*1 McMahon, Et John Al v. John L. Junior Et Al. Christmann
J. May 29, A-5696. Decided 1957. No. Rehearing July 10, overruled (303 341.) S.W. 2d Series 257.) (304 S.W. 2d Series *2 Prothro, Falls, E. Turner, James of Wichita Kerr & Smith Passman, Midland, Emile all petitioners. C. Dupree Milam, New, Crenshaw, Milam, Paul & and Jas H. Lubbock, respondents. all of opinion delivered the of the Court.
Mr. Justice Calvert oil, gas This case involves the construction anof *3 rights lease and the establishment of the of there- under. petitioners, lessors, as executed and delivered to the oil, gas
respondents, lessees, as and mineral lease on premises “All described follows: certain tract land of County Yoakum, Texas, situated in the of of State described follows, to-wit: one-fourth Northwest and the West one-half K,
Northeast one-fourth of Section Block Public Land School County, Texas, containing in Yoakum 240 acres more or Special less.” The was on a printed form, lease Producers 88 general warranty provided contained of covenant in usual language customary for reservation to the lessors of a one- eighth royalty. part printed The lease pro- contained as a of its proportionate following visions reduction clause in the lan- guage :
“If said lessor owns a less interest in the above described simple land than the entire undivided and therein, fee estate royalties provided and rentals then the herein paid for shall be only proportion in the the lessor which lessor’s interest bears to fee.” whole and undivided body printed of Attached lease contract was a reading typewritten clause or “rider” as follows: lessors herein reserve unto “The themselves their heirs and reduction, assigns, as an royalty, without a net gas produced of all oil or of and saved from the l/32nd 8/8ths premises, expense described of cost or to the credit above free storage pipe- tank or or into the of the lessors into tanks on said land connected.” line to which well wells of At the time of execution did fee estate in the 240 acres own the of the mineral of whole They only an therein. land. Their undivided l/6th equivalent arithmetical of interest is the undivided l/6th interest. 16/96ths question proportionate re- Petitioners do not but that the operates royalty in the lease to reduce the normal duction clause production are entitled from of of to which l/8th l/6th production. They however, l/8th, contend, of /48th, or 1 application proportionate reduction clause has no overriding royalty Respondents them. con- l/32nd proportionate tend, hand, reduction clause on the other that the applies royalty to the normal reserved but to the overriding royalty petitioners are as well. If reserved l/32nd provides in their construction of the lease it nor- correct production overriding royalty royalty of of mal l/48th royalty pro- production, or a of duction. total of l/32nd 5/96ths interpretation respondents’ If of the lease is correct it production provides a normal of 1 and an /48th overriding royalty produc- l/32nd, or l/6th l/192nds tion, a will first address ourselves total We 5/192nds. point of difference. *4 involving litigation interpretation As is often true in parties and construction of written instruments insist that both unambiguous” “plain the instrument is and and admits of no meaning reasonable other than that for which contend. having plaintiffs, position Petitioners, as taken the that the on the plain unambiguous, permitted and lease was were not trial to introduce extrinsic evidence of all the acts of and con- parties leading up preparation duct of and execution They permitted prove of the lease. were that the lease was typewritten prepared by respondents, providing that the rider overriding royalty prepared for the was and at- l/32nd by petitioners, part tached the lease and that as a of the con- executing paid lease sideration were a cash per ownership acre on an of bonus of 40 acres. At $15.00 judere petitioners’ jury trial close of evidence the instructed the respondents, to return a and thereafter he verdict rendered parties keeping respondents’ judgment interpre- with for the
407 Appeals affirmed. 285 of the lease. The Court of tation Civil 2d 818. S.W. interpreting duty seek
In the lease it court to of 179, Gas, parties. intention and 31-A Texas Oil Jur. parties, 109. The intention as that intention is ex Sec. lease, pressed in the to be ascertained consideration of provisions 181, all of lease. 31-A Texas Jur. Oil and of'the Gas, 110, harmonizing, possible, provisions Sec. if those appear Sims, 59, conflict. to be in Woods v. 154 Texas interpretation 2d If 273 617. after established rules S.W. appears been still an am have biguity there a conflict or be provisions susceptible it is the lease so meanings, then, then, two reasonable is the court authorized to receive extrinsic evidence resolve the conflict ambiguity. Corp. Daniel, Universal C.I.T. Credit v. 150 513, 154; Co., Texas 243 2d Lewis Texas S.W. v. East Finance 149, Texas 2d 136 146 S.W. providing overriding
