Tracy v. Lion Oil Co.

• Decision Date: 11 April 1958
• Docket Number: No. 3360,3360
• Citation: 312 S.W.2d 562
• Parties: George H. TRACY et al., Appellants, v. LION OIL COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 562

312 S.W.2d 562

George H. TRACY et al., Appellants, v. LION OIL COMPANY et al., Appellees.

No. 3360.

Court of Civil Appeals of Texas, Eastland.

April 11, 1958.

Rehearing Denied May 2, 1958.

Wynne & Wynne, Wills Point, Carleton P. Webb, Post, for appellants.

Richard S. Brooks, whitaker & Brooks, Stubbeman, McRae, Sealy & Laughlin, Midland, Frank L. Heard, Jr., Houston, for appellees.

GRISSOM, Chief Justice.

George H. Tracy and H. H. Tracy sued Lion Oil Company, Humble Oil & Refining Company and Charles Lindsey Marchbanks in trespass to try title to an interest in an oil and gas leasehold estate and for specific performance of an alleged contract by Lion to reconvey to the Tracys three-fourths of the leasehold estate in a tract of land in Scurry County. Since some of the Tracys' pleadings and contentions are difficult to understand they will be stated in some detail. They first alleged that they owned an oil and gas lease on a one-fourth interest and a one-sixteenth of seven-eighths overriding royalty on the remaining threefourths of the leasehold estate. (It is undisputed that the Tracys own the leasehold above 4,000 feet and a one-sixteenth of seven-eighths overriding royalty on threefourths of the leasehold estate below 4,000 feet. Therefore, this will hereafter be assumed and not repeated.) In the next paragraph they alleged they owned all the leasehold below 4,000 feet; that Lion owned the lease on three-fourths thereof but that Humble and Charles Lindsey Marchbanks did not own any interest. They alleged that on December 28, 1948, they made a contract with Lion for the sale of two oil and gas leases and assigned them to Lion; that Lion approved the title to and paid for a three-fourths interest but did not approve the title to nor pay for the remaining one-fourth; that Lion pretended to work with them in clearing the title to said one-fourth interest but that it did not act in good faith; that Lion had agreed, after it had approved the title to and paid for a one-fourth interest, to either accept and pay for all the remaining three-fourths interest or reconvey it to the Tracys; that Lion accepted the title to and paid for a three-fourths interest but did not approve the title to nor pay for the remaining one-fourth and, therefore, Lion had the duty to reconvey a three-fourths interest. Wherefore, they prayed that the court compel Lion to reconvey said three-fourths interest. In a trial to the court judgment was rendered for all the defendants, except Tracys' undisputed interest heretofore mentioned, and the Tracys have appealed.

The case grew out of the following situation. In 1943 R. Biship, who is the common source of title, owned the land and conveyed it to R. P. Marchbanks, excepting one-half of the minerals but granting Marchbanks, his heirs and assigns, the right to lease the excepted minerals. Marchbanks died on December 7, 1946. He was survived by his wife and by two sons, Lindsey A. and Robert Marchbanks. He devised his property to his wife, Maggie Marchbanks, for life, then to said two sons for their lives and at their deaths to a grandson, Charles Lindsey Marchbanks, in fee. Lindsey A. Marchbanks was appointed independent executor. On Jauary 6, 1947, R. P. Marchbanks' will was probated and Lindsey Marchbanks qualified as independent executor. At his death R. P. Marchbanks and wife owed the Federal Land Bank approximately $959.07, which was secured by a vendor's lien. The land was not then leased and no oil had been produced thereon.

It is undisputed that R. P. Marchbanks and wife owned as community property one-half of the minerals and had the right to lease the half retained by Bishops; that, after the death of her husband, Mrs. Marchbanks had the power to lease her one-fourth of the minerals, subject to the payment of debts and the rights of the independent executor; that the will of R. P. Marchbankd purported to devise only his one-fourth of the minerals and the minor was devised the fee to said one-fourth subject to said life estates.

