Veal v. Thomason

• Citation: 159 S.W.2d 472
• Decision Date: 25 February 1942
• Docket Number: No. 7814.,7814.
• Parties: VEAL et al. v. THOMASON.
• Court: Supreme Court of Texas

Page 472

159 S.W.2d 472

VEAL et al. v. THOMASON.

No. 7814.

Supreme Court of Texas.

February 25, 1942.

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

Action in trespass to try title by Claude A. Thomason against George T. Veal and others. To review a judgment of the Court of Civil Appeals, 144 S.W.2d 361, reversing a judgment dismissing the action, defendant brings error.

Judgment of the Court of Civil Appeals reversed, and judgment of District Court affirmed.

Robert Howard and Geo. S. Berry, both of Lubbock, for plaintiff in error Veal.

H. S. Garrett, of Ft. Worth, and Bradley & Wilson, of Lubbock, for plaintiff in error Texas Co.

Allison & Gordon, of Levelland, and Crenshaw, Dupree & Milam, of Lubbock, for defendant in error.

T. L. Foster, Martin A. Row, J. W. Timmins, Walace Hawkins, Earl A. Brown, and R. T. Wilkinson, Jr., all of Dallas, amici curiae.

CRITZ, Justice.

This is an action in trespass to try title to Tract 68 in the Bob Slaughter Block in Hockley County, Texas. Suit was filed in the district court of such county by Claude A. Thomason against George T. Veal and wife, Minnie Slaughter Veal, R. L. Slaughter, Jr., and wife, Sue Alice Slaughter, and the Texas Company, a private corporation. R. L. Slaughter, Jr., is the only surviving heir at law of Bob Slaughter, deceased.

The record before us discloses that in March, 1929, Bob Slaughter conveyed to Thomason and wife 80 acres of land out of Tract 68, here involved. Thomason executed to Bob Slaughter a note for $480 as part of the purchase money for this conveyance. Also, Thomason executed to R. L. Slaughter, trustee, a deed of trust to further secure such note.

In March, 1933, George T. Veal and wife conveyed to Thomason the south 117.4 acres of Tract 68, here involved. Thomason executed to George T. Veal, as part consideration for such conveyance, ten notes for $259.56 each. Thomason executed to A. J. Richards, as trustee, a deed of trust to further secure these notes.

Both trustees named in the two original deeds of trust resigned, and one A. D. Forehand was appointed substitute trustee for both such instruments. In February, 1936, Forehand, acting as such substitute trustee, sold both the above described tracts of land to George T. Veal.

The Bob Slaughter block of land in Hockley County, Texas, of which Tract 68, supra, is a part, is divided into several tracts, owned by various parties. In 1936 some twenty-one of such owners, including George T. Veal and wife, made to the Texas Company a unitized lease, covering a group of contiguous tracts of land as one area or unified block. Such block comprised about 6,000 acres. For convenience the several lessors executed separate instruments, instead of all signing the same paper. Each instrument, however, was identical as to terms, and described all the tracts of land in the unitized block. Of course, the instrument executed by a particular lessor described the tract leased by him as a part of the unitized block. George T. Veal and wife owned some fourteen of the tracts in the unitized block, including Tract 68, supra. The total acreage of the Veals was about 2,025 acres. These 2,025 acres, including Tract 68, were leased to the Texas Company by George T. Veal in the instrument or copy of the unitized lease contract executed by them. It appears that Bob Slaughter signed the instrument with the Veals, because he owned one of the tracts included therein,—not Tract 68. The Veal lease was made subsequent to the foreclosure by which they acquired title.

The unitized lease contract signed by the Veals and Bob Slaughter, as well as all similar instruments signed by the lessors in the unitized block, provided that the unitized block should be operated and developed as one area, and that each land owner who executed a lease is vested with an interest in the royalty oil or any other minerals produced from any land in the whole unitized block, in the proportion which his acreage bears to the aggregate number of acres in the whole unitized block. At this point we deem it expedient to quote certain provisions of the unitized lease, which we deem controlling of the issues of law presented in this Court by this appeal.

