Court Opinion

ID: 2749614
Source: CourtListenerOpinion
Date Created: 2014-11-08 04:13:14.919459+00
Date Added: 2024-06-11T11:26:37.784308
License: Public Domain

In The
                              Court of Appeals
                     Seventh District of Texas at Amarillo

                                   No. 07-13-00304-CV

                          MCT ENERGY, LTD., APPELLANT

                                            V.

             KEVIN COLLINS, EXECUTOR AND BENEFICIARY OF THE
                  ESTATE OF LINDA LOU COLLINS, APPELLEE

                         On Appeal from the 286th District Court
                                  Cochran County, Texas
                Trial Court No. 11-09-4251, Honorable Pat Phelan, Presiding

                                     October 21, 2014

                            MEMORANDUM OPINION
                Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.

      We are asked to resolve a dispute regarding whether Kevin Collins, as the

executor and beneficiary of the estate of Linda Lou Collins, (Collins) owns a 1.974%

working interest in two particular oil and gas leases. Collins commenced an action

against MCT Energy, Ltd. (MCT), seeking a declaratory judgment pronouncing that he

owned such an interest.     So too did he allege causes of action sounding in fraud,

breached contract, and, eventually, trespass to try title. Collins’ position is based upon

a document signed in 1983 purportedly by the predecessors-in-interest of both Collins
and MCT.     Of course, the latter disputed Collins’ claim and moved for summary

judgment. Collins responded by seeking a partial summary judgment declaring that he

owned the working interest. The trial court granted Collins’ motion. Thereafter, a trial

was convened on the issue of damages. Upon the jury rendering a verdict favoring

Collins, the trial court issued its final judgment reiterating that Collins owned a 1.974%

interest in the leases and awarding the damages found by the jury.

      MCT appealed and contended that 1) the trial court erred in granting a partial

summary judgment because the 1983 document purporting to evince a conveyance of a

1.974% working interest was not a deed or conveyance, 2) the method for adjudicating

the claim was through an action for trespass to try title, not a declaratory proceeding, 3)

the 1983 document was ambiguous, 4) the trial court erred in awarding attorney’s fees

based on a declaratory judgment cause of action, 5) the trial court erred in awarding

damages based on a four-year statute of limitations instead of a two-year statute, and 6)

the trial court erred in denying its motion to transfer venue. We reverse and remand.

      1983 Writing

      As mentioned, MCT opens its attack upon the final judgment by contending that

the 1983 document was not a conveyance or deed. That is, it “contained no words of

grant and, thus, failed to meet the essential elements of a conveyance . . . [it] did not

contain any words suggesting a present intent to convey property, and as such, was not

a conveyance as a matter of law.”

      To address the argument, we turn to the writing itself. It reads as follows:

      WHEREAS, an agreement was entered into on or about May 5, 1956
      between F.M. LATE/LATE OIL COMPANY, and Louis C. Wacker, which
      acknowledged and honored his/her/their (1.974%) Working/Royalty
      Interest in the following described Oil and Gas Lease . . . .

                                            2
       FURTHER, it was understood and agreed between the parties that all
       income and expense would be either disbursed or billed to any other
       interested parties by F.M. Late/Late Oil Company under the specific verbal
       agreement between Operator, Getty Oil Company, and F.M. Late/Late Oil
       Company.

       As of date indicated below, the Working/Royalty Interest held by Louis C.
       Wacker is 1.974%.

       This agreement is drawn and acknowledged between the aforesaid
       parties for reference purposes only, and is not [sic] be recorded.

       Dated this 24th day of May, 1983.

(Emphasis added). The document was signed by F.M. Late and “ACKNOWLEDGED

and AGREED” to by Louis C. Wacker.1                      According to MCT, an “instrument of

conveyance must . . . contain the essential characteristics of a deed.” The “essential

characteristic” purportedly missing in the 1983 instrument is words expressing an

intention by Late to convey to Wacker an interest in the property. The authority cited by

MCT to support its position, i.e., Gordon v. West Houston Trees, Ltd., 352 S.W.3d 32

(Tex. App.—Houston [1st Dist.] 2011, no pet.), does express that the instrument is

effective if it contains, among other things, “operative words or words of grant showing

an intention by the grantor to convey to the grantee title to a real property interest.” Id.

at 43. It further states that there is no longer a requirement that the instrument have all

the formal parts of a deed recognized at common law or contain technical language to

be effective. Id.; accord Green v. Canon, 33 S.W.3d 855, 858-59 (Tex. App.—Houston

[14th Dist.] 2000, pet. denied) (stating that “[t]here is no longer a requirement, as there

was at common law, that a deed or instrument to effect conveyance of real property

have all the formal parts of a deed formerly recognized at common law or contain

       1
           Late was MCT’s predecessor-in-interest while Wacker was that of Collins.

                                                    3
technical words”). Instead, the writing is enforceable if, when read in its entirety, one

can ascertain 1) a grantor and grantee and 2) intent by the former to convey an interest

in sufficiently described realty to the latter.2 Id. Again, no technical words, such as

“convey,” “sell,” “grant,” “assign” or the like, need be used to express the requisite

intent. It is enough if the words actually used reveal that intent.

        While the 1983 document contains no words like “convey” or “grant” or “sell,” it

nonetheless refers to an “agreement” made in 1956 between Late and Wacker that

“acknowledged and honored” Wacker’s 1.974% interest in the leases at issue.

