Consolidated Property Interests, LLC v. Penny Payne

ACCEPTED
12-15-00105-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
11/10/2015 2:37:14 PM
Pam Estes
CLERK

NO. 12-15-00105-CV FILED IN
12th COURT OF APPEALS
TYLER, TEXAS
11/10/2015 2:37:14 PM
PAM ESTES
IN THE TWELFTH COURT OF APPEALS Clerk
TYLER, TEXAS

CONSOLIDATED PROPERTY
INTERESTS, LLC
APPELLANT

v.
JERRY PAYNE AND PENNY PAYNE
APPEL LEES

APPEALED FROM THE 273RD JUDICIAL DISTRICT COURT
SABINE COUNTY, TEXAS

BRIEF FOR APPELLEE

JOHN H. SEALE
SEALE, STOVER & BISBEY
P. 0. BOX480
JASPER, TEXAS 75951
TELEPHONE: (409) 384-3463
FACSIMILE: (409) 384-3017
EMAIL: katiecmorgan@yahoo.com
ATTORNEYS FOR APPELLEE
PENNY PAYNE

ORAL ARGUMENT REQUESTED
 TABLE OF CONTENTS

Page

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u

Index of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Statement of the Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Statement Regarding Oral Argument. . . . . . . . . . . . . . . . . . . . 2

Issues Presented . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Statement of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Summary of the Argument............................ 8

Argu1nent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Prayer............................................. 16

Certificate of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Word Count Certification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

11
 INDEX OF AUTHORITIES

Chandler vs. Hartt, 467 SW2d 629
(Tyler Ct. Of Civil App. 1971, writ ref. N.R.E.).... . . . . . . . . . . . 15

Greene vs. White, 153 SW2d 575 (Tex. 1941)...... . . . . . . . . . . . . . 15

Henderson vs. Book, 128 SW2d 117 (San Antonio Ct. of
Civil Appeals 1939, writ refused)........... . . . . . . . . . . . . . . . 15

Kahn v. Kahn, 94 Tex. 114, 58 SW 825. . . . . . . . . . . . . . . . . . . . . . . . 15

Martin v. Roberts, 57 Tex. 564, 568............ . . . . . . . . . . . . . . . 15

Orbeck v. Alfei, Tex. Civ. App. 276 SW 947. . . . . . . . . . . . . . . . . . . . 15

Pridgen v. Furnish, Tex. Co,. App., 23 SW2d 307... . . . . . . . . . . . . . 15

Westland Oil Development Corporation v. Gulf Oil Corporation,
637 SW2d 903 (Tex. 1982)............................... 16

Williams vs. Hardie, 22 SW 399 (Tex. 1893)........... . . . . . . . . . 14

TEXT

16 Am. Jur. p. 645, §358 ......................... : . . . . . . . . . . 15

19 Am. Jur. p. 627 §29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

21 Corpus Juris. p. 1095 §81 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

111
 STATEMENT OF THE CASE

Appellant Consolidated Property Interests, LLC, brought this suit to settle a dispute

as to mineral ownership on roughly 620 acres ofland, and Appellee and her husband (now

deceased) answered and filed a counterclaim to remove a cloud on the title to a 112 mineral

interest. The trial court ruled in favor of Appellee (CR 23 8-241 ). Appellant then perfected

an appeal to this court.

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 STATEMENT REGARDING ORAL ARGUMENT

Appellee agrees that oral argument would be helpful to the court, because of the

complicity of the issues in this case.

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 ISSUES PRESENTED

Issue No. 1 (In response to Appellant's No. 1)

The trial court did not err in determining the mineral ownership.

Issue No. 2 (In response to Appellant's No. 2)

Appellant is not entitled to recover declaratory judgment attorney's fee unless the trial

court awards them in the exercise of its discretion, and no attorney fees were awarded by the

trial court in this case.

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 STATEMENT OF FACTS

The only non-party witness called by the Plaintiff was Robert Moffett, an attorney.

He testified that he "went to do the record search to try and figure out what, if anything,

Chris Casey and his - - you know, he and his family own". (CR 60). He testified as to his

procedure to arrive at an opinion about whether a conveyance resulted in community or

separate property, at CR 63:

"And so I can - - there's always two ways to write an opinion.

You know, does it look like they've treated it as community property?

Does it look like they've treated it as separate property? And you can

sit there - - they would require different requirements, but you could - -

you- -you make your- -your best guess on what it is. It's still subject

rebuttal; but you make your best guess on what it is, and you write your

opinion from that".

On the issue of whether they "treated it" as community property or separate property,

lawyer-witness Moffett testified that he was familiar with a lease from the Paynes to

Chesapeake where a lease bonus of "a quarter of a million" was paid for a lease of one-half

(1/2) of the minerals under 492 acres, CR 82. That lease was the one where $1,000.00 an

acre bonus was paid for a lease on one-half (1/2) of the minerals under 492 acres (CR 149,

9, 81-82).

Mr. Moffett contended that after Frances Payne Casey deeded a one-fourth (114)

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mineral interest in the subject property to Mr. Shelby, she still owned a one-fourth (1/4)

mineral interest (CR 85). However, he was shown Defendant's Exhibit IA, which was an

Inventory and Appraisement of her property in her estate records, and there was no listing

of any mineral interest in the property involved in this suit (CR 86-89).

Appellee Penny Payne's testimony begins at RR 131 and ends at RR 154. She

testified that this property was known to the Payne family as the "Sexton Farm" and was first

acquired by Robert Polley by grant from the Republic of Texas. Robert Polley died in 1847

and his son John Polley then died in 1893 and then John's daughter Jenny Polley Payne came

into ownership of the property. Jenny then died in 1903 and her son J. 0. Payne came into

full ownership upon receiving a deed to one-half ( 1/2) interest from his sister Lucy in 1904

(CR 132-137).

