Court Opinion

ID: 9660924
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:24:20.583727+00
Date Added: 2024-06-11T18:14:23.440740
License: Public Domain

JUSTICE HAMILTON,
dissenting.
The dissenting opinion delivered on November 29, 1961, is withdrawn, and the following is substituted therefor:
I respectfully dissent from the Court’s opinion.
It appears to the writer that the contract is unambiguous and should be construed by this Court. The rider, which deals with the subject of payment of rentals in case of discovery of gas, is in conflict with the rental-paying provision of the main *349body of the lease, and no ambiguity arises when the rider is construed in connection with such provision. The question of ambiguity arises only when an attempt is made to lift a part of the first sentence in the rider, that is, “one well will hold only 640 acres” out of context and apply it to the habendum clause, the subject matter of which is wholly foreign to the subject matter of the rider.
It appears that where two possible constructions could be placed upon a contract, one of which would cause a conflict between two provisions and another would harmonize the two provisions, that the latter would be the reasonable construction and the other would not be reasonable. This rule of construction is supported by a decision of this Court in Universal C.I.T. Credit Corporation v. Daniel, 150 Texas 513, 243 S.W. 2d 154, cited by the majority opinion in support of its holding that the contract is ambiguous. The Court in that case, after stating that the primary concern of courts is to ascertain and give effect to the true intention of the parties, said:
“To achieve this object the courts will examine and consider the entire writing, seeking as best they can to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless.”
It is clear from a reading of the rider that its subject matter is the payment of rentals, in case of gas production. No other subject is dealt with. The first three sentences therein deal with the matter of payment of rentals. The first two sentences simply modify the rental provision in the lease, so as to provide that in case of gas production, rentals are payable on all the acreage except the 640 acres per well, and even the 640 acres on which a gas well is drilled is not entirely exempt. If the royalty does not amount to as much as the annual rental on 640 acres, the difference is to be made up so that the revenue therefrom is not to be less than the rentals would have been for that acreage.
The third sentence simply says what is meant by the rider. That is, that payments under the lease, regardless of gas production, shall never be less than the rentals provided for in the lease ($3,040.00) during any twelve months’ period. The lessor, for whose benefit this rider was placed on the lease, put her own interpretation on the rider by adding the third sentence to the first two sentences. It adds nothing to the contract except to make certain that the lease is not divisible. The Court of Civil *350Appeals says it was added for emphasis. I think we should give effect to that emphasis.
The fourth sentence makes the rider provision controlling over conflicting provisions contained in the main body of the lease. Full effect is given to this sentence when the rider is construed as modifying the rental payment provision in the lease. No one contends that the rider is ambiguous as applied to the rental payment provision, and everyone admits that the rider and rental payment provisions are in conflict.
It should be held that since the rider refers only to the payment of rentals, it necessarily follows that it applies only to the primary term. Its purpose was to assure to the lessor during the primary term a continuance of the rental payments without any reduction in the total revenue received after production of gas was obtained. This construction is in accord with that given similar provisions by the courts of Texas and by the Fifth Circuit Court. Waggoner Estate v. Sigler Oil Co., 118 Texas 509, 19 S.W. 2d 27; Lido Oil Company v. W. T. Waggoner Estate, 31 S.W. 2d 154, error refused; Johnson v. Montgomery, 31 S.W. 2d 160, writ refused; Glasscock v. Sinclair Oil Company, 185 Fed. 2d 910, 5th Cr. Ct.
The Waggoner Estate v. Sigler Oil Company case involved a lease which provided that one well would hold 2000 acres in a square around the well, and rentals were to be paid on the balance of the acreage. Suit was to cancel the lease on all acreage outside that held by each well. Only 3000 acres were involved, the rest of the 87,000 acres having been assigned to the Waggoner Estate. The suit was primarily for cancellation on account of nondevelopment. However, the primary term had expired. The court held that the lease was valid as to the acreage outside of the 2000 acres agreed to be held by one well. It did not discuss the matter which we have before us, but in the Lido v. Waggoner Estate case, which was the second appeal of the same case, the court, at page 159, 31 S.W. 2d, specifically construed the former opinion by the Supreme Court as holding that the proviso that one well would hold 2000 acres applied to the rental payment period only.
The Glasscock v. Sinclair Oil Company case, instead of saying that one well would hold only 640 acres, says that “production from any well thereon shall continue this lease in force only in so far as this lease covers a tract for each such well * * * containing not more than 640 acres”, rentals to be paid on bal*351anee of the acreage. (Emphasis ours.) Each of these cases had a similar habendum clause and a similar rental payment provision to that contained in the Archer lease, and in each of the cases it was held there was no ambiguity and that the provision applied only to the rental payment provision and did not apply after the primary term.
Under the above authorities and the accepted rules of construction, I would hold the lease to be valid and binding as to the entire acreage covered thereby, since it is undisputed that there is paying production on Section 285.
ASSOCIATE JUSTICE SMITH joins in this dissent.
Opinion delivered April 4, 1962.