Humble Oil & Refining Co. v. Southland Royalty Co.
| Decision Date | 18 July 1951 |
| Docket Number | No. 4794,4794 |
| Citation | 244 S.W.2d 249 |
| Parties | HUMBLE OIL & REFINING CO. et al. v. SOUTHLAND ROYALTY CO. et al. |
| Court | Texas Court of Appeals |
Jones, Hardie, Grambling & Howell, El Paso, Felix A. Raymer, Houston, G. R. Pate, Fort Worth, for appellants.
Ben G. Smith, R. M. Coleman, both of Fort Worth, A. W. Walker, Jr., Dallas, for appellees.
By this suit appellees sought a declaratory judgment under Article 2524-1, Vernon's Ann.Civ.St., to settle and determine a controversy which had arisen between them and appellants as to their claim to a royalty interest in certain minerals produced from a portion of Section 6 in Block 'A', B. S. & F. Survey in Crockett County. They also sought an accounting and judgment against appellant, Humble Oil & Refining Company, the purchaser of the oil produced from such land. Trial to the court without a jury resulted in a judgment in favor of appellees for all relief sought, the monetary judgment against Humble being in the sum of $14,072.89. The trial court incorporated Findings of Fact and Conclusions of Law in the judgment. The parties concede that the facts are not disputed, and that the sole questions for our determination are questions of law. Appellants have made a very clear statement of the facts, which is fully supported by the trial court's findings. A statement of these facts is deemed essential to a proper understanding of the points of law presented. We copy copiously from appellants' brief:
'L. P. Powell and wife, Essie D. Powell, on April 2, 1925, and prior thereto, were the owners of Section 6 in Block 'A' B&SF Survey in Crockett County, Texas. Section 6 was in the form of a square and contained 640 acres of land. L. P. Powell and wife are the common source of title.
'On April 2, 1925, Powell and wife conveyed to J. H. Youngmeyer an undivided one-half (1/2) interest in all oil, gas and other minerals in the South one-half (1/2) of this Section 6. On this date, as a result of such conveyance, the title to Section 6 was vested as follows: L. P. Powell and wife owned the surface to the whole section, all the minerals in the North one-half (1/2) and one-half (1/2) of the mineral estate in the South one-half (1/2); while J. H. Youngmeyer owned one-half (1/2) of the minerals in the South one-half (1/2).
'On August 13, 1925, Powell and wife conveyed to Southland Royalty Company, among other lands, an undivided one-half (1/2) interest in the oil, gas and other minerals in the Northwest quarter (NW 1/4) and in the Northeast quarter (NE 1/4) of the Southwest quarter (SW 1/4) of the same Section 6. There was a limitation on the grant, in that it was to remain in force and effect only for 'a period of twenty years from date' (August 13, 1925) and as long thereafter 'as oil, gas or other minerals are produced from said land'.
'The J. H. Youngmeyer interest was in part conveyed by subsequent deeds, and, to such extent there was a mutation in such title. The mutation in the Youngmeyer title is immaterial to this appeal, and, in the interest of brevity we do not chain it, but will continue reference to it, where pertinent, as the Youngmeyer interest.
'Thereafter, and by instrument dated June 22, 1932, filed for record November 3, 1932, L. P. Powell and wife, Essie D. Powell, the owners of the Youngmeyer interest and Southland Royalty Company made an oil, gas and general mining and mineral lease to Gulf Production Company, covering 250 acres of land out of Section 6. This 250 acres was described as follows: 'The north 50 acres (N.50) of the West 1/2 of the Southwest 1/4; the Northeast 1/4 of the Southwest 1/4; and the N.W. 1/4 of Section 6, Block 'A' B. S. & F. Survey, aggregating 250 acres, more or less.'
'The conditions which then existed upon the land subject to this litigation can best be presented by the following plat:
'The Gulf Production Company thereafter assigned the entire lease, to a depth of 3,000 feet, to Garrett M. Smith, one of the defendants in the trial court.
