Archer County v. Web

338 S.W.2d 435 (1960)

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Nature of the Case

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Facts

Ps (Archer County, Fred Turner, Jr., and Juliette Turner, as trustees for Dorothy Scarbauer, and Fay Durham), sued D and other trustees of the Shannon West Texas Memorial Hospital and of the Margaret A. Shannon Estate, in trespass to try title and for a declaratory judgment establishing the continued existence of a term royalty interest. Phillips Petroleum Company and Fred Turner, Jr., sued Ds in trespass to try title and for a declaratory judgment establishing the continued existence of an oil and gas lease covering 202 acres of land. This all started on May 7, 1929, when Margaret A. Shannon, owner in fee simple of a league of land executed a deed to James E. Ferguson, conveying '* * * an undivided one-half interest in and to all oil and gas royalty that may be produced under oil and gas leases outstanding or to be hereinafter outstanding on the aforesaid lands, or any part thereof, for the full term of fifteen (15) years from this date, or so long as oil or gas shall be produced from said premises, or any part thereof in commercially paying quantities * * *. 'If no commercially paying oil or gas be produced from aforesaid lands within fifteen years, this conveyance to become null and void.' All the interests acquired by Mr. Fergusion passed to Ps herein. Margaret A. Shannon died testate on December 13, 1931. All interests in the land passed to Ds as trustees of her estate and the Shannon West Texas Memorial Hospital. On April 24, 1940, Ds executed to R. G. Carr an oil and gas lease covering 202 acres for a primary term of ten years 'and as long thereafter as oil, gas or other mineral is produced from said land hereunder.' The lease provided for payment of shut-in gas well royalty of $50.00 per well per year where gas from a well-producing gas only was not sold or used. Carr assigned his interest under the lease to Phillips, which in turn assigned an interest in 40 acres thereof to Fred Turner, Jr. Delay rentals were paid to Ds sufficient to keep the lease in force until April 24, 1944. Phillips and Turner completed a well on the 40 acres as a potential producer on September 24, 1943. From September 15, 1948, to January 5, 1949, gas from this well was produced and sold, but except during that period no gas was produced from the well. Since the completion of the well, Phillips and Turner have annually tendered payment of the shut-in gas well royalty provided for in the lease to Ds, all of which tenders, except one made by Turner in 1943, were refused. The trial court held that the royalty interest of Ps subsisted to the extent that it pertained to the 202-acre tract under lease to Phillips and Turner. It further held that the lease owned by Phillips and Turner remained in effect. The Court of Civil Appeals affirmed the judgment of the trial court insofar as it held that the oil and gas lease remained in effect, but reversed and rendered that part of the judgment maintaining the royalty interest in the 202 acres, holding that all rights under the royalty deed under which Ps claimed had reverted to Ds. Ps appealed.