Weber v. Texas Co., 7806.

Decision Date05 June 1936
Docket NumberNo. 7806.,7806.
PartiesWEBER v. TEXAS CO.
CourtU.S. Court of Appeals — Fifth Circuit

W. G. Banks, of Houston, Tex., and Alvin O. King, of Lake Charles, La., for appellant.

T. J. Lawhon, Jr., of Houston, Tex., for appellee.

Before FOSTER, and SIBLEY, Circuit Judges, and STRUM, District Judge.

STRUM, District Judge.

Texas Company, as plaintiff below, sued to enforce performance by the defendant, W. P. Weber, of certain option provisions of a Texas oil lease.

Natali and wife, owners of the land, on October 22, 1928, leased the same to H. C. Aiken for the purpose of prospecting and drilling for oil and gas. The lease, recorded November 30, 1928, ran for five years, called "the primary term," and "as long thereafter as either oil or gas is or can be produced from any well on said land."

The lease reserved to the lessor a royalty of one-eighth of the oil and gas produced from the demised lands, or, at the option of the lessee, the market value of such oil and gas, the sum of $69 on account of the royalties being paid-in cash at the execution of the lease. The lease also contained the following option, from which this suit arose: "The lessee is hereby given the option of purchasing all or any part of said royalty rights from the lessor at the best bona fide price offered by responsible third parties when and if offered for sale or transfer by lessor."

Plaintiff, Texas Company, by assignment dated April 23, 1930, recorded May 8, 1930, succeeded to all the rights of the lessee Aiken in that part of the demised lands here involved. Some time prior to April 11, 1933, plaintiff commenced drilling, bringing in a producing well April 24, 1933. On April 13, 1933, the lessors Natali and wife, for a consideration of $7,000 cash, conveyed to defendant Weber one-fourth of the one-eighth royalty reserved to said lessors in that part of the demised lands here involved. The conveyance, recorded April 14, 1933, recites: "It is understood and agreed that this assignment is subject to an oil, gas and mineral lease, and to all of the terms and provisions thereof, covering said tract of land now held by the Texas Company, but covers and includes one-fourth of all royalties payable to grantors (Natali and wife) under the terms thereof."

The lease from Natali and wife to Aiken was part of Weber's chain of title to the one-fourth of Natali's royalty rights, therein reserved. Weber had both actual knowledge and constructive notice of its provisions.

Plaintiff, Texas Company, Aiken's assignee, had neither notice nor knowledge of the conveyance from Natali and wife to defendant, Weber, until April 27, 1933, recording of the conveyance from Natali to Weber not being constructive notice to plaintiff because such conveyance is not within the chain of title under which plaintiff claims. White v. McGregor, 92 Tex. 556, 50 S.W. 564, 71 Am.St.Rep. 875. Neither had plaintiff notice or knowledge of the consideration for said conveyance from Natali to Weber until May 4, 1933. On May 12, 1933, plaintiff advised defendant, Weber, of its election to exercise its option to purchase the royalty interest conveyed to him by Natali, tendered a consideration of $7,000, and demanded a conveyance, which Weber refused. This suit for specific performance followed, culminating in a decree adverse to Weber, from which he appeals.

Appellant Weber contends that since the royalty eighth remained owned by the lessor as realty Evans v. Mills (C.C.A.) 67 F.(2d) 840; Sheffield v. Hogg, 124 Tex. 290, 77 S.W.(2d) 1021, 1024, 80 S. W.(2d) 741, and since the lease extends to the heirs, personal representatives, successors, and assigns of the lessee, and continues in force "as long as either oil or gas is or can be produced from any well on said land," and since the option to purchase the lessor's royalty eighth is co-extensive with the life of the lease, the option has a prospective operation beyond the limit fixed by the rule against perpetuities Cf. Clarke v. Clarke, 121 Tex. 165, 46 S.W.(2d) 658 and is therefore void Anderson v. Menefee (Tex.Civ.App.) 174 S.W. 904; Bigelow v. Cady, 171 Ill. 229, 48 N.E. 974, 63 Am.St. Rep. 230.

The rule against perpetuities springs from considerations of public policy. The underlying reason for and purpose of the rule is to avoid fettering real property with future interests dependent upon contingencies...

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42 cases
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    ...where the right to repurchase the property is for the same price the owner is willing to sell to a third party. Weber v. Texas Co., 83 F.2d 807, 808 (5th Cir.1936), Cambridge Co. v. East Slope Inv. Corp., 700 P.2d 537, 542 (Colo.1985); Shiver v. Benton, 251 Ga. 284, 304 S.E.2d 903, 906-07 (......
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