If the royalty clause for the l/32nd provide did the reserved was “without reduc problem construing present tion” the difficulty. great the lease would no is, withal, “royalty,” State Corpus Morgan, 509, Bank of National Christi v. 757, Taylor, 2d 1, 143 S.W. Griffith Texas 291 S.W. 2d and in the absence the words “without reduction” the proportionate require clause reduction would its reduction ato production. However, put the words l/192nd “without right reduction” in the clause and we have no to take out unless them the established rules of construction noted above dictate action. proportionate
On the face of the reduction clause overriding royalty present clause an obvious conflict. require proportionate first would reduction of the l/32nd overriding royalty prohibit second would its reduction. resolving of the rules of construction for requires One conflicts typewritten given in a matter contract printed effect over Hughes Mayflower Co., J. K. Oil Co. v. Inv. matter. Texas Civ. refused; writ App., 2d S.W. Richardson v. Rich ardson, App., 307, 311, Texas Civ. writ refused. *5 820, Annotation, seq. A.L.R. et pecu see 37 That And liarly applicable rule is proportionate it here. is the When re overriding royalty and the clause clause duction harmon given meaning. language each is language and the ized given clause proportionate reduction effect requir- the 408
ing lease, royalty in but a reduction the normal the given the it is not an effect which would render words “without meaningless. To royalty in clause reduction” the proportionate effect of clause refuse to so limit the the reduction holding necessarily ambiguity the result in a would by construction, a result lease cannot resolved rules of gives the This of the lease both disavow. construction greater than the usual mineral l/8th them, by parties may validly contract for fee owned greater ownership. than of the lessor’s l/8th Benge Scharbauer, 447, 166; 152 Texas 2d v. v. 259 S.W. Gibson 781; King Turner, 289, 294 2d v. First Nat’l Texas S.W. Falls, Bank of 144 Texas 2d Wichita agree quantum A.L.R. as the so far We royalty reserved in the lease is concerned the lease is unam- biguous quantum 6th and we hold that reserved is a 5/9 interest. necessity yet ex- construction lease is not respondents here,
hausted. The insist did in their motion verdict, analysis question instructed that in final governed by estoppel in the Duhig the rule of laid down Peavy-Moore Co., Lbr. 144 S.W. grantor purported convey 878. In that case a a deed fee simple by containing title to certain land a deed a covenant of general warranty. grantor In the deed the reserved and retained (%) undivided one-half all in and to of the minerals in and under the land. One-half of the minerals in had the land theretofore and been severed on the date of the deed was out- standing person. in a third In that fact situation it held was warranty the covenant of extended to surface of land therein, and to one-half of the minerals that there was an auto- warranty equity matic breach of the and estop would g-rantor claiming asserting against those under from him grantee claiming those under one- title to the half of the minerals reserved and retained. The effect of holding grantor was to take from the one-half of the minerals by him, regard retained without reference to or for the inten- give parties, grantee tion of the same in order general warranty. to fulfill the covenant of have examined the file We record on in this court Duhig case. The rule announced was a novel one in the fact adoption urged situation court. Its before the was the defend- (respondent) ant in error able amicus adoption curiae. Its plaintiff opposed by was (petitioner) error able
409 opinion the face of court’s from the It is evident amicus curiae. 879-880) that able 503, 144 2d (153 S.W. in the case Texas adoption the rule. of the of judges wisdom also differed rule in filing which cited case briefs of the None adoption of support its applied. In of approved had been Douthit, 64 following v. cases: Robinson rule this court cited 3; v. Root, 546, 40 Jacobs 101; Texas S.W. 90 Texas Baldwin v. 309; 231, Llano Oil Robinson, v. 254 Caswell 113 Texas S.W. 208; Crawford, 130 139, v. Company, Moore 120 Texas 36 2d S.W. Williams, 447, 878; v. 122, Sup. 449, 32 L. Ed. Smith U.S. 9 Ct. support 240, the cases cited 44 rule, 662. None of Mich. 6 N.W. ap- except analogy. an cases cited involve Each of the against estoppel as- plication rule of of the well established grantor after-acquired title in contradiction of an sertion citing the cases warranty. In addition to of his covenant of from Am. quoted opening 19 noted the court sentence above seeming support 16, language gives of Jur. Sec. adopted, by the writer of rule case is cited but no of text of the section and and an examination of the remainder the writer was deal- the cases cited in the shows that footnotes ing after-acquired applied with the effect the rule title. history has
