Mitchell v. Simms, 1691-6199.

• Decision Date: 04 October 1933
• Docket Number: No. 1691-6199.,1691-6199.
• Citation: 63 S.W.2d 371
• Parties: MITCHELL et al. v. SIMMS et al.
• Court: Texas Supreme Court

Page 371

63 S.W.2d 371

MITCHELL et al. v.SIMMS et al.

No. 1691-6199.

Commission of Appeals of Texas, Section A.

October 4, 1933.

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

Suit by Bill Mitchell and another against W. F. Simms and others. A judgment for plaintiffs was reversed and judgment rendered for defendants by the Court of Civil Appeals [44 S.W.(2d) 1056], and plaintiffs bring error.

Reversed and remanded.

Monning & Akin, of Amarillo, for plaintiffs in error.

Underwood, Johnson, Dooley & Simpson and Kimbrough & Boyce, all of Amarillo, and J. Sid O'Keefe, of Panhandle, for defendants in error.

HARVEY, Presiding Judge.

This suit was brought by the plaintiffs in error, Bill Mitchell and John Doucas, to remove cloud from their title to an oil and gas leasehold estate in 40 acres of land in Carson county, and to establish, as still subsisting, so far as said 40 acres are concerned, a certain oil and gas lease executed by W. F. Simms and wife to J. D. McGrath, and by the latter assigned, so far as it applies to the said 40 acres, to Mitchell and Doucas.The suit was commenced on May 17, 1930, and Simms and his wife, and various other parties holding an interest in said land, were made partiesdefendant.The case was tried in April, 1931, without a jury, and on the 25th day of that month the trial court gave judgment in favor of Mitchell and Doucas.In some respects the decretal provisions of the judgment of the trial court are more or less obscure and confusing, but for present purposes it is sufficient to say that in substantial respects the judgment is in favor of Mitchell and Doucas.A number of the defendants prosecuted an appeal, and the Court of Civil Appeals reversed the trial court's judgment and rendered judgment for them.Mitchell and Doucas have been granted the writ of error, and the case is now before us for review.

The material facts are substantially as follows:

On June 1, 1926, the defendants in error, W. F. Simms and wife, executed an oil and gas lease on a tract of 320 acres of land (being the south half of section 11, I. & G. N. Ry. Co. survey) in Carson county to J. D. McGrath.The lease was promptly recorded.Under the terms of the lease, McGrath had the right to assign any portion of the leasehold, and on August 15, 1927, duly assigned to the plaintiffs in error, Bill Mitchell and John Doucas, all his rights under the lease so far as same applies to a specific 40 acres of the 320-acre tract.In other words, with respect to this 40-acre tract, Mitchell and Doucas became the holders of the McGrath lease.The question at issue in this suit is whether or not the lease, as to said 40 acres, still subsists in all respects as it did originally.The question involves the payment of rentals provided by the lease, in lieu of drilling operations.The McGrath lease was for the term of ten years, and so long thereafter as oil or gas was produced from the land, the lessors, in effect, reserving a one-eighth interest in the oil and gas in place.The lease is in the usual commercial form, and vested in McGrath a determinable fee in seven-eighths of the oil and gas in place, and provided for the payment of royalties, etc.Among the provisions of the lease were the following:

"If no well be commenced on said land on or before the 1st day of June, 1927, this lease shall terminate as to both parties unless the lessee on or before that date shall pay or tender to the lessor or to the lessor's credit in the Panhandle Bank at Panhandle, Texas, or its successors, which shall continue as the depository regardless of change in the ownership of said land, the sum of $1.00 per acre, which shall operate as a rental and cover the privilege of deferring the commencement of a well for twelve months from said date.In like manner and upon like payment or tenders, the commencement of a well may be further deferred for a like period of the same number of months successively. * * *

"If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided shall be paid the lessor only in the proportion which his interest bears to the whole and undivided fee. * * *

"If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is expressly allowed—the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns, but no change in the ownership of the land or assignment of rentals or royalties shall be binding on the lessee until after the lessee has been furnished with a written transfer or assignment or a true copy thereof, and it is hereby agreed that in the event this lease shall be assigned as to a part or as to parts of the above described lands and the assignee or assigns of such part or parts shall fail or make default in the payment of the proportionate part of the rents due from him or them, such default shall not operate to defeat or affect this lease in so far as it covers a part or parts of said lands upon which the said lessee or any assignee thereof shall make due payment of said rentals."

On July 9, 1926, Simms and wife duly conveyed to one J. P. Leslie"one-half interest in and to all of the oil, gas and other minerals in and under and that may be produced from [describing the east half of the 320-acre tract covered by the McGrath lease]."The instrument of conveyance to Leslie further provided that: "The above described lands being now under lease originally executed to J. D. McGrath and now held by J. D. McGrath, it is understood and agreed that this sale is made subject to said lease, but covers and includes 1/2 of all the oil royalty and gas rental or royalty due and to be paid under the terms of said lease.It is agreed and understood that 1/2 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 J. P. Leslie, and in the event the above described lease for any reason becomes cancelled or forfeited, then and in that event the lease interest and all future rentals on said land for oil and gas and...