Hawkins v. Texas Oil and Gas Corp.

724 S.W.2d 878, 97 Oil & Gas Rep. 399, 1987 Tex. App. LEXIS 6469
CourtCourt of Appeals of Texas
DecidedJanuary 22, 1987
Docket10-86-021-CV
StatusPublished
Cited by28 cases

This text of 724 S.W.2d 878 (Hawkins v. Texas Oil and Gas Corp.) 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
Hawkins v. Texas Oil and Gas Corp., 724 S.W.2d 878, 97 Oil & Gas Rep. 399, 1987 Tex. App. LEXIS 6469 (Tex. Ct. App. 1987).

Opinion

OPINION

THOMAS, Justice.

This is an appeal from a summary judgment in a declaratory judgment and inter-pleader proceeding. The controversy involves the interpretation of a 1930 deed which conveyed oil and gas interests under 54.2 acres “subject to” a Humble oil and gas lease that has since expired. The principal question is whether the grantees owned a royalty interest or a mineral interest after the lease’s expiration. Treating the instrument as unambiguous, the court interpreted the deed as conveying a permanent royalty interest. The “two-grant theory” and the decision in Alford v. Krum, 671 S.W.2d 870 (Tex.1984), are at the center of the parties’ dispute over the deed’s interpretation. The summary judgment will be affirmed.

The deed was from H.M. York and wife, Susie York, to W.S. York and Max Scharff. Marjorie Hawkins and Phillip Baker, the successors to whatever interest Scharff acquired under the deed, filed the suit against the Fairfield State Bank, John and Kathryn Alford and Texas Oil and Gas Corporation. 1 They also joined as defendants Shirley York Bates and Sybil York Estes who, as successors to the interest of W.S. York, were later realigned as plaintiffs. Bates and Estes have not appealed from the summary judgment. The interests acquired by Bates and Estes under the deed, being identical to those acquired by Hawkins and Baker, are not discussed in the opinion. Asking for a construction of the deed and essentially relying on the two-grant theory, Hawkins and Baker claimed that the deed’s granting clause conveyed a royalty interest, which terminated upon the expiration of Humble’s lease, followed by a grant to Scharff in the future-lease clause of a Vith mineral interest. Hawkins and Baker are now the appellants.

Fairfield State Bank, the Alfords and Texas Oil and Gas all argued in their pleadings and in motions for a summary judgment that an irreconcilable conflict existed between the deed’s granting clause and future-lease clause and that based on the decision in Alford v. Krum the conveyance *881 in the granting clause of a permanent royalty interest must prevail. Therefore, they contended that the Bank and the Alfords owned all of the minerals under the 54.2 acres as successors to the interests of H.M. York and Susie York, burdened equally by the royalty interest conveyed in the granting clause.

The court allowed TXO Production Corporation, a wholly-owned subsidiary of Texas Oil and Gas, to intervene in the suit because it held two oil and gas leases covering the 54.2 acres. Fairfield State Bank and the Alfords executed the first lease (Bank-Alford lease) in 1977, purportedly leasing all of the minerals for a Vsth royalty. Hawkins and Baker refused to accept royalty payments under this lease or to ratify it because they claimed ownership of a Vith mineral interest through Scharff. Texas Oil and Gas then acquired the second lease (Hawkins-Baker lease) in which Hawkins and Baker purportedly leased their k th mineral interest for a V6th royalty. Pri- or to the suit, Texas Oil and Gas contributed both leases to the Williford Gas Unit No. 1 and assigned the leases to TXO. Two producing wells were drilled prior to the suit on acreage in the gas unit other than the 54.2 acres. Because of the controversy over the ownership of the minerals covered by its two leases, Texas Oil and Gas withheld royalty payments on the disputed Vrth mineral interest.

By counterclaims and cross-claims, Texas Oil and Gas, TXO, Fairfield State Bank and the Alfords all asked for a construction of the deed through a declaratory judgment. Texas Oil and Gas and TXO also deposited $61,353.73 into the court’s registry, claiming that they were disinterested stakeholders of this amount of suspended royalty payments. However, they later claimed through an amendment that they had inter-plead $2,139.50 of the $61,353.73 through an error or mistake. In addition to seeking a return of the $2,139.50, Texas Oil and Gas and TXO also sued for attorney’s fees as interpleaders and as petitioners for a declaratory judgment. Fairfield State Bank and the Alfords also sought attorney’s fees in connection with their declaratory-judgment actions.

Texas Oil and Gas and TXO moved for a summary judgment on the grounds the summary judgment evidence conclusively established that: (1) the deed only conveyed a V32nd royalty interest to York and Scharff; and (2) Hawkins and Baker were not entitled to recover any of the suspended royalty payments deposited in the court’s registry because they had not ratified the Bank-Alford lease or consented to the pooling of their royalty interest in the gas unit. The Bank and the Alfords also moved for a summary judgment on virtually these same grounds.

In a written response to the motion filed by Texas Oil and Gas and TXO, Hawkins and Baker argued that: (1) regardless of the deed’s interpretation, Texas Oil and Gas and TXO were estopped by the Hawkins-Baker lease from denying that they were entitled to be paid a V6th royalty based on the production from the gas unit; (2) the deed conveyed a Vith mineral interest to Scharff as a matter of law; (3) they had ratified the gas unit and consented to the pooling of their “undivided interest” in the gas unit as a matter of law; (4) Texas Oil and Gas and TXO were estopped from contending that they had not pooled their interest in the gas unit because Texas Oil and Gas and TXO had, in fact, pooled their interest or at least the evidence raised a fact issue on whether their interest had been pooled; and (5) Texas Oil and Gas and TXO were not entitled to recover attorney’s fees as disinterested stakeholders because, as a matter of law, they had each taken positions as adverse parties. Hawkins and Baker also alleged in a written response to the motion filed by the Bank and the Al-fords that the deed conveyed a V-ith mineral interest to Scharff as a matter of law and that, in any event, the Bank and the Al-fords, as successors in interest to H.M. York and Susie York, were estopped by the deed from disputing their ownership of a '/t th mineral interest.

None of the parties claimed in the trial court that the deed was ambiguous. The court interpreted the deed as conveying a “lk of lh royalty interest” to W.S. York and Scharff and “not the grant of a ‘mineral’ *882 interest.” Moreover, the court held that Hawkins and Baker each owned “Vi of V4 of the Vs royalty” in the 54.2 acres and under the Bank-Alford lease but were not entitled to recover any royalty payments under the Bank-Alford lease until they ratified it or consented in writing to having their royalty interest pooled in the gas unit. Furthermore, it held that the Bank owned lh of the minerals under the 54.2 acres and that the Alfords owned the remaining V2 of the mineral estate.

Interpretation of an unambiguous deed is a question of law for the court. Altman v. Blake, 712 S.W.2d 117, 118 (Tex.1986). A court’s primary duty in interpreting such an instrument is to ascertain the intent of the parties by applying the “four-corners rule”. Id.

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Bluebook (online)
724 S.W.2d 878, 97 Oil & Gas Rep. 399, 1987 Tex. App. LEXIS 6469, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hawkins-v-texas-oil-and-gas-corp-texapp-1987.