of the taxes thereon. This suit was brought to enjoin the tax collector from further attempting to collect such taxes and to enjoin the county assessor and county commissioners from further assessing for taxation any royalty interest owned by Lee Hager or the Federal Royalty Company.

"`Upon trial of the case, it was agreed that Lee Hager was the owner of the properties described in the petition, subsequent to the conveyances which were fully set out in the petition, and that for the purpose of this suit, the valuations assessed were correct.

"`The petition shows that prior to January 1, 1923, Lee Hager was the owner of a tract of 3.94 acres of land in Orange county, Texas, and that prior to January 1, 1923, he had executed an "oil and gas lease" to the Atlantic Oil Producing Company, which is fully set out in the pleading, and in which the following language is used:

"`"Know all men by these presents: That Lee Hager, of Harris county, state of Texas, herein called lessor, whether one or more, does hereby lease, demise and let unto the Atlantic Oil Producing Company, herein called lessee, and to its heirs, successors, and assigns, the herein described premises for the purpose and with the exclusive right of exploring, mining, drilling, and operating for oil, gas, coal, sulphur, lignite, salt, and other minerals, or water, with the right to erect, maintain, use, and remove all buildings," etc.

"`The consideration for this contract is stated to be $10, and the further obligation with reference to the payment of royalty:

"`"Should oil be found in paying quantities in any well, drilled by lessee upon the above-described premises, lessee agrees to deliver to lessor in pipe line (lessor paying pipe line charges), or settling tanks with which lessee may connect the well or wells, the equal one-sixth part of all the oil produced and saved from such premises; the balance of such oil being the property of lessee."

"`The contract contains further provisions with reference to royalty to be paid on gas or other minerals.

"`The petition further shows that prior to January 1, 1923, Lee Hager was the owner of a 16-acre tract and an undivided four-fifths interest in an 11.99-acre tract in the Bradley Garner survey, and that prior to January 1, 1923, he had executed a conveyance to the Farish-Watts-Collins, Inc., an instrument which is fully set out in the amended petition, and which contains this provision:

"`"The purpose of this lease is such that, so long as it remains in force, the lessee shall have the exclusive right to prospect and drill on said land for oil and gas and remove the same therefrom; to erect and maintain thereon and remove therefrom all necessary and proper structures and equipment. * * * And subject to the royalties hereinafter reserved, all of the oil and gas in and under said land is hereby granted and conveyed to the lessee.

"`"The royalties reserved by the lessor and which shall be paid by the lessee are: (a) On oil, a quantity equal to one-eighth of all produced and saved, the same to be delivered at the wells or to the credit of the lessor in the pipe line to which the wells may be connected."

"`That on the 21st day of May, 1923, the title to the oil, gas, and other minerals described in the foregoing instrument, reverted to the plaintiff, Lee Hager, and on the same day the said Lee Hager executed an instrument to W M. McMahon, which instrument contained the following provision:

"`"The purpose of this lease is such that, so long as it remains in force, the lessee shall have the exclusive right to prospect and drill on said land for oil and gas and remove the same therefrom; to erect and maintain thereon and remove therefrom all necessary or proper structures and equipment, * * * And subject to the royalties hereinafter reserved, all of the oil and gas in and under said land is hereby granted and conveyed to the lessee.

"`"The royalties reserved by lessor and which shall be paid by lessee, are: (a) On oil, a quantity equal to one-eighth of all produced and saved, the same to be delivered at the wells or to the credit of the lessor in the pipe line to which the wells may be connected."

* * * * * * * *

"`That, prior to January 1, 1923, Lee Hager was the owner of an undivided interest in 11.99 acres of land out of the Bradley-Garner survey, but that on the 28th day of September, 1921, he, joined by W. M. Gunstream, executed to the Atlantic Oil Producing Company an instrument which contains the following provisions:

"`"Know all men by these presents: That Lee Hager, of Houston, Harris county, Tex., and W. M. Gunstream, of Orange county, Tex., herein called lessor, whether one or more, does hereby lease, demise, and let unto the Atlantic Oil Producing Company, herein called lessee, and to its successors and assigns, the herein described premises, for the purpose and with the exclusive right of exploring, mining, drilling, and operating for oil, gas, coal, sulphur, lignite, salt, and other minerals, or water; with the right to erect, maintain, use and remove all buildings, structures," etc.

"`The consideration for the instrument is stated to be $10 and the further provision with reference to the payment of royalty, to wit:

"`"Should oil be found in paying quantities in any well drilled by lessee upon the above-described premises, lessee agrees to deliver to lessor in the pipe line (lessor paying pipe line charges), or settling tanks, with which lessee may connect the well or wells, the equal 16 per cent. part of all the oil produced and saved from such premises; the balance of such oil being the property of lessee."

"`That prior to January 1, 1923, Lee Hager was the owner of an interest in 84.06 acres of land in the S. M. Luce survey, but that on the 26th day of June, 1913, he executed an instrument to the J. M. Guffey Petroleum Company, which instrument contains the following provisions:

"`"Know all men by these presents: That for the consideration hereinafter stated, I, Lee Hager of said Harris county, Tex., have granted, bargained, sold, and by these presents do grant, bargain, sell, and convey unto the J. M. Guffey Petroleum Company, a corporation, created under the laws of the state of Texas, all of my interest, the same being seventeen-eighteenths undivided, in a tract of land in Orange county, Tex., being a portion of the Sarah M. Luce survey, situated on Cow bayou, located by virtue of certificate No. 36—94, issued to Sarah M. Luce and patented to J. M. Wingate, assignee, September 29, 1886, by patent No. 215, in volume 26, said patent being recorded in the deed records of Orange county, Tex., in Book 2, p. 425," etc.

"`It also contains the following provisions:

"`"The considerations for this conveyance are as follows:

"`"First, $2,238.81, paid by the J. M. Guffey Petroleum Company, the receipt whereof is hereby acknowledged; and

"`"Second, one-eighth of seventeen-eighteenths of all petroleum which said J. M. Guffey Petroleum Company, its successors and assigns hereunder may produce and save from the land above described, such portion of the petroleum to be delivered free of expense to me, the said Lee Hager, my heirs or assigns, at the well or at my or their option into any pipe line which may connect with the well."

"`This instrument also contains the following provision:

"`"It is agreed that no obligation is imposed on said J. M. Guffey Petroleum Company, its successors or any holder of title under it, to drill or operate for oil on said premises, but that I, the said Lee Hager, my heirs and assigns, shall have such part of such petroleum only if and when produced."

"`That prior to January 1, 1923, the said Lee Hager was the owner of a tract of 22.14 acres of land in the Wm. Dyson league, but that on the 12th day of October, 1920, the said Lee Hager executed an instrument...