Opinion ID: 1898696
Heading Depth: 1
Heading Rank: 1

Heading: the chain of title, the mineral deed in question, and the facts

Text: On July 8, 1937, Carl F. Griffith executed an oil, gas and mineral lease to Vaughan, who assigned it to Sun Oil Company. There was later production from this lease, and it remained in effect until 1959. On November 21, 1944, Carl F. Griffith and wife executed a deed to B.C. Griffith (correcting one of July 24, 1944) conveying to him a 1/32 royalty, 64 and 3/4ths full royalty acres. On August 11, 1944, Carl F. Griffith and wife executed the deed in question in this suit. It was properly acknowledged and filed for record on August 24, 1944. At this time Carl F. Griffith was a farmer with a ninth grade education. Payne was an experienced oil and gas operator and investor. The deed is as follows: On November 13, 1944, Payne conveyed to Cockburn a 1/8 mineral interest on a Form R-101, without any revisions. On February 27, 1945, Payne executed a deed of trust to a trustee for Rogers Lacy, beneficiary, in which he stated his intention to convey 1/2 of the interest in the minerals conveyed to him by Carl F. Griffith and wife by the 1944 deed, with the intention of grantor to convey 32 3/8 full mineral acres of said lands, the same being non-participating as to bonus and lease rentals. On March 13, 1947, Cockburn conveyed to Rogers Lacy of Longview, Texas, a 1/8 mineral interest. Appellants claim through Lacy. On November 14, 1947, Payne executed a deed of trust to a trustee for a bank, covering his undivided 1/64 royalty interest in the minerals in the stated lands. On June 21, 1949, Payne executed a non-participating royalty deed to Peterson, which included the following statement: It is the intention of the grantor to convey 32 3/8 full royalty acres in said land and being the same interest conveyed in trust in the same lands as described in the Deed of Trust executed by Thomas O. Payne to S.W. Breeding, Trustee, Rogers Lacy, Beneficiary of record in Book 130, page 440, Oil and Gas Records of Jefferson Davis County, Mississippi. In 1945, Sun Oil Company secured gas production on a unit which included the subject property. Sun Oil Company paid a 1/64 royalty attributable to its production from said land to the Rogers Lacy interest. In 1959, after cessation of commercial production under the Sun lease, Carl F. Griffith sought a release from Sun of its lease, and finally employed attorneys for that purpose. The defendants contributed nothing toward getting this release, and did not assert a claim that they owned anything other than a royalty. Griffith paid forty per cent of his mineral estate as an attorney's fee to secure the cancellation of the Sun lease. In 1960 Gulf Oil Corporation and other operators, including appellees B.C. Griffith and M.M. McGowan, completed a deep gas well on Gwinville Unit No. 105, which embraced the subject property and other lands. On December 8, 1959, complainants McGowan and B.C. Griffith executed Gulf's Operating Agreement, and paid Gulf all billings to them for drilling and development costs of the Carl F. Griffith tract in Unit No. 105. Gulf's No. 105 well produced poorly, so Gulf terminated its operations, and in 1963 Jack E. Stack, Jr., became the operator. Subsequently, production was increased considerably, and the well became a paying venture. When Stack took over operation of the well, it was $472,772.00 in debt. At that time complainants had paid to Gulf expense payments of $34,479.30, attributable to the 1/8 interest in the Carl Griffith land. Complainants McGowan and Howie acted as operators of the Griffith tract included in Unit No. 105, and payments of revenue for minerals taken from that tract (except for the Stack interest) were made to them. Defendants Crain and Griffith declined to sign a division order, which reflected that they were the owners of 1/8 of the 1/8 royalty attributable to the Griffith land. The money assigned to this asserted royalty interest has been placed in an escrow account, and complainants admit that Crain and Griffith are entitled to it. McGowan pleaded that he was willing and able to disburse such funds to Crain and Griffith upon receipt of a properly executed division order. After drilling and completion costs were more than offset by production income, in July 1966, an oil and gas lease dated 1960 to James W. Harris was acknowledged by Mesdames Crain and Griffith and filed for record. It provided for an overriding royalty to lessors. No cash bonus money was paid them. On the theory that the deed was ambiguous, complainants introduced extrinsic evidence to show various alleged circumstances, including conversations, surrounding the execution of the Griffith-Payne deed. The chancery court held that, considering the instrument as an entirety, it was the intention of the parties to convey to Payne a non-participating royalty. Alternatively, if the instrument is ambiguous, the trial court stated that, in view of the extrinsic evidence, the general situation of the parties, and the practical construction by them, the deed conveyed only a non-participating royalty. Hence the chancery court ordered cancellation of the lease from Crain and Griffith to James W. Harris, dated 1960, but acknowledged and recorded in 1966. It denied any relief on the cross-bill.