Tenneco Oil Company v. Alvord

416 S.W.2d 385, 10 Tex. Sup. Ct. J. 432, 26 Oil & Gas Rep. 710, 1967 Tex. LEXIS 240
CourtTexas Supreme Court
DecidedMay 31, 1967
DocketB-31
StatusPublished
Cited by5 cases

This text of 416 S.W.2d 385 (Tenneco Oil Company v. Alvord) 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
Tenneco Oil Company v. Alvord, 416 S.W.2d 385, 10 Tex. Sup. Ct. J. 432, 26 Oil & Gas Rep. 710, 1967 Tex. LEXIS 240 (Tex. 1967).

Opinion

GREENHILL, Justice.

The question here is whether certain oil and gas instruments reserved to the grantor the mineral estate to a depth of 4704 feet. The trial court entered a summary judgment that such estate was not reserved. The Court of Civil Appeals reversed that judgment and remanded the cause for a trial on the ground that the various instruments in question were ambiguous and hence parol evidence was admissible to ascertain the intentions of the parties. Tex.Civ.App., 408 S.W.2d 769. We granted a writ of error to review that holding.

The eight oil and gas leases in question were owned by Natural Gas Production Company, hereinafter called Natural. It had sixteen oil or gas wells on the leases in Harrison and Panola Counties. The shallowest production was of gas at 900 feet on the Floyd lease. There were other producers of oil or gas between 2300 and 2500 feet. The deepest well was bottomed at 4704 feet on the Roquemore lease.

On March 7, 1941, Natural and Midstates Oil Corporation entered into a contract whereby Natural agreed to assign to Mid-states major interests in the above leases. *386 It was contemplated that Midstates would test the lower strata, and Natural would receive an overriding royalty from such production. The contract to assign resulted in an assignment dated April 24, 1941. The question is whether Natural, in such contract and assignment, reserved the entire mineral estates in all the leases down to 4704 feet, or whether it reserved only the then existing wells on the leases, together with the right to produce from such wells, to rework them, and other incidental rights restricted to the particular wells.

Natural subsequently assigned its rights to H. H. Alvord, Jr., who had been Natural’s president. Midstates assigned its interests to Tenneco. Tenneco, in turn, farmed out the Floyd lease down to 3850 feet, or to the base of the Mooringsport Lime, to J. S. Meriwether et al. who obtained production. As mentioned above, Natural had one well on the Floyd lease producing at 900 feet.

Alvord brought this suit against Tenneco for a declaratory judgment. He sought a declaration that his predecessor, Natural, had reserved the mineral estate down to 4704 feet. Meriwether et al. intervened and aligned themselves with Tenneco.

The contract whereby Natural [Alvord] agreed to assign the leases to Midstates [Tenneco] will be discussed below. One of its provisions, however, was that “title to each of the [16] wells * * * shall not pass * * * to Midstates,” and that Natural would have the right to produce such wells from the horizon from which they were producing “until Natural elects to abandon the same * * *.” [All emphasis herein is ours.]

Upon the first trial of this case, the court entered a summary judgment for Tenneco and the intervenors. The holding was that they owned the entire mineral estates (including that above 4704 feet) subject to certain overriding royalties not in question here. The court also, by summary judgment, held that Natural [Alvord] had abandoned all of the sixteen wells, and hence their rights in the shallow production had ceased.

Upon the first appeal, the Court of Civil Appeals at Tyler was of the opinion that there was an issue of fact as to whether there had been an abandonment of the wells. It remanded the cause for a trial of that fact issue. 382 S.W.2d 358 (1964). That opinion does not mention any question of ambiguity of the written instruments. Only Tenneco filed an application for writ of error, and the only point in the application was that the Court of Civil Appeals had erred in holding that there was an issue of fact as to abandonment. The application was refused, no reversible error.

Before the second trial, Tenneco and the intervenors stipulated that there had not been an abandonment of the wells, thus taking out the fact issue found by the Court of Civil Appeals. They again moved for summary judgment. Alvord contended, however, that oral evidence should be introduced to show the intention of the parties that Natural [Alvord] intended to reserve the minerals above 4704 feet, and that the true meaning of the instruments was that this estate had been reserved. 1 The trial court again entered summary judgment for Tenneco and the intervenors, holding that the instruments were not ambiguous and that Natural [Alvord] had reserved only the particular wells and the rights therein ; and that the entire mineral estate had been assigned by Natural [Alvord] to Midstates [Tenneco], subject to overriding royalties not here involved.

The Court of Civil Appeals at Texarkana, on the second appeal, was of the view that, taken as a whole, the instruments were ambiguous; and it reversed the case again for a trial at which extrinsic evidence *387 would be introduced to show the intention of the parties. No particular provisions were stated to be ambiguous; and Alvord’s counsel points out none. We are pointed to no provisions which specifically conflict with other provisions. The argument is that from several different provisions, none ambiguous in themselves, a doubt is raised as to the meaning and intention of the entire contract and assignment. It will be necessary, therefore, to summarize or set out the various provisions referred to.

The actual assignment in the case is that of April 24, 1941. After describing the leases, it states that Natural [Alvord] “does hereby grant, sell, assign and transfer unto Midstates Oil Corporation * * * its successors and assigns [Tenneco], all of the right, title and interest of the original lessee and present owner in and to each of the above described oil and gas leases * * It then refers to “a certain unrecorded agreement of even date between the same parties” and to the basic agreement between the parties of March 7, 1941, and provides that the assignment is subject to the reservations and stipulations therein contained. The “unrecorded instrument of even date” (March 7, 1941) was included in an appendix to the application for writ of error in this cause on the first appeal. Alvord’s counsel does not contend that anything in that instrument creates any ambiguity. So we turn to the contract of March 7, 1941.

That contract, after describing the leases and prescribing the usual terms for furnishing and examining abstracts, contains these provisions, most of which are summarized for brevity:

(2) Upon approval of title by Midstates, “Natural shall * * * grant, sell, transfer and assign all of the right, title and interest” it has in all of the leases, subject to certain overriding royalties.

(3) Natural will assign to Midstates its gas purchase contracts, with certain specified exceptions.

(4) The sixteen producing wells are described as to location by leases and the depth from which they were producing. The deepest was the gas well at 4704 feet on the Roquemore lease. The instrument then sets out the language which is important here:

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Bluebook (online)
416 S.W.2d 385, 10 Tex. Sup. Ct. J. 432, 26 Oil & Gas Rep. 710, 1967 Tex. LEXIS 240, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tenneco-oil-company-v-alvord-tex-1967.