Court Opinion

ID: 4898176
Source: CourtListenerOpinion
Date Created: 2021-09-03 00:12:32.024563+00
Date Added: 2024-06-11T08:12:50.345098
License: Public Domain

Mr. Justice Garwood
joined by Justice Culver dissenting.
As the author of the original opinion of the Court now withdrawn on rehearing, I submit herewith, by way of dissent and in the interest of time, the same opinion with exception of the statement of the facts, which substantially corresponded to that of the new opinion of the Court:
We shall assume that the royalty clause, in consonance with decisions such as Lacy v. Jarrett, Texas Civ. App., 214 S.W. 2d 692, wr. of er. refused, refers to and describes 1/8 of 40/40 of the total production from Survey 14, and that there is nothing on the face of the lease, or in its nature as a lease, unless it be the warranty, to vary the effect of such a royalty stipulation where the lessors have less title than the granting clause purports to convey.
What, then, is the effect of the warranty? In the Lacy case, in which the lease in question evidently contained a warranty, the court held that the fraction of total production, from which the $15,000 reserved oil payment in question was stipulated to come, should not be reduced merely because the lessor actually owned but 7/12 of the three lots of which the granting clause purported to lease the full interest. But notwithstanding our earlier approval of the opinion in that case, we cannot well ignore the fact that the existence of the warranty was not even mentioned, and that evidently no argument based on the principle of Duhig v. Peavy-Moore Lumber Co., 135 Texas 503, 144 S.W. 2d 878, was made. The only point referred to in the opinion was whether the words in the oil payment clause, “from said land under this lease,” referred to the 7/12 interest that actually passed under the granting clause (as in Hooks v. Neill, Texas Civ. App., wr. of er. refused, 21 S.W. 2d 532) or the tracts of land described in that clause (as in King v. First National Bank, 144 Texas 583, 192 S.W. 2d 260, 163 A.L.R. 1128).
The King case is also much relied on by the petitioner here, but is less in point than Lacy v. Jarrett, in that the granting clause in the former purported to convey the exact interest *307which the grantor owned, to wit, “* * * all that certain undivided one-half (%) interest (being all of the interest owned by the grantor) in and to the following described land * * *,” while in the Lacy and instant cases the granting clause purported to convey the full ownership, as against an actual ownership of a mere fraction. Naturally the warranty did not enter into the King decision, which went off largely on other considerations. These latter were: (a) whether the reference in the royalty clause to “ ‘the hereinabove described land’ ” meant what it said or meant something such as “the hereinabove conveyed interest in the hereinabove described land;” and (b) whether the reservation of “one-eighth (1/8) of the usual and customary one-eighth royalty interest reserved by the landowner in oil and gas * * * that may be produced from the above-described land,” should be taken to mean only half of the stated fraction, merely because the granting clause conveyed (and purported to convey) only a half interest in the land.
In the instant case we are not at all concerned with the correctness of the general proposition that a grantor or lessor may validly reserve a royalty amounting to even more than 5/9 or 55 per cent of the production corresponding to the interest conveyed or leased by him. We are concerned with whether a lessor accomplishes that result where his warranted conveyance is in fact false in that he does not own all he purports thereby to convey.
The now familiar holding of the Duhig case, supra, is that where a grantor purports to convey land, reserving half of the minerals, and there is already a half interest outstanding, the deed being taken as intending to reserve the half which was not outstanding, the effect of the warranty is to defeat the reservation by way of estoppel. Subject to the questions hereinafter discussed, we think the same equitable principle applies where a lessor purports to lease with warranty 40/40 of the minerals and purportedly reserves 1/8 of 40/40 as royalty, when actually he owns only 9/40.
That the principle of the Duhig case is sound we have reaffirmed as lately as Benge v. Scharbauer, 152 Texas 447, 259 S.W. 2d 166. There we actually applied it to the extent of vesting in the grantee a 2/8 mineral interest corresponding to the 2/8 interest outstanding, although under the facts of that case, we did not apply it so as to reduce the royalty. The Benge case does not say that the Duhig rule applies only to reservations of mineral interests as distinguished from royalties. It is not *308even cited by the petitioner in this Court in support of her position. Here, there is no possible way to satisfy the warranty unless by reducing the royalty.