What been said with reference to disparage- adoption of the not said in rule case is apply adopt ment ultimate decision of the court to said, rather, justification it. It is extend it of our refusal gas oil, apply to and it in and mineral leases. the construction of According Shepard’s Reporter Southwestern Citations twenty-five subsequently case has cited been in some cases reading A decided. of the cases in has shows which it been cited involving many it whereas has been cited cases the con- points struction of deeds—in on other most of which was cited estoppel —and that the rule of in five such has been cases, involving it has been cited in two cases the construc- opinion tion of mineral It lease. was cited Court Appeals opinion in this and in the of this Civil court Turner, Gibson v. 2d rule 781. The given controlling was not effect Turner. Gibson v. having con rule become established one occasion,
struction deeds in this case or we have no at hour, validity question late is so used. its when it We recently as rule in the of a deed as followed the construction Benge Scharbauer, 166. Texas 259 S.W. declining apply But it and there is sound reason for to extend oil, gas know it in the leases. construction of and mineral We knowledge experience as a that deeds matter common *7 usually his prepared by grantor by are of or a scrivener a rarely prepares choice his executes under direction. He and purports convey deed which title to an to and which warrants greater through property interest in careless- than he owns. If convey purports or ness otherwise he executes a deed which to greater property and which warrants title an interest to taking than justification he owns there is for from some moral necessary him as much of the interest to make he which does own as is good warranty. his as a also know matter of com- We knowledge experience mon usually and that mineral leases prepared, or completed, by standard forms lessee. Even though a lessee knows a lessor owns less than fee title the full premises to the sought often, a which lease is if not he usually, prepares and upon insists purports a lease which to convey the entire fee in order to make certain that fractional no outstanding against interest is left protected is lessor. He possibility being greater of pay royalty forced to on a inter- actually est than that owned the lessor the inclusion of a proportionate standard reduction clause in the lease. That clause protects the lessee it operate does not to reduce estate purports convey. which the lessor to Klein Humble Oil v. & Ref’g. Co., many 126 Texas 2d S.W. 1077-1079. In such cases, case, illustrated the instant the lessor ac- tually owns an undivided interest the minerals in land described in the lease and a in which there reservation is royalty, lessee, by resort to and rule even though owning through working leases the entire inter- 7/8th est in the minerals, remainder take, paying of the could without therefor, minerals, the whole interest of the lessor in the including that royalty, could, well, reserved as and recover damages warranty. from lessor for It breach is unthink- able contrary experience all to modern human in the oil and gas industry suppose owning to that one an interest mineral development fee would lease interest mineral receiving estate with no intention of of the returns production from of the minerals. Benge Scharbauer,
In 169, we declined gran to extend the a rule transfer any part tee a royalty provided for in a deed at while 3/8th giving same time gran- effect to the rule transfer part also mineral fee tee 3/8th gas oil, rule now, extend the decline to in the deed. We arbitrary it should one at best is an leases. The rule rights in- transfer of an automatic to work not be all often lessor, too transfer which would to a terests reserved parties. In of the intention than effectuate the frustrate rather the we will seek to gas interpretation oil, leases and mineral and construction of parties, give intention effect to the true interpret following rules used to in that endeavor established written instruments. and If that method of construction bilateral construe contracts other warranty warranty ato leads breach enough the fulfillment then soon to enforce damages by estoppel thereof. breach award stipulated respondents full knowl It in the record that had edge only a interest in minerals 1 6th / *8 accept the then in as true and under the 