French v. Chevron U.S.A. Inc.

896 S.W.2d 795 (1995)

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Nature of the Case

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Facts

In 1943, George Calvert (Grantor), the owner of a 1/32 mineral interest in a 32,808.5 acre tract, deeded a fifty acre, 1/656.17 interest to Capton M. Paul (Grantee). The pertinent parts of the document, titled 'Mineral Deed,' read as follows: That I, George Calvert, . . . do grant, bargain, sell, convey, set over, assign and deliver unto Capton M. Paul, an undivided Fifty (50) acre interest, being an undivided 1/656.17th interest in and to all of the oil, gas and other minerals, in, under and that may be produced from the following described lands. . . . It is understood and agreed that this conveyance is a royalty interest only and that neither the Grantee, nor his heirs or assigns shall ever have any interest in the delay or other rentals or any revenues or monies received or derived from the leasing of said lands present or future or any part thereof, or the renewal or extension of any lease or leases now on said lands or any part thereof. Neither the Grantee herein nor his heirs or assigns shall ever have any control over the leasing of said lands or any part thereof or the renewal or extending of any lease thereon or for the making of any lease contract to develop or prospect the same for oil, gas or other minerals, which is hereby specifically reserved in the Grantor. P, the successor-in-interest to the grantee, brought suit against Grantor Calvert's successors to construe the deed as conveying a royalty interest. P maintains the deed conveyed a pure fixed royalty interest of 1/656.17 of all production. D claims the deed conveyed a mineral interest with a reservation of all rights stated in paragraph II. If the deed conveyed a mineral interest reduced by reservations, the grantee would receive only a 1/656.17 fraction of any royalty payable under a lease. The trial court denied P's summary judgment motion, finding only that the case constituted a proper declaratory judgment action, and granted D's motion, holding that the deed conveyed a mineral interest with a reservation of certain rights. P appealed and argued that the phrase 'royalty interest only' indicated that the parties intended to transfer only a royalty interest in production from the land. The court of appeals concluded that under Watkins and other Texas decisions, a deed transferring a royalty interest must expressly provide that royalty be from 'actual production.' P appealed.