Ussery v. Hollebeke, 5705

• Decision Date: 12 May 1965
• Docket Number: No. 5705,5705
• Citation: 391 S.W.2d 497
• Parties: Huling E. USSERY et al., Appellants, v. Dewey HOLLEBEKE et ux., Appellees.
• Court: Texas Court of Appeals

Page 497

391 S.W.2d 497

Huling E. USSERY et al., Appellants, v. Dewey HOLLEBEKE et ux., Appellees.

No. 5705.

Court of Civil Appeals of Texas, El Paso.

May 12, 1965.

Rehearing Denied June 9, 1965.

Finley & Scogin, Kermit, for appellants.

John F. Tomlin, Pecos, for appellees.

FRASER, Chief Justice.

On January 3, 1944 the appellants conveyed nine sections of mineral classified land in Culberson County to appellees. In addition to the usual clauses of such deeds, this particular deed contained the following clause, covenant or agreement:

'It is understood and agreed by and between the grantors and the grantees herein that in the event said grantees or their heirs or assigns shall hereafter place any oil and gas or other mineral lease on said lands herein conveyed, or any part thereof, they will pay to said grantors, or their heirs or assigns one-half of all amounts that may be received by them from such source and to such extent this covenant shall run with said lands.'

The vendor's lien was paid off and released on June 24, 1948.

Appellees executed an oil and gas lease and, in accordance with the agreement set forth above, forwarded one-half of the monies received to appellants. The first payment was made in April, 1949. Subsequently, two more oil and gas leases were executed with the same results, and this condition existed until July, 1959. In July of 1960 the appellees executed another oil and gas lease, but refused to pay any part of the monies received by them to the appellants, asserting that the above covenant was illegal and could not be enforced. Appellants filed this lawsuit in July, 1961, asking that the above set-forth agreement be enforced and appellees be required to pay appellants the sum of $12,768.50 as due in the covenant or as damages for breach of personal contract, or that the court cancel the aforementioned deed on the grounds that it was a mutual mistake between the parties. Appellants offered to adjust the so-called equities, if any, by paying a just and ascertainable sum of money bakc to appellees so as to restore the parties to their original position. The trial court entered a 'take-nothing' judgment against appellants, and from such action appellants hereby appeal.

Appellants set forth in their brief that the facts have either been reduced to stipulation or are undisputed.

It seems generally agreed that, under the Relinquishment Act, the owner of the surface of mineral classified lands becomes an agent of the State of Texas for the purpose of leasing such land for oil and gas. It has also been held that the surface owner of such property does not have the right to reserve or sell any of the minerals under the surface as, under such Act they belong to the State of Texas, with the surface owner acting as agent therefor. We think it has been clearly established that the provisions of the Relinquishment Act are now clear and in Effect. Some cases have pointed out that the reason for such Act is that a contrary situation violates the legislative intent or policy, so as to make a future lease of such lands less attractive. Appellants maintain there is a distinction between the situation where a reservation is attempted, rather than an outright conveyance by the surface owner of some part of the minerals to another. It is our opinion and holding that both such situations come under the terms and provisions of the Relinquishment Act and the cases dealing with or construing said Act.