We may, of course, speculate at length over whether the parties to the instant case actually meant what the lease says and, if not, just what they did mean. From any point of view, the contract, as applied to the actual facts, is peculiar. But the contract itself not being ambiguous, we cannot depart from its terms. The royalty clause undoubtedly stipulates 1/8 of 40/40 ■of the production from the tract. But with equal clarity the granting clause refers to 40/40 of the minerals, and the warranty clause warrants the title of the lessors. How are we to say that the royalty clause is to be respected, but that the granting clause and the warranty are not to be respected? The net result of the contract as written is that the lessee is to get 35/40 (that is, 40/40 less royalty of 5/40) of the production from the whole tract, and the lessors warrant their title accordingly. But the lessors actually own only 9/40 and therefore cannot keep their bargain that the lessee shall have 35/40 by the lease. There is little justice in holding the lessee to one part of the contract while not holding the lessors to another part. As before indicated, the mere fact that, as in the King case, supra, the parties could have validly contracted for the lessee to pay a royalty of 1/8 of 40/40, or 5/40, and thus to get by the lease only a net ownership of 4/40 (9/40 - 5/40), or less oil than the royalty owner gets, does not mean that they did so contract.
The theoretical result of applying the Duhig rule here is, of course, that the lessors get nothing from their lease, and obviously that, too, is somewhat peculiar. But such was the result in the Duhig case, and actually the result here, under the position to which the respondents have firmly committed themselves, is that the petitioner gets the more or less usual royalty corresponding to her actual ownership. The other lessors are not parties to this litigation and, for whatever relevance the matter may have, are evidently accepting such a royalty without question.
Klein v. Humble Oil & Refining Co., 126 Texas 450, 86 S.W. 2d 1077, 1080, which, like the Duhig case, is relied on by the respondents, supports the thesis of the latter to the extent of an apparent emphasis on what the lessor purported by the granting clause to lease in determining the effect upon the 1/8 royalty reservation of an outstanding interest of 1/8 reserved by a remote grantor. The decision was that the royalty reserved *309in the lease was simply the outstanding interest, so that the lessor in effect got nothing by his lease, and possibly this was because the granting clause in the lease (like that in the instant case) purported to apply to the full mineral interest and was accompanied by the usual warranty. But the point actually disputed by the parties seems to have been as to whether the outstanding interest was one of a royalty which the lessor was authorized to incorporate in the lease or was something else, the court holding it to be the former by reason of recitals in sundry documents of record. The court also stated that the proportionate reduction of royalty clause in the lease did not “operate to reduce the estate which the lessor purported to convey,” since otherwise it would have “the effect of nullifying the warranty.” The matter of warranty is not elsewhere referred to nor is that of the proportionate reduction clause.
In the Duhig case, supra, which came after the Klein case, the Court of Civil Appeals rested its conclusion upon the latter and held that Duhig’s deed should be construed as meaning merely to reserve the half interest which had been reserved by his remote grantor. But the Supreme Court deliberately took what it evidently considered to be an essentially different course, treating the deed as purporting to convey the half interest purportedly reserved and holding Duhig- estopped by his warranty. See 135 Texas, p. 506, 144 S.W. 2d p. 879. We are thus rather doubtful as to what effect we might here give the Klein case.
The petitioner argues that our view as thus far stated amounts to putting back into the lease the proportionate reduction clause which the parties deliberately struck out. But, even assuming the fact of the provision having been stricken to be evidence that it was stricken in order to contract, in effect, upon the basis of a contrary provision, we yet fail to appreciate its competency when the petitioner herself asserts the instrument to be on its face unambiguous, as it is. The other parol evidence in the case (as in the Duhig case) does not deal with the meaning of that instrument, but simply gives the facts to which the instrument must be applied.