Paragraph 3 of the unitized lease reads as follows: "The royalties reserved by lessor for the benefit of himself and other lessors executing similar leases in the unitized block and which shall be paid by the lessee, are: (a) on oil, one-eighth (1/8 th) of that produced and saved from said land, the same to be delivered at the wells or to the credit of lessor in the pipe line to which the wells may be connected; however, lessee may from time to time purchase such royalty oil, paying therefor the market price at the wells currently prevailing on the day it is run into the pipe lines or storage tanks; lessor's interest in either case shall bear its proportion of any expense of treating unmerchantable oil to render it merchantable as crude; and (b) on gas (including casinghead gas) produced from said land and sold or used off the land or in the manufacture of gasoline or other product, the market value at the wells of oneeighth (1/8 th) of the gas so sold or used, provided that if and when lessee shall sell gas (including casinghead gas) at the wells, lessor's royalty thereon shall be one-eighth (1/8 th) of the amount realized from such sales; during any period when, after a discovery of gas on said land, gas is not being sold on account of lack of a market, and is not being used off the land or in the manufacture of gasoline or other product, and there is no current production or operation on said land sufficient to keep this lease in force, lessee may pay as royalty fifty dollars ($50.00) per year for each shut-in gas well, and it will be considered that gas is being produced, within the meaning of paragraph 2 hereof, during any period for which such payment is made, and no rental shall inure during any period covered by such a payment."

The part of paragraph 4(b) which is pertinent to this opinion reads as follows: "* * * that it is agreed and covenanted that each lessor in said similar lease covering land in said unitized block will participate in the royalty herein provided from oil, gas or other minerals produced from this land if, when and as produced and sold, in the exact proportion as the individual royalty owner's interest in any tract bears to the aggregate number of acres still held by lessee, its successors or assigns under lease in the Unitized Block, at the time of production. For example: If at any time oil or gas or other minerals is produced from said land, this lessor or any other party executing a similar lease on land covered by said block, to lessee herein should own a 100-acre royalty interest and lessee, its successors or assigns, holds under lease in the Unitized Block six thousand (6,000) acres, then the lessor herein or lessor in other leases shall be entitled to 100/6000ths of the one-eighth or other royalty provided for in this lease. For the purpose of operation and development, it is intended that this lease and other similar leases upon land in the unitized block shall be treated as one lease."

Paragraph 9 of the unitized lease, which is not discussed in the opinion of the Court of Civil Appeals, reads as follows: "It is understood and agreed that any royalty payable under this lease or similar leases on the unitized block shall be paid to the Lubbock National Bank of Lubbock, Texas, for the benefit of the lessor herein and lessors executing similar leases on land in said unitized block and for the purpose of accomplishing this, the named lessors do hereby designate said bank as their agent to receive payment for all of them and lessee shall not be required to make payments to such persons except through the designated agent. But it is provided that no change or division in the ownership of the royalties shall be binding upon lessee or the designated agent of the lessor, to-wit: the Lubbock National Bank at Lubbock, Texas, for any purpose until lessee and said agent shall be furnished with satisfactory written evidence thereon, including muniments or title or certified copies thereof."

At this point we pause to note that Thomason's petition in the district court sought to recover the title and possession of this land from Veal and wife because of certain alleged illegalities in the trustee's sales under which they acquired title. It appears that The Texas Company is joined to free this land from the unitized lease executed by Veal and wife to The Texas Company after they had acquired it at the trustee's sale already mentioned. This must be true because Thomason's petition seeks to recover the title to and possession of this land from The Texas Company, and a judgment to that effect would free it from the lease held by it.

None of the other parties who executed leases in this unitized block were made parties to this suit. The trial court ruled that they were necessary parties, and offered to continue this case to afford Thomason an opportunity to join them as defendants. Thomason declined to amend, and signified to the court that he declined to make such new parties. Thereupon the trial court dismissed this case. On appeal by Thomason, the judgment of the trial court was reversed, and the cause remanded to the district court for trial on its merits. Tex.Civ.App., 144 S.W.2d 361, 365. The opinion of the Court of Civil Appeals holds that the other parties who executed leases in this unitized block are not necessary parties to this suit.

The opinion of the Court of Civil Appeals, in effect, holds that the various other lessors and royalty holders in this unitized block are not necessary parties to this suit, because they have no direct interest...