Opinion
No. 49181.
April 6, 1977.
Appeal from Chancery Court, Monroe County, Fred P. Wright, Chancellor.
Richard B. Booth, Aberdeen, for appellants.
Houston, Chamberlin Houston, Claude A. Chamberlin, Aberdeen, for appellees.
Before GILLESPIE, SMITH and WALKER, JJ.
This suit arose in the Chancery Court of Monroe County. Clarence C. Day and Frank R. Day appeal from that part of a decree adjudging that they had no interest in the oil, gas and mineral royalty under a tract of land. No purpose will be served by describing the voluminous pleadings and how the issue arose.
The facts insofar as necessary to present the question involved are next stated. On December 24, 1928, G.T. and Sara Roberts, owners of a tract of land in Monroe County, executed a warranty deed conveying to C.C. Day a one-half interest in and to all oil, gas and other minerals in, under or upon the land. This mineral deed was recorded in Book 8, page 325 of the Chancery Clerk's records. Also on December 24, 1928, the Roberts executed to C.C. Day an oil, gas and mineral lease on the same lands for a primary term of five years, with lease providing for a royalty of 1/8th of the oil produced and a royalty of $150 per year for each gas well produced. This lease expired not later than December 24, 1932. On February 5, 1938, C.C. Day quitclaimed to L.W. Rea "all of my right, title, and interest in all of the oil, gas and other mineral rights except my oil and gas royalty found in Lease Record 8, page 325 [on the land in question]."
See Appendix.
C.C. Day died and devised all of his estate to the appellants, Clarence C. Day, Jr., and Frank R. Day. L.W. Rea subsequently conveyed his entire interest to his wife, Mary Isabella Rea. Appellee's interest is derived either directly or indirectly from Mrs. Rea. (The style of this case is a misnomer. Actual appellees are George H. Miller, Mrs. Mary Isabella Rea and Ace Rig and Construction Co., Inc.)
The question before the Court is whether (1) C.C. Day reserved any estate in the oil, gas and other minerals in the deed to L.W. Rea dated February 5, 1938, and (2) if so, the quantum of the estate thus reserved.
The rules for construing the mineral deed of C.C. Day to L.W. Rea are stated in Harris v. Griffith, 210 So.2d 629 (Miss. 1968), as follows:
In trying to solve this question, we should keep in mind certain well-established principles of construction of contracts. Those applicable here are (1) the deed must be read in the light of the circumstances surrounding the parties when it was executed; (2) that the construction should be upon the entire instrument, and each word and clause therein should be reconciled and given a meaning, if that can be reasonably done; (3) that the main document and that to which it refers must be construed together, (4) that if the wording of the deed is ambiguous, the practical construction placed thereon by the parties will have much weight in determining the meaning. . . .
In our opinion the construction we now place upon the exception or reservation in the deed in question is the only possible one consistent with the rule that we must give some meaning to all parts of an instrument. The word "royalty" has had a reasonably well understood meaning for many years and undoubtedly did when the deed in question was executed. We do not find that the reservation is void for uncertainty. The reservation of the royalty meant just what it said. The deed operated to convey the minerals with all executive rights to L.W. Rea with a royalty reserved to the grantor. The amount of the royalty is determined by what is fair and reasonable at the time and place the lease is made. See Oil Gas Law, Williams Meyers, Vol. 2, § 339.3, page 219 (Supp. 1975).
In Harris v. Griffith, supra, a royalty interest was defined as the right to royalty under existing or future leases, the owner of which has no development right and no executive right. Westbrook v. Ball, 222 Miss. 788, 77 So.2d 274 (1955), and Mounger v. Pittman, 235 Miss. 85, 108 So.2d 565 (1959), recognize that the owner of a mineral fee can create by conveyance or reservation a separate estate in the minerals commonly referred to as a royalty interest. When this term is used in reference to a specific existing lease, royalty will mean that portion of the oil or gas for which the lessee must account to the lessor under the terms of the lease. Oil Gas Law, Williams Meyers, Vol. 1, § 301, p. 437 (Supp. 1975).
The same treatise at section 301, pages 442 and 443, states that a nonexecutive mineral interest or a right to royalty may be conveyed under existing or future leases and the general rule as there set forth recognizes that a royalty interest may be created prior to the execution of a lease. Volume 2, sections 339, et seq., deal with the rights and duties of the owner of the executive rights in reference to future leases.
In the pleadings appellees recognized that C.C. Day reserved a royalty in the conveyance to L.W. Rea on February 5, 1938, but contended that the royalty thus reserved was limited to one-half of one-eighth of the oil and one-half of $150 per year per gas well as provided in the lease dated December 24, 1928, from the Roberts to C.C. Day. As previously stated, this lease had expired at the time C.C. Day conveyed the minerals to L.W. Rea on February 5, 1938.
It is manifest that C.C. Day intended to reserve and did reserve a royalty interest. He had a one-half interest in the minerals and the reservation was sufficient to reserve a one-half interest in the royalties on any future lease of the mineral estate. The December 24, 1928, lease had long since expired at the time of C.C. Day's mineral deed to L.W. Rea. The parties obviously did not intend to reserve a royalty in a lease that did not exist. The reservation could only apply to future leases. Any other interpretation would be tantamount to saying the parties intended that the words meant nothing.
