Case Name: A. H. (Arch) Benge, et al v. Clarence Scharbauer, Jr., et al.
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1953-06-17
Citations: 152 Tex. 447
Docket Number: No. A-3939
Parties: A. H. (Arch) Benge, et al v. Clarence Scharbauer, Jr., Et Al.
Judges: 
Reporter: Texas Reports
Volume: 152
Pages: 447–459

Head Matter:
A. H. (Arch) Benge, et al v. Clarence Scharbauer, Jr., Et Al.
No. A-3939.
Decided June 17,1953.
Rehearing overruled July 15,1963.
(259 S. W. 2d Series 166)
Ñaman, Howell & Boswell, of Waco, Wilson, Wilson & Logan, of San Angelo and Douglas Forde of Dallas, for petitioners.
The Court of Civil Appeals erred in holding that the grantee in the subject deed was not Vested by such deed with the title to five-eighths (5/8) of . the royalties arising therefrom under the. lease here involved. American Republics Corporation v. Houston Oil Company of Texas, 173 Fed. 2d 728; Fleming v. Miller, 228 S. W. 2d 355; Greene v. White, 137 Texas 361, 153 S.W. 2d. 575.
Turpin, Kerr <6 Smith and Raymond A. Lynch, all of Midland, for respondent. ...
In reply to petitioners’ proposition respondents cited MacDonald v. Sanders, 207 S. W. 2d 155, writ of error refused; Talley v. Howsley, 142 Texas 81, 176 S.W. 2d 158; Adams v. Duncan, 147 Texas 332, 215 S.W. 2d 599.

Opinion:
Mr. Justice Griffin
delivered the opinion of the Court.
This cause involves the construction of a paragraph in a deed from Clarence Scharbauer, Sr., et ux (predecessors in title) as grantors to A. H. Benge, who with the heirs of his deceased wife, are the petitioners. The deed is dated December 17, 1941, and was delivered shortly thereafter and immediately recorded in Midland County, Texas, where the land was located. At the time of the trade, and the negotiations between the parties leading up to the execution and delivery of the deed, it was understood by all parties that there was an outstanding l/4th full mineral interest in all the lands, and the trade was made subject to such l/4th mineral interest as. outstanding, and no contention has ever been made regarding such l/4th interest.
On April 18, 1942 A. H. Benge and wife executed to Holt Jowell an oil, gas and mineral lease on the six sections of land conveyed to them by the Scharbauers on December 17, 1941. This lease covered the title to all of the oil, gas and other minerals in, on and under the six sections, but contained the usual paragraph reducing the bonuses, rentals and royalties, etc., in proportion to lessors' ownership of the whole of the title. The bonus under this lease was paid 3/8ths to Benge, 3/8ths to the Scharbauers, and l/4th to the owners of the outstanding mineral interest. All parties took their money. Jowell duly assigned the lease to Magnolia Petroleum Company, who paid the annual delay rentals to the parties and in the proportions set out above, and without any complaint on the part of any party, for the years 1943 to ,1950, both inclusive. On December 27, 1950, as a result of a claim on the part of Benge, Magnolia Petroleum Company paid to Benge the difference between the 3/8ths interest for which he had been theretofore paid, and the 5/8ths interest he then claimed to own under the deed from the Scharbauers. Shortly thereafter the Magnolia Petroleum Company filed this suit in the nature of an interpleader and called on the court to determine the ownership of l/4th mineral interest claimed by both Benge and Scharbauer and to determine who was entitled to receive the bonuses, delay rentals, royalties, etc. due under the lease. Benge, et al answered claiming title to 5/8ths mineral interest and 5/8ths of all bonuses, delay rentals and royalties under the lease. The Scharbauers answered claiming they were entitled to receive 3/8ths of all these benefits under the lease. Trial was before a jury, but at the conclusion of the testimony, the trial court instructed a verdict in favor of the Scharbauers for their claimed 3/8ths mineral interest and overruled the motion for instructed verdict filed by Benge. On appeal this judgment of the trial court was affirmed by the Court of Civil Appeals. 254 S.W. 2d 236.