240 acres of land. We respondents petitioners’ statement in owned themselves brief remaining 5/6ths, 70/96ths, the min or 7/8ths 419, erals. Rule Procedure. Petitioners Texas Rules Civil warranty interest, held, a reserved 6th as we and their have 5/9 remaining purportedly It therefore extended to the 91/96ths. appears thus construc that if the rule were right respondents tion of the lease the in their own who own could, law, of the minerals a matter of take as 70/96ths estonpel by petitioners, in the entire owned 16/96ths l/6th cluding by them, then have and would 5/96ths damages against petitioners cause of action for breach warranty remaining of title to the interest.1 5/96ths apply demonstrated, As we have heretofore when we seek to subject to lease its matter we serious difficulties. encounter purports The to warrant so much of the mineral title to petitioners. estate the 240 acres land reserved to purports It thus to title therein. warrant to interest 91/96th guar purpose operative The not to effect of the covenant is good guar premises antee that lessor has title Covenants, 521, antee lessee his title thereto. 14 Am. Jur. Restrictions, Moore, 48 51; Conditions and v. Sec. McClelland Langford App., 355, 363; Newsom, 220 Texas Texas Com. unjust actually 1Respondents or harsh result do seek to achieve such defensively only invoking Duhig rule; they to effect seek to use the rule provided overriding royalty lease. In their for in the reduction the l/32nd away “Respondents respondents no to take have desire brief in this court state: Respon for, they really contracted interest which from Petitioners really agreed them to reserve.” dens 412 289, 781, 544; Turner, S.W. Gibson v. 156 Texas 294 S.W. by respondents, therefore, 787. As to the interest owned 70/96th warranty, practical purposes, for all Rancho is satisfied. North, Bonito Land Livestock Texas Co. v. & 994; Turner, Gibson v. S.W. 2d respondents passed peti- Title to an additional under ll/96ths warranty
tioners’ lease to that interest the is satisfied. outstanding persons, however, There in- remains third warranty purports terest of extend which the 10/96ths respondents’ purported and to which title has war- failed. ranty ported respondents’ pur- title to this interest and the 10/96ths petitioners cannot reservation of a 5/96ths unimpaired. both stand warranty purport If the is enforced to extent its full destroyed. purported the is will reservation If the reservation preserved warranty pro will be tanto. This breached ambiguity requiring repair again creates latent that we once parties to the intention of the for its resolution. parties they did What intend? No intended doubt warranty operative the covenant of should some effect or they they would not have included it in lease. No doubt also petitioners intended that as lessors should have title to and enjoy royalty. the fruits of the reserved were bar gaining respect with anto interest of an undivided 16/96ths respect not with to the whole of the minerals the 240 acres Respondents land. knew that a 16/96th They petitioners, knew, interest. moreover, as did *9 persons themselves and third owned all interest minerals in the Respondents paid over and above the interest. a cash 16/96th they greater paid interest; bonus on a bonus a no 16/96th respondents interest. no There was occasion for exact to from petitioners petitioners warranty or for to furnish to a of title any greater they than un interest which ll/96th convey. dertook to It is evident that the intended the warranty covenant of extend to to the interest in ll/96th respondents passed the minerals title to which under lease, and we so hold on this record a matter as of law. hold So preserves ing warranty royalty preserves the purpose. for its intended has There been no of the war there breach interpreted ranty fore, warranty cannot, we it and the by respondents obtaining be used as a vehicle for or cutting down the reserved to in the lease. respondents, In court their answer the trial as defend-
413 reduction” alternatively the words “without ants, pleaded result of a overriding royalty a clause as in the were included sought by parties, cross-action mistake of mutual Inasmuch the words. the lease to eliminate a reformation of respondents at the close trial court instructed verdict reached for never was petitioners’ cross-action evidence They entitled thereon. are offered trial and no evidence was therefore The cause must for reformation. trial of their suit Procedure; 503, Rules of South Rule Texas Civil remanded. be western 284, Robbins, Drug Corp. McKesson & 487, A.L.R. 1056. 172 S.W. Appeals trial judgments and the of Civil Court trial court is remanded to the and the cause
court reversed respondents’ for trial of cross-action.
Opinion May delivered Smith, concurring.
