Humble Oil & Refining Co. v. Harrison

• Decision Date: 22 October 1947
• Docket Number: No. A-1225.,A-1225.
• Citation: 205 S.W.2d 355
• Parties: HUMBLE OIL & REFINING CO. et al. v. HARRISON.
• Court: Texas Supreme Court

205 S.W.2d 355

HUMBLE OIL & REFINING CO. et al. v. HARRISON.

No. A-1225.

Supreme Court of Texas.

October 22, 1947.

Rehearing Denied November 26, 1947.

Error to the Court of Civil Appeals of First Supreme Judicial District.

Suit by Humble Oil & Refining Company and others against D. J. Harrison for removal of cloud from and to quiet title to certain oil and gas interests. To review a judgment of the Court of Civil Appeals, 199 S.W.2d 786, affirming a judgment for defendant, plaintiffs bring error.

Judgments of the district court and of the Court of Civil Appeals reversed and rendered.

Andrews, Kurth, Campbell & Bradley, of Houston, W. C. Hock, of Fort Worth, R. E. Seagler, Robt. F. Higgins and Rex G. Baker, all of Houston, and Black & Stayton and Charles L. Black, all of Austin, for petitioners.

Fouts, Amerman & Moore, Joseph W. Moore and H. G. Dunlap, all of Houston, for respondent.

HART, Justice.

Humble Oil & Refining Company, joined by others claiming interests as its partial assignees, brought this suit to remove a cloud from and to quiet the title to its mineral leasehold interest in 1074.4 acres of land in Brazoria County, Texas. The defendants in the suit were D. J. Harrison and Mrs. Lottie Otto and her husband, M. C. Otto, who are owners of undivided interests in the minerals. Humble alleged in its petition that Harrison cast a cloud on its title by contending that the leasehold estate had terminated as to Harrison's interest by reason of the asserted failure of Humble to pay to him the correct amount of delay rentals. Mrs. Otto and her husband were joined as defendants but no relief was sought against them. Harrison answered, alleging that Humble had failed to pay delay rentals to him as required by leases then in effect and that by reason of such failure the leases had terminated as to Harrison's interest. The Ottos answered by a general denial. In a trial before the court without a jury judgment was entered denying plaintiffs all relief, adjudging that the defendant D. J. Harrison is the owner of an undivided one-half interest in the minerals in the 1074.4-acre tract free and clear of any claims asserted by the plaintiffs, and dismissing the suit as to the Ottos. Upon appeal by Humble and its assignees, the Court of Civil Appeals affirmed the judgment of the district court. 199 S.W.2d 786.

The questions presented by this appeal are (1) whether the delay rentals tendered by Humble to Harrison were sufficient in amount and, if not, (2) whether under the facts of this case Harrison is estopped to assert that the leases have been terminated.

The facts are undisputed and may be summarized as follows:

The 1074.4-acre tract was the separate property of Mrs. Maud S. Paddock, who, on March 19, 1928, by a deed in which she was joined by her husband, conveyed it to Henry Banker, reserving an undivided one-fourth interest in the minerals, but giving to the grantee the power to execute mineral leases binding on the entire mineral estate. On April 28, 1928, Henry Banker conveyed the land to Mrs. Lottie Otto. It is undisputed that at all times thereafter until Mrs. Otto and her husband executed a mineral deed to Harrison, Mrs. Otto owned an undivided three-fourths interest and Mrs. Paddock owned an undivided one-fourth interest in the minerals, subject to the oil and gas leases executed by them respectively.

Without expressly purporting to exercise the power given in the deed from Mrs. Paddock to Banker, Mrs. Otto and her husband, on November 8, 1932, executed a mineral lease to Pierce Withers covering 874.4 acres of the 1074.4-acre tract. On December 24, 1932, Mrs. Otto and her husband and Mrs. Paddock and her husband joined in a lease of the 874.4-acre tract to Withers, "in lieu of and to take the place of and in confirmation and ratification of" the lease of November 8, 1932, which had been executed by the Ottos alone. The lease of December 24, 1932, contained the usual "unless" clause, providing for the payment of semiannual delay rentals of $2.50 per acre "for all of the land," and that payments thereunder should be made three-fourths to the Ottos and one-fourth to the Paddocks. This lease on October 24, 1935, was assigned by Withers to Humble. The Ottos have extended the lease as to the 874.4 acres by agreements dated June 7, 1937, and December 21, 1942. These extension agreements did not amend the provisions of the lease with regard to the amount or the division of delay rentals.