We have decided that the deed in question is not ambiguous, and must be given the legal effect resulting from a construction of the language contained within the four corners of the instrument. There are certain well settled rules governing us in our construction of this instrument.
All parts of the instrument must be given effect if possible to do so without violating any legal principles. Even though different parts of the deed may appear to be contradictory and inconsistent with each other — if possible, the court must construe the language of the deed so as to give effect to all provisions thereof and will harmonize all provisions therein, and not strike down any part of the deed, unless there is an irreconcilable conflict wherein one part of the instrument destroys in effect another part thereof. Associated Oil Co. et al v. Hart et al. Com. App., 277 S.W. 1043 (3); Watkins et ux v. Slaughter et al, 144 Texas 179, 189 S.W. 2d 699 (3) ; Fleming v. Ashcroft et al, 142 Texas 41, 175 S.W. 2d 401, 406; Hester v. Weaver et al, Tex. Civ. App., 252 S.W. 2d 214 (1), writ refused; 14 T. J. 919, et seq., Sec. 140.
It is well settled that the owners of land may reserve to themselves minerals or mineral rights, including the oil or any right or ownership therein. Humphreys-Mexia Co. et al v. Gammon et al, 113 Texas 247, 254 S.W. 296; 29 A.L.R. 607; Hoffman et al v. Magnolia Petroleum Co. et al, Com. App., 273 S.W. 828 (4) ; Watkins v. Slaughter, supra; Curry v. Texas Company, Civ. App., 18 S.W. 2d 256, writ dismissed.; 31-A T. J. 64, Sec. 32, and authorities therein cited.
A grantor may reserve unto himself mineral rights, and he may also reserve royalties, bonuses and rentals — either one, more or all. Schlitter v. Smith, 128 Texas 628, 101 S.W. 2d 543; King v. First Nat. Bank of Wichita Falls, 144 Texas 583, 192 S.W. 2d 260, 163 A.L.R. 1128; State Nat. Bank of Corpus Christi v. Morgan et al, 135 Texas 509, 143 S.W. 2d 757; Collier et al v. Caraway et al, Texas Civ. App., 140 S.W. 2d 910, writ refused; Curry v. Texas Company, supra; Kokernot et ux v. Caldwell et al, Texas Civ. App., 231 S.W. 2d 528, writ refused.
An instrument may convey two separate estates in the minerals, one of which may be a full mineral interest and the other a royalty, or other interest in the minerals. Richardson v. Hart, 143 Texas 392, 185 S.W. 2d 563, 565; Countiss et al v. Baldwin et al, Texas Civ. App., 151 S.W. 2d 235, writ dismissed, correct judgment; MacDonald et al v. Sanders et ux, Texas Civ. App., 207 S.W. 2d 155, refused, N. R. E.; Acklin et al v. Fuqua, Texas Civ. App., 193 S.W. 2d 297, N. R. E.
It is also well settled that where the conveyance represents that the grantor is the owner of a particular interest in property and such interest is conveyed by the deed, the grantor is estopped by his covenant of general warranty to claim that the deed conveyed a less estate than grantor's ownership. Duhig et al v. Peavy-Moore Lumber Co., Inc., 135 Texas 503, 144 S.W. 2d 878.
The covenant of general warranty extends only to what is granted, or what purports to be granted by the deed. Clark et al v. Gauntt, 138 Texas 558, 161 S.W. 2d 270; Adams et al v. Duncan et al, 147 Texas 332, 215 S.W. 2d 599, 603; Nye et al v. Bradford, 144 Texas 618, 193 S.W. 2d 165 (3), 169 A. L. R. 1.
