Court Opinion

ID: 3956186
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:17:25.07576+00
Date Added: 2024-06-11T14:15:34.598149
License: Public Domain

I cannot agree with the majority opinion that this contract is void when tested by the rules which govern in its construction; i. e., construing *Page 329 
the writing as a whole in the light of the surrounding circumstances, and giving effect to every part, that the whole may stand if possible and in favor of its validity. Stone v. Robinson, 180 S.W. 135.
It is: First, a lease upon condition subsequent, in this, it is recited that the lands then being leased for a term of years, and it not being known whether the parties of the first part could obtain possession, the grantees are given 18 months in which to obtain possession, and 18 months after getting possession in which, in good faith, to begin operations leading to a discovery of the substances named; and, should they fail to begin work within said time, they are bound to pay 10 cents per acre at the end of each year until operations begin.
Second. It is a sale of the minerals in place upon condition subsequent; the condition being that title vests in them "forever" and so long as some of the substances named are being produced in "paying quantities," if some of the minerals are discovered in paying quantities. That it is a sale of minerals upon condition subsequent, and not of any part of the surface, is clearly declared by both the granting and the habendum clauses of the instrument; it grants the minerals named, "in and under the land described," provided "that in no event shall the grant run for longer than five years from date of possession, unless some of the substances are being produced in paying quantities, and forever, if they are."
In other words, it conveys the substances named themselves in the ground, and not simply the right to take them from the ground. Texas Co. v. Daugherty, 107 Tex. 226, 176 S.W. 717, L.R.A. 1917F, 989.
As to its further construction, Upshur county owned these lands; the commissioners' court of that county exercising their judgment and discretion, as they were permitted to do by law, concluded that there might be found oil, gas, or other mineral substances underneath the lands, which, if developed (produced), would or might be of greater value to the school funds for a time than could be realized by its sale for its surface value, and having found the defendants who were willing to spend money to prospect the lands and pay for such minerals as might be discovered, these parties, by mutual consent, entered into the contract which we are called upon to construe.
The contract itself clearly discloses that the primary purpose of the commissioners was to sell the mineral and dispose of such parts of the surface of the lands, in form of easements, as might be necessary to accomplish the act of producing such minerals as might be found, for such moneyed consideration as then decided would be a reasonable value thereof after they were brought to the surface; and it is just as clear that the defendants' purpose was to make a profit out of the transaction by producing some one or more of the minerals in paying quantities and by a sale thereof. There is no charge that there were any fraudulent misrepresentations which induced its execution, nor that there was any mutual mistake. So looking to the contract itself, is it subject to the criticisms in plaintiff's petition: (1) That it is unilateral; (2) that the consideration is uncertain; (3) or that it is without consideration, in that it attempts to give away any of the property designated, whether mineral in place or the lands' surface? As to the charge that, if defendants find oil in paying quantities, they are not obligated to develop it or market it: The contract provides that they shall "produce it in paying quantities." To "produce" means "to bring forth," and the contract further provides that, "should oil be found (produced) in paying quantities," the defendants are to pay the price fixed to the plaintiff, and there is nothing said about whether it shall be sold or not. As to the provision:
"In case gas alone is found in paying quantities, the plaintiff shall be paid. * * * So long as same is conveyed and sold commercially off of the premises or used on the premises for manufacturing purposes"
— it must be given a meaning in accord with the provision next above in the contract, viz., that the life of the grant is five years unless some of the substances are being produced in paying quantities. It would not do to construe this sentence to mean that the defendants were granted the right to occupy and enjoy the whole of these lands because gas had been found, leaving it to the defendants to, or not to, dispose of it off the ground, or on it, at their own discretion; but the natural meaning is that the defendants shall produce it in paying quantities, and to within a reasonable time find a market off the premises, or to secure manfacturing enterprises to be placed upon the premises. These are but matters that could and should have been in contemplation of the parties at the time of entering into this contract. The language used, too, indicates that this idea was in the minds of the parties, for the fact that the instrument grants right of way for railroads, dirt roads, pipe lines, mills, machinery, etc., indicates that the parties realized that the lands were isolated from large cities where gas in large quantities might be marketed, and away from centers of railway transportation necessitating providing means for marketing of their own, and for that reason it would require time and much money expended in providing for placing this substance upon the market. The grant of the easements is no more than the law would have read into a deed conveying a portion of this land in the center of the tract. It must be borne in mind, too, that no part of the surface of these lands is granted to *Page 330 
defendants for agricultural or grazing purposes, but solely for those purposes definitely fixed in the instrument, to wit, producing in paying quantities some of the minerals named. With this in mind, it follows as a natural sequence that, when the defendants shall have failed to so produce one or more of them within five years, and should they thereafter cease to produce them, the possession reverts to Upshur county, eo instanti, for in law they would have by such failure abandoned their rights under the contract to further occupy the land.
Can it logically be construed to be a division of the minerals named in consideration of their development? It reads:
"That Upshur county * * * lessor * * * in consideration of the sum of $5.00 cash * * * and other valuable considerations and the further considerations hereinafter mentioned * * * do hereby devise and grant unto the Thomasons all of the following described minerals, * * * oil, gas, etc., * * * in and under the following described land."
What is the price fixed by the commissioners' court?
"Should oil be found in paying quantities the second parties hereby agree to pay first party the market value of same at the well or wells as follows: From all wells producing one thousand barrels or over of oil per day twelve and one-half per cent. or so much thereof as may be sold and delivered."
It seems but logical that by this language the commissioners' court concluded that 12 1/2 per cent. of the value of the oil on the market was its full value in place, and I think have clearly fixed this as its price "in place," and is in no sense a gift of any part of the oil.
The manner and terms of the sale are left to the commissioners' court. Waggoner v. Wise Co., 17 Tex. Civ. App. 220, 43 S.W. 839; Delta County v. Blackburn, 100 Tex. 55, 93 S.W. 419. And they have decided that the value of the occupancy of the surface of the ground and of the minerals as they were, in place, shall be the price fixed in the contract; that it may now be worth more would not void the contract. Taber v. Dallas County, 101 Tex. 241, 106 S.W. 332. So since it provides for a definite consideration, it was not a gift, nor is it unilateral because it provides for mutual benefits and obligations.
Is there anything in that portion of the contract which provides that the defendants may select a town site not exceeding 1,000 acres to be blocked, laid out in streets, etc., to void the contract? It does not provide that any portion of such town site shall be given to defendants; therefore it will be presumed that they would be required to pay the reasonable value of any part conveyed to them. And if read in connection with the further provision of the contract:
"In case the lands described in the contract are sold or released during the life of this contract the parties of the second part are to have a 60 days' option to purchase or lease said lands on such price terms and conditions as may be prescribed by the commissioners' court of Upshur county, at the time of sale, etc."
— it is clear that there is nothing in it to void the contract. For when the time should arrive to establish this town site, the sale to defendants is to be made at such valuation as may then be agreed upon.
The plaintiff having charged that the defendants had not begun to produce any of the minerals named within the life of the contract, five years, and the defendants having entered a general denial, and specially pleaded that it had discovered some of the minerals within the time, and believing, as I do, that the contract is valid, it follows that this question should have been inquired into by the trial court, and for this purpose I conclude that the cause should be remanded.
I therefore enter my dissent.