In their first four points, appellants maintain that the court erred in holding that the provision above set forth was invalid and that such was a material part of the deed, and the court erred in not, therefore, holding the entire deed invalid. We do not believe that appellants have produced sufficient evidence to indicate that the deed itself, with the exception of the covenant, was against either the public policy or the Relinquishment Act of the State, nor have they been able to prove the particular covenant legal and enforcible. State v. Magnolia Petroleum Co., Tex.Civ.App., 173 S.W.2d 186 (err. ref., w. m.); Lewis v. Oates, 145 Tex. 77, 195 S.W.2d 123. We do not believe that the illegality or invalidity of the provision or covenant above set forth requires the court to set aside the entire deed and transfer of property. If the covenant were legal, there is no allegation of bad faith on the part of anyone in this matter, nor any allegation of fraud; and in the absence of these elements we do not believe cancellation and/or rescission of the executed conveyance should be granted for failure of the grantees to perform some act in the future, even assuming such acts to be legal. We believe, and so hold, that the provision in question here was a mere covenant or promise that was illegal from its inception, but does not, as such, vitiate the entire deed. It is apparent from the record that both parties knew about the Relinquishment Act and willingly agreed to this particular provision or covenant. The subsequent discovery that this one provision of the deed was illegal would not, in our opinion, constitute grounds to cause the entire deal, or deed, to be declared invalid and entitled to cancellation. It was not the main or entire consideration of the deed, and the record reflects-and it is so stated in appellants' brief-that this was the usual form of deed used in conveying real property. Therefore the only taint was the attempt on the part of the grantors to reserve something which they had no right to reserve. With reference to the first four points of appellants we therefore hold that this provision was contrary to the Relinquishment Act of the State of Texas, against the public policy of the State, and therefore invalid. Further, that the invalidity of this one provision does not destroy the main transaction, which was the conveyance of the surface of the nine sections of ranch land. Appellants' first four points are therefore overruled.

Appellants' Points 5, 6, and 7 allege error in that the trial court should have allowed them the sum of $12,768.50. This sum represents mineral revenue from the lands herein concerned, and we have already held that the provision under which this money was requested by appellants is invalid, and appellees are therefore not obliged to share their mineral revenues from these nine sections of land. We cannot agree with appellants that the provision with which we are dealing was a personal contract between the parties and, as such, enforcible. To so hold would permit evasion of the provisions of the Relinquishment Act and, secondly, this provision is contained within the deed or conveyance, and there is no evidence that it is any separate personal contract. The amount set forth above represents mineral revenue accruing after 1959 and as a result of new oil and gas leases. The sum demanded by appellants is one-half of the amount received by appellees. Because this provision is, in our opinion, illegal, there can be no enforcible demand emanating therefrom for either its payment or specific performance. Pomeroy on Equity, page 940; Blaine v. Blaine, Tex.Civ.App., 207 S.W.2d 989; Morgan Ice Co. v. Barfield, Tex.Civ.App., 190 S.W.2d 847. The court stated in the Blaine case, supra; "As between the parties to such a contract, who are in equal fault, no right exists which a court of justice will enforce." The record in the case before us does not, in our opinion, reflect any mistake in fact-only a mutual misunderstanding or mistake of the law. These points are therefore overruled.

Appellants' Points 8 through 14 claim that the trial court committed error in refusing to order rescission or cancellation of the deed. In discussing these points it must be borne in mind that the parties knew about the Relinquishment Act, and that this was mineral classified land; also, that the trial court found that the attorney who drew up the deed in question advised both parties that he knew of no way that the vendors could reserve a half interest in the minerals. In addition, the appellant who was making the deal testified that he was not misled and that there was no fraud involved; that it was merely a mistake. It has been held that in an executed conveyance such as we have here, the remedy for mere breach of covenant, unaccompanied by equitable grounds for rescission, is one at law for damages, rather than equitable rescission. Other cases have held, as we have pointed out earlier, that rescission and cancellation will not be decreed because of the failure of the grantee to perform some act in the future. Also, that a mutual mistake of law is not grounds for rescission or cancellation of a deed or contract. The record here, including the exhibits, shows that there was no withholding of material facts by either party, and no fraud; nor is there any evidence of planned breach or fraud in the future. On the contrary, appellants received considerable money under this provision until such was stopped in 1959. The correspondence between the appellant who was making the deal and the attorney exhibits complete faith and confidence in the attorney's ability and integrity in representing both parties. Therefore, we must hold that there was no mutual mistake of fact, or any mistake of fact, nor was there any evidence of present or planned fraudulent behavior on the part of either of the contracting parties. One Federal court, in the case of Boren v. Burgess, D.C., 97 F.Supp. 1019, goes so far as to say:

'A mutual mistake of law is not grounds for rescission or cancellation of a deed or contract. The probate attorney stated that an owner of an interest in the 140 acre tract in Section 26 was entitled to participate in the...