Court Opinion

ID: 9665191
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:42:29.206984+00
Date Added: 2024-06-11T18:15:13.775126
License: Public Domain

On Motion for Rehearing
HALL, Chief Justice.
Hazarding the probability of repeating findings expressed in our original opinion, we shall undertake'to explain in more detail the reason for our holding, and, at the same time, answer some of the vigorous contentions advanced in appellant’s motion for rehearing.
The scrivener used an oil and gas lease form known as “Producers 88 — Revised 8-42, Texas Standard Lease Form,” which in our opinion was prepared for the purpose ■of leasing from a lessor his entire interest in a tract of land, regardless of whether he owned the whole tract or only a proportionate part thereof. The provisions of •each paragraph are so synchronized, one with the other, in order for the scrivener to describe the tracts of. land involved as •a whole; then after the parties have agreed upon the amount of annual delay rental to be paid upon the whole tract to insert •such amount in the rental clause, so that under the provisions under the last sentence in the proportionate reduction clause the lessee will pay rental in proportion to the amount of interest lessor has in the land. Evidently, for convenience, this or a similar form is consistently used by the oil industry and its niceties are well recognized by this court. This form of preparing an oil and gas lease, however, is not necessarily suitable where the lessor owns a lesser interest than the whole tract but does not intend to grant a lease on all of his interest. Neither should it become effective where the lessor owns the entire tract but is only leasing a portion thereof.
Be that as it may, let us review the provisions of the lease as written, and undertake to distinguish them from the above formula as outlined. We find the scrivener using a more orthodox method of describing the real estate, in that he only describes the interest lessor is to convey, which description is referred to in the instrument as “said lands” or “lands above described.” Then we find in paragraph 4 the parties agreeing that $160.00 is the amount of annual rental to be paid on said land. At this point, no complication has arisen. However, under the last sentence in said paragraph 4, 320 acres more or less are referred to as the total amount of land considered for the purpose of executing releases and assignments, etc., by lessee. As to this particular phase of the written instrument, the scrivener was following the first formula, supra, which, among other things, requires that the tract be described as a whole. Thus, we have our first real diversity as the 320 acres last mentioned conflict with the description of the land conveyed in the granting clause. No doubt, the scrivener should have continued to follow his orthodox rule by describing said land as being a one-half undivided interest in 320 acres more or less.
Having the main issue in mind, the substance of appellant’s argument is that we should consider the description in the granting clause as though it did cover the entire east half of the section in question. While appellant, in substance, is asking us to double the amount of acreage called for in the granting clause, yet it is not willing for us to raise the amount of rentals called for in the rental clause in the same proportion. If we were to change the number of acres in the granting clause without changing the amount of rental due under the rental clause, then we would be writing a new lease for the parties, which, under the *184law, the court is prohibited from doing'. In other words, by applying such construction, we would reduce by fifty per cent the amount. of rentals which the instrument calls for to he paid upon said proportionate interest in the whole tract of land.
The saving clause, or what is here termed the proportionate reduction clause, is designed to protect the lessee in the event' the lessor owns a lesser interest in the land which he undertakes to convey. .
While seeking to ascertain, from the four corners of the instrument, the true intention of the original parties pertaining to their agreement relative to the amount of delay rentals which might 'become due lessor, we would not be applying- the “common-sense rule” by finding that both parties agreed to rely upon said proportionate reduction clause to determine such amount. ■
In our original opinion we undertook to differentiate the facts in this case from those in the King case by showing that the grantor in the King case, even though he claimed to have only owned a one-half interest in the land, specifically retained an interest in the tracts enumerated by describing them as a whole in their respective 'j units.
The discrepancy, supra, makes the instrument somewhat ambiguous, but appellant! is in no position to complain of such ambig-j uity because it has vouched for correctness of the instrument by electing to stand upon, its contents without a request for reformattion. Then too, appellant evidently has construed such conflicting statement found in paragraph 4, supra, as being a one-half undivided interest in 320 acres more or less by admitting such was the -amount of acreage conveyed in the lease; and the further admission that title to said one-half interest has not failed.
We do not agree with appellant’s contention “that where a lease covers a fractional or undivided interest, lessee may under the proportionate reduction clause reduce the rental stated in the lease,” as being the law applicable in a case where no greater interest in a tract of land is described than the portion being leased. Neither do we agree with appellant’s argument that the effect of our opinion “is to place in jeopardy the right of the lessee to reduce royalty under every producing oil and gas lease in this State in which an undivided or fractional interest was described, rather than-the entire fee simple interest, in the granting clause.” Looking to the description of the land leased, we believe the- lessee, or his-assigns, would have no difficulty in determining the amount of royalty interest which appellees should receive if and as oil is produced from said land. We need not state here that a formula used or the reason given for determining amount of rental due under a lease should necessarily be the same formula used to ascertain proportionate royalty interests in the oil if and when produced. Nothing in our opinion conflicts, with or changes the method of determining royalty and mineral interest as set out in the King and Harrison cases- cited in our original opinion.
