Prairie Producing Co. v. Schlachter

• Decision Date: 30 January 1990
• Docket Number: No. 9730,9730
• Citation: 786 S.W.2d 409
• Court: Texas Court of Appeals
• Parties: PRAIRIE PRODUCING CO., et al., Appellants, v. David A. SCHLACHTER, et al., Appellees.

Page 409

786 S.W.2d 409

PRAIRIE PRODUCING CO., et al., Appellants, v. David A. SCHLACHTER, et al., Appellees.

No. 9730.

Court of Appeals of Texas Texarkana.

Jan. 30, 1990.

Rehearing Denied Feb. 27, 1990.

Geoffrey H. Bracken, Jerry A. DeVault, Houston, Donald Carroll, Tyler, for Prairie Producing Co.

Charles Clark, Law Offices of Charles H. Clark, Tyler, for appellees.

Lisa L. Bagley, Houston, for Conoco, Inc.

CORNELIUS, Chief Justice.

The principal question to be decided in this appeal is whether a deed conveyed a mineral interest or a royalty interest. We conclude that the deed conveyed a mineral interest and accordingly reverse the judgment of the trial court which held to the contrary.

On July 14, 1934, Mrs. J. H. Riner and B. E. Riner and wife executed a deed to R. R. MacDonald which conveyed an interest in a 675.4 acre tract and a 46.05 acre tract in Wood County. The deed is titled "Mineral Deed," and states in its granting clause that the interest conveyed is "an undivided one-half interest in and to all of the oil, gas and other minerals in and under and that may be produced" from the land described.

The deed also contains the following paragraphs:

Together with the right of ingress and egress at all times for the purpose of mining, drilling and exploring said land for oil, gas, and other minerals, and removing the same therefrom.

Said land now being under an oil and gas lease executed in favor of R. R. MacDonald, it is understood and agreed that this sale is made subject to the terms of said oil and gas lease, but it is intended that said Mrs. J. H. Riner, a widow and B. E. Riner joined by his wife Julia Riner shall and hereby does grant, sell, convey, assign and deliver unto said R. R. MacDonald a one-half interest in and to any and all royalties, incomes, interests and benefits of every kind and character accruing and to accrue under the provisions of said oil and gas lease, save and except delay rentals to extend the time within which a well may be commenced under the terms of said oil and gas lease and bonus monies paid upon and for the execution of said lease. No part of which delay rentals and bonus monies is intended hereby to be conveyed.

In the event the aforesaid oil and gas lease, for any reason, becomes cancelled or forfeited then and in that event an undivided one-half interest in and to any and all future royalties, incomes, interests and benefits of every kind and character accruing or to accrue under the provisions of any and all future oil and gas leases hereafter placed upon the afore described (sic) land shall be owned by said R. R. MacDonald, save and except delay rentals to extend the time within which a well may be commenced under the terms of any such oil and gas lease and bonus monies paid and to be paid upon and for the execution of any such oil and gas lease, no part of which said delay rentals and bonus monies is intended hereby to be conveyed.

The said Grantee to own the undivided one-half interest in future oil and gas leases hereafter placed upon said land as aforesaid, together with and incident to said undivided one-half interest in and to all of the oil, gas and other minerals in and under and that may be produced from afore described (sic) land.

R. R. MacDonald conveyed to Atlatl Royalty Company, by instrument identical to the Riner deed except for date and parties, the interest he acquired by the Riner deed. Ultimately, the interest became vested in eight different parties, six of whom leased their respective undivided interests to Prairie Producing Company in 1986. Prairie Producing Company included the 46.05 acre tract in the G. R. Garrett Trust Unit No. 1. The remaining interest owned by the Riners was conveyed to L. J. Carothers in 1939. Ultimately, David and Mona Schlachter acquired an undivided three fourths of that interest. The Schlachters leased their interest in 1983 to a corporation owned by them, and after this suit was filed they drilled a producing well on the 46.05 acre tract.

The Schlachters filed suit seeking a declaratory judgment that the Riner deed conveyed a royalty interest rather than a mineral interest. Prairie Producing Company and others claiming under the MacDonald interest filed a counterclaim seeking a declaration that the deed conveyed a mineral interest.

All parties moved for summary judgment. The trial court severed the claims with respect to the 46.05 acre tract and rendered summary judgment for the Schlachters, declaring that the deed conveyed only a royalty interest as to that tract.

In interpreting a deed we must ascertain and enforce the intention of the parties. Alford v. Krum, 671 S.W.2d 870 (Tex.1984); Smith v. Graham, 705 S.W.2d 705 (Tex.App.-Texarkana 1985, writ ref'd n.r.e.). However, the controlling intention is not the subjective intention the parties may have had but failed to express, but the intention actually expressed in the deed; that is, the question is not what the parties meant to say, but the meaning of what they did say. Alford v. Krum, supra; Smith v. Graham, supra.

Moreover, in ascertaining the intention of the parties, we must attempt to harmonize all parts of the deed. If it is impossible to harmonize internally inconsistent expressions in the deed, then we must give effect to the controlling language. The controlling language, and consequently the key expression of intent, is found in the granting clause. It defines the nature of the estate granted. Alford v. Krum, supra; Texas Pacific Coal & Oil Company v. Masterson, 160 Tex. 548, 334 S.W.2d 436 (1960).

The granting clause of the deed in question here conveys "an undivided one-half interest in and to all of the oil, gas and other minerals in and under and that might be produced" from the land described in the deed. Such language grants a fee interest in the minerals in place. Altman v. Blake, 712 S.W.2d 117 (Tex.1986); Alford v. Krum, supra; Smith v. Graham, supra, and cases there cited.

The Schlachters argue that other paragraphs in the Riner deed reveal an intention to convey only a royalty interest, i.e., an interest only in the production to be obtained from the land rather than a fee interest in the minerals. The paragraphs generally provide for these things:

(1) The land is subject to an existing lease, but conveys to MacDonald one half of the royalties and rights accruing under said lease, except delay rentals and bonus money;

(2) As to future leases, MacDonald is conveyed one half of the royalties and other rights, except delay rentals and bonus money paid for the execution of leases; and

(3) MacDonald is to own an undivided one-half interest in future leases "together and incidental to said undivided one-half interest" in and to all of the oil, gas and other minerals and that may be produced from said land.

The provisions referred to are consistent with the conveyance of a fee interest in the minerals and do not conclusively express an intention to convey only royalty.

There are five attributes of a severed mineral estate: (1) the right to explore and develop (the right of ingress and egress), (2) the right to lease (the executive rights), (3) the right to receive bonus payments, (4) the right to receive delay rentals, and (5) the right to receive royalty. Altman v. Blake, supra. When a fee mineral interest is...