Appellees rely upon the case of Commerce Trust Company v. Lyon, 284 S.W.2d 920 (Tex.C.C.A. 1955), as authority for the proposition that the reservation in the deed from C.C. Day to L.W. Rea was limited to the royalties provided in the lease from the Roberts to C.C. Day dated December 24, 1928. That case is not in point. The reservation in the Texas case specifically retained the royalty interest "in said lease" then existing. The book and page referred to in the reservation in the present case was the book and page where the mineral deed from the Roberts to C.C. Day was recorded, not the lease.
We hold that the reservation in the deed from C.C. Day to L.W. Rea reserved a royalty interest under any future lease executed by the grantee or his successors in title, and that one-half of the royalties provided in such future leases is the quantum of the estate reserved by C.C. Day. We do not have in this case any question concerning whether the present leases executed by the present owner of the estate conveyed to L.W. Rea complied with the duties the lessor owed to the owners of the royalty interest. The decree of the trial court is reversed and judgment entered here adjudging Clarence C. Day, Jr., and Frank R. Day and their successors in title, if any, to be the owners of the royalty interest in any present or future leases executed by the successors in title to the one-half mineral interest conveyed by C.C. Day to L.W. Rea. But the royalty owner does not share in bonus or delay rentals. Mounger v. Pittman, supra.
This cause is remanded for any further appropriate proceedings consistent with this decision.
REVERSED, RENDERED AND REMANDED.
PATTERSON and INZER, P. JJ., and ROBERTSON, SUGG, WALKER, BROOM and LEE, JJ., concur.
SMITH, J., dissents.
Dissenting from a conclusion in which eight of my brethren concurred must be thought to require a great deal of temerariousness, and it does. In doing so I do not question the validity of the learned dissertation on oil and gas law contained in the majority opinion. My misgivings are addressed solely to the efficacy of the attempted exception contained in the deed given by Day's predecessor in title to exclude a one-half royalty interest in the minerals from the grant.
Mississippi Code Annotated section 89-1-39 (1972) is as follows:
A conveyance of quitclaim and release shall be sufficient to pass all the estate or interest the grantor has in the land conveyed, and shall estop the grantor and his heirs from asserting a subsequently acquired adverse title to the lands conveyed.
As stated in the controlling opinion, the title asserted by appellant Day depends upon an exception contained in a deed given by his predecessor in title in 1938 to one Rea, the exception being quoted in full in the opinion.
The granting clause and the attempted exception in the 1938 deed were as follows:
I hereby convey, quit claim, and release unto L.W. Rea all of my right, title, and interest in and to all timber, and all of my right, title and interest in all of the oil, gas, and other mineral rights except my oil and gas Royalty found in Lease Record 8 Page 325 on the following described lands. . . .
It is my view, humbly asserted here, that the description of the mineral estate, right, title or interest attempted to be excluded by the grantor, Day, was not described with sufficient clarity or precision quantitatively or qualitatively to be effective so as to cut down the grant of Day's total interest, including mineral interest. That being so, the exception, not the grant, failed.
The general rule is quoted with approval in Day v. Pounders, 231 Miss. 63, 94 So.2d 620 (1957), as follows:
If there be a patent ambiguity in the description of land excepted from a conveyance, the exception, not the deed, is void for uncertainty. (Citing Beasley v. Beasley, 177 Miss. 522, 171 So. 680, 683 and McAllister v. Honea, 71 Miss. 256, 14 So. 264.) [231 Miss. at p. 70, 94 So.2d at 623].
Since the transaction occurred almost forty years ago and apparently the whole matter has lain quiescent since that time and until comparatively recent mineral activities began in the area, extrinsic evidence as to intention is lacking.
It is a principle of universal application that grants are liberally, exceptions strictly, construed against the grantor. 8 R.C.L. 1094; 14 Tex.Jur. 926; Curdy v. Stafford, 88 Tex. 120, 30 S.W. 551; Barker v. Lashbrook, 128 Kan. 595, 279 P. 12; Bolton v. Dyck Oil Co., Tex.Civ.App., 114 S.W.2d 299; Jones v. Sun Oil Co., Tex. Civ.App., 110 S.W.2d 80; Higdon v. Nichols, 204 Ky. 56, 263 S.W. 665.
( Texas Co. v. Newton Naval Stores, 223 Miss. 468 at 484, 78 So.2d 751 at 757).
An exception must be as definite as is required to convey title; and if it is not the whole property passes. Richardson v. Marqueze, 59 Miss. 80, 42 Am.Rep. 353; McAllister v. Honea, 71 Miss. 256, 14 So. 264; Nunnery v. Ford, 92 Miss. 263, 45 So. 722; Beasley v. Beasley, 177 Miss. 522, 171 So. 680; and Ates v. Ates, 189 Miss. 226, 196 So. 243.
The intention of the parties to a conveyance of an interest in real estate, whether it is a mineral interest or some other interest, is to be gathered from the instrument itself and may not be gathered from surmise or conjecture as to what the parties probably intended. Construing the grant strongly against the grantor, Day, and the exception strictly against him, as we must under the authorities, it is impossible to say with that degree of certainty which the law requires that it was his intention to retain a one-half royalty interest in the minerals or that it was understood by Day's grantee, L.W. Rea, that the attempted exception would have the effect of depriving him of a one-half mineral royalty in the land.