Virgil Mathews v. Sun Oil Co.

425 S.W.2d 330, 11 Tex. Sup. Ct. J. 234, 28 Oil & Gas Rep. 457, 1968 Tex. LEXIS 277
CourtTexas Supreme Court
DecidedFebruary 21, 1968
DocketB-145
StatusPublished
Cited by51 cases

This text of 425 S.W.2d 330 (Virgil Mathews v. Sun Oil Co.) 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
Virgil Mathews v. Sun Oil Co., 425 S.W.2d 330, 11 Tex. Sup. Ct. J. 234, 28 Oil & Gas Rep. 457, 1968 Tex. LEXIS 277 (Tex. 1968).

Opinions

[331]*331NORVELL, Justice.

Petitioners, Virgil Mathews1 and wife, Elsie May Mathews, J. W. Sanders, E. T. Scott Trust2 and the Willie Belle Sanders Trust3, brought suit against Sun Oil Company and Kerr-McGee Oil Industries, Inc., seeking a decree that an oil, gas and mineral lease dated March 8, 1957, executed by Virgil Mathews and wife to Kerr-McGee had terminated and was no longer effective insofar as Section 4, Block M-22, Texas Central Railway Company Survey, Hutchinson County, Texas, was concerned. The trial court rendered summary judgment for respondents. Rule 166-A, Texas Rules of Civil Procedure. The Court of Civil Appeals affirmed. 411 S.W.2d 561. We affirm the judgments of the courts below.

The lease of March 8, 1957 4 was for a primary term of five years and covered both Section 4, above described, and a contiguous tract, namely, Section 13, C. L. & C. Co. Survey, Hutchinson County, Texas. At the time of trial, the lease which had been obtained by Sun under a farmout from Kerr-McGee was in its secondary term and being held by production from Section 13. Immediately after the execution of the lease, the title to the royalty interests in Section 4 were held as follows:

Vie — by Virgil and Elsie May Mathews
⅞56 — by J. W. Sanders
⅞56 — by Sanders Trust
⅛28 — by Scott Trust

The interests of J. W. Sanders, the Sanders Trust and the Scott Trust were nonparticipating royalty interests. The leasing powers or the executive rights were vested in Mathews.

Mathews also held the executive rights to Section 13 and a ¾e royalty interest therein. The remaining ½6 royalty interest was non-participating and was held by the successors in interest to R. Niles Graham and Margaret Graham Crusemann. Such successors are not parties to this suit.

The controlling question relates to the legal effect of Mathews’ action in combining two tracts in one lease when the holders of non-participating royalty interests in such tracts were not identical.

Petitioners contend that both courts below erred in holding as a matter of law from the uncontroverted facts that the oil and gas lease of March 8, 1957 was valid and subsisting as to their respective interests in Section 4 as the primary term of such lease had expired and there was an absence of drilling upon or production from said section. The validity of this contention is the sole issue in the case. The petitioners’ arguments are presented primarily from the position of the holders of the non-participating royalty interests. Their situation is different from that of Mathews as above indicated, and if they cannot recover, it seems clear that Mathews cannot recover. We shall, therefore, discuss the case from the standpoint of the non-participating royalty owners, namely, J. W. Sanders, the Sanders Trust and the Scott Trust.

Petitioners rely heavily upon Brown v. Smith, 141 Tex. 425, 174 S.W.2d 43 (1943), wherein it was said that in a situation bearing some similarity to the one now before us that:

“In many respects the burdens and obligations of petitioners under the lease tendered by respondents would be the [332]*332same as they would be under two separate leases, one affecting the 20-acre tract and the other affecting the 42.75-acre tract.”

The suit was one for specific performance brought by the sellers of an oil and gas lease against the purchasers thereof for specific performance. The purchasers’ defense was that sellers did not tender the title that purchasers had contracted to buy. The sellers were Ector Smith and Floyd Smith and their respective wives. The lease which they tendered to the purchasers contained the following clause:

“ ‘Of the acreage above described, the said Floyd Smith and wife, Bertha Smith, own twenty (20) acres and the said Ector Smith and wife, Ada Smith, own 42.75 acres, and it is understood and agreed as between Lessors, that the rents and royalties hereinafter stipulated to be paid on said 62.75 acre tract are to be pooled and shared by said Lessors in proportion to acreage owned.’ ”

However, it appeared that Floyd Smith deraigned title to the 20-acre tract from Mrs. C. B. Lee who retained a ⅜2 royalty interest, but no leasing rights to the tract. Mrs. Lee did not join in the lease. This Court held that Brown had no power or authority to pool Mrs. Lee’s royalty interest with those of other persons holding royalty interests in the 20-acre and 42.75-acre tracts involved because:

“The language used, by which Mrs. Lee reserved to herself the one-thirty-second royalty interest in all of the 20 acres conveyed, with provision that the royalty be delivered to her as is usual where oil, gas or other minerals are produced and saved, negatives the existence of an intention to confer upon her grantee the power or authority to convey or in any way dispose of any part of the royalty interest which she reserved.”

In Minchen v. Fields, 162 Tex. 73, 345 S.W.2d 282 (1961), this Court reiterated the rule stated in the Brown case. It was said:

“We agree with the Court of Civil Appeals that the act of Fields (the holder of the leasing power) in executing one lease covering the 802.6 acres did not unitize or pool all the mineral interests in said land. Brown v. Smith, 1943, 141 Tex. 425, 174 S.W.2d 43; Nugent v. Freeman, Tex.Civ.App.1957, 306 S.W.2d 167, wr. ref. n. r. e.”

The Court then quoted with approval the following statement from the opinion of the Court of Civil Appeals (330 S.W.2d 683, l. c. 687):

“[T]he reason of the rule is that where mere executive rights are conferred or reserved, there is no intention evidenced to vest authority to convey a royalty interest reserved or the royalty interest attributable to the minerals leased and to hold that such holder can unitize or pool the interest would allow him to convey such royalty interest because a uniti-zation of the royalty and minerals under different tracts effects a cross-conveyance to the owners of minerals under the various tracts of royalty or minerals so that they all own undivided interests under the unitized tract in the proportion their contribution bears to the unitized tract. Veal v. Thomason, 138 Tex. 341, 159 S.W.2d 472; Brown v. Smith, supra.”

No pooling problem is here involved; nor is it contended that the lease was invalid when executed; nor that such lease should be cancelled in whole or in part because the operator thereof has failed to reasonably develop the mineral potentials of the lands under the lease; 5 e. g. W. T. Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27, l. c. 29 (1929); nor is it [333]

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Bluebook (online)
425 S.W.2d 330, 11 Tex. Sup. Ct. J. 234, 28 Oil & Gas Rep. 457, 1968 Tex. LEXIS 277, Counsel Stack Legal Research, https://law.counselstack.com/opinion/virgil-mathews-v-sun-oil-co-tex-1968.