'The mineral interests in the land subject to the oil and gas lease (enclosed by the broken line) were owned as follows:
Powells:
1/2 interest in NW/4
1/2 interest in N 50 acres of W/2 SW/4
No interest in NE/4 SW/4
Southland Royalty Company:
1/2 interest in NW/4
1/2 interest in NE/4 SW/4
(subject to the 20 year limitation)
No interest in N 50 acres of W/2 SW/4
Youngmeyer:
No interest in NW/4
1/2 interest in N 50 acres of W/2 SW/4
1/2 interest in NE/4 SW/4
'By deed dated October 17, 1932, filed for record October 24, 1932, L. P. Powell and wife conveyed to Humble Oil & Refining Company all the oil, gas and other minerals in Section 6, Block 'A'. This deed specifically passed all 'reversionary' rights of which Powell and wife were possessed at that time, * * *
'Garrett M. Smith, pursuant the assignment to him by Gulf Production Company of the leasehold rights to a depth of 3,000 feet, commenced drilling operations on the North 50 acres of the West one-half (1/2) of the Southwest quarter (SW 1/4), and, on June 19, 1941 completed a producing oil well. On September 24 of the same year he completed another producer on the same 50-acre tract. Oil has been continuously produced from said two wells, in paying quantities, from the date of completion to the time of trial. The location of the wells is shown on the plat.
'No well was drilled on the lands described in the mineral conveyance from Powell and wife to Southland Royalty Company, dated August 13, 1925, within the 20-year period provided in that deed as being the term limit of the grant; and, of course, there was no production from this land at the end of the 20-year term.
'After oil had been produced from said wells from June 19, 1941, Southland Royalty Company, on January 30, 1945, for the first time made known to Humble Oil & Refining Company that it was claiming an interest in such oil under the lease of June 22, 1932, and, for the first time made demand for payment. This demand was predicated upon the claim that the lease was a 'unitized' lease under the holdings made in French v. George, (Tex.Civ.App.) 159 S.W.2d 566, and in Parker v. Parker, (Tex.Civ.App.) 144 S.W.2d 303.
'Humble was then (and still is) purchasing the oil from the leased premises, and it was willing to recognize the Southland demand to the extent of treating the lease as a unitized lease-but no production having been obtained on the land in which Southland owned a mineral interest, within the 20-year term, it was unwilling to recognize any ownership or rights in Southland subsequent to August 13, 1945 (20 years from August 13, 1925).
'Continental Oil Company's interest in the litigation arises by virtue of its purchase, from Humble, of a one-half (1/2) interest in the estate passing to Humble as a result of L. P. Powell's deed to Humble dated October 17, 1932.
'Earl Sneed is involved by virtue of a purchase from Southland Royalty Company of a small interest in the estate conveyed to it by L. P. Powell's deed of August 13, 1925, which interest vested in Sneed by mesne conveyances.'
The controversy is over the construction of the mineral deed from the Powells to Southland of August 13, 1925, in connection with the lease by the Powells to Southland and others of June 22, 1932. Appellants contend that inasmuch as no minerals were produced by August 13, 1945 from any well located on that part of the leased premises convered by the mineral deed, all of Southland's rights under that deed terminated and the minerals thereby conveyed reverted to the Powells and were acquired by Humble under the Powells deed to it of October 24, 1932. Appellees contend, and the trial court in effect so held, that the lease being a 'unitized' lease the production of oil on any part of it was in law production on the 200 acres convered by the mineral deed, and the twenty year limitation therein contained was therefore not effective. The controversy is therefore centered around the trial court's conclusion of law No. 5, which is as follows:
Both parties concede that the question presented is one of first impression in this State. We have been favored with excellent briefs in which the respective contentions are ably set forth with exhaustive citation of authorities.
Appellants do not complain of the trial court's conclusion of law that the lease of June 22, 1932, is what is known as a 'unitized' lease, and that the several lessors were for the full 20-year term of the mineral deed of August 13, 1925, entitled to participate in the royalty produced under the lease. Their complaint is of the court's conclusion that the lease operated as an extension of the 20-year term specified in the mineral deed and modified that deed so as to comply with the condition of the grant to Southland and extend the term of the grant so long as oil, gas or other minerals should be produced from the 50-acre tract in which appellee owns no title or claim.
The doctrine of a unitized lease is epitomized in French v. George, Tex.Civ.App., 159 S.W.2d 566,...
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