C. U. Bishop and wife executed a lease to Cannon Drilling Company, dated December 24, 1946, which was filed for record on June 13, 1947. On June 14, 1947, it was assigned to the Tracys, who on December 16, 1948, assigned it to Lion. About June 13, 1947, the surviving wife and sons of R. P. Marchbanks delivered a mineral lease to Cannon Drilling Company 'on our undivided 1/2 interest' in said land. It was dated December 24, 1946. This lease recited that C. U. Bishop was then the owner of the other half of the minerals and had by a separate instrument leased same. This lease was assigned by Cannon to the Tracys on June 14, 1947, and assigned by the Tracys to Lion on December 16, 1948. In March, 1949, Mrs. Marchbanks and Lindsey Marchbanks, as independent executor, delivered to George Tracy a lease on the land in question. It was not recorded when Humble purchased the lease at the guardian's sale. By assignment dated March 3, 1949, said lease to Tracy was transferred to Lion with Tracy excepting one-sixteenth of seven-eighths of the oil produced thereon. In March, 1949, Maggie Marchbanks and Lindsey A. Marchbanks, as independent executor, delivered to the Tracys and Lion a ratification of the lease by Maggie, Lindsey and Robert Marchbanks to Cannon, stating therein that they ratified same 'but as if there had been no specification in said lease of the interest covered thereby and as if there had been no reference therein to the existence of any other oil and gas lease * * *.'

Lindsey Marchbanks filed an application in the probate court to be appointed guardian of the estate of the minor, Charles Lindsey Marchbanks. He was appointed, qualified and filed an inventory and appraisement of said minor's estate on July 20, 1948, listing said one-fourth interest as the property of the minor then in his possession. Thereafter, said guardian was authorized to execute a lease on said minor's interest to Humble. In accord with the orders of the probate court, on March 11, 1949, the guardian executed a lease on said minor's 'vested remainder in an undivided 1/4th of the oil, gas and other minerals' to Humble for a large consideration.

On December 28, 1948, an agreement was executed by Lion and the Tracys, evidenced by a letter, in which it was recited that the Tracys had assigned to Lion the lease from the Bishops to Cannon and the lease from Maggie, Lindsey and Robert Marchbanks to Cannon, reserving, however, to the Tracys the leasehold estate down to and including 4,000 feet and an overriding royalty of one-sixteenth of seven-eighths of the minerals produced from below 4,000 feet. It recited that Lion had then approved title to only a one-fourth interest and had paid the Tracys $19.50 per acre and that the Tracys' assignments to Lion 'purported' to convey the 'full' interest in said leases. It was agreed that the Tracys would continue their efforts for one year and at their expense to make title acceptable to Lion to the remaining threefourths and deliver to Lion such additional instruments as might be necessary to vest title in Lion to said interest. The remainder of said contract that may be here material is as follows:

'2. If at any time within one year from this date you are able to make title acceptable to us the leasehold estate in that 3/4 of the minerals not yet approved by our attorneys, then upon our acceptance of title we agree to pay you for the additional 3/4 leasehold interest at the rate of $16,50 per net leasehold acre, being the same basis upon which payment for 1/4 leasehold interest has already been made to you.' (The lease to Humble was made within said one year period.)

'3. If at the end of one year you have not made title acceptable to us to the leasehold estate in that 3/4 of the minerals mentioned above, we shall have the right as we may then determine (a) to reassign and relinquish to you the leasehold acreage hereinabove described except insofar as the leases above cover that 1/4 of the minerals which has been approved by our attorneys and for which we have made payment to you, or (b) to take over in our own right the matter of curing title and securing a lease upon that 3/4 of the minerals, title to which is presently unsatisfied; if we make the latter decision we shall have an additional year within which to endeavor to perfect the title and secure leases adequate to cover the particular 3/4 of the minerals. If we proceed, under subdivision (b) of this section, to make efforts to cure the title any expense incurred in so doing shall be borne wholly by us.

'4. In the contingency that after you have spent one year in endeavoring to perfect title to the leasehold estate in the 3/4 of the minerals mentioned above and have been unsuccessful and if we have elected to take an additional year for such curative effort on our part, then in the event that we are unable to perfect leasehold title to that 3/4 of the minerals, title to which is presently unsatisfied, then upon completion of our efforts and the securing of such leases and other instruments as are adequate to vest in us leasehold title to that particular 3/4 of the minerals, we agree to make payment to you for the additional 3/4 leasehold interest at the same rate of $16.50 per acre hereinabove mentioned. If at the end of this company's efforts to perfect title during the second year we are unable to do so, then at the end of that year we agree to reassign and relinquish to you the leases the acreage hereinabove described except to the extent of the 1/4 interest title to which has been approved and for which we have made payment to you.

'5. Notwithstanding any provision hereof indicating to the contrary, if, during the curative periods avove allotted each of us, you or we should perfect title to an interest in addition to the 1/4 leasehold interest now approved and paid for, we shall, upon delivery to us of such instruments as our attorneys require, make payment to...