Qaude H. Miller and wife sued Carleton D. Speed, Jr., and others. Miller died prior to the trial and the cause was continued in the name of Zula Miller, individually and as community administratrix. Mrs. Miller sought a declaratory judgment construing the effect of a reservation in a deed and for an accounting of royalty accrued from the production of oil. It was stipulated that First Texas Joint Stock Land Bank of Houston, hereinafter called Bank, was the owner of -the fee simple title to the land and minerals on December 14, 1941, when the Bank executed a deed to J. W. Jacobs. Said deed contained the following reservation:
“Out of the above described tract of land there is hereby expressly reserved to the vendor herein, its successors and assigns an undivided ⅛⅜⅛ of all the oil, gas and other minerals produced, saved and made available for market therefrom for a period of 15 years from the date hereof; but should there be no production of such oil, gas or other minerals during said period of time, said interest shall be terminated; provided, however, that should there be production of oil, gas or other minerals within such period of time upon said land said undivided interest shall be prolonged and continue in full force and effect so long as there is such production, and in the execution of any mineral leases it shall not be necessary for the grantor herein to be joined therein, nor shall the grantor herein be entitled to participate in or receive any of the bonuses or delay rentals provided for in such leases.”
The proper construction of said reservation is the question to be decided. Mrs. Miller is now the owner of the 160 acres conveyed to Jacobs, subject to the above reservation, and defendants own the interest reserved by the Bank.
Mrs. Miller contends that the quoted paragraph constitutes a reservation of ½⅛⅛ mineral fee interest and that defendants (other than Tidewater Associated Oil Company, who owns an oil and gas lease executed by Jacobs on said land and produced oil therefrom and occupies the position of a stake holder in this suit) owns only ½<⅛ of the oil, gas and other minerals in place. She contends that defendants, the present owners of said reserved interest, are entitled to only ½4⅛ of a' ⅛⅛ royalty subsequently reserved in an oil and gas lease executed by Jacobs. Defendants contend it is a reservation of ½⅛⅛ of all oil produced, saved and made available for market, free of cost to them. In a trial to the court, the court held that it is a reservation of ½⅜⅛ of all the oil, gas and other minerals produced, saved and made available for market, free of cost to defendants. Judgment was rendered accordingly and Mrs. Miller has appealed.
Plaintiff, Mrs. Miller, prayed that the court determine that the “mineral interest” reserved by the Bank in its deed to Jacobs is a reservation of an undivided “½4⅛ of the fee title to all the oil, gas and other minerals in and under and that may be produced from said land for a period of 15 years * * * and as long thereafter as oil, gas and other minerals are produced from said land, entitling the 'defendants * * * to receive * * * only their respective shares of ½4⅛ of the ^/gth royalty payable under the terms of the lease * * * ” executed by Jacobs and now owned by Tidewater.
Plaintiff’s first point is that the court erred in refusing to hold that the reservation is, as a matter of law, a reservation of an undivided ½⅜⅛ mineral interest. Plaintiff plainly asked the court to
*252
read into the reservation two provisions not contained' therein, to-wit: (1) .that the Bank reserved
Yzith.oí
%th of all the oil, gas and minerals produced, saved and made available for market; and (2) that there was reserved a ½4⅛ interest in the minerals in place under the ground. Without the words “in and under said land” or words of similar import, the reserved interest is clearly ½4⅛1 of all the oil, gas and other minerals produced, saved and made available for market, and is an interest in all the oil, gas and other minerals after they are produced, saved and made available for market. It is royalty and not an interest in the minerals in place under the ground, which must be discovered and produced at great expense. ½<⅛ of “all” of the oil produced cannot mean
%ith
of ⅛& of the oil produced. The Bank did not reserve %4th of the oil in the ground but ½4⅛ of all the oil after it was produced, saved and making ready for sale a ½4⅛ of the not to pay the cost of producing, saving and making ready for sale a ½4⅛ of the minerals in the ground. By the express language of the reservation it was entitled to ⅜4⅛ of “all” the oil after it was produced, saved and ready for market. 31-A Tex.Jur. 850; King v. First Nat. Bank of Wichita Falls,
' An interest in minerals in place under the ground, which must be found and produced at considerable expense, must either share in the cost of production or contribute a part of such interest to others to produce the minerals. But, a ½4⅛ of all oil after it is produced, saved and made available for market is not an interest in oil and gas in place but is royalty and does not share in the expense of producing, saving and making it ready for sale. 31 — A Tex.Jur. 835.
