Court Opinion

ID: 3071010
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:31:47.696913+00
Date Added: 2024-06-11T12:26:47.832071
License: Public Domain

NO. 12-13-00282-CV

                           IN THE COURT OF APPEALS

              TWELFTH COURT OF APPEALS DISTRICT

                                    TYLER, TEXAS

SHERILYN ALEXANDER LANDERS                     §       APPEAL FROM THE 123RD
AND BILLYE C. ALEXANDER,
HEIRS OF W. W. ALEXANDER AND
JERRELL FLEMING, SHARON
FLEMING, LAVEY ALEXANDER
AND DIANNE BATSON,
APPELLANTS                                     §       JUDICIAL DISTRICT COURT

V.

RICHARD LIVINGSTON AND
DIANNE LIVINGSTON,
APPELLEES                                      §       SHELBY COUNTY, TEXAS

                                 MEMORANDUM OPINION
       This is an appeal from a summary judgment quieting title in Richard and Dianne
Livingston to twenty-five undivided royalty acres out of the east half of a 185.50 acre tract in
Shelby County, Texas. The trial court denied the motion for summary judgment of Jerrell
Fleming, Sharon Fleming, Lavey Alexander, and Dianne Batson, and the motion for summary
judgment of Billye C. Alexander and Sherilyn Alexander Landers. In two issues, Appellants
maintain the trial court erred in denying their motions for summary judgment and in granting the
Appellees’ motion. The resolution of Appellants’ issues turns on whether the trial court erred in
its interpretation of a royalty deed on which Appellants’ claim is based. We reverse and render
judgment for Appellants.

                                         BACKGROUND
       On July 15, 1941, Theron and Thelma Hughes and J.W.C. and Noda Hughes leased to
M.L. Stephens the minerals under 185.5 acres in Shelby County.
       On September 27, 1947, the Hugheses executed a royalty deed conveying to M.L.
Stephens an undivided twenty-five acre royalty interest under the east one-half of the 185.5
acres. On the same day, Stephens assigned the twenty-five acre royalty interest to William H.
Ball and W.W. Alexander.
       Omitting the metes and bounds description of the 185.5 acres, the royalty deed reads, as
follows:

       ROYALTY DEED

       THE STATE OF TEXAS }

       COUNTY OF SHELBY }                   KNOWALL MEN BY THESE PRESENTS}

                 That We, Theron Hughes and wife, Thelma Hughes, and J. W. C. Hughes and wife, Noda
       Hughes, hereinafter called Grantor (whether one or more), for and in consideration of the sum of
       Ten ($10.00) Dollars, (and other good and valuable consideration) cash in hand paid by M. L.
       Stephens hereinafter called Grantee, the receipt of which is hereby acknowledged, have granted,
       sold, conveyed, assigned and delivered, and by these presents do grant, sell, convey, assign and
       deliver, unto the said grantee an undivided Twenty-five full royalty interest in and to all of the oil
       royalty, gas royalty, and royalty in casinghead gas, gasoline, and royalty in other minerals in and
       under, and that may be produced and mined from the following described lands situated in the
       County of Shelby and State of Texas, to-wit:

                                            (metes and bounds omitted)

       together with the right of ingress and egress at all times for purpose of mining, drilling and
       exploring said lands for oil, gas and other minerals and removing the same therefrom. This grant
       shall run, and the rights, title and privileges hereby granted shall extend to Grantee herein, and to
       Grantee’s heirs, administrators, executors and assigns, for a period of perpetual years from date
       hereof and as long thereafter as oil, gas or other minerals, or either of the[m], is produced or mined
       from the lands described herein, in paying or commercial quantities. If at the expiration of said
       perpetual years from date hereof, oil, gas or other minerals or either of them, is not being produced
       or mined from said land or any portion thereof is paying or commercial quantities, this contract
       shall be null and void and the Grantee’s rights hereunder shall terminate.

