Case Name: Etta Mae KNOX, et al. v. SHELL WESTERN E & P, INC., et al.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1988-06-03
Citations: 531 So. 2d 1181
Docket Number: No. 56567
Parties: Etta Mae KNOX, et al. v. SHELL WESTERN E & P, INC., et al.
Judges: HAWKINS, P.J., and PRATHER, SULLIVAN and ANDERSON, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 531
Pages: 1181–1193

Head Matter:
Etta Mae KNOX, et al. v. SHELL WESTERN E & P, INC., et al.
No. 56567.
Supreme Court of Mississippi.
June 3, 1988.
As Corrected on Denial of Rehearing Nov. 2, 1988.
John K. Keyes, Keyes & Rogers, Collins, Louis Alford, McComb, for appellants.
Walker L. Watters, Gerald, Brand, Wat-ters, Cox & Hemleben, Jackson, Ernest W. Graves, Gibbes, Graves, Mullins, Bullock & Ferris, Laurel, E.O. Spencer, III, McKibben & Spencer, Jackson, for appellees.

Opinion:
HAWKINS, Presiding Justice,
for the court:
Linda Faye Echols and Lewis E. Turner have appealed from a decree of the chancery court of Jefferson Davis County dismissing the complaint filed by Etta Mae Knox, deceased, and Turner against Shell Oil Company.
The issue we address on this appeal is whether the grantors in a mineral conveyance retained only a one-sixteenth non-participating royalty interest, or conveyed a one-sixteenth non-participating royalty interest. We agree with the chancellor that the interest conveyed a fifteen-sixteenths mineral interest, and reserved to the grantors only a one-sixteenth non-participating royalty interest, and affirm.
FACTS
On November 17, 1939, Thomas (Tom) Price was fee simple owner of twenty acres in Jefferson Davis County, described as the South Half of the Northwest Quarter of the Southwest Quarter (S-½ NW-V4 SW-¼) of Section Three, Township Six North, Range Seventeen West (3-6N-17W). On that date he and his wife Mollie executed a form mineral deed to C.L. Wagner, conveying unto him an undivided fifteen-sixteenths (1B/i6) interest in the oil and gas minerals. The instrument is on Form 0270 Rev. 3-36; a copy is made an appendix to this opinion. Prior to the execution of this instrument, the Prices on the same date executed an oil and gas lease to the same property to Charles W. Kelley. Kelley assigned the oil and as lease to Wagner on November 20, and all three instruments were filed for public record in the chancery clerk's office on December 14.
Tom died intestate in 1941, leaving as his sole heir-at-law his widow Mollie Terrell Price. On January 27, 1971, Mollie executed a general warranty deed to the twenty acres to Etta Mae Knox, which was filed for public record the same day.
There was no development under the 1939 oil and gas lease, and it expired.
On August 7, 1940, Wagner executed a mineral deed to Kelley conveying an undivided one-third interest in the oil and gas minerals on 390 acres of realty in Jefferson Davis County, which included the twenty-acre tract. This conveyance provided that the grantee would have and enjoy all bonuses, rents and royalties and other benefits in proportion to his interest. There were various conveyances of the Kelley interest unnecessary to recite. Their interest will be referred to as the Wagner interest.
In September, 1972, the Shell Oil Company acquired an oil and gas lease from the Wagner interest parties, having as their source of title the November 17,1939, deed from the Prices to Wagner. Shell in turn assigned the lease to the Florida Gas Exploration Company (Florida).
In October, 1973, Florida obtained a drilling permit for a block of acres, which included the twenty-acre tract, and drilled a well approximately one-half mile from this tract. This well began commercial production in March, 1974.
The Florida interest was also assigned to numerous parties unnecessary to recite.
On August 3, 1982, Knox executed an oil and gas lease of the tract to Lewis E. Turner, which was filed for public record on January 18, 1983. On March 23, 1983, she assigned an overriding royalty equal to one-sixteenth of eight-eights (½6 of %) part of the oil produced under the lease.
On March 28, 1983, Knox and Turner filed a complaint in the chancery court of Jefferson Davis County seeking inter alia to have the court construe the Price deed to Wagner as a conveyance of a one-sixteenth royalty only, and cancel as clouds on their title all oil and gas leases and assignments thereof from the Wagner owners, and all subsequent minerals conveyances of the Wagner interest, insofar as they purported to convey anything more than a one-sixteenth non-participating royalty interest. The complaint also asked for an accounting. The complaint did not charge fraud, and did not ask to reform the conveyance because of mistake.
The basic question before the chancellor was whether the Price deed was a mineral deed of an undivided fifteen-sixteenths interest, or simply a one-sixteenth royalty conveyance, with no right in the grantee to execute oil and gas leases.
The record supports the chancellor's finding that the Prices were illiterate, and that Kelley, when he acquired the oil and gas leases, was acting as agent for Wagner. He found no element of either estoppel or laches. As above noted, there was no charge of fraud on the part of Wagner, and no claim was made that the instrument should be reformed because of mistake.