Keeping in mind the above rules of law, let us examine the deed governing the rights of the parties therein. The deed, except for the reservation of an interest in the minerals and the provision as to the grantee's power to execute leases and for payment of bonuses, rentals and royalties under such leases, is an ordinary general warranty deed. It purports to convey to the grantee the several sections of land with reservation to the grantors of an undivided 3/8ths interest in the oil, gas and other minerals, and gives to the grantee and his assigns sole power to execute all future oil, gas and other mineral leases without joinder of the grantors, "but said leases shall provide for the payment of three-eighths (3/8ths) of all the bonuses, rentals and royalties to the grantors". The warranty is a general warranty of title to "the said premises". At the time when the deed was executed and delivered the grantors did not own the entire mineral interest in the land, there being outstanding in third parties a l/4th mineral interest which was not mentioned in the deed. Disregarding for the present the clause above quoted about bonuses, rentals and royalties to be paid the grantors on all future leases, the deed purported to convey to the grantee the surface and 5/8ths of the minerals in the land and to reserve to the grantors a 3/8ths mineral interest, and it warranted the title to what it purported to convey.
Under the decision in Duhig v. Peavy-Moore Lumber Co., 135 Texas 503, 144 S.W. 2d 878, the effect of the deed, by reason of the outstanding l/4th interest in the minerals and the general warranty, was that the grantee acquired by the deed the surface and a 5/8ths mineral interest, and the grantors reserved only a l/8th mineral interest. On account of the outstanding l/4th mineral interest in third parties the warranty was breached at the very time the deed was executed and delivered, and a l/4th mineral interest required to remedy the breach was taken from what the grantors undertook to reserve to themselves leaving them only a l/8th mineral interest.
The difficult question in the case arises because of the provision above quoted that the mineral leases to be executed by the grantee shall provide for payment of 3/8ths of all bonuses, rentals and royalties to the grantors. But for that provision the grantors, as owners of but l/8th interest in the minerals as the effect of the deed, would be entitled to only a like interest, l/8th, of bonuses, rentals and royalties under leases executed by the grantee. One-eighth of the bonuses, rentals and royalties normally would go to the grantors as owners of a l/8th interest in the minerals and 5/8ths of bonuses, rentals and royalties would normally go to the grantee as the owner of a 5/8ths interest in the minerals. But are not the owners of such interests in the minerals free to agree, if they desire to do so, that their fractional .interests in bonuses, rentals and royalties under leases' to be executed shall be in different amounts from what they normally would be?
The fractional part of the bonuses, rentals and royalties that one is to receive under a mineral lease usually or normally is the same as his fractional mineral interest, but we cannot say that it must always be the same. The parties owning the mineral interests may make it different if they intend to do so, and plainly and in a formal way express that intention. Here that intention is expressed by clear language in the deed that leases executed by the grantee under the power given shall provide for the payment of 3/8ths of all bonuses, rentals and royalties to the grantors. The provision is not an agreement that the parties to the deed shall participate in the bonuses, rentals and royalties in proportion to their ownership of mineral interests. It is rather a contractual provision that the grantors shall receive a specified part of the bonuses, rentals and royalties; namely, 3/8ths.
The warranty and its breach on account of the l/4th mineral interest outstanding in third parties reduced the 3/8ths mineral interest which the grantors undertook to reserve from 3/8ths to l/8th and in so doing it left to the grantee the surface and the 5/8ths mineral interest that the deed purported to convey to him. There is seeming inconsistency between the parts of the deed that give the grantors a l/8th and the grantee a 5/8ths mineral interest and the provision that the grantors' share in bonuses, rentals and royalties shall be 3/8ths, but there is no fatal repugnancy.
The warranty extends to what the deed purports to grant; namely, the surface and the 5/8ths interest in the minerals, and the application of the rule in the Duhig case assures the grantee of title to what the deed purports to grant to him. But the warranty does not extend to the provision in the deed as to the interest in bonuses, rentals and royalties. The deed does not purport to convey the right given by that provision.