       Said lands, or portions thereof, being now under oil and gas lease executed in favor of M. L.
       Stephens it is understood and agreed that this sale is made subject to the terms of said lease, but
       covers and includes Twenty-five (25) full royalty acres of all the oil, [sic] royalty, and gas royalty,
       and casinghead gas and gasoline royalty, and royalty from other minerals or products, due and to
       be paid under the terms of said lease. And it is further understood and agreed that notwithstanding
       the Grantee does not by these presents acquire any right to participate in the making of future oil
       and gas mining leases on the portion of said lands not at this date under lease nor of participating
       in the making of future leases, should any existing or future leases for any reason become
       cancelled or forfeited nor of participating in the bonus or bonuses which Grantor herein shall
       receive for any future lease, nor of participating in any rental to be paid for the privilege of
       deferring the assessment of a well under any lease, now or hereafter;

       NEVERTHELESS, during the term of the grant, neither the Grantor nor the heirs, administrators,
       executors and assigns of the Grantor shall make or enter into any lease or contract for the
       development of said land or any portion of same for oil, gas or other minerals, unless each and

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        every such lease, contract, leases or contracts, shall provide for at least a royalty on oil of the usual
        one-eighth to be delivered free of cost in the pipe line, and a royalty on natural gas of one-eighth
        to be delivered free of cost in the pipe line, and a royalty on natural gas of one-eighth of the value
        of same when sold or used off the premises, or one-eighth of the net proceeds of such gas and
        one-eighth of the net amount of gasoline manufactured from natural or casinghead gas; and in the
        event Grantor, or the heirs, administrators, executors, and assigns of the Grantor, or as in the status
        of the fee owners of the land and minerals, or as the fee owner of any portion of said land, shall
        operate and develop the minerals therein, Grantee herein shall own and be entitled to receive as a
        free royalty hereunder, (1) An undivided 25 full royalty acres of all the oil produced and saved
        from the premises delivered to Grantee’s credit free of cost in the pipe line, (2) An undivided 25
        full royalty acres interest and portion of the value or proceeds of the sales of natural gas when and
        while the same is used or sold off the premises, (3) An [sic] 25 full royalty acres of the net amount
        of gasoline or other products manufactured from gas or casinghead gas produced from wells
        situated on the premises, during the term hereof,

        TO HAVE AND TO HOLD the above described property and rights, together with all and
        singular the rights and appurtenances thereto in any wise belonging, unto the said Grantee, and to
        Grantee’s heirs, administrators, executors, and assigns, forever; and Grantor does hereby bind
        ourselves and our heirs, administrators[,] executors and assigns, to warrant and forever defend all
        and singular, the said property and rights unto the said Grantee, and Grantee’s heirs,
        administrators, executors and assigns, against every person whomsoever lawfully claiming or to
        claim the same or any part thereof.

        (Signatures and notary’s acknowledgments omitted)

        Appellees, the Livingstons, are the successors in title to the Hugheses, the grantors of the
royalty deed. Appellants Billye C. Alexander, Sherilyn Alexander Landers, LaVey Alexander,
and Dianne Batson are the successors in title to W.W. Alexander. Appellants Jerrell and Sharon
Fleming succeeded to the interest of William H. Ball.
        The 1941 oil and gas lease from the Hugheses to Stephens expired at the end of its ten
year primary term in 1951.
        Because of the dispute as to the ownership of the twenty-five acre royalty interest, Noble
Energy, Inc. filed an interpleader action in the Shelby County District Court interpleading the
disputed production proceeds into the registry of the court and seeking a determination of the
ownership of the disputed twenty-five acre royalty interest.
        Appellees assert that the twenty-five acre royalty interest terminated with the expiration
of the ten year term of the 1941 Hughes–Stephens lease without oil or gas production.
Appellants maintain the grant for a “perpetual” term was a grant of a fee simple interest in the
royalty interest.
        The questions of the duration of the royalty interest must be resolved by construing the
language used in the royalty deed from the Hugheses to Stephens. In the trial court, none of the
parties claimed the language was ambiguous.

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Applicable Law
       The construction of an unambiguous deed is a question of law for the court. Luckel v.
White, 819 S.W.2d 459, 461 (Tex. 1991). In Luckel, the supreme court summarized the rules or
canons that should guide the court in construing an unambiguous deed.