Mr. Justice opinion by I am of the that this case should be reversed judgment Court and agree petitioners. here rendered for the I do holding Duhig majority with the that the case has any bearing application present Duhig case case. controlling, therefore, is not unnecessary here it is decision hold, ap- majority does, as the extend and declines to ply Duhig oil, gas, doctrine in the construction and min- eral support theory leases. I cannot find for the ad- sound majority Duhig applies vanced rule the con- deed, oil, gas, struction of a not in the construction of Granting Duhig given mineral trolling leases. con- rule was not Turner, effect Gibson v. Texas 294 S.W. 781, 786, yet, great 2d length majority in that at case discussed Duhig respondents, upon fact, case. The relied support position rule to their v. Turner Gibson case, supra. This Court refused to follow the rule in case, “Respon- case. In the Gibson v. Turner this Court stated: larger dents’ contention amounts one that cannot than respondents of the interest owned In our lessors.” /8th Appeals contend and the has held Court Civil *10 overriding that the could not lessors reserve unto themselves an royalty greater they interest than the mineral interest which reservation, owned at the time of their execution of the royalty as reserved must from the mineral be carved by estate as respon- the lessors. I think the view say, in majority opinion dents our case is in seems to error. effect, Duhig applied that if the rule in the con- case is oil, gas, lease, struction of an then reach and mineral it would respondents. a different conclusion hold with the With agree. rights I cannot are entitled to have their by principles applicable determined record. law as apply just readily I would rule as this case which oil, gas, involves the construction and mineral as in involved, provided supported a case where a deed is the record application. such The rule announced in the is sound case agree majority to the facts in that case. I with the established, here the rule announced has become well but agree abridge I do this Court can effect of by refusing oil, application rule its of an the construction gas, conveys and mineral lease. A deed an interest in land. An oil, gas, and mineral fee. lease amounts to a determinable We royalty.” overriding pay- have involved in our “an An oil has payment ment been held to be an interest in land. An oil overriding Knight virtually same. See Chicago 670, Corporation, 666, App., Texas Civ. affirmed in 144 Texas was said: 188 S.W. 2d where it payment overriding except royalty, “The oil is similar to the assignee receiving that the upon interest of an ceases his a cer- money gas produced tain amount of or of oil or from a value percentage working certain interest.” In an Payments,” Review, Article entitled “Oil 20 Texas Law good p. support holding Chicago I find for the Cor- poration case, supra. In that Article it is said: principle making
“On justification there seems to be little any distinction between property the nature of the by payment overriding created royalty, oil and an there Texas, royalty, can overriding be no doubt that an payable money oil, delivery whether is an interest in land. The difference con- throughout tinues payment life of the lease whereas the oil entire provided
terminates when the sum for has real- been payee. appear justify izd This does difference property distinction in the nature interests created so long endure.”
Again, in an Article entitled “Problems Presented Joint Oil, Ownership Minerals,” Gas and Other Texas Law Re- view, p. 697, it is said: *11 only payment an oil overriding royalty differs from “An all, most, duration, if not and it is of unlimited
in that apply equal force with payments will said about oil has been * ** similarity these overriding between royalty. The obvious adoption of similar in the types result of interest should two juris- any particular respect to both within law with rules of diction.” similarity logic equal the said with
I think can be interests, (1) deed property i.e. types three between conveying royalty, land, (2) conveying a deed a fee interest gas, oil, and mineral (3) an a contractual reservation payment an oil conveyance of to a either which amounts rules adoption of similar overriding royalty, for the would call respective instruments for the of law construction determining conveyed contract. or reserved interest principles shall question is: of law The in our case What determining should who followed to the facts royalty? overriding amount, receive and what stipulated petitioners only It an undivided owned simple by the covered fee mineral interest the 240 acres 1/6 by respondents. other lease. The leasehold interest is owned 5/6 stipulated respondents knew, they It was un- at time it, paid acquire dertook to the lease and at the time petitioners only interest. les- owned undivided 1/6 attempted (petitioners) only sors to reserve combined 5/96 ordinary overriding royalty out of their admitted 16/96 leaving premises, in- mineral interest leased in the an 11/96 exactly bargained and terest for lessees. This is lessees what paid ordinary royalty. This for. suit does involve the 1/8 overriding amount of It involves royalty, the determination However, ownership
and the three thereof. there are fractions in the lease: involved (1)
“There three fractions involved in lease: admittedly by petitioners; (2) interest 1/6 ordinary royalty, (3) overriding royalty. 1/32 1/8 lowest common denominator of verting petitioners’ three fractions all is 96. Con- to the lowest common denom- 1/6 inator, they owned under de- minerals the land 16/96 denominator, Applying scribed in the lease. common same ordinary royalty equals 2/96, equals since 1/8 1/6 1/8 1/48, or, denominator, By converted to common 2/96. process, royalty is same converted to 3/96 1/32 production. under Petitioners therefore received (2/96 equals terms plus 5/96) of the lease 5/96 3/96 respon- ordinary overriding royalty, form of combined remaining (5/96 dents therefore received the subtracted 11/96 *12 working 11/96) from leaves as a net interest.” 16/96 it is Thus seen that this is not a case in which royalty by royalty in excess them or of their re- premises. mineral The lease the leased overriding gas pro- serves as all oil or 1/32 8/8 lease, duced from the land reduction described in the without for reason. The reservation reads: themselves,
