SHELL OIL COMPANY v. Rudder

299 S.W.2d 686, 156 Tex. 618, 7 Oil & Gas Rep. 638, 1957 Tex. LEXIS 553
CourtTexas Supreme Court
DecidedMarch 6, 1957
DocketA-5955
StatusPublished
Cited by4 cases

This text of 299 S.W.2d 686 (SHELL OIL COMPANY v. Rudder) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SHELL OIL COMPANY v. Rudder, 299 S.W.2d 686, 156 Tex. 618, 7 Oil & Gas Rep. 638, 1957 Tex. LEXIS 553 (Tex. 1957).

Opinions

Mr. Justice Garwood

delivered the opinion of the Court.

Relator, Shell Oil Company, brings this original mandamus proceeding to require the respondent, J. Earl Rudder, Commissioner of the General Land Office, to file for record in his office certain oil and gas leases running to relator as lessee on lands in Hartley County, Texas, being part of the lands recovered in 1923 by the State from private parties in the “Capitol Syndicate Land Suit” (Findlay v. State, 113 Texas 30, 250 S.W. 651) and appropriated to the public school fund by Acts 1923, Ch. 106, p. 222, the leased premises having been thereafter sold in 1924, by authority of the mentioned Act, to the instant lessors or their predecessors in title. We conclude that the writ should issue.

The tendered leases stipulate a royalty to the State of 1/16, and the sole proposition underlying the refusal of the respondent Commissioner to file them, and presenting the essential question for our decision, is, in brief, that the 1923 Act operates to reserve a royalty of 1/8, or double the tendered figure. The relator, for its part, contends that the leases, including the 1/16 state royalty provisions, are — as the respondent, in fact, admits — in proper terms for leases made under the Relinquishment Acts ,Acts 1919, 2nd C.S., Ch. 81, p. 249; Arts. 5367-5382, Vernon’s Texas Civ. Stats.) and that the Relinquishment Act controls the leases, notwithstanding the sales of the lands were made under authority of the 1923 Act.

Stated in a different way, the opposing contentions are (a) for the respondent Commissioner, that by virtue of Sec. 3 of the 1923 Act, which is quoted in the footnote,1 the sale of the lands operated to dispose of the oil and gas to substantially the same effect as if a private owner of ordinary land had executed a deed thereof reserving a perpetual 1/8 royalty interest (although the word “royalty” does not occur in Sec. 3) in the oil and gas, and stipulating the leasing rights of said minerals to [620]*620be in the grantee; and (b) for the relator, that, notwithstanding the sales were made under the 1923 Act, and notwithstanding the provision in Sec. 3 for a reservation of “one-eighth of all the oil and gas * * * and the value of same,” the sales were necessarily with full reservation of all minerals, and that accordingly the appropriate legal machinery for their leasing and development was and is that of the Relinquishment Act, which admittedly would apply if the full mineral interest were so reserved, and would give the purchaser the right to lease the latter as agent for the State, reserving for the State a royalty of as little as 1/16. Greene v. Robison, 117 Texas 516, 8 S.W, 2d 655.

At first blush, it does appear extreme to hold, as we do in effect, that the words “one-eighth of” in Sec. 3, supra, mean nothing, even though their ordinary significance would conduce to recognizing in the State only a 1/8 mineral ownership, as distinguished from a royalty, which ownership in turn would ordinarily correspond to a royalty of only 1/64, or 1/8 of the 1/8 owned. However, the State itself necessarily admits considerable peculiarity in the language as written, when it so contends for a royalty, despite the complete absence of that highly important and most familiar word or its equivalent. Moreover, in the controversy over Sec. 3 decided in Stallcup v. Robison, 1927, 117 Texas 189, 300 S.W. 24 the State apparently took the position that a mere 1/8 mineral interest, rather than a 1/8 royalty, was reserved. At that time conceivably the distinction between royalty and mineral interest was not as familiar as it is now,' and, indeed, was not directly in issue in the case; but, certainly, if the then attorney general regarded the purportedly reserved 1/8 interest as a royalty interest, much of what the court said against the State’s position and with regard to the absence of provision for the development of the reserved mineral interest would have been misleading or beside the point, as hereinafter explained.