The chancellor found the instrument to be a mineral deed conveying an undivided fifteen-sixteenths interest in the minerals, less an undivided one-sixteenth royalty interest reserved in the grantors.
The complaint was dismissed; Knox and Wilson have appealed.
LAW
The pertinent portions of the Wagner conveyance are as follows:
MINERAL DEED
The State of Mississippi, County of Jefferson Davis.
KNOW ALL MEN BY THESE PRESENTS:
That Tom Price and Millie Price, husband and wife . for and in consideration of the sum of Five and 00/100 Dollars, and other good and valuable considerations, cash in hand paid by C.L. Wagner . the receipt of which is hereby acknowledged, have granted, bargained, sold, conveyed, transferred, set over and delivered and by these presents do grant, bargain, sell, convey, transfer, set over and deliver unto said Grantee, forever, an undivided fifteen-sixteenths ('Vieth) interest [emphasis added] in, to and of all oil, gas and other minerals, whether similar or dissimilar, on, in, under and that may be produced from the following described land situated in the Court of Jefferson Davis, State of Mississippi, more particularly described as follows, to-wit:
The South half of the Northwest Quarter of the Southwest Quarter (S-V2 of NW of SW-¼) Section Three, Township Six North, Range Seventeen West. Section 3 Township 6N Range 17 W Containing 20 acres, more or less, . It is the intent of this instrument to convey Ten (10) Royalty acres. Together with the right of ingress and egress in, upon and over said land at all times for the purpose of mining, drilling and exploring said land for oil, gas and other minerals and removing the same therefrom; together with the use of such amount of the surface of said land as is necessary or useful to produce, save, store, refine, treat, transport and remove such oil, gas and other minerals, including water, and to conduct all operations and erect and use thereon all buildings, derricks, tanks, structures, machinery and equipment as may be necessary or proper for such purpose, together with the right to lay and operate thereon pipe lines, telephone and telegraph lines, and to repair and remove from said land any of Grantee's property thereon at any time, including the right to pull and remove casing.
In respect to the undivided one-sixteenth (Vieth) part of and interest in the oil, gas and other minerals retained and reserved by the Grantor in said land, it is understood and agreed that said one-sixteenth (½6⅛) interest is and shall always be a royalty [emphasis added] interest, and shall not be charged with any of the costs which the Grantee may incur in exploring, drilling, mining, developing and operating wells or mines for the production of oil, gas and other minerals; and, if the grantee or his heirs, executors, assigns or any person or concern to whom the Grantee shall give an oil and gas mining lease thereon, shall, by his or their explorations and operations, discover and produce oil, gas and other minerals the Grantor's one-sixteenth (½6⅛) royalty interest above referred to shall be delivered free of cost to the Grantor at the wells or mines or to the credit of Grantor in pipe lines or storage provided by the Grantor. It is expressly understood that the Grantee shall never be required or under any covenant or obligation, either express or implied, to drill or operate on said lands or any part thereof for the discovery of or production of oil, gas and other minerals, and that all drilling operations and development for oil, gas and other minerals, before and after discovery, shall be solely at the Grantee's option and election, and that any wells or mines discovered or drilled by the Grantee may be abandoned or operated by him at any time at his election or discretion; provided that, before Grantor's royalty shall be calculated and determined, all oil, gas and other minerals used for light, heat and operations by the Grantee and any taxes against the production shall be first deducted.
Grantor further agrees that the Grantee shall have the right at any time to redeem for the Grantor or his heirs, executors and assigns, by payment, any note, deed of trust, taxes, judgments or other liens on the above described land in the event of default of payment by Grantor and be subrogated to the rights of the holder or holders thereof.
The rights and interest herein granted, created and reserved shall extend to the respective heirs, executors, administra tors, successors and assigns of the parties hereto, it being agreed that the Grantor shall not be required to join in or ratify any oil or gas mining lease which the grantee may grant by virtue of his ownership hereunder and that Grantor shall be entitled to none of the bonus money therefor and to no part [emphasis added] of the delay rentals paid thereunder; it being further understood that any change of ownership of the one-sixteenth (½6⅛) royalty belonging to the Grantor, whether effected by conveyance, will, partition or otherwise, shall entitle the respective owners only to their proportionate part of said royalty, and that the Grantee shall not be responsible for the payments or delivery of said royalty to any new owners unless and until he shall be furnished with the instrument of transfer or duly certified copy thereof.
This conveyance is made subject to any valid and subsisting oil, gas or other mineral lease or leases on said land, including also any mineral lease, if any, heretofore made or being contemporaneously made from Grantor or Grantee, but, for the same consideration herein-above mentioned, Grantor has sold, transferred, assigned and conveyed and by these presents does sell, transfer, assign and convey unto Grantee, his heirs, successor and assigns, the same undivided interest (as the undivided interest hereinabove conveyed in the oil, gas and other minerals in said land) in all the rights, rentals, royalties and other benefits accruing or to accrue under said lease or leases from the above described land; to have and to hold unto Grantee, his heirs, successors and assigns.
