Texas Co. v. Parks

• Decision Date: 01 February 1952
• Docket Number: No. 15317,15317
• Citation: 247 S.W.2d 179
• Parties: TEXAS CO. v. PARKS et ux.
• Court: Texas Court of Appeals

Page 179

247 S.W.2d 179

TEXAS CO. v. PARKS et ux.

No. 15317.

Court of Civil Appeals of Texas, Fort Worth.

Feb. 1, 1952.

Rehearing Denied Feb. 29, 1952.

Johnston S. Rowe and William N. Sands, both of Fort Worth, for appellant.

Rawlings, Sayers, Scurlock & Daly, of Forth Woth, for appellees.

RENFRO, Justice.

Suit was brought by appellees, L. D. Parks and wife, as owners and lessors, to terminate a lease and assignment thereunder and remove same as a cloud upon their title. From a judgment terminating the lease, because of failure of appellant, The Texas Company, to pay the rental provided in the lease, this appeal resulted.

The facts are undisputed. On February 4, 1950, L. D. Parks and wife executed an oil and gas lease to W. L. Simmons covering their undivided one-half interest in the E/2 of Sec. 208, Block D of the John H. Gibson Survey in Yoakum County, Texas. On February 10, 1950, Simmons assigned the lease to The Texas Company.

The lease was for a period of ten years from February 4, 1950, and for as long thereafter as oil and gas or other minerals were produced. The lease provided for the payment of $160 per year delay rental.

On January 18, 1951, appellant tendered to the First National Bank of Fort Worth the sum of $80 to be deposited to the credit of L. D. Parks et ux. to cover the annual rental for the privilege of deferring commencement of drilling operations for a period of twelve months from February 4, 1951. L. D. Parks refused to accept the $80, contending the proper amount of annual rental was the sum of $160. Perations for drilling on the E/2 of Sec. 208, Block D, John H. Gibson Survey, were not commenced on or before February 4, 1951.

Appellant did not pay or tender to L. D. Parks and wife, or to the First National Bank of Fort Worth, the sum of $160 to constitute the delay or annual rental on said lease. The contention of The Texas Company had been at all times since receiving the assignment from Simmons that '$80 is the correct amount.'

At the time of the execution of the oil and gas lease on February 4, 1950, L. D. Parks and wife, Una W., were the owners of an undivided one-half interest in the property therein described. There has been no failure of title as to the leasehold interest in such undivided one-half interest.

The appellant presents its appeal on these points: (a) Under the proportionate reduction clause of the lease, appellant was entitled to reduce the rental in proportion to appellees' interest in the entire fee simple estate in said land; (b) the phrase 'said land' refers to the physical premises constituting the E/2 of Sec. 208, or the whole land; (c) appellant was entitled to reduce proportionately the amount of rental stated in the rental clause notwithstanding there had been no failure of title to the undivided one-half interest granted and conveyed under the terms of the lease.

The three points raised by appellant may be summarized in one question, namely, whether, in the situation presented by the undisputed facts, appellant was entitled under the proportionate reduction clause to reduce proportionately the amount of rental stated in the rental clause.

In determining whether appellant was entitled to reduce proportionately the amount of the rental, we must ascertain, if possible, from the lease instrument the true intention of the parties. The intent of the parties, if it can be ascertained from the instrument, will prevail. Sun Oil Co. v. Burns, 125 Tex. 549, 84 S.W.2d 442.

Appellant cites King v. First National Bank of Wichita Falls, 144 Tex. 583, 192 S.W.2d 260, 263, 163 A.L.R. 1128, as authority for its contentions. In that case the granting clause of a warranty deed conveyed an undivided one-half interest in certain property which was then described as a whole. Certain royalty interest was reserved. The Supreme Court said, '* * * looking forward from the granting clause and backward from the reservation clause it seems evident that the terms 'following described land', 'hereinabove described land', 'said land', and 'premises', refer not to the one-half interest actually conveyed * * * but relate to the intervening paragraphs of the deed wherein the '1st Tract' and the '2nd Tract' are particularly described as a whole in units of 160 acres and 80 acres, respectively.'

