Lewis v. Oates

• Decision Date: 05 June 1946
• Docket Number: No. A-638.,A-638.
• Citation: 195 S.W.2d 123
• Parties: LEWIS v. OATES.
• Court: Texas Supreme Court

195 S.W.2d 123

LEWIS v. OATES.

No. A-638.

Supreme Court of Texas.

June 5, 1946.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit in trespass to try title by Tryon Lewis against John S. Oates to establish a perpetual royalty interest in future oil and gas leases and to recover a portion of moneys paid to defendant by a lessee. A judgment that plaintiff take nothing and that the purported mineral conveyance under which plaintiff claimed was void was affirmed by the Court of Civil Appeals, 188 S.W.2d 895, and the plaintiff brings error.

Affirmed.

Garland Casebier, of Fort Stockton, for petitioner.

Travers Crumpton, of Fort Stockton, for respondent.

TAYLOR, Justice.

The following statement will suffice to present and make apparent the sole question presented for decision; that is whether John S. Oates and Tryon Lewis, on September 25, 1929, had a right under the facts to effectuate by contract the transaction they undertook to enter into on that date. Oates was then, as at all times mentioned herein, the surface owner and original awardee of 640 acres of Pecos County school land. About three years prior to the above date (January 28, 1926), Oates, as surface owner of the land and as agent of the state, leased the land for oil and gas to Pure Oil Company for a term of ten years. Thereby the company, as lessee, became the owner of the lease interests for the duration of that lease and Oates became the owner of the agency compensation payable to him by the lessee for the same duration. The lease was still in force with about seven years of its term unexpired, the state was still the owner of the entire oil and gas mineral estate in the land, and Oates was still the owner of the surface estate. No oil or gas had been produced or discovered on the land and no oil or gas operations for the production of either had been begun. Oates owned the entire surface estate, having made no sale of any part thereof; and, so far as the record discloses, the territory was unproven as to oil or gas production prospects. Tryon Lewis was desirous of buying a permanent oil and gas royalty interest in the land and Oates was desirous of selling such permanent interest. Accordingly, they undertook, by contract, to enter into a transaction to effectuate their respective desires. The means whereby they undertook to enter into the transaction, was the execution and delivery contemporaneously of two instruments bearing date, September 25, 1929, both signed by Oates, the promisor, and delivered to Lewis, the promisee. The instruments will be labeled as First Part of Proposed Mineral Conveyance, and Second Part of Proposed Mineral Conveyance, respectively. The first part, in so far as pertinent here, is as follows:

First Part of Proposed Mineral Conveyance.

"And the said above described land being now under an oil and gas lease * * *, it is * * * agreed that this sale is made subject to the said lease, but covers and includes 1/8 th of all the oil royalty and gas rental or royalty due and to be paid under the terms of said lease, * * * whether covered by said original lease or not. * * * It is agreed * * * that one-eighth of the money rentals which may be paid to extend the term within which a well may be begun under the terms of said lease is to be paid to the said Tryon Lewis and that in the event said above described lease for any reason becomes cancelled or forfeited, then, and in that event, the lease interests and all future rentals, * * * for oil, gas and mineral privileges shall be owned jointly by the respective owners of record, * * * Lewis owning an undivided one-eighth interest therein being in and to all oil, gas and other minerals in and upon said land, together with a like interest in all future rents. * * * This sale is made for and in consideration of Ten Dollars ($10.00) and other valuable considerations, * * *.

"To Have and to Hold the above described property * * * (etc), unto the said Tryon Lewis, * * * (etc), forever, and we do hereby bind ourselves, * * * (etc), to warrant and forever defend * * * (etc)." (Italics ours)

The second part of the proposed conveyance, in so far as pertinent here, is as follows:

Second Part of Proposed Mineral Conveyance.

"That whereas, on the 25th day of September, 1929, John S. Oates * * * did convey * * * a 1/8 th undivided interest in and to all of the minerals in and under (said land, mineral classified) * * * to Tryon Lewis, * * *; (and) the above described * * * land, * * * is involved in the present litigation of the Relinquishment Act, which gives to the landowner fifteen-sixteenths of the interest in and to the minerals in and under all school lands bearing such classification; (and) * * * in the future the question might arise as to whether the landowner owning lands with such classification, owns any of the minerals after a specified lease has expired, and whether or not any mineral interest which he had sold during the time such land is under lease, will revert to the State at the expiration of such lease.

