Edward Charles Sebesta, Sr. v. Quinoco Petroleum, Inc.
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Opinion
IN THE
TENTH COURT OF APPEALS
No. 10-91-133-CV
        EDWARD CHARLES SEBESTA, SR., ET AL,
                                                                                       Appellants
        v.
        QUINOCO PETROLEUM, INC., ET AL,
                                                                                       Appellees
From the 272nd District Court
Brazos County, Texas
Trial Court # 28,873-272
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O P I N I O N
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          This is an appeal from a summary judgment finding that notice by only one of the five lessors was insufficient to effect forfeiture of an oil and gas lease.
          Lessors, Appellants herein, were Edward C. Sebesta, Sr., and wife, Laura J. Sebesta, who held a life estate, and Murray F. Sebesta, Wayne H. Sebesta and Edward C. Sebesta, Jr., who were remaindermen. They executed an oil and gas lease on 146.5 acres of their property in Brazos County in which Quinoco Petroleum, Inc., was a subsequent assignee.
          Lessors brought this action to declare the oil and gas lease forfeited and for royalties due pursuant to Section 17 of the lease, which in pertinent part provided as follows:
In the event the Lessee shall be delinquent with any royalty payment to Lessor under the terms of this Lease Agreement for a period in excess of 180 days . . . , the Lessor shall have the right to terminate this agreement following 30 days written notice to Lessee of such delinquency and default. Lessee shall have the right to maintain the lease by payment to Lessor of all delinquent sums and interest thereon prior to expiration of the thirtieth day following said notice. In the event of such declared forfeiture by Lessor, Lessee shall lose all of its rights and estates under all producing acreage hereunder . . .
          It is undisputed that Quinoco failed to pay royalties to the lessors for a period of 180 days from October 1984 through June 1985. Pursuant to the lease, Appellant Murray F. Sebesta sent a letter "on behalf of his family and other royalty owners" to Quinoco giving notice of the 180-day delinquency with the right to cure the default within thirty days. No payment was made by the thirtieth day after such notice. Murray F. Sebesta then gave notice to Quinoco of termination of the lease under the above provision and provided a Release of Oil and Gas Lease, which Quinoco refused to sign.
          Appellants complain in two points that (1) the court erred in granting the motion for summary judgment because there is a dispute of a genuine issue of material fact of whether notice was given by all lessors to the lease, and (2) that there is a material issue of fact whether notice was required to be given by all lessors to the lease. We will affirm the judgment.
          In construing this lease contract, we are guided by the rule stated in Hancock v. Texaco, Inc., 520 S.W.2d 466, 469 (Tex.Civ.App.âCorpus Christi 1975, writ ref'd n.r.e.), where the court stated: "If a forfeiture provision is capable of two constructions, one of which will effect a forfeiture, the provision is to be given the construction which will prevent a forfeiture." Here, we do not find the contract to be ambiguous. Each of the lessors signed the lease and beside each signature was the printed designation "Lessor," making it obvious there were five lessors. After the making of the lease, the lessors entered a "Stipulation of Interest" among themselves which attempted to divide the royalty proceeds under the lease, but which did not change their legal relationship as life-estate owners and remaindermen in all other respects on the leased premises. Absent the "Stipulation of Interest," the remaindermen would have no title to any present possessory interest in the royalties, and the life tenants would be entitled to exclusive control of the property. See Enserch Exploration, Inc. v. Wimmer, 718 S.W.2d 308, 310 (Tex.App.âAmarillo 1986, writ ref'd n.r.e.). However, the court is controlled by the meaning of the lease at the time it was entered into and not in light of subsequent events. See Hancock, 520 S.W.2d at 468. Therefore, when Murray F. Sebesta gave notice of default, he must be considered in his capacity as a remainderman. As such, he had no present status to impact the estate without the joinder of the life tenants, and it stands to reason that he could not individually effect a valid notice of forfeiture of the lease. See Lowrance v. Whitfield, 752 S.W.2d 129, 134 (Tex.App.âHouston [lst Dist.] 1988, writ denied).
          Appellants argue that Murray F. Sebesta's notice letter stating he was acting on behalf of his "family members and other royalty owners" was sufficient because the lessors subsequently by affidavit confirmed his authority to act in behalf of the other lessors. Their after-the-fact attempt to provide authorization is not sufficient to effect notice of forfeiture and is contrary to the long-standing principle that the law does not favor forfeitures. See Sirtex Oil Industries, Inc. v. Erigan, 403 S.W.2d 784, 787 (Tex. 1966). If the terms of a contract are fairly susceptible of an interpretation which will prevent a forfeiture, they will be so construed. Id.
          Points of error one and two are overruled. The judgment is affirmed.
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