       The primary duty of a court when construing such a deed is to ascertain the intent of the parties
       from all of the language in the deed by a fundamental rule of construction known as the “four
       corners” rule. “That intention, when ascertained, prevails over arbitrary rules.” The court, when
       seeking to ascertain the intention of the parties, attempts to harmonize all parts of the deed. “[T]he
       parties to an instrument intend every clause to have some effect and in some measure to evidence
       their agreement.” Even if different parts of the deed appear contradictory or inconsistent, the court
       must strive to harmonize all of the parts, construing the instrument to give effect to all of its
       provisions. The court should “not strike down any part of the deed, unless there is an
       irreconcilable conflict wherein one part of the instrument destroys in effect another part thereof.”
       (citations omitted).

Id. at 461-62.
Discussion
       The parties used a form for a term royalty deed. The deed states that this grant shall run
“for a period of perpetual years from the date hereof and as long thereafter as oil, gas or other
minerals. . . is produced or mined from the lands described herein in paying quantities. . . .”
(emphasis added). It then provides that “[i]f at the expiration of said perpetual years from date
hereof, oil, gas or other minerals . . . is not being produced in paying . . . quantities, this contract
shall be null and void and the Grantee’s rights hereunder shall terminate.” (emphasis added).
       The deed contains an ordinary “subject to” clause that recites “this sale is made subject to
the terms of said lease.”        The same clause further specifies that the interest granted is a
nonparticipating royalty interest, that is, that the grantee could not participate in the making of
future leases nor share in the bonuses which the grantor might receive under future leases.
       The deed also contained a “future lease” clause providing that all future leases by grantor
shall provide “for at least a royalty on oil of the usual one-eighth” and further providing that
under future leases, grantee “shall own and be entitled to receive as a free royalty hereunder an
undivided 25 full royalty acres of all the oil produced. . . .” There followed similar provisions
relating to natural gas and gasoline.
       Appellees read the ordinary “subject to” clause with the last sentence of the granting
clause. That sentence provides that “[i]f at the end of said perpetual years” no oil, gas or other

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minerals is being produced from said lands, “Grantee’s rights hereunder shall terminate.”
Appellees argue that this sentence, when read together with the “subject to” clause, evinces the
parties’ intention to limit the grant of perpetual years to only the life of the lease then in effect.
Since there was no production when the lease expired nine years and eight months later without
production, the grantee’s rights under the royalty deed terminated with the lease. Appellees
attempt to harmonize a grant for perpetual years and thereafter as long as oil, gas, or other
minerals are produced with their view that the grant was really for nine years and eight months
and for so long thereafter as there is production under the prevailing lease. Appellees argue the
“term of the grant could have lasted forever had there been production under the M.L. Stephens
lease and had the production continued in perpetuity.” This is, at best, a strained interpretation.
The parties stated that “if at the end of perpetual years” there is no production “Grantee’s rights
hereunder shall terminate.” They did not provide, as Appellees assert, that, if there is no
production under the prevailing lease, the grantee’s rights will terminate.
       The parties employed a form commonly used for a royalty deed for a term of years. If
they had inserted a term of ten, one hundred, or a thousand years, an argument that the term of
the grant was modified by the “subject to” clause would not have been raised. The “subject to”
clause was included, as is ordinarily the case, to protect the grantor under the general warranty
and to delineate the grantee’s right to the royalty due from production under that lease.
       Appellees’ interpretation largely ignores fully a third of the instrument containing
detailed provisions relating to future leases. The parties plainly contemplated that the grantor
might enter into future leases during the term of this grant and that the grantee would be entitled
to royalties under those leases. Future leases would have been impossible if the grant terminated
with the existing lease. Appellees acknowledge the difficulty in harmonizing the future lease
provisions with their interpretation, and, as an alternative, argue that primacy should be given to
their interpretation of the granting clause.
       “It is the rule that the intention of the parties must be gathered from the entire instrument,
and not from some isolated clause or paragraph. The entire instrument must be construed as a
whole in order to arrive at the intention of the parties.” Bumpass v. Bond, 114 S.W.2d 1172,
1174 (Tex. 1938). “The relative positions of the instrument are not necessarily controlling; the
modern and sounder reason being to ignore the technical distinctions between the various parts