The position taken by petitioners cannot be sustained unless it is held that the amount of bonuses, rentals and royalties to be received by the grantors under leases to be executed must be reduced from the 3/8ths specified in the deed to l/8th because the grantors' mineral interest is by reason of the doctrine of the Duhig case reduced to l/8th. That would be to hold that the fractional part of bonuses, rentals and royalties to be received must always be the same as the fractional mineral interest owned, and that the parties are powerless otherwise to provide.
The stipulation that all leases shall provide for payment of 3/8ths of all bonuses, rentals and royalties to the grantors is part of and a limitation upon the power given to the grantee to execute leases. The rule of the Duhig case, in order to remedy the breach of warranty, takes from the grantors part of what the deed purported to reserve to them, but that rule should not be extended to change the express agreement as to what interests the grantors shall receive in bonuses, rentals and royalties under leases to be . executed by the grantee.
Such stipulation being a valid provision and having been in the deed at- the time of its delivery and acceptance is binding on all parties. Benge accepted the "deed and recorded it promptly and is holding title to Ms lands under the deed and-by virtue of its provisions. He received his mineral interests in this land under and by virtue of this deed. He made an oil and gas lease on all the lands, without the joinder of the Scharbauers under and by virtue of. the second clause of this paragraph of the deed, and he now cannot be heard to say that he is not bound by the tMrd clause of this paragraph which gives to the Scharbauers 3/8ths of all bonuses, delay rentals and royalties under such lease, or future leases. Talley et al v. Howsley et al, 142 Texas 81, 176 S.W. 2d 158; Adams et al v. Duncan et al, supra; Nye et al v. Bradford, supra.
Petitioners argue that by the first clause of this paragraph they receive 5/8ths of all the minerals and therefore the third clause is void as repugnant to the grant. Under deeds which in one clause convey all of the mineral interests, effect has been given to a reservation on the part of the grantor of the right to . drill an oil well. Collier et al v. Caraway et al, supra. In another case the deed conveyed all of the mineral interest grantor owned in the land, and it was held that there was nothing inconsistent with this provision, and a provision reserving to the grantor an undivided 1/16th royalty interest. Countiss et al v. Baldwin et al, supra. In Odstrcil et al v. McGlaun et ux, Texas Civ. App., 230 S.W. 2d 353, no writ history, Odstrcil deeded a tract of land to one Birdwell and reserved an undivided one-half of the mineral rights. Also in the deed Birdwell was given the right to execute leases without the joinder of Odstrcil, but this power to lease was limited as to the royalty to be reserved in the lease and the payment of delay rentals to Odstrcil. The Court of Civil Appeals at Eastland held the power to lease must be exercised in accordance with the limiting provision, and a lease of Odstrcil's reserved mineral interest without complying was of no effect.
Under the construction of the paragraph involved herein as sought by the petitioners the last clause would be disregarded and held for naught, while under our construction of this paragraph, all clauses are given effect. Under petitioners' contentions, the third clause has no meaning and its insertion was a useless act on the part of the grantors. The parties meant something by the third clause and our construction harmonizes it with the other parts of the paragraph and gives a meaning to the whole paragraph.
The trial court erred in its judgment that the petitioners, A. H. Benge, et al, owned only an undivided 3/8ths interest in and to all of the oil, gas and other minerals in and under the six sections of land described in the court's judgment. The trial court's judgment is modified, and A. H. Benge, et al are here adjudged to be the owners of an undivided 5/8ths mineral interest in said land; and the Scharbauers, et al are adjudged to own an undivided l/8th mineral interest in that land but that the Scharbauers are entitled to receive 3/8ths of all bonuses, delay rentals and royalties payable under the existing and all future leases on said land. Except as above set out the judgment of the trial court and Court of Civil Appeals is in all things affirmed.
Opinion delivered June 17, 1953.