Different from the description in King v. First National Bank, supra, the lease before us conveys the whole leasehold interest of grantors in and to an undivided one-half interest in the E/2 of Sec. 208, Block D, John H. Gibson Survey. The only question before the court in the King case was the amount of royalty interest reserved by the grantor in a warranty deed. The question of rental was not involved. In the instant case the amount of annual delay rental agreed upon in an oil and gas lease is the only question to be determined.

Par. 4 of the lease provides that if drilling operations are not commenced within one year on said land, the lease shall terminate as to both parties unless the lessee deposit in the First National Bank of Fort Worth to the credit of lessors the sum of $160 rental.

In Par. 9, lessor agrees to warrant title to said land, and the same paragraph provides that if lessor owns an interest in said land less than the entire fee simple estate, then the rentals shall be reduced proportionately.

Looking forward from the granting clause and backward from the rental clause, we reach the conclusion that as to the rental, the lease referred to the undivided one-half interest of lessors, and when lessee agreed to pay $160 rental on said land, said land referred to the interest therein conveyed by lessor, namely, lessors' undivided one-half interest.

The agreement to pay $160 rental on said land referred to the undivided one-half interest in the whole tract and not to the 320 acres in its entirety.

The property referred to as the land is the same as that actually owned and conveyed by the lessors.

The delay rental clause is for the benefit of the lessee. The provision for payment of delay rentals is designed to enable a lessee who finds it undesirable to begin drilling on the agreed date to avert a forfeiture, and retain his rights by paying periodical rentals for the privilege of deferring operations. 31A Tex.Jur., pp. 247-8, Sec. 145.

The lease does not specify any particular rental rate per acre. On the contrary, it provides a lump sum payment to lessor of $160. If the parties had intended the rental to appellees to be any other sum, the lease could have so provided. The parties could agree upon any amount of rental they desired. In our opinion, it is inescapable that by the terms of the lease before us, it was the intention of the parties, and they agreed, that lessors would receive an annual rental of $160 for their interest conveyed. There is nothing in the lease to indicate that the parties were fixing the rental on a percentage or fractional basis, or in proportion to lessors' interest in the entire tract. It was an agreement to pay the lessors in the particular lease the lump sum of $160 per year rental. The language employed does not support the contention that lessee agreed to pay a total of only $160 to all the owners of the 320 acre tract.

It is admitted that at the time of the execution of the lease, appellees were the owners of an undivided one-half interest in and to the E/2 of Sec. 208, Block D, John H. Gibson Survey, and it is further admitted that there has been no failure of title as to the leasehold interest granted and conveyed by appellees.

Having determined that the lessee agreed to pay lessor $160 annual delay rental for the interest conveyed, it necessarily follows that appellant could not rely upon the reduction clause to reduce the payment from $160 to $80. The appellees' title has not failed. They owned the entire fee simple in what they conveyed, to-wit, their undivided one-half interest. Griffin v. Stanolind Oil & Gas Co., 133 Tex. 45, 125 S.W.2d 545; Reeves v. Republic Production Co., Tex.Civ.App., 177 S.W.2d 1011, refused w. m.

The court did not err in holding that appellees were entitled to cancellation of the lease.

While appellant did not bring forward a point of error on the point, it argues in its brief that appellees are estopped from asserting that the lease has terminated, citing Humble Oil Refining Co. v. Harrison, 146 Tex. 216, 205 S.W.2d 366. The facts of the instant case do not bring it within the rule as announced in the above mentioned case. In the instant case, appellant in its reply for admission, took the position that it owed $80, and that had been its position at all times. There was no pleading of mistake, fraud or accident, no plea for reformation, and no offer to pay more than $80. Under the facts of this case, appellees are not estopped to declare the lease terminated.

The judgment of the trial court cancelling the lease and removing said lease and assignment as a cloud on appellees' title is affirmed.

Affirmed.

On Motion for Rehearing

HALL, Chief Justice.

Hazarding the probability of repeating findings expressed in our original opinion, we shall undertake to explain in more detail the reason for our holing, and, at the same time, answer some of the vigorous contentions advanced in appellant's motion for rehearing.

The scrivener used an oil and gas lease form known as 'Producers 88-Revised 8-42, Texas Standard Lease Form,' which in our opinion was prepared for the purpose of leasing from a lessor his entire interest in a tract of land, regardless of whether he owned the whole tract or only a proportionate part thereof. The provisions of each...