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of the deed. . . .” Reynolds v. McMan Oil & Gas Co., 11 S.W.2d 778, 781 (Tex. Comm’n App.
1928, holding approved).
       The future lease clause obligated the grantor to enter into no future leases providing for
less than a one-eighth royalty. It further specified that the grantee was entitled to receive under
future leases as a free royalty an undivided twenty-five full royalty acres. This clearly evidences
the intent of the parties that the grantee receive royalty on all future leases, not just under the
prevailing lease. Appellees’ interpretation treats the entire section regarding future leases as
surplusage, which violates the rules of contract interpretation. See J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 235 (Tex. 2003). A deed is subject to the same general rules of
interpretation and construction as a contract. See Luckel, 819 S.W.2d at 461-62.
       It has been observed that the parties may not always read and understand form language.
But they are almost certain to be aware of and understand specific language they insert in the
form. See generally McMahon v. Christmann, 303 S.W.2d 341 (Tex. 1957). We can be
relatively sure that the parties consciously and intentionally inserted the word “perpetual” as the
term of the lease. We must assume they intended “perpetual” to have its ordinary, everyday
meaning, that is forever or for an unlimited duration. See AMERICAN HERITAGE DICTIONARY OF
THE ENGLISH LANGUAGE 977      (1978).
       Viewing the instrument in its entirety, we conclude that Appellees’ interpretation of the
royalty deed is erroneous and therefore the trial court erred in granting their motion for summary
judgment. We further conclude that, as Appellants argue, the parties intended to create a
twenty-five acre nonparticipating royalty in fee simple and that the trial court should have
granted their motion for summary judgment on that basis. Appellants’ first and second issues are
sustained.

                                          DISPOSITION
       Having sustained Appellants’ first and second issues, we reverse the trial court’s
judgment and render judgment quieting title in Appellants in the twenty-five acre
nonparticipating royalty interest in fee simple. See Commr’s Court of Titus Cnty. v. Agan, 940
S.W.2d 77, 81 (Tex. 1997) (“When, as here, both parties move for summary judgment and the
trial court grants one motion and denies the other, we review the summary judgment evidence,

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determine all questions presented, and render such judgment as the trial court should have
rendered.”).

                                                                                 BILL BASS
                                                                                  Justice

Opinion delivered August 27, 2014.
Panel consisted of Griffith, J., Hoyle, J., and Bass, Retired J., Twelfth Court of Appeals,
sitting by assignment.

                                                    (PUBLISH)

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                                  COURT OF APPEALS

     TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                           JUDGMENT

                                           AUGUST 27, 2014

                                         NO. 12-13-00282-CV

   SHERILYN ALEXANDER LANDERS AND BILLYE C. ALEXANDER, HEIRS OF
      W. W. ALEXANDER AND JERRELL FLEMING, SHARON FLEMING,
                LAVEY ALEXANDER AND DIANNE BATSON,
                             Appellants
                                 V.
             RICHARD LIVINGSTON AND DIANNE LIVINGSTON,
                              Appellees

                                Appeal from the 123rd District Court
                       of Shelby County, Texas (Tr.Ct.No. 11-CV-31,845)

                        THIS CAUSE came to be heard on the appellate record and the briefs filed
herein, and the same being considered, because it is the opinion of this court that the judgment
same should be reversed and rendered.
                        It is therefore ORDERED, ADJUDGED and DECREED by this court that
the judgment of the trial court below in favor of Appellees, RICHARD LIVINGSTON AND
DIANNE LIVINGSTON, be, and the same is, hereby reversed and judgment is rendered
quieting title in Appellants’, SHERILYN ALEXANDER LANDERS AND BILLYE C.
ALEXANDER, HEIRS OF W. W. ALEXANDER AND JERRELL FLEMING, SHARON
FLEMING, LAVEY ALEXANDER AND DIANNE BATSON, twenty-five acre
nonparticipaing royalty interest in fee simple, more particularly described in the royalty deed
recorded in Volume 214, Page 245 of the Shelby County Deed Records. All costs in this cause
expended in this court be, and the same are, hereby adjudged against the Appellees, RICHARD
LIVINGSTON AND DIANNE LIVINGSTON, for which let execution issue; and that this
decision be certified to the court below for observance.
                    Bill Bass, Justice.
                   Panel consisted of Griffith, J., Hoyle, J., and Bass, Retired J., Twelfth Court of Appeals,
                   sitting by assignment.