“The lessor herein and reserve unto their heirs assigns, reduction, overriding royalty, without as an a net 1/32 gas produced of all oil and and saved from the above 8/8 premises, expense described free of cost to the credit or storage pipe lessors the into tank tanks the line to or or into may which the or well wells said land connected. be operating premises “Fuel oil for the shall deducted be- be computing provided. fore the herein agreed “In this connection it is understood and that the overriding royalty by reserve only payable lessors herein is gas produced, if or when marketed, oil or is saved and that rights of the lessors herein receive shall create same obligation lessee, development operation upon as to or assigns, express except his heirs implied, provided or or under the terms of this lease. pay portion
“Lessors shall their of all ad valorem taxes.” The reservation provision just is contractual as the reser- provision Benge vation 447, Scharbauer, in the case of 166, 169, was held to be In that Court. case the reservation aswas follows:
“Saving, excepting reserving herein, grantors to the however, three-eighths oil, gas an undivided of all (3/8) minerals, in, and other lands, to and under said above described grantee assigns but the and his power shall have the sole oil, gas execute all future joinder and other mineral leases without grantors herein, provide said leases shall but payment three-eighths bonuses, of all rentals (3/8) royalties grantors.” — Benge that held in the We bonuses, royalties part rentals and
“The factual normally is usually one is under a to receive mineral say interest, we cannot the same as his fractional mineral always owning that it must same. plain- so, and
interests intend to do make different if ly in- way express intention. Here and in a formal leases language expressed in the deed that tention clear grantee given provide for power executed under shall royalties three-eighths bonuses, payment rentals and of all agreement grantors. provision to the parties not an bonuses, participate shall rentals the deed royalties proportion ownership interests. to their of mineral grantors provision It is shall rather a re- contractual specified part bonuses, royalties.” ceive a rentals *13 Company, Ar The case of Pollock v. McAlester Fuel 842, 813, my 815, fairly kansas points up 2d well con 223 S.W. agreement ambiguous tention that an clear and on its face will by according be enforced the courts its that case terms. In “Reservations, part: made, may Court said in worded if be parties please. they provide grantor as the If that the shall have land, produced named fraction of the oil on all the described thing; provide is one if that he a fraction shall have produced of conveyed by particular what is from the interest lease, thing. agree it is another The courts will enforce either ment.” principle Benge followed this in We of both the v. law Schar-
bauer, supra, Turner, and the Gibson v. cases. We made no dis- applying tinction in the law to the facts in each One in- case. deed, volved a reservation in other involved construc- oil, gas, tion of a in reservation and mineral lease.
In the v. Turner Gibson case followed we the rule announced Lacy, Jarrett, in the 1948, case of R. Inc. App., v. Texas Civ. 214 S.W. 2d er. ref. The same should in this be done case. Lacy payment, The principle case involved an oil but the of law equally applicable overriding announced is royalty.
lease in present prepared and in case were case both virtually on provide ordinary the same lease form. Both for an gas, warranty on oil and and both contain covenants of and 1/8 provisions. payment other standard The oil was reserved typewritten provision part which read follows: “Lessor hereby production payment $15,000 reserves a out of 1/8 7/8 marketed if, produced, saved and oil, only and when stipulated lease.” It
from said land under this was interest, con- lessee only lessor owned a undivided 7/12 limited production payment therefore was tended theory rejected this the oil. The Court 1/8 7/8 7/12 Turner, supra, this just v. as this did in' Court Gibson question held: limit the case does not in the instant
“The reservation clause conveyed’ or the production payment ‘herein the interest out of payment from oil conveyed, merely $15,000 land limits lease land under the produced to that ‘from the made,’ lease here involved then other lease. The under some describes the three lots.” holding ap- supra, holding Lacy Jarrett,
Under the v. proved Turner, supra, hold v. we should Court Gibson unambiguous ex- plain terms in our case pressed a clear intention of to reserve an acres, merely production from 240 1/32 thereof. 1/6 case, supra,
In
v.
held
the Gibson
Turner
we
that case was
reasoning
judgment
also
the case of
controlled
King
Falls,
First
National Bank of
Wichita
ap-
The record before us me convinces the words “without controlling, reduction” in finding the contract are not that such words were inserted in the lease mutual mistake respondents judgment. event, would entitle In proper. was instructed verdict There was pro- no evidence of support plea force introduced in bative of the alternative the words “without reduction” were included parties. clause as a of a result mutual mistake of the All of the contrary. evidence
My judgment conclusion of the Court of Civil Appeals should reversed and rendered.