 It has been held that delay rentals on oil and gas leases are rents, that they -accrue by mere lapse of time and do not depend on the finding or production of oil or gas and do not exhaust any substance from the land. Rentals are unlike bonus payments, which have been held to be advance royalties. Rental pay is for additional time in which to acquire a limited dominion over the land. It has also been held that rental payments- derived from oil and gas leases-on separate property become community and are considered personal property. McGarraugh v. McGarraugh, Tex.Civ.App., 177 S.W.2d 296. To -the contrary, bonus payments made for oil and gas leases upon separate property remain separate. Lessing v. Russek, Tex.Civ.App., 234 S.W.2d 891; 23 Tex.Jur., p. 123.
Deeds to lands and minerals convey future rentals due thereon, whether mentioned in the instrument or not. This is due to the fact as stated in the case of Harris v. Currie, 142 Tex. 93, 176 S.W.2d 302, 305, wherein Harris conveyed all of his right, title an-d interest in his mineral estate: “It would be unreasonable to say that R. H. Harris can collect delay rentals on the thing he has entirely parted with, when such rentals accrued after he had divested him*185self of such entire title. If the owner thereof sells land already rented or leased for ordinary rental or lease purposes, the purchaser thereof would certainly be entitled to the rent or lease money accruing after his purchase * * and is not due to the fact that rentals are appurtenances or hereditaments to land. We say this because a lessee is neither obligated nor compelled to pay rentals. 31A Tex.Jur., p. 264, sec. 153.
The holding 'by our Supreme Court in the case of Humble Oil & Refining Co. v. Harrison, 146 Tex. 216, 205 S.W.2d 355, is relied upon by appellant for authority to reduce the stated rentals which its assignor agreed to pay.appellee. The Harrison case is too complicated for a full discussion here, but it is there noted in the court’s opinion, 205 S.W.2d on page 360, under syllabi 4 and 5, “The land previously described in the deed is the entire 1074.4 acres. One-half of the delay rentals payable on the land means one-half of the entire rentals and not one-half of a fractional interest therein”, citing the King case, supra, and others.
If the description in the lease under discussion had been the same as the description in the assignment from W. L. Simmons, the original lessee, to appellant, to wit: “All of the East ⅜ of Section 208, Block D, John H. Gibson Survey,” then in our opinion the .proportionate reduction clause would apply; that is, if appellees owned a lesser interest than the whole of said land described. It is undetermined by a reading of the instrument as to whether appellees owned a greater interest in the east one-half of Section 208 than the one-half conveyed to appellant’s assignor.
Since appellees only leased a one-half interest in the east one-half of the section in question to appellant’s assignor, could it be contended by appellant that under the .provisions of paragraph 9, the proportionate reduction clause, to wit: “Lessor hereby warrants and agrees to defend the title to said land and agrees that Lessee at its option may discharge any tax, mortgage or other lien upon said kmd and in event Lessee does so, it shall be subrogated to such lien with the right to enforce same and apply rentals and royalties accruing hereunder toward satisfying same * that appellees have obligated themselves to defend the title to the other one-half interest in the land which they neither describe as owning nor leasing? Is it further contended by appellant that it could pay the taxes, mortgages or other liens that. may be due upon the other half of said undivided interest in said land and by subrogation rights recover from appellees such indebtedness so paid, even though the other one-half interest in said land may not have been owned by appellees?
Neither appellees nor appellant offered any extraneous evidence to aid the court in determining the facts of this case. It is not shown who drew the instrument or furnished the printed form in order that the court might construe same most strongly against such person. The following general rule that is used in construing written instruments pertaining to real estate, to the effect that the instrument must be construed most strongly against the lessor, does not necessarily apply as to oil and gas leases. As stated in 31A Tex.Jur., p. 178, sec. 108: “In many instances a contrary rule has been followed and the lease construed most strongly against the lessee.” Obviously this rule does not apply where the lease is free from ambiguity.
Most other established rules governing the courts while construing description of lands in conveyances do generally apply to oil and gas leases. Therefore it is not amiss for an oil and gas lease to contain as near as possible a proper and accurate description of the land to be leased. 31A Tex.Jur., p. 146, sec. 83, p. 199, sec. 122. The lease should also definitely define the lessee’s duties and obligations in respect to continuing the life thereof, that is, in the instant case, to either commence a well or pay the “agreed delay rentals.” 31A Tex. Jur., p. 218, sec. 134.
All emphases are ours.
Appellant’s motion for rehearing is overruled.