TO HAVE AND TO HOLD the above described property, rights, interest and privileges, together with all and singular the rights and appurtenances thereto in anywise belonging unto the said Grantee, his heirs, executors, administrators and assigns forever; and I do hereby bind myself, my heirs, executors, administrators and assigns, to warrant and forever defend all and singular the said property, rights, interest and privileges unto the said Grantee, his heirs, executors, administrators and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof.
WITNESS the hand of the Grantor this 17th day of Nov., 1939.
Witnesses;
R.W. DeGraw
W.J. Kerley
Tom Price
Mollie Price
The form used by Wagner is not a familiar form. We do not know how often it was used in 1939, but the parties have cited no reported decisions of this Court interpreting the provisions of a mineral deed on this form.
The central question in this case is who had the right to execute oil and gas leases following the execution of the instrument, the grantee Wagner or the Price grantors. We recently had to answer the same question, albeit on a different form in Thornhill v. System Fuels, Inc., 523 So.2d 983 (Miss.1988).
There really can be no question but that the instrument clearly and specifically conveyed unto the grantee Wagner an undivided fifteen-sixteenths interest in all the oil and gas minerals with the right to explore for oil and gas. The grantor reserved only a one-sixteenth (Vie) royalty interest in the oil and gas produced, and specifically stated that the grantor would not be required to join or ratify any oil and gas lease, and would not be entitled to any bonuses or delay rentals from any oil and gas lease.
The only ambiguity in this instrument, if any, pertains to the one-sixteenth interest which was not conveyed. The chancellor held this to be a full one-sixteenth royalty interest with the right of the grantor to receive absolutely a full one-sixteenth royalty on all of the oil and gas produced. This is how the parties had treated the instrument, and this was in favor of the grantor. There is no ambiguity whatever in this instrument vis-a-vis the grantors and grantee as to the executive right. The grantee acquired this complete right by the clear and unequivocal terms of the deed.
To argue otherwise from the terms of this deed is a vain exercise.
The appellants contend, however, that under our holding in Clark v. Carter, 351 So.2d 1333 (Miss.1977), this instrument should be construed as a conveyance of a one-sixteenth non-participating royalty interest only.
Clark v. Carter is another instance where this Court, as in Harris v. Griffith, 210 So.2d 629 (Miss.1968), overruled in part in Thornhill v. System Fuels, Inc., supra, on a very special set of facts, interpreted what otherwise would have been construed a mineral deed as a royalty conveyance only. That case, however, is distinguishable.
In Clark v. Carter, Will and Dolly Carter, she being illiterate, on June 26, 1944, executed an oil and gas lease to W.T. Ro-well. On the same day they executed a Form R-101 mineral deed to Rowell conveying all their mineral interest in the same realty. In a suit to construe the instrument, the chancellor held only the Carters' royalty interest was conveyed, and that they retained all rights to execute oil and gas leases, and receive bonuses and delay rentals therefrom.
We affirmed. To us, with no explanation for having done so in the record, it was superfluous to simultaneously execute to the same leasee and grantee an oil and gas lease and a conveyance of all the minerals. Rowell owned the minerals, so why have the Carters executed an oil and gas lease? In our view, the parties must have intended that Rowell obtain only the Carters' entire royalty interest, but the Carters retain all other incidents of ownership. As we have held in Westbrook v. Ball, 222 Miss. 788, 77 So.2d 274 (1955); Mounger v. Pittman, 235 Miss. 85, 108 So.2d 565 (1959); and Thornhill v. System Fuels, Inc., supra, the incidents of ownership of minerals can be conveyed separately or together.
While the conveyance in each case was on separate forms, the distinguishing factor to us between the two cases is that in Clark v. Carter, supra, under the precise terms of the instruments the Carters had no mineral interest whatever, and this Court did not believe the parties contemplated this result. In this case, the Prices clearly retained a full one-sixteenth royalty interest. We see no reason to apply the holding of Clark v. Carter, under very exceptional circumstances, to this case.
The decree of the chancery court will be affirmed.
AFFIRMED.
HAWKINS, P.J., and PRATHER, SULLIVAN and ANDERSON, JJ., concur.
ROBERTSON, J., concurs with written opinion.
DAN M. LEE, P.J., ROY NOBLE LEE, C.J., and GRIFFIN and ZUCCARO, JJ., dissent.
APPENDIX
. Knox died just prior to the chancery court decision, and her cause was revived in the name of her adopted daughter Linda Faye Echols.
. If the grantee had reserved only an undivided one-sixteenth mineral interest, as opposed to a one-sixteenth royalty interest, it might be argued that the grantor would only be entitled to receive one-eighth of one-sixteenth of the oil and gas produced, a result the parties expressly excluded.