Opinion May delivered Garwood, dissenting rehearing. (304 Mr. Justice 267). 2d Series opposes To the extent the distinction now drawn purposes between mineral leases deeds agree rule, concurring opinion. I with Justice Smith’s He *15 saying theory correct also in that the well be of the instant de- Benge Scharbauer, cision runs counter to that of v. although greatly this does not disturb However, contrary opinion, Duhig
me. to hiá I think the
rule, require inapplicable leases, if not would declared judgment for the lessees. opinion Court, despite polite of the disclaimer its nothing
“disparagement” mind, Duhig opinion, is, my open less an than even as to deeds. condemnation it may that, And about we sure for all our declared reservations be cases, having property deed we rule become rule will, it, strength here- present on the comments on be of our urged particular altogether, after it it suits to abandon when interest so to contend.
Naturally, apply rule where conclude not a well-known we undoubtedly type conveyance (which to one is, of fee oil continuing apply it observes) Justice Smith while complicated types, just other law will that much more be likely before, than to oc- more mistakes will be much strong, ought cur. So the rather reasons for the difference to be given. and I not do so consider reasons opinion respect, escape concluding With all I cannot from limiting in the mind of the the real reason for now Court Duhig purported rule is less between deeds distinction law, simply and leases than the conviction that the rule is bad opin- improvidently law, the instant declared. If the rule is bad consequence that ion seems to be the first statement of much declares, although infrequently so not had we have ample opportunity then what before us with to have said disregarded against say we now it. The statement we Benge supra, up point Scharbauer, is doubtless rule correct, to but, case, ef- opinion was the as I in that such read fect neither stated rather than the intent of our decision. We and therefore nor rule unsound intimated was application. be should be limited its Now there escaped devastating has of the rule which books some my criticism attention, certainly authorita- here cites no the Court particular beyond tive the fact condemnation of (admittedly Appeals an excellent member of the Commission opinion in that case judge) draft who an earlier wrote Supreme required agree did the final draft not with While, course, memory may faulty, I do one’s Court. involving Duhig rule any recall that counsel in of the cases Court, during years have made my approximately ten lawyers rule, and special soundness attack on the regard a dubious apt overly when decision in this to be timid adversely of their clients. the interests affects
421 supported directly may prior fact no decision that necessarily reason is not a at the time it was written the rule point to to it, especially when we seem unable to condemn prior decision, one, matter, neces- or, any subsequent that sarily deliberately at with it. odds objection is some
Seemingly made to it that the main every occur, yet will take that has to mineral lessee instance including royalty, thing actually had, his reserved lessor warranty with merely purported lease because lessor happen, certainly than more he owned. If should will judicial history party an in be the first time in our that a or his heirs or for the strument devisees will have suffered signature, although put may he his he have done words which so with the best of intentions and on advice of counsel. In even strong suspicion party such cases often we have a understand, intend, question really did not still less he what was yet doing, ambiguous, him but if the instrument is not we remit usually hopeless remedy to his reformation for fraud or See, examples, Lacy, mutual mistake. few R. Inc. v. Jar rett, App., refused, 692; Texas wr. er. Civ. 214 S.W. 2d Hart, 563; Richardson v. 143 Texas S.W.