As conceded by distinguished counsel for plaintiff, Armstrong v. McCracken,
“The grantors herein hereby reserve unto themselves from this conveyance an undivided Yie interest in and to' all oil and gas produced from the land above described, giving full power to' the grantees to execute and deliver oil and gas mineral leases upon such land, without the concurrence therein or signatures thereto of grantors and waiving all right to participate in any bonuses paid for or extension payments-under such oil and gas lease or leases.”
Mrs. Armstrong owned a ½ interest in-the reserved ¼6. The trial court held' that she was entitled only to Vie of ⅛ of' the oil produced from said land under a lease executed by the grantee in said deed. #which retained a ⅛⅛ royalty. The Supreme Court reversed and rendered said: judgment, holding:
“The trial court took the view that this ½6 interest which was retained by the Armstrongs was ¼6 of the ⅛ royalty interest, and unquestionably relied upon the case of Swearingen v. Oldham,195 Okl. 532 ,159 P.2d 247 , as *253 authority for its judgment in the case. In our opinion the Swearingen case is distinguishable from this one, for in that case there was considerable oral testimony offered, especially that of the attorney to whom the deed was submitted, who testified that he told the parties to the deed that Mr. Swearin-gen would take Vie of ⅛ of the oil, as provided in the lease. The trial judge stated in that case that the attorney’s testimony influenced him in arriving at his judgment. The reservation in the Swearingen case was of Vie of all oil and gas and other minerals in and under the land, and an owner of a mineral interest would know, that it would be necessary to give up something to get production, while in the case at bar the grantors retained their- right to the oil and gas that was produced, indicating that they did not intend to give up anything in order to have the land developed. We also think that Hinkle v. Gauntt,201 Okl. 432 ,206 P.2d 1001 , is distinguishable from the case at bar on the facts.
“The judgment is reversed, with instructions to the lower court to enter judgment for Ruth E. Armstrong, fix- . ing her interest at one-half of ¼6 of all oil and gas produced. from the land in question.”
In Hardy v. Greathouse,
“The Court’s conclusion that a mineral interest in the oil and gas in place was not reserved in the grantors seems to be based on the fact that the word ‘produced’ was used, and on the further fact that the grantors did not expressly reserve the privilege of going on the land to produce the minerals. The word ‘produced’ or similar words, commonly appear in grants or reservations creating separate estates or interests in oil and gas in place. Other courts have generally held that such words are not indicative of an intent to- create a royalty interest. The following quotation from Little v. Mountain View Dairies, 1950,35 Cal.2d 232 ,217 P.2d 416 , fairly represents the viewpoint of other jurisdictions:
“ ‘The defendant contends that the addition of the words “and which may hereafter be produced and saved” to a grant of a fraction of all the oil in and under the land clearly evidences an intent that the interest granted should be expense free. It has been generally held, however, that a grant of a fraction of all “of the oil, gas and other minerals in and under, and that may be produced” from the land cre^ ates an expense-bearing mineral fee interest rather than an expense-free royalty interest.’ The court cited Kansas, Oklahoma and Texas cases.
“Furthermore, if the interest excepted in the instant -case was an interest in the oil and gas in place, the failure of the grantors to expressly reserve the privilege of going on the land to produce them was wholly immaterial for the reason that such an easement is implied.”
We agree with the quoted statement. But, we do not have in this case an addition of the words “hereafter produced and saved” to reservation of a fraction of the oil “in and under the land.” We are aware of the fact that when such language is contained in a reservation it is held a reservation of an interest in the mineral in place. As in Armstrong v. McCracken, supra, the interest reserved by the Bank in its deed to Jacobs was not in the oil, gas and minerals “in and under the land,” that is, minerals in place or as mineral fee, which would require that the owner of the reserved interest give up a part of the thing reserved to get the oil produced, but,
on
the contrary,
there
was expressly reserved ⅛4 of “all” the oil and gas “produced, saved and made available for market.” While the reservation contemplated that the land might be leased by the grantee and that a bonus and rentals might be ob
*254
tained and retained by him, such rights, natural attributes of ownership of the mineral fee but not of royalty, were expressly granted exclusively to Jacobs and none of them were retained by the grantor. See Brown v. Smith, Tex.Civ.App.,
In Pinchback v. Gulf Oil Corporation, Tex.Civ.App.,
We think the decision of the Supreme Court in Watkins v. Slaughter,
“Together with a Wie interest in and to all the oil, gas and other minerals in and under and that may be produced from said land and the grantor retains title to a ¾s interest in and to all of the oil, gas and other minerals in and under and that may be produced from said land; but it is distinctly agreed and understood that the grantor, his heirs and assigns shall not receive any part of the money rental paid on any future lease; and the grantee, his heirs, or assigns, shall have authority to lease said land and receive the cash 'bonus and rental; and the grantor, his heirs or assigns, shall receive the royalty retained herein only from actual production of oil, gas or other minerals on said land.”