The Stallcup case involved the question of whether Sec. 3, supra, applied to certain of the recovered Capitol Syndicate lands, which had not then been sold but were sought to be made the subject of an oil and gas exploration permit to Stallcup from the Land Office, the position of the attorney general being that disposition of the oil and gas could only be made by sale of the land, including 7/8 of the minerals according to Sec. 3. The court actually held that Sec. 3 had been superseded as to the particular land by a 1925 Act (39th Leg., Ch. 130, p. 332) but, at the same time, stated by way of rather elaborate dictum [621]*621that sales made under the 1923 Act (apart from the 1925 Act) operated to reserve all of the minerals to the State, and did not transfer 7/8 of the oil and gas to the purchaser as the attorney general contended that they did.

The later decision in Magnolia Petroleum Co. v. Walker, 1935, 125 Texas 430, 83 S.W. 2d 929, involved the effect, as to oil and gas reservations, of a resale of school lands under the so-called Relief Act of 1925, to wit, Art. 5326a, R.S. 1925, the pertinent provision of which2 was quite similar to that of the 1923 Act, except that the purportedly reserved fraction was only 1/16. The issue was whether Magnolia as lessee under the land repurchaser had to pay the State one-half of the lease bonus and delay rentals (as required in the Relinquishment Act) or might preserve the leases without so doing, Magnolia’s theory being that the land sale vested a 15/16 mineral estate in the repurchaser, who might lease it without regard to the requirements of the Relinquishment Act. The State took a contrary position concerning the quoted section of the 1925 Act to what it took in the Stalleup case and to what it now takes regarding the similar section of the 1923 Act, contending that the language was ineffective, that the effect of the land resale was actually to reserve all the minerals to the State, and that accordingly the matter of leases was governed by the Relinquishment Act. It relied heavily and at length on the dictum in the Stalleup case. The court held with the State. The emphasis on the lack of any provision in the 1925 Act concerning development of the purportedly reserved 1/16 interest of the State indicates that this interest was not regarded by the court as a purported royalty interest, althoug it appears from the briefs in the case that the alternative of so construing the purported reservation was before the court, Magnolia actually suggesting that such a construction would not be unreasonable.

The Magnolia decision is thus: (a) a holding that, notwithstanding language quite similar to that involved in the instant case, there was a full reservation of the minerals, with consequent applicability of the Relinquishment Act to leases executed by the land purchaser (repurchaser) ; (b) a fairly clearly implied rejection of what is now the State’s view — that language such as that of the 1923 and 1925 Acts contemplates a royalty; and (c) an illustration of the State having taken a somewhat [622]*622contrary position to what it took earlier and what it now takes as to applicability of the Relinquishment Act.

A still later decision — and one which the State regards as favorable to its present view — is Wintermann v. McDonald, 1937, 129 Texas 275, 102 S.W. 2d 167, 104 S.W. 2d 4, involving an application by Wintermann to purchase a small tract of unsurveyed school land under Acts 1931, 42nd Leg., Ch. 271, also known as H. B. 358, [Article 5421c, Vernon’s Texas Civ.

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Related

State v. Durham
860 S.W.2d 63 (Texas Supreme Court, 1993)
Montgomery v. Rittersbacher
410 S.W.2d 925 (Court of Appeals of Texas, 1966)
SHELL OIL COMPANY v. Rudder
299 S.W.2d 686 (Texas Supreme Court, 1957)

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Bluebook (online)
299 S.W.2d 686, 156 Tex. 618, 7 Oil & Gas Rep. 638, 1957 Tex. LEXIS 553, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shell-oil-company-v-rudder-tex-1957.