recently Lankford, decided case of Pich policy 2d 645. The moral or distinction such cases between and the case seems to me rather thin. give
The formal reason we for our distinction between deeds (and and leases thus for our decision) whole assumed our judicial knowledge that generally prepare lessees and, leases interests, themselves prepare fractional conveyance them in the form of a of the minerals under entire question. the tract really I think What we mean here is less a distinction feeling, between deeds leases than a born of knowledge our operations practical production oil business, any case, rule which we consider unsound in has opportunity more for mischief as than as leases applied to deeds. preparing
As to generally, the lessee I think leases is, sense, longer in a great realistic no a consideration of im- portance, anybody buy up-to-date quite since can form any stationery store, legal for a few cents in most if a form accessible, book isn’t “country lawyers,” and the so-called who average rights, advise the individual lessor about his are gas In up-to-date anybody matters. on oil quite as well holding any event, pointedly here busi- seem to avoid we leasing practice in the of mineral such ness matter against If lessee. generally require leases be construed can think of one the facts of the instant case some other *17 need are in much examples, it doesn’t look like the lessors fair special protection this of from Court. of in matter practice of lessees the
As to the assumed the one, getting interests, I, no such for have leases of fractional knowledge not appears have, and do judicial as the to Court knowledge may any such know source from what authoritative certainty, I, one, say, any out of come. for could not with leases probably thousands of fractional interest hundreds of years, per cent been executed in Texas over the have per by are in the form on which or 10 cent written lessees probable say usually success—to the we insist —and with detriment of lessors. lessor, paternal at
This somewhat concern the mineral for produced every nearly county a time is in the state when oil landowner, large thinking every and logically looms doubtless involving relates as well deeds minerals and fraction- to al interests as to If we are assume that the forceful leases. to enterprising the rela- “oil man” hands finished lease to “Quick! tively ignorant says fractional landowner there,” your Sign Here’s bonus. should we not also assume involving thing happens many somewhat the same deeds with by fractional mineral purchasers traffic “oil men” interests? No doubt the by quite purchases the area of mineral deed large. Making many assumption then latter thousands this —that purchases pur- fee are men” oil absolute made “oil for poses necessarily, probably, or even true that corres- —is ponding deeds, leases, largely land- unlike drawn owner-grantors, any “oil-men”- without intervention grantees? Accordingly just clear and I should think not. how logical deeds and Court’s distinction between leases purposes Duhig rule? I it is arti- submit that somewhat and, distinctions, to ficial like most artificial will conduce more or for itself. trouble than to benefit landowners the law For these reasons con- I dissent from the view the Court cerning Duhig complicate good reason to case. There is no proper result law in that fashion. the final further What me, need now the instant suit should be not discussed be theory upon we now follow since we reach whatever result wrong, my opinion. necessarily will be although opinion My is this: about the other concern Court’s limitations, my my I must due own state mind to which, portion, to as to the confess some confusion latter although having rule previously made clear will that, nothing leases, say with mineral we seem to do nevertheless, convey purported here has and war- lessor interest, rant lessees’ to a which title is out- 10/96 standing parties, third and should therefore the lessees lose evidently royalty interest, his otherwise he 5/96 lose, conflicting did mean and that situation is entitling ambiguity parol latent consider the Court to evidence parties. of the intent of the leases, if,
If apply does rule as we also say, it, cases, we have refused heretofore to extend even in deed *18 grantee compensate grantor’s so as to out of the reserved royalty, how can it be that the lessor here stands to lose his royalty? thing only reserved Duhig rule, to make him lose it is the say apply. which we does not I can see how might warranty an lessees see action for breach but do how, except rule, they automatically for the would become owners of the royalty belonging to otherwise say the lessor. Do we mean purports to that whenever A to B general lease an tract, warranty, to entire with and there develops title, outstanding: ambiguity? be an we have latent ambiguity Or is it that such exists when fraction lessor, of net ownership deducting of the after the out- standing interest, equals or exceeds fraction reserved as royalty, and thus ownership does not exist when the net frac- tion is royalty even millionth more than the fraction reserved? ambiguities go, far as
So latent I can see no difference be- tween Surely one case and every another. real estate trans- involving action warranty ambigui- a breach of one is of latent ty; nor royalty does the mere existence of a reservation it make otherwise. I we say think as well the reservation aof part purchase vendor’s lien price, of which was calcu- lated per acre, at so much ambiguity, creates a latent it when develops part acreage that all purportedly or actually conveyed warranty with is person. some third In such not, think, a situation we parol do I invite evidence to what mind, really although warranty had in together” reservation the vendor’s lien can no more “stand warranty royalty can say) reservation (as than we ap- together the Court the instant case. To me what stand saying' that, apply ac- pears the lease we to be “When effect, necessary ownership, con- we find that tual facts convey Duhig case), sidering warranty (and is to with a smaller the lessee without reservation provides; this in turn reservation of than roy- reserving particular express provision conflicts with the develops alty lessor, ambiguity so have an we unambiguous application the actual facts.” of an instrument reasoning application rule If not an produce ambiguity, simply it. If order I fail to follow apply application rule, then seem to is such an we saying rule as to while it does not exist leases.
Opinion July delivered 1957.
Rehearing July 10, overruled 1957. Incorporated
Mitchell’s v. Ben Friedman No. A-6101. June Decided 1957. Rehearing July 17, overruled (303 775.) Series