The Supreme Court said the controlling question was, “Did the conveyance of the land by Slaughter to Watkins, together with a Wie interest in the oil, gas and other minerals, and the reservation to Slaughter of a ¼6 interest in the oil, gas and other minerals, reserve to Slaughter a Vie royalty interest, or did it reserve to him merely a Vie mineral fee interest?” Unlike the Slaughter case, there was not in the reservation here under consideration a reservation of the minerals “in and under” the land nor was the word “royalty” used to describe the reserved interest but, as in the Slaughter case, the deed from the Bank to Jacobs described the nature and quality of the reserved interest and stated what incidents and rights should attach thereto. In both cases, the grantor was not to receive any part of the bonus or delay rentals under a future lease, nor was the grantor to have any authority to execute a lease but such rights were expressly given to the grantee. In the instant case, the deed from the Bank to Jacobs clearly states that the ½⅛ reserved is only out of oil and gas produced, saved and made available for market, within a certain period of time, not ½4 of the oil and gas in place, that is, in and' under the land. Judge Sharp said in the Slaughter case:
“Disregarding for the moment the use of the word 'royalty’ in this cause, it is apparent that the clause is intended to reiterate that the owner of the Vie is to be paid only from production, and that he shall receive no part of the payments of bonus or rentals, all of them belonging to the owner of the Wie interest, the mineral fee estate.”
A ½⅜ of all the oil in and under and that may be produced from a tract of land is an interest in the minerals in place in the ground, but that is a different interest than a ½4 of all the oil that may be produced, saved and made available for market within a certain period. The first is a present interest in oil in the ground' before it has been produced, saved and' made available for market. Money, effort and time must be expended finding and' producing the oil before it can be saved and' made available for market. The second is an interest in the oil, not in its present state in the ground, but after it has been, produced, saved and made ready for market. What the Bank reserved was the right to receive ⅜⅛ of “all” the oil, gas and other minerals after it has been produced, after it has been saved and after it has-been made available for market, which, ordinarily, means ½4 of all the oil when it is ready to be run in the pipe line to a purchaser. The Bank did not reserve any right to drill, lease or share in bonuses and royalties. These rights, not reserved but expressly conveyed to the grantee, his heirs and assigns, are attributes of a mineral fee. The provisions of the reservation describe a ½4 royalty and are inconsistent with a *256 ½4 mineral fee. Although the reserved interest is not called a royalty and it is not expressly stated that the reserved interest is to be free of cost, it is not referred to as minerals in and under the land, or a mineral fee, and the reservation does not retain the natural attributes, of a mineral fee. Turpin, “Mineral Deeds and Royalty Transfers,” 1st Annual Institute on Oil & Gas Law (Southwestern Legal Foundation) pp. 222-232. Had the reservation contained the word “royalty” it would have added nothing to its effect. Calling it royalty would have been merely to call by its usual flame what the instrument described. “ ‘Royalty’ refers not to oil and gas in place, but to a share in the oil and gas produced.” Glassmire, “Law of Oil and Gas Leases and Royalties,” 2nd Ed., 1938 Pocket Parts 949, page 67.
“Royalty interest may be created prior to any lease for oil and gas purposes. In some jurisdictions a grant or reservation of. a royalty prior to lease has the effect of creating a separate mineral fee estate in the oil and gas or in the right to produce them, but if such interest is restricted to the right to receive a portion of the oil or gas produced with no right in the owner thereof to join in future leases, or to receive a portion of the bonus or delay rentals, the interest is a perpetual nonparticipating royalty.” Summers, Oil and Gas, 1938, Vol. 3, pp. 349-350, Pocket Parts 1951.
In Lion Oil Co. v. Gulf Oil Corp., 5 Cir.,
“The language ⅛ of ⅞ of all oil produced and saved clearly negates any inference or implication that the stated fraction was subjected to any deduction for operating costs.”
The language of the reservation in the instant case, to-wit: “¾⅛ of all oil, gas and other minerals produced, saved and made available for market” together with the additional provisions of the reservation, clearly disclosed the intent to reserve ⅝⅜ of the gross amount of oil produced, net to the Bank. The interest reserved is clearly royalty, hence, free of cost of producing, saving and preparing for market We hold that the reservation is unambiguous and reserved to the Bank, its successors and assigns, ½4 of all oil, gas or other minerals produced, saved and made available for market as a royalty, free of expenses.
The judgment is affirmed.