Jupiter Oil Co. v. Snow
| Decision Date | 23 October 1991 |
| Docket Number | No. D-0811,D-0811 |
| Citation | 819 S.W.2d 466 |
| Parties | JUPITER OIL COMPANY, Petitioner, v. Gene M. SNOW, Respondent. |
| Court | Texas Supreme Court |
This is a suit to construe a mineral deed. Jupiter Oil Company (Jupiter) seeks, in addition to damages, a declaratory judgment to establish its claimed ownership of one-half of the minerals underlying a tract upon which Gene M. Snow (Snow), a mineral lessee, has produced oil and gas. The trial court held that Jupiter owned a one-half interest in all minerals underlying the tract. The court of appeals reversed, 802 S.W.2d 354, based on the application of the "repugnant to the grant" rule of Alford v. Krum, 671 S.W.2d 870 (Tex.1984). We hold that Alford v. Krum is inapplicable in the current case as the deed at issue unambiguously grants a one-sixteenth interest in the mineral estate as well as seven-sixteenths of the grantor's possibility of reverter. Thus, we reverse the judgment of the court of appeals and affirm the judgment of the trial court. 1
In 1918, J.W. and Malinda Henderson owned all of the minerals underlying a 80-acre tract in Eastland County. The land was at that time subject to an oil and gas lease to the States Oil Corporation (the "States lease"). The States lease reserved a 1/8th royalty to the Hendersons.
On September 27, 1918, the Hendersons conveyed a portion of their mineral interest to Joseph M. Weaver. The proper construction of this 1918 mineral deed (the Henderson deed) is the issue here. Specifically, the issue is the interest conferred in the grantee, Joseph M. Weaver, after the termination of the States lease. Jupiter, the successor in interest to the grantee, claims that the deed gave the grantee an immediate 1/16th mineral interest in the property which expanded to a full one-half mineral interest upon termination of States lease. Snow, the holder of the current oil and gas leases on the subject property, contends that the grantee received only a 1/16th mineral interest.
The first paragraph of the Henderson Deed conveys:
all that certain undivided 1/16 interest in and to all the oil, gas, and other minerals of whatsoever kind and character in and under the following described lot....
The second paragraph acknowledges that the tract in dispute was under lease at the time to the States Oil Corporation. The third paragraph provides that:
[i]n the event the lease now on said land is forfeited or terminated withou[t] producing mineral of any kind, then the grantee herein or his assigns are to have and hold under this conveyance an undivided 1/2 of all the oil. [sic] gas or other mineral of whatsoever kind character in and under the land herein described, and it is the intention of the grantors herein that in the event said lease is forfeited, then in that event the grantee is to have and hold an equal undivided one half of all such minerals.
The common oil and gas lease is a fee simple determinable estate in the realty. Cherokee Water Co. v. Forderhause, 641 S.W.2d 522, 525 (Tex.1982); Halbouty v. R.R. Comm'n, 163 Tex. 417, 432, 357 S.W.2d 364, 375 (1962); Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 174, 254 S.W. 290, 295 (1923). A possibility of reverter is the interest left in a grantor after the grant of a fee simple determinable. 2 Caruthers v. Leonard, 254 S.W. 779, 782 (Tex.Comm'n App.1923, approved); James v. Dalhart Consol. Indep. School Dist., 254 S.W.2d 826, 829 (Tex.Civ.App.--Amarillo 1952, writ ref'd); See also Texas Oil & Gas Corp. v. Ostrom, 638 S.W.2d 231 (Tex.App.--Tyler 1982, writ ref'd n.r.e.) (lessor of mineral estate retains non-possessory interest in the minerals which is a possibility of reverter). The grantor's possibility of reverter in the mineral estate becomes a present possessory interest only upon the termination of the lease. Cherokee Water Co. v. Forderhause, 641 S.W.2d at 525 (Tex.1982); Murphy v. Dilworth, 137 Tex. 32, 37, 151 S.W.2d 1004, 1006 (1941). Thus, upon the termination of the lease, the mineral estate ordinarily reverts to the grantors of the lease, their heirs or assigns. Kaiser v. Love, 163 Tex. 558, 560, 358 S.W.2d 586, 587 (1962).
Texas courts have long recognized that the owner of a mineral estate can sell or assign the possibility of reverter. Murphy v. Dilworth, 151 S.W.2d at 1006; Gregg v. Caldwell-Guadalupe Pick-Up Stations, 286 S.W. 1083, 1084 (Tex.Comm'n App.1926, approved). For example, in Tipps v. Bodine, 101 S.W.2d 1076 (Tex.Civ.App.--Texarkana 1936, writ ref'd), Mrs. Tipps conveyed a 1/16th mineral interest to Mrs. Bodine subject to an existing oil and gas lease to Shaw, Shipp & Spivey. In the third paragraph the deed provided that
in the event that the above described lease for any reason becomes canceled or forfeited, then and in that event an undivided one-half of the lease interest and all future rentals on said land for oil, gas, and other mineral privileges shall be owned by the said Grantee ...
Reading the deed as a whole and reconciling all paragraphs in order to ascertain the intent of the parties, the Tipps court held that the initial statement conveyed a present one-sixteenth interest in the mineral estate while the third paragraph granted a portion of the grantor's possibility of reverter. Thus, the Tipps court held that the deed unambiguously granted one-sixteenth of the minerals to Mrs. Bodine as well as seven-sixteenths of the grantor's total fourteen-sixteenths possibility of reverter. Id. at 1078-79.
Such analysis is equally applicable here. The Henderson deed immediately gave the grantee a 1/16th interest in the mineral estate. Upon the termination of the States lease, fee simple title would revest in the Hendersons. Read thus, the third paragraph conveys one half of the Hendersons' possibility of reverter. The effect of this grant is that when the States lease ended, Jupiter's interest in the mineral estate simultaneously expanded into a full one-half by operation of law.
Under this analysis, we hold the deed unambiguous as none of its clauses irreconcilably conflict. The court of appeals therefore erred in resorting to rules of construction which are inapplicable absent clear conflict. Harris v. Windsor, 156 Tex....
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