But the more difficult question arises from the argument of the petitioner that: (a) the Duhig type of case reaches its result in order to avoid what would otherwise be a breach of warranty; (b) there can be no talk of breach of warranty here because, unlike the Duhig situation, the outstanding interest was owned by the respondents themselves at the time the warranty was given. In support of this, the petitioner cites Rancho *310Bonito Land & Livestock Co. v. North, 92 Texas 72, 45 S.W. 994, undoubtedly holding — as to deeds of land generally — that ownership of the outstanding paramount title by the grantee at the time the warranty was given, although the grantee may not have known that he did own it (as where there is an unsuspected conflict between surveys) prevents an action for damages by the grantee on the warranty. Admittedly the holding is simply an application of the old and still subsisting rule that such actions are conditioned upon an eviction, actual or constructive, else the warrantor would be unfairly deprived of the chance that his potential liability might disappear by acquisition of the outstanding title through limitations. More specifically it was said in the Rancho Bonito case that to allow the warrantee to recover when he himself owns the outstanding title, would be to eliminate the requirement of eviction, since a person cannot well evict himself.1
The rule, by the terms of the opinion, applies primarily to actions for damages as distinguished from equitable proceedings, especially those of a defensive nature, where the grantee asserts fraud, mistake, or even ignorance of the outstanding title. While in the latter we have dispensed with the requirement of eviction, we have yet held that, if the grantee on taking the deed knows of the outstanding title, he may not resist payment of vendor’s lien notes on the ground of breach of warranty, but must pay and then sue for damages if and when evicted. Brock v. Southwick, 10 Texas 65.2 See also May v. Ivie, 68 Texas 379, 381, 4 S.W. 641; Haralson v. Langford, 66 Texas *311111, 18 S.W. 339; Turner v. Neel, Texas Civ. App., 231 S.W. 2d 660. On the other hand, we have held that an action for breach of warranty is not foreclosed by the fact that the warrantee took the deed with knowledge of the outstanding interest. City of Beaumont v. Moore, 146 Texas 46, 57, 202 S.W. 2d 448, 455.
But the matter of the warrantee’s ownership of the outstanding interest has no effect in a Duhig case type of situation. That decision was expressly an extension of the equitable principle applied in the doctrine of after-acquired title. However, the title which the court treated as “after-acquired” was not a title purchased by the grantor from a third party as in the ordinary instance of the doctrine. It was the very title which the grantor himself reserved in the deed to the grantee, even as the royalty is in the instant lease. Since the reservation itself is what in effect passes to the grantee in order to forestall the “contradition or breach of the warranty,” [135 Texas 503, 144 S.W. 2d 880], how can the ownership of the third party outstanding title by the grantee logically have anything to do with the matter? As the respondents well observe, it would have made no difference in the Duhig case if the grantee in the Duhig deed had owned the half interest that was then outstanding in Duhig’s remote grantor.
The mere knowledge by the respondents of the outstanding 31/40 interest in Survey 14 is likewise immaterial. What difference would it have made in the Duhig case if Duhig’s grantee had known (as it doubtless did) of the half interest outstanding in Duhig’s remote grantor? If the Duhig deed itself purported to reserve the other half, then certainly his grantee knew it, and yet that reservation was held to be in effect destroyed by the warranty. As before stated, even in an ordinary suit for breach of warranty, knowledge of the outstanding interest by the plaintiff grantee is no defense. City of Beaumont v. Moore, supra.
Resting our views largely on the Duhig case, we conclude that the judgments of the trial court and Court of Civil Appeals in favor of the respondents were correct, and accordingly should be affirmed.
Opinion delivered July 25, 1956.

“If the covenantee were to procure the holder of the superior title to evict him, certainly such act would debar him from his action upon the covenant, and we think the same would be true if he were to purchase such title when it had not been asserted, for in each of such cases but for his own act his title might have remained unquestioned until perfected by lapse of time. To the benefit of such contingencies the vendor is entitled as well after as before his conveyance, and the covenantee who has been placed in privity with the title and often in possession of the land will not be permitted to deprive him thereof. There can be no legal eviction or turning out unless and until a superior title has been without the invitation of the covenantee pressed upon him. * * * *. If in such cases he yields to a force he cannot resist, he is, in contemplation of law, evicted. But to hold that this is so when he, as in the case before us, discovers that he really owned the superior title before he purchased from his warrantor, would be extending the rule beyond its reason. It could only be applied to such a case by holding that he could evict himself by electing- to hold under his superior title upon its discovery. But we have seen that legal eviction cannot be predicated upon the., mere voluntary act of the covenantee.” 92 Texas 75-6, 45 S.W. 996.

“It is fair to conclude that he considered his purchase worth, or that he was willing to give, the stipulated price, notwithstanding the defect of title; or that he chose to take the chances as to the title, and have his recourse upon the covenants in his deeds in ease of eviction. * * * * Had the defendant been deceived as • to the title * * * by the fraud of the vendor, or had he been ignorant of the dfefect of title,, a very different case would have been presented.” (10 Texas 65, 68-9).