"Now, therefore, know all men by these presents: That I, John S. Oates, having sold * * * perpetual royalty or perpetual mineral interest as shown by the above mineral deed, do hereby agree and bind myself, my heirs * * * (etc) to protect Tryon Lewis in the interest so conveyed as above described, in the following manner:

"If the Supreme Court rules that all minerals under the above described section of land, shall revert to the State of Texas, at the expiration of the present lease, now in good standing, then I hereby agree and bind myself, * * * (etc) to carry the said Tryon Lewis, * * * (etc), to the extent of the interest outlined in the above * * * mineral deed, in the sale of any future leases on the above described land and upon the execution of such lease or leases, the interest so conveyed in the * * * mineral deed, will again be in force and effect in * * * Tryon Lewis, * * * (etc)." (Italics ours)

During the seven years that then remained of the term of the lease (executed in 1926), the only income from the State's mineral estate in the land was a leasing income. This was paid to Oates by the lessee company and Oates in turn paid to Lewis his pro rata part of the income. No question ever arose between them concerning the income from that lease. Such income was property which Oates, by leasing the land could lawfully acquire, and was assignable. On January 28, 1936, upon expiration of the first lease, Oates executed a second lease of the land to the same lessee for a ten-year term. While this was the second lease, it was, in relation to the purported conveyance the parties were undertaking to make, the first lease made after the purported sale of the permanent royalty interest. Oates did not pay over to Lewis any part of the income received by him under the first future lease. After it had run for about eight years Lewis, on September 11, 1944, filed suit in trespass to try title against Oates to establish, under the above transaction, a perpetual royalty interest in future leases, and to recover moneys paid over to Oates by the lessee under the first future lease. The case was tried without a jury. The above instruments were received in evidence. The testimony of Oates, Lewis and other witnesses was heard. The following additional facts were stipulated by the parties upon the trial, some of which have already been stated:

"That the land * * * has been awarded to John S. Oates by the state * * * as mineral classified lands; * * * that it is unpatented, and that * * * Oates constitutes common source of title; that both parties claim under him, but that such statement is not an admission of title in either party; that by instrument dated April 20, 1926, Oates, as agent for the state * * *, executed and delivered to Pure Oil Company an oil and gas lease covering the land * * *. Subsequently and during the time * * * the lease was in effect, * * * Oates * * * executed and delivered to Lewis an instrument (mineral deed dated September 25, 1929) purporting to convey an undivided one-eighth interest in and to all of the oil, gas and other minerals in and under the land in suit, subject to the said lease, * * *. That contemporaneously with the execution and delivery (thereof) * * * Oates executed and delivered to Lewis a purported contract with reference to the * * * mineral conveyance, * * *. That subsequent to the execution and delivery of * * * (the instruments) * * *, the oil and gas lease in favor of the Pure Oil Company expired by its own terms, and no oil or gas was ever produced under same. That thereafter (January 28, 1936), Oates, * * * as agent for the state, executed and delivered to Pure Oil Company * * * an oil, gas and mineral lease * * * covering the land in suit * * * and neither oil nor gas has been produced from the premises under the terms of this last-mentioned lease, * * *." (Italics ours)

Lewis testified that in the transaction between him and Oates they were undertaking "to perpetuate an oil and gas rental." The ruling of the Supreme Court in Greene v. Robinson, 1928, 117 Tex. 516, 8 S.W.2d 655, and that of the trial court in Empire Gas & Fuel Co. v. State, 126 Tex. 138, 47 S.W.2d 265, 267, was pending on appeal. The judgment of the trial court in Lemar v. Garner, 121 Tex. 502, 50 S.W.2d 769, 773, was pending also. The decisions of the courts in those cases stood in the way of Oates and Lewis in effectuating their mutual desire in regard to the assignment of a permanent royalty interest. They undertook nevertheless, by contract, to do so.

The trial court in the present case rendered judgment that Lewis take nothing by his suit (filed some fifteen years after the undertaking referred to); and recited as a part of the judgment that the "purported mineral conveyance * * * is hereby declared to be, and it always has been absolutely void and of no force and effect whatever * * *." Lewis appealed direct to the...