Campbell v. Dreier

382 S.W.2d 179, 21 Oil & Gas Rep. 165, 1964 Tex. App. LEXIS 2797
CourtCourt of Appeals of Texas
DecidedJuly 15, 1964
Docket14262
StatusPublished
Cited by16 cases

This text of 382 S.W.2d 179 (Campbell v. Dreier) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Campbell v. Dreier, 382 S.W.2d 179, 21 Oil & Gas Rep. 165, 1964 Tex. App. LEXIS 2797 (Tex. Ct. App. 1964).

Opinion

POPE, Justice.

Claud B. Hamill filed this interpleader suit to determine whether two term royalty deeds had terminated, and tendered all disputed royalty payments into court. Owners of the reversionary interest in the term royalties, Edmund and Fritz Dreier, urged and the trial court held, that the royalty deeds had terminated because there was no actual production on the critical dates as required by the terms of the deeds. Two questions are presented: (1) In the case of a term royalty deed which terminated on April 6, 1959, and another which terminated on March 29, 1960, if there was no paying production on the described lands, neither of which royalty deeds mentioned shut-in royalty; did the payment of shut-in royalty, as permitted by an overlying lease, preserve *181 the term royalty deeds ? (2) Eight original co-tenants jointly granted two term royalty deeds to a described 541-acre tract, but expressly reserved executive rights. Neither royalty deed mentioned pooling with lands •outside the described tract. The original owners later voluntarily partitioned the tract, and the separate owners then made leases which authorized pooling. Did actual production outside the described tract, but on lands pooled with a part of that tract, preserve the royalty deeds as to the entire tract? We answer both questions in the negative and affirm the judgment.

On October 6, 1943, F. C. Dreier and his •three sons, Edmund, Fritz and Henry, joined by their wives, executed a term roy.alty deed to Charles L. Campbell and conveyed one-half of the royalty “in and under ■the following described tract of land” (describing the Dreier tract by metes and bounds). The deed would become null and void “in case there is no paying production on said land on October 6, 1958, and for six months thereafter, * * On March 29, 1945, the same members of the Dreier family conveyed to R. F. Scheig one-fourth • of their royalty “from the following described lands” (describing the Dreier tract by metes and bounds). The Scheig deed would become null and void “IF at the expiration of said 15 years from date hereof, ■ oil, gas or other minerals, or either of them, is not being produced or mined from said land * * The royalty deeds required ■production on April 6, 1959, in the case of the Campbell royalty deed, and production on March 29, 1960, in the case of the Scheig royalty deed, and the production must be from the described land.

All of the Dreier grantors expressly reserved executive rights in both their royalty deeds to Campbell 1 and Scheig. 2 On July 1, 1946, the three brothers and their wives appear to be the equal fee owners of the entire tract, subject to the term royalty conveyances. On that date, the three brothers, Edmund, Fritz and Henry, joined by their wives, exchanged warranty deeds to effect a partition of their land into three equal 180)4 acre tracts. Edmund then owned the tract on the west, Fritz the one in the middle, and Henry the one on the east. Later, Edmund made an oil and gas lease to his separate tract, and by the lease he authorized a pooling unit of 320 acres. Fritz and Henry also made separate oil and gas leases covering their tracts, and by amendments they also authorized 320-acre units. These leases were made by each brother and his wife, acting independently of the other brothers and their wives. They were made at different times and on different terms.

On July 27, 1959, a gas well was completed on the western tract partitioned to Edmund. The tract had been pooled with a part of Fritz’s middle tract. The well completion date was too late to preserve the Campbell royalty deed, but was before March 29, 1960, and in time to save the Scheig royalty deed, if there was “produc *182 tion” within the meaning of that grant. Under the facts there was not production, as ruled by the trial court. The well was shut in after completion and remained shut in until January, 1962, when for two weeks it produced fuel for other drilling purposes. It was again shut in until April, 1962, since which time it has actually produced. Another well was completed on May 27, 1959, but it too was shut in until April, 1962. There was no actual production from it until after the termination date for both of the royalty deeds. The lease permitted shut-in royalty payments, which were paid to the Scheig royalty owners up to the time of actual production.

The word “production” as used in a term royalty deed means actual production. Holchak v. Clark, Tex.Civ.App., 284 S.W.2d 399. If shutin royalty is relied upon as substitute production applicable to the royalty deed, provision for it must be found in the royalty deed and not in the overlying lease. This Court stated in Sellers v. Breidenbach, 300 S.W.2d 178: “The parties could have placed in their royalty deed a shut-in gas well provision, if they had desired to do so, hut we find no such provision in this deed.” Archer County v. Webb, 161 Tex. 210, 338 S.W.2d 435; Midwest Oil Corp. v. Mengers, Tex.Civ.App., 372 S.W.2d 247; Investors Royalty Co. v. Childrens Hospital Medical Center, Tex.Civ.App., 364 S.W.2d 779; Union Producing Co. v. Scott, D.C., 173 F.Supp. 361, affirmed, 5 Cir., 267 F.2d 469, 470.

The royalty owners have not pointed us to any additional grant which enlarged their original royalty deeds. After the separate leases were made of the partitioned lands, the lessee obtained ratifications of the leases from each of the royalty claimants. The ratifications from the royalty owners were ratifications of the leases but they did not change the royalty deeds. Any enlargement of the grant to the royalty owners must, come, not from the royalty owners but from the other direction — from the mineral fee owner.

A third well was actually producing gas in time to preserve both royalty deeds but it was located outside the Dreier tract described in the royalty deeds. It commenced actual production on March 16,. 1959. It was located 330 feet north of Henry Dreier’s tract and was in a unit authorized by Henry’s lease, \yhich unit embraced some of Henry’s tract. Henry does, not resist the claims by the royalty owners, that the term royalty deeds are still in force-Edmund and Fritz do resist, and they argue that production from a well located off the Dreier lands described in the royalty-deeds, is not production “on said land” or “from said land” as required by the deeds.. The phrase “from said land,” in its ordinary meaning, is the same as “from wells located on said land.” Southland Royalty Co. v. Humble Oil and Refining Co., 151 Tex. 324,. 249 S.W.2d 914. At no time has there beem production from a well located on any part of the Dreier lands.

Every precedent which we have-cited in support of the rule that the actual 1

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Bluebook (online)
382 S.W.2d 179, 21 Oil & Gas Rep. 165, 1964 Tex. App. LEXIS 2797, Counsel Stack Legal Research, https://law.counselstack.com/opinion/campbell-v-dreier-texapp-1964.