Thereafter, the parties to the “agreement” reiterated that the interest “held by Louis C.

Wacker is 1.974%.” Read as a whole, the language of the document illustrates that

both Late and Wacker intended that Wacker own the 1.974% interest in the leases.

Whether the ownership came through a gift, purchase, or some other mechanism is

unimportant; Late (MCT’s predecessor-in-interest) intended, since 1956, that it belong

to Wacker. So, we conclude that the language is enough to satisfy the “intent” prong

mentioned in Gordon and Green and overrule MCT’s first issue3

        The concern now becomes, though, the nature of the interest conveyed. MCT

disputes that it is the type of interest sought by Collins, that is, a working interest in the

leases. That leads us to the next point urged in the appellant’s brief.

        2
         Of course, the purported grantor must also sign the instrument. Green v. Canon, 33 S.W.3d
855, 858-59 (Tex. App.—Houston [14th Dist.] 2000, pet. denied).
        3
         Though MCT did not allude to it in its brief, evidence appears of record disclosing that Wacker
and his successors-in-interest have been receiving proceeds from that interest from both MCT and its
predecessors-in-interest.

                                                   4
        Trespass to Try Title

        To the extent that Collins sought an adjudication that the right encompassed by

the 1983 document was a working interest, MCT argued below and here that the only

means by which such an adjudication could occur was through an action in trespass to

try title. It could not be resolved through an action for declaratory judgment or a partial

motion for summary judgment seeking declaratory relief. We agree.

        A working interest is a mineral interest, Steger v. Muenster Drilling Co., 134
S.W.3d 359, 367 n.7 (Tex. App.—Fort Worth 2003, pet. denied), or interest in land.

Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 437 (Tex. App.—Dallas 2002, pet.

denied). It provides the interest holder with the right to drill, produce, and otherwise

exploit the minerals encompassed by it. H.G. Sledge, Inc. v. Prospective Inv. & Trading

Co.,    36 S.W.3d 597,    599     n.3    (Tex.     App.—Austin        2000,      pet.    denied).

Given that, the interest is deemed possessory, as opposed to a royalty interest which is

non-possessory. See Natural Gas Pipeline Co. v. Pool of Am., 124 S.W.3d 188, 192

(Tex. 2003) (stating that a “royalty interest, as distinguished from a mineral interest, is a

non-possessory interest”). This is of import because an action in trespass to try title is

the way by which the judiciary determines title to land or other real property.4 TEX.

PROP. CODE ANN. § 22.001(a) (West 2000) (stating that a “trespass to try title action is

the method of determining title to lands, tenements, or other real property”). Indeed, it is

        4
            To be the fodder for an action in trespass to try title, the interest (though in land) must be
possessory. See Richmond v. Wells, 395 S.W.3d 262, 266-67 (Tex. App.—Eastland 2012, no pet.)
(holding that the claimant need not have prosecuted an action in trespass to try title because the interest
involved was non-possessory); Glover v. Union Pac. R.R., 187 S.W.3d 201, 210-11 (Tex. App.—
Texarkana 2006, pet. denied) (stating that “[b]ecause trespass to try title is a possessory remedy,
however, a non-possessory interest such as an overriding royalty interest is not suitable for a trespass-to-
try-title suit”); T-Vestco Litt-Vada v. Lu-Cal One Oil Co., 651 S.W.2d 284, 291 (Tex. App.—Austin 1983,
writ ref’d n.r.e) (stating that an action in trespass to try title was unavailable even though the type of
royalty involved was “an interest in land” because it was a non-possessory interest).

                                                     5
the sole or exclusive way by which such title is determined. Tex. Parks & Wildlife Dep’t

v. Sawyer Trust, 354 S.W.3d 384, 389 (Tex. 2011).

       Again, Collins is claiming ownership of or title to a working interest in the

minerals encompassed by two oil and gas leases. That right to produce, exploit, and

participate in the production of the minerals was and is a possessory interest in real

property. So, his claim fell within the scope of § 22.001(a) of the Texas Property Code.

Thus, the exclusive way by which the claim could be adjudicated was through an action

in trespass to try title. Here, however, Collins did not seek summary judgment on that

basis. Instead, he requested “partial judgment on his claim for Declaratory Relief,”

which request the trial court granted.           Consequently, that manner in which title or

ownership was adjudicated was statutorily prohibited.5

       In sum, the trial court erred in entering summary judgment decreeing that Collins

owned a 1.974% working interest in the leases mentioned by the 1983 document. This

error was also harmful since it resulted in the rendition of an improper judgment.

       Accordingly, we reverse the judgment and remand the cause to the trial court.

                                                               Brian Quinn
                                                               Chief Justice

       5
          Collins cites Teon Management, LLC v. Turquoise Bay Corp., 357 S.W.3d 719 (Tex. App.—
Eastland 2011, pet. denied) as permitting the use of a declaratory proceeding to adjudicate the dispute
here. Teon suggested, in dicta, that a declaratory action may be appropriate to construe an assignment
and determine the percentage of the ownership conveyed by it. Id. at 727. Yet, we do not have before us
a situation wherein the parties agree that an assignment was made and only the percentage assigned
necessitated resolution via construction of the document manifesting the transaction. Our dispute
concerns whether any mineral interest was actually conveyed.

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