Court Opinion

ID: 5019776
Source: CourtListenerOpinion
Date Created: 2021-10-01 03:58:04.73345+00
Date Added: 2024-06-11T08:17:43.447909
License: Public Domain

The first paragraph of the conveyance executed by W. H. Taylor to P. G. Malone, as copied in the majority opinion, reveals that the conveyance is of an individed one-half interest in all oil, gas and other minerals in and under the Northwest Quarter *Page 773 
(NW 1/4) of Section 22, such conveyance being subject to a then existing oil and gas lease providing for payment of a 1/8 royalty thereunder.
The second paragraph of the same conveyance provides that in the event such oil and gas lease to which the conveyance is subject and providing for 1/8 royalty, is cancelled or terminated, an undivided 1/2 interest in all oil, gas and other minerals shall be owned by each of the parties, P. G. Malone and W. H. Taylor. The conveyance, as to future leases, further provides in Paragraph Three thereof that in the event of the expiration, termination or cancellation of the said oil and gas lease then on the land that W. H. Taylor may execute and deliver all future oil and gas leases and retain the bonus and delay rentals as paid but that P. G. Malone, the grantee, 'his heirs and assigns, shall receive and be entitled to one-half 1/2 of the royalty upon oil, gas and casinghead gas, which may be paid from or upon said lands hereinbefore described under such future oil and gas mining leases, if any.' Under this last provision it is material that there is no limitation as to the royalty other than 'one-half (1/2) of the royalty'. Whether the royalty provided in the lease is 1/8 royalty or 3/16 royalty is not material as to its division as Taylor specifically provided that Malone and his assigns would receive 'one-half (1/2) of the royalty'. Taylor could have stipulated that Malone and his assigns would receive only 1/2 of the usual 1/8 royalty on all future leases but he did not do this.
As permitted under the provisions of Paragraph Three in W. H. Taylor's conveyance, above-discussed, on termination of the original lease, Taylor executed an oil and gas mining lease and under the terms of his conveyance to P. G. Malone, it is indisputable that Malone and his assigns are entitled to receive 1/2 of the royalty paid under such lease. Since P. G. Malone or his assigns own not only 1/2 of the minerals under the land but by Taylor's express written conveyance are entitled to 'one-half (1/2) of the royalty' from any future oil lease on the land as executed by W. H. Taylor, the simple issue is whether the 3/16 royalty payable upon production under the lease executed by Taylor is royalty.
The oil lease in issue reveals that W. H. Taylor placed in Paragraph Three of such oil and gas lease to J. M. Hawley et al. a provision for the payment of 1/8 royalty. He placed a further provision in Paragraph Eleven of the same lease that he was to receive one-sixteenth bonus royalty. By thus dividing the 3/16 royalty payable under the lease, Taylor sought to limit Malone and his assignees to an undivided 1/2 of the royalty of 1/8 while he, Taylor, received not only 1/2 of the 1/8 royalty but, in addition, received all of the 1/6 royalty. The entire 3/16 royalty was payable from production under the lease during its term.
An examination of Paragraph Eleven, the paragraph in which Taylor attempts to divide off 1/16 of the royalty to himself, defines the consideration payable under such paragraph as royalty but merely appends to the same the word 'bonus'. However, in the same Paragraph Eleven, as to payment of this 1/16 'bonus royalty'; Taylor provided 'delivery thereof to be made in the same manner as other royalty oil.'
It is not a sound principle of law that a grantor may make a written conveyance in fee of 1/2 of the minerals under a tract of land with a further specific provision in the conveyance that the grantee and his assigns shall receive and be entitled to 1/2 of the royalty on any future leases and may thereafter execute such future lease, and by merely dividing the royalty payable in said lease and using the term 'bonus royalty'; set apart to himself more than 1/2 of the royalty payable under the lease.
The alleged 1/16 'bonus royalty' is defined in Paragraph Eleven of the lease as royalty and is payable out of all oil production under the lease 'in the same manner as other royalty oil'. This 1/16 is royalty and Malone or his assigns are entitled to 1/2 thereof. Therefore, judgment should be rendered in this Court that the 3/16 royalty payable under Paragraphs Three and Eleven of the lease in issue is royalty and the same should be adjudged to the respective *Page 774 
owners according to their interests. Patterson v. Texas Co., 5 Cir., 131 F.2d 998; State Nat. Bank of Corpus Christi v. Morgan, 135 Tex. 509, 143 S.W.2d 757 Syl. 5; Sharp v. Fowler,151 Tex. 490, 252 S.W.2d 153-154; Schlittler v. Smith, 128 Tex. 628,101 S.W.2d 543; Vol. 31-A Tex.Jur., Section 476, pages 818-819; Davis v. Davis, 141 Tex. 613, 175 S.W.2d 226.