Raley v. Moore

289 P.2d 957, 60 N.M. 200
New Mexico Supreme Court·Decided November 4, 1955·No. 5954·Published·Cited by 2 cases

Opinion

COMPTON, Chief Justice.

This is a quiet title action brought by appellees. On February 3, 1942, appellees executed an oil and gas lease in favor of C. P. Yadon upon the W 32^ acres of the SE& SW%, SWK SW14, Section 8; the NWJ4 NWj4 and the W 32j4 acres of the NEj4 NWj4j Section 17, Township 20 South, Range 38 East, containing 145 acres, with a primary term of 10 years and as long thereafter as oil and gas should be produced from the premises. Subsequently, and during'the primary term of the lease, appellees conveyed to appellant Moore an undivided 4/ú interest, 10 royalty acres, and to W. R. Childers, predecessor in title to Alice L. Childers, an undivided %3 interest, 22% royalty acres, in and under the W 32% acres of the NE% NW% of said Section 17. Appellees seek to quiet their title to the premises retained by them. Appellants deny appellees’ alleged ownership and, by cross-complaint, allege that by reason of their ownership of the W 32% acres of the NE14 NW%, Section 17, covered by the lease to Yadon, they are entitled to participate in all oil and gas rentals and royalties in the ratio as their interests bear to the whole and undivided fee. The rentals and royalties involved are from oil and gas produced from the premises retained by appellees. The trial court found in favor of appellees and the cause is brought here for review.

Appellants’ position is without substance. Where a portion of the leased premises is subsequently conveyed by a lessor, rentals and royalties will not be apportioned on the basis of acreage in the absence of an express contract to that effect.' Garza v. De Montalvo, 147 Tex. 525, 217 S.W.2d 988; Kimbley v. Luckey, 72 Okl. 217, 179 P. 928; Pierce Oil Corp. v. Schacht, 75 Okl. 101, 181 P. 731; Galt v. Metscher, 103 Okl. 271, 229 P. 522; Carlock v. Krug, 151 Kan. 407, 99 P.2d 858; Pittsburgh & West Virginia Gas Co. v. Ankrom, 83 W.Va. 81, 97 S.E. 593, 5 A.L.R. 1157; Osborn v. Arkansas Territorial Oil & Gas Co., 103 Ark. 175, 146 S.W. 122; Boren v. Burgess, D.C., 97 F.Supp. 1019. The record before us does not disclose such agreement.

Appellants rely strongly on Schrader v. Gypsy Oil Co., 38 N.M. 124, 28 P.2d 885, 888, as supporting their position. The Schrader lease contains the provision “ ‘If the leased premises shall hereafter be owned in severalty or in separate tracts, the premises, nevertheless, shall be developed and operated as one lease and all royalties accruing hereunder shall be treated as an entirety and shall be divided among and paid to such separate owners in the proportion that the acreage owned by each such separate owner bears to the entire leased acreage.’ ” The lease under consideration is 88 Producers Special and contains no such provision. The lesser interest and severability clause appearing in the lease upon which appellants rely, cannot be considered as having the effect of an “entirety clause.” The Schrader case, 'therefore, is thus distinguished and is not in point. 1

The conveyances to appellants contain the following provision:

“Said land being now under an oil and gas lease executed in favor of various parties, it is understood and agreed that this sale is made subject to the terms of said lease, but covers and includes (Vi3 interest as to Moore and %3 interest as to Childers) of all the oil royalty, and gas rental or royalty due and to be paid under the terms of said lease as to said lands above described only.”

The foregoing provision is clear and when construed with the Yadon lease, which makes no provision for apportionment, we are readily led to the conclusion that rentals and royalties produced from appellees’ lands, are not apportionable. Appellants, severally, are entitled to receive rentals and royalties only on oil and gas produced from their respective premises.

The case of Carlock v. Krug, supra, and this one are so nearly alike on the facts, we quote therefrom at length [151 Kan. 407, 99 P.2d 861]:

“ * * * Appellant concedes that under the majority doctrine oil production belongs solely to the owners of the well and of the land on which the well is located. * * *
“While admitting that the majority doctrine, as .heretofore stated, would be fatal to his contention, appellant argues that ‘this is not the law now.’ He contends that it has all been changed — ‘immediately after the decision of Galt v. Metscher, 103 Okl. 271, 229 P. 522’— by the inclusion in oil [and gas] leases for the first time of the following provision : ‘ * * * if said lessor owns a less interest in the above described lands than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided for shall be paid to the lessor only in the proportion which his interest bears to the whole and undivided fee.’
“Appellant relies heavily upon the Oklahoma case of Gypsy Oil Co. v. Schonwald, 107 Okl. 253, 231 P. 864, in which it was held that one purchasing part of the land covered by a lease thereby acquired an interest in the royalty on the whole acreage, prorated in the proportion that his parcel bore to the entire tract. The fatal weakness of the argument is, however, that the provision or covenant involved in the Gypsy Oil Co. case, supra, was not at all the same provision which appears in the instant lease. The determining clause in the Gypsy Oil Co. case, as well as in the case of Schrader v. Gypsy Oil Co., 38 N.M. 124, 28 P.2d 885, and Eason v. Rosamond, 173 Okl. 10, 46 P.2d 471, 472, reads as follows: ‘If the leased premises shall hereafter be owned in severalty or in separate tracts, the premises, nevertheless, shall be developed and operated as one lease and all royalties accruing hereunder shall be treated as an entirety and shall be divided among and paid to such separate owners in the proportion that the acreage owned by each such separate owner bears to the entire leased acreage.’

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Raley v. Moore, 289 P.2d 957, 60 N.M. 200 (N.M. 1955).

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