The Paddocks did not join in the extension agreements affecting the 874.4 acres. On April 20, 1938, Humble released to the Paddocks its rights as lessee in the 874.4 acres in so far as the rights of the Paddocks were concerned. On June 27, 1938, the Paddocks executed to Humble a lease covering their one-fourth interest in the minerals in the entire 1074.4 acres, which in the "unless" clause provided for annual delay rentals of $5 per acre, the payment to be calculated on the basis of one-fourth of 1074.4 acres, or 268.6 acres. This lease was extended by a new lease executed by the Paddocks on June 3, 1943, which contained the same provisions as to the payments of delay rentals.

On February 20, 1939, the Ottos alone executed to Humble a lease covering their interest in the 200 acres of the 1074.4 acres which had been excepted from the leases and extension agreements previously executed by the Ottos. This lease in the "unless" clause provided for annual delay rentals of $5 per acre, the payment to be calculated on the basis of three-fourths of 200 acres, or 150 acres. This lease was extended by the Ottos by an agreement dated December 21, 1942, which did not change the agreement regarding the payment of delay rentals.

On February 8, 1944, the Ottos executed to Harrison a mineral deed conveying an undivided interest in the minerals in the entire 1074.4-acre tract. This deed contained the following provisions:

"Know All Men by These Presents: That we, Lottie Otto and husband, M. C. Otto, of Fort Bend County, Texas, hereinafter called Grantor, for and in consideration of the sum of Ten and No/100 ($10.00) Dollars cash in hand paid by D. J. Harrison, hereinafter called Grantee, the receipt of which is hereby acknowledged, have granted, sold, conveyed, assigned and delivered, and by these presents do hereby grant, sell, convey, assign and deliver unto the said Grantee, an undivided one-half (1/2) interest in and to all of the oil, gas and other minerals in and under, and that may be produced from the following described land situated in Brazoria County, Texas, to-wit:" (Here follows a description of the 1074.4 acres)

"In the above described tract of land the Grantors own three-fourths (3/4) of the minerals and are hereby conveying two-thirds (2/3) of their said three-fourths (3/4) of the minerals, or an undivided one-half (1/2) of said minerals. Said land being now under oil and gas leases from Grantors and of record in the Deed Records of Brazoria County, Texas, and owned by Humble Oil & Refining Company, it is understood and agreed that this sale is made subject to the terms of said leases and/or any other leases from Grantors now valid and now of record in the Deed Records of Brazoria County, Texas, covering same, but covers and includes one-half (1/2) of all the oil royalty, gas royalty and royalties on other minerals due and to be paid under the terms of said lease or leases in so far as they cover the above described land.

"It is understood and agreed that one-half (1/2) of the money rentals, which may be paid, on the above described land, to extend the term within which a well may be begun under the terms of said leases is to be paid to the said Grantee; and, in event that the above described leases for any reason become canceled or forfeited, then and in that event, Grantee shall own one-half (1/2) of all oil, gas and other minerals in and under said lands, together with a like one-half (1/2) interest in all bonuses paid, and all royalties and rentals provided for in future oil, gas and mineral leases covering the above described land."

On the same date that the mineral deed was executed Harrison mailed to Humble a photostatic copy of the mineral deed, together with a letter, which read in part as follows:

"It is our understanding that you are the owners of oil and gas leases from Mrs. Lottie Otto and husband covering portions of 1074.4 acre tract in the Shipman & Charles League in Brazoria County, Texas. We hand you herewith photostatic copy of mineral deed from Mr. and Mrs. Otto conveying to D. J. Harrison 1/2 of the minerals, rentals and royalties, and we ask you to change your records accordingly."

On February 15, 1944, Harrison mailed to Humble a certified copy of the mineral deed from the Ottos. On February 18, 1944, Humble's agent in charge of its records mailed to Harrison a letter in which receipt was acknowledged of the certified copy of the mineral deed and it was stated that "our records have been amended in accordance with this instrument."

The supervisor of the land rental division of Humble's oil department, who is a licensed attorney at law, testified that he had charge of setting up the rental to be paid to Harrison under the mineral deed from the Ottos, and that he construed the deed to mean that thereafter Humble should pay to Harrison one-half of the rentals which had theretofore been payable to the Ottos. Humble's rental records, which were introduced in evidence, show that they were changed in accordance with this construction.

The next rental payment which fell due after the execution and delivery of the mineral deed to Harrison was the annual payment due on March 1, 1944, on the 200-acre tract. Under the lease executed by the Ottos, a total payment of $750 was payable to the Ottos, and following its construction of the mineral deed Humble, on February 23, 1944, deposited in the bank at Needville, which had been designated in the lease as the depository, the total sum of $750,...