Storm Associates, Inc. v. Texaco, Inc.

645 S.W.2d 579, 76 Oil & Gas Rep. 124, 1982 Tex. App. LEXIS 5609
CourtCourt of Appeals of Texas
DecidedDecember 29, 1982
Docket16881
StatusPublished
Cited by16 cases

This text of 645 S.W.2d 579 (Storm Associates, Inc. v. Texaco, Inc.) 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
Storm Associates, Inc. v. Texaco, Inc., 645 S.W.2d 579, 76 Oil & Gas Rep. 124, 1982 Tex. App. LEXIS 5609 (Tex. Ct. App. 1982).

Opinion

OPINION

BASKIN, Justice.

This is an appeal from consolidated declaratory judgment actions brought to construe mineral deeds, royalty deeds, oil, gas, and other minerals leases, a warranty deed, and a mining lease, and to determine the rights, titles, and interests under such instruments in uranium and associated minerals in and under 694 acres in McMullen County.

By deed dated June 23, 1930, Philippa Gunter Kynette and her daughter, Adele K. Friedman (Friedman), each acquired fee ownership of an undivided one-half interest in both the surface estate and mineral estate in the tract. The instruments, all of which were found to be unambiguous by the trial court, are:

June 11, 1937 Royalty deed from Philip-pa G. Kynette (Kynette) to J.N. Abel of ½2 royalty interest in and to all of the oil, gas and other minerals in and under and that may be produced from the tract, subject to oil, gas and other mineral lease to M.I. Shaw.
January 9, 1939 Two (2) oil, gas and other minerals leases identical in terms, one executed by Kynette individually and one by Kynette for the estate of Lois Adele Kynette, a minor, to Magnolia Petroleum Company, predecessor of Mobil Oil Corporation (Mobil).
June 27, 1941 Royalty deed from Kyn-ette to E.T. McDowell of one-fourth (¼) interest in and to all oil royalty, gas *581 royalty and royalty in casinghead gas, gasoline, and royalty in other minerals in and under and that may be produced and mined from the tract.
(May 5, 1958 Kynette died testate leaving all her interest to her daughter Adele K. Friedman).
October 31, 1959 Warranty deed from Adele K. Friedman et vir. to T.J. Martin conveying title to the tract but grantor did not convey and grantee did not receive any “right, title or interest whatever in and to the oil, gas and other minerals, in and under said tract of land (the title to which mineral rights in said land shall be and remain in all things unaffected hereby), and Grantor expressly reserves ... her present interest and all rights necessary, proper, reasonable or incidental to the geological or geophysical exploration on said land, or to the development, production, handling, treating and marketing of the oil, gas and other minerals in said land, provided however, that payment for damage, if any, to the surface of said land caused by such operations, may be demanded by Grantee.” Water, caliche and gravel were not considered minerals and all interest of the grantor to water, ca-liche, and gravel were conveyed to grantee, provided, however, that grant- or reserved the right to produce and use all water, caliche and gravel necessary or proper to the oil, gas and mineral development and exploration of the land.
December 15, 1977 Mining lease from T.J. Martin individually and as agent and attorney-in-fact for others joined by his wife, Alberta Martin, and by T.J. Martin, Jr., individually and as trustee for his two minor children to Texaco, Inc. Lessor granted to Texaco all their interest in and to “Leased Substances” to explore and prospect for and to develop, extract, mine, save, store, mill, process, concentrate, refine, stockpile, convert, treat, remove, transport, own, sell, dispose of, and market all Leased Substances. Leased substances were defined as uranium, thorium, molybdenum, vanadium, and all other fissionable or associated minerals, together with all ores, minerals, metals, materials, elements, compounds, solutions, mixtures and source materials containing such substances, but specifically excluded oil, gas, casinghead gasoline, sulfur, condensates and associated hydrocarbon substances, and further specifically excluded coal, lignite, sand, gravel, and caliche. Lessee Texaco could use any mining method, including without limitation surface mining, open pit mining, shaft mining, tunnel mining and solution mining.

Adele K. Friedman, joined by her husband Sidney Friedman, brought suit seeking declaratory judgment that the warranty deed from Friedman to T.J. Martin (Martin) conveyed no interest in uranium. Mobil took essentially the same position as Friedman under its two oil, gas, and mineral leases of January 9, 1939. Successors to J.N. Abel under the royalty deed of June 11,1937, were Harold Kaffie, et al. (Kaffie), and the successors to E.T. McDowell under the 1941 royalty deed were Storm Associates, Inc., et al. (Storm Associates). Kaffie and Storm Associates, by cross-action, took essentially the same position as Friedman and, in addition, asserted that even if uranium and associated minerals were a part of the surface estate conveyed to Martin rather than the mineral estate reserved by Friedman, they were nonetheless entitled to receive their respective royalties under the respective royalty deeds.

Martin, his wife, and various of their children and their spouses, for themselves and other minor children, entered into two “Pooled Substances Agreements” on August 23, 1977, and September 12, 1977. Such agreements were not brought forward with the record on appeal, but we are told, apparently without objection, that the purpose of the Pooled Substances Agreement was to pool various products and substances underlying the tract “which constitutes no part of the mineral estate” with like products or substances underlying other desig *582 nated tracts of land. The agreements specifically purported to include “all uranium, vanadium, thorium, molybdenum, other fissionable source materials.... ” Martin and the other Martins, by counterclaim and cross-action, argue that uranium was not a mineral reserved by Friedman in the mineral estate, but was a substance that was conveyed with the sale of the surface estate. Texaco, holding the lease from Martin and the other Martins, also by counterclaim and cross-action, is in the same posture.

Trial was to a jury which answered unanimously each of the four special issues submitted to it. In answer to Special Issue No. 1, the jury found that deposits of uranium and associated substances began at a depth of 20 feet beneath the surface. To Special Issue No. 2, the jury found that extraction or production of uranium and associated substances from beneath the surface of the tract could be accomplished “by the mining method known as ‘strip mining’ or ‘open-pit mining’.” By its answer to Special Issue No. 3, the jury found that the process known as strip mining or open-pit mining was a reasonable method of extracting and producing uranium underlying the tract. In this regard the court instructed the jury that in order to be a “reasonable” method of production the method of removal must be both technically feasible and economically feasible. To Special Issue No. 4, the jury found that extraction or production of uranium and associated substances from beneath the surface of the tract by means of the method known as “strip mining” or “open-pit mining” would entail the substantial consumption, depletion, or destruction of the surface of the tract. The court defined the terms “substantial” and “consumed,” “depleted” and “destroyed.” We shall not burden an already lengthy opinion with a copying of the definitions.

The trial court made several findings 1

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Bluebook (online)
645 S.W.2d 579, 76 Oil & Gas Rep. 124, 1982 Tex. App. LEXIS 5609, Counsel Stack Legal Research, https://law.counselstack.com/opinion/storm-associates-inc-v-texaco-inc-texapp-1982.