Concord Oil Company v. Pennzoil Exploration And Production Company

966 S.W.2d 451 (1998)

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Nature of the Case

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Facts

A.B. Crosby executed a deed to Southland Lease and Royalty Corporation. Crenshaw acquired Southland's interest and subsequently executed two oil and gas leases under which P is the lessee. P's deed provides in relevant part: That I, A. B. Crosby . . . Grant, Sell and Convey unto Southland. . . an undivided one-ninety sixth (1/96) interest in and to all of the oil, gas and other minerals in and under, and that may be produced from Survey Sixty-four . . . together with the right . . . of ingress and egress at all times for the purpose of prospecting, drilling, mining and exploring said lands for oil, gas and other minerals . . . together with all rights of every kind and character necessary and convenient to the full use and enjoyment of such estate herein conveyed . . . .While the estate hereby conveyed does not depend upon the validity thereof, neither shall it be affected by the termination thereof, this conveyance is made subject to the terms of any valid subsisting oil, gas and/or mineral lease or mineral lease or leases on above described land or any part thereof, but covers and includes one-twelfth (1/12) of all rentals and royalty of every kind and character that may be payable by the terms of such lease or leases insofar as the same pertain to the above described land, or any part thereof. This deed was executed on August 5. The day before the deed was executed, Crosby had acquired an undivided 1/12 interest in the minerals under a deed identical to the Concord deed in all respects but one: The granting clause in the deed to Crosby contained the fraction 'one-twelfth (1/12)' rather than 1/96. At the time each of these deeds was executed, an oil and gas lease that provided for a 1/8 royalty was outstanding. In 1961, Crosby executed another mineral deed purported to convey to John M. Robinson an undivided 7/96 interest in the minerals. Robinson subsequently entered into an oil and gas lease with D. D completed producing wells on the property. P sought a determination of its interest and sued for damages. P claims the deed at issue unambiguously conveyed a 1/12 interest in the minerals. D contended the deed conveyed only a 1/96 interest in the minerals. P stated that the deed had also conveyed 1/12 of rentals and royalty, but took the position that the 1/12 interest was limited to the lease that existed at the time the deed was executed. D claims the 1/12 interest terminated upon the expiration of that lease, which occurred well before the Crosby conveyance to Robinson, D's lessor. The court entered a take-nothing judgment against P. The court of appeals affirmed holding that the P deed did not convey any interest in future leases. The grant of 1/12 of rentals and royalty was limited to the lease in existence at the time of the conveyance, and upon expiration of that lease, P was left with only a 1/96 interest in the minerals. The court relied on the 'two-grant' or 'multiple-grant' theory in concluding that the deed did not convey a single estate but instead conveyed a 1/96 interest in the minerals in addition to a 1/12 interest in the lease existing at the time of the grant. P appealed.