Terry v. Conway Land, Inc.

508 So. 2d 401, 12 Fla. L. Weekly 1136
CourtDistrict Court of Appeal of Florida
DecidedApril 30, 1987
Docket86-514
StatusPublished
Cited by11 cases

This text of 508 So. 2d 401 (Terry v. Conway Land, Inc.) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Terry v. Conway Land, Inc., 508 So. 2d 401, 12 Fla. L. Weekly 1136 (Fla. Ct. App. 1987).

Opinion

508 So.2d 401 (1987)

David E. TERRY, Mary E. Terry and George A. Terry, Jr., Appellants,
v.
CONWAY LAND, INC., Etc., et al., Appellees.

No. 86-514.

District Court of Appeal of Florida, Fifth District.

April 30, 1987.
Rehearing Denied June 16, 1987.

*402 Robert N. Reynolds and Arnold David Barr, of Robert N. Reynolds, P.A., Miami, for appellants.

Fletcher G. Rush, of Rush, Marshall, Bergstrom, Reber & Gabrielson, P.A., and John A. Reed, Jr., of Lowndes, Drosdick, Doster, Kantor & Reed, P.A., Orlando, for appellees.

ORFINGER, Judge.

This appeal is from a summary final judgment denying appellants' claim to an apportionment of an award entered in a condemnation suit in which the City of Orlando acquired the fee simple title to the property involved. The sole issue is whether appellants are entitled to an apportionment of the award based on a royalty interest reserved by their predecessors in title.

Appellees were the fee owners of the property at the time of the taking. Appellants are successors in interest to Magnolia Ranch, Inc., the former owners of the property involved. The deeds by which Magnolia Ranch, Inc. conveyed the property to appellees' predecessor in title, each contain the following provision:

SUBJECT HOWEVER, to the following:
1. Taxes and assessments of the County of Orange, Florida, for the year 1954.
2. That certain oil, mineral, and gas lease and agreement entered into between Magnolia Ranch, Inc., George Terry and Mary Elizabeth Terry, his wife, as parties of the first part, or lessors, and Warren Petroleum Corporation, which said lease and agreement is dated the *403 24th day of June, 1953, and recorded in Deed Book 951 at page 230-8, in the public records of Orange County, Florida, the rental with respect to which is on an annual basis of fifty cents (50c) per acre, which said oil, mineral and gas lease and agreement to the extent that it embraces the lands aforesaid is hereby assigned, transferred and set over unto party of the second part, the annual rental thereof with respect to which shall be prorated between Magnolia Ranch, Inc. and the party of the second part herein as of the date hereof, except however, parties of the first part do hereby specifically reserve for the account, use, and benefit of Magnolia Ranch, Inc., its successors and assigns forever, one-half of any and all royalties that may be paid or obtained from the lands aforesaid on account of any oil, mineral, minerals, or gas which may be taken from said real property herein conveyed, provided however, this reservation shall not apply to participation in delay rental which may be paid on account of existing or any future oil, mineral and gas leases and arrangements affecting said real property.

The construction and interpretation of Paragraph 2 is at issue here. The trial court agreed with appellees that the royalty reservation applied only to the then existing lease referred to in the quoted provision which had long since expired, and on that basis entered summary judgment for appellees.

Considering the clause in its entirety, it is clear that it does not purport to limit the royalty interest to the existing lease. If it did, there would be no purpose in the provision that "this reservation [of the royalty interest] shall not apply to participation in delay rental which may be paid on account of existing or any future oil, mineral and gas leases ..." If the reservation applied only to the existing lease, there would be no entitlement to any participation in proceeds of future leases, and no reason to refer to future leases. Since we cannot ignore or disregard this language, we conclude that the royalty interest, whatever it may be, was intended to apply to leases in futuro, as well as to the then existing lease.

But even if the trial court erred in construing the reservation to apply only to the then existing and now expired lease, we must sustain his order if it is correct for any reason. Zinger v. Gattis, 382 So.2d 379 (Fla. 5th DCA 1980). Appellees contend that the order can be sustained for any one of the following reasons:

a) if the reservation applies to leases in the future, it would apply only to leases which would be entered into by the immediate grantee of Magnolia Ranch, Inc., who has since conveyed the property;

b) the royalty interest is personal property, and thus was not encompassed at all in the condemnation proceeding, which involved only real property;

c) whether the royalty interest is considered to be real or personal property, if it is construed to apply to any lease not in existence now and which may be entered into in the indefinite future, then such provision would be entirely void as violative of the rule against perpetuities (now codified in section 689.22, Florida Statutes (1985).

There is nothing in the language of Paragraph 2 which in any way purports to limit future leases to those entered into by Magnolia's immediate grantee. The language "existing or future ... leases and arrangements affecting said real property." indicate a clear intention that the provision follow the land.

What type of interest, then, does the royalty reservation create? A grant of a royalty interest and a conveyance of minerals in place are recognized as two entirely different concepts and convey different interests. Neel v. Rudman, 160 Fla. 36, 33 So.2d 234 (1948). In Miller v. Carr, 137 Fla. 114, 188 So. 103 (1939) the court had to determine whether a complaint which alleged an oral agreement to bequeath the decedent's oil royalty interest stated a cause of action. The court indicated that

The next question for decision is whether or not the interest in the royalties is personal property or an interest in *404 land. If the interest in the royalties is personal property, then counts 1 and 2 each state a cause of action. If the interest in the royalties is an interest in land, and controlled by an oral agreement to leave same to Pearl Miller, then counts 1 and 2 of the declaration fail to state a cause of action.

Id. 188 So. at 106. After reviewing the appropriate authorities the court concluded that royalties on oil which had been severed from the ground were personal property, but royalties on oil still in the ground constituted a part of the realty and could not pass by an oral contract to devise. Florida has thus adopted the view that a royalty interest in unsevered oil is an interest in real property.[1]

Where the grant or reservation of a royalty interest applies, (here to future leases not yet made although presently existing leases may be involved as well) and is not otherwise limited as to time, the interest is referred to as a perpetual non-participating royalty. Stokes v. Tutvet, 134 Mont. 250, 328 P.2d 1096 (1958). Commenting further, the Montana Supreme Court said:

"Non-participating royalty has a well-understood meaning in the oil industry. It may be defined as an interest in the gross production of oil, gas and other minerals carved out of the mineral fee estate as a free royalty, which does not carry with it the right to participate in the execution of, the bonus payable for, or the delay rentals to accrue under, oil, gas and mineral leases executed by the owner of the mineral fee estate. The exclusive-leasing privilege remaining in the mineral fee owner is commonly referred to and known as the `executive right'".

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Cite This Page — Counsel Stack

Bluebook (online)
508 So. 2d 401, 12 Fla. L. Weekly 1136, Counsel Stack Legal Research, https://law.counselstack.com/opinion/terry-v-conway-land-inc-fladistctapp-1987.