J. 0. Payne executed a deed in 1904 to the property in controversy here, along with

several other tracts, to his uncle W. A. Polley in 1904 (Defendant's Exhibit 1), then married

Pearl Leak on November 4, 1905(RR137), and they had two children, James Oliver Payne,

Jr. and Frances Payne, in 1907 and 1908. Pearl died in January of 1909 as result of

complications from childbirth of Jam es 0. Payne, Jr. (RR 13 8). W. A. Polley reconveyed the

property in controversy, along with other tracts, to his nephew J. 0. Payne on December 15,

1907 (Defendant's Exhibit 2). Next was testimony proving up a 1983 newspaper article and

picture telling of the building of a house in 1906 by J. 0. Payne for his bride. This testimony

is at RR 140-141, and this exhibit is Defendant's Exhibit 4.

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 The next Defendant's exhibit was the deed from J. 0. Payne to his second wife

Gertrude Payne, of a one-half (1/2) interest in the property in question. This is offered and

received at RR 142, and is in evidence as Defendant's Exhibit 6. Then the oil and gas lease

from J. 0. Payne and wife Gertrude Payne to Sun Oil Company, dated February 12, 1931,

was offered and received in evidence at RR 142-143, and is in evidence as Defendant's

Exhibit 7.

The last of the exhibits offered by Defendant and received by the trial court were

Defendant's Exhibits 8 and 9, and this appears at RR 143-144. Defendant's Exhibit 8 is the

mineral deed with recitals. Defendant's Exhibit 9 is an oil and gas lease from J. 0. Payne

Bridges (formerly J. 0. Payne, Jr.) to W. A. Bridges in 1938, in which he leases an undivided

one-fourth (1/4) interest in the minerals under the subject property. The testimony atRR 145

was that J. 0. Payne Bridges had lived with W. A. Bridges and changed his name to Bridges.

Further testimony by Appellee Penny Payne revealed that there were five children

born to J. 0. Payne and Ge1irude Payne, that one had died at age 16 with no issue, and that

the other three had conveyed their interests to Penny's husband Jerry Payne (RR 146-147).

Appellee said that her husband Jerry Payne and his half-sister Frances Payne Casey were

compatible in every way, and talked about property that they owned and the old home place,

etc. (RR148). She said that in addition to the lease to Chesapeake, that they had leased this

property previously to Exxon through a "lady from Jasper" (RR 149). Her testimony

concluded with the statement that her husband's will had resulted in her succeeding to his

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interest in the property (RR 151 ). Then after some questions by the trial court, Appellee

testified that she knew from family history that there was a very close relationship between

J. 0. Payne and his uncle W. A. Polley, and W. A. Polley was like a father to J. 0. Payne

once J. 0. Payne's father had died when J. 0. was eight years old. (RR 152).

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 SUMMARY OF THE ARGUMENT

Appellee acknowledges that the timing of the deed from J. 0. Payne to his uncle when

the grantor was single, followed by a reconveyance of the property when J. 0. Payne was

married, results in a presumption of community property. However, the "treatment" of the

property by the parties and their descendants for over a century and the wording of a mineral

deed result in the Appellee being the rightful owner of one-half of the minerals. No attorney

fees were awarded by the trial court, and only the trial court may award attorney fees in such

a case.

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 ARGUMENT

Appellee concedes that she is not able to rebut the Texas law presumption that a deed

to a married person makes the conveyed property community property. This is because of

the long-sealed lips of J. 0. Payne, his uncle W. A. Polley, and others around in the first

decade of the 20th century. Also the poor wording of the deeds involved, prevents her from

producing the clear and convincing evidence necessary to rebut the community property

presumption. Therefore, no response is made to the argument presented at page 9 through

the first four lines of page 25 of Appellant's Brief. But the case does not end there.

The decisive issue in this case is the interpretation of the 1931 instrument which is in

evidence as both Plaintiffs Exhibit 9 and Defendant's Exhibit 8. It is elementary that when

construing and interpreting an instrument, a court must look at the entire instrument and

consider why certain words or phrases were used in the instrument, since, after all, the court

must try to determine what the intent of the parties (grantors and grantees) was at the time

of the execution of the instrument. In fact, several of the cases cited at page 13 of

Appellant's brief refer to this rule.

Appellant's brief at page 25 contends that family members recognized that the

property was community property. Appellee contends that that is simply Appellant's

counsel's theory. On the contrary, various actions over the years indicate just the opposite.

For example, Appellate contends at page 26 of his briefthat the 1916 deed from J. 0. Payne

to his wife Gertrude of a one-half undivided interest in the property means that J. 0. Payne

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was recognizing that "Pearl Payne owned a community interest". On the contrary, it is clear

to the writer that the January 12, 1916 deed from J. 0. Payne to his new wife he had married

on May 20, 1915 (RR 145), resulted from his desire to make his wife an owner of an

undivided one-half interest in the property while retaining ownership of the other one-half

undivided interest. Therefore, he was considering this as separate property.

The same difference of opinion applies to the 1938 oil and gas leases from James, Jr.

and Frances to James' foster father W. A. Bridges of a one-fourth interest each in the

minerals. Appellant contends at pages 26-27 of its brief that this is all they could lease

because the 1931 lease to Sun Oil Company had a 10-year primary term. The fact is that the

1931 lease had provisions for the lease terminating yearly if delay rentals were not paid

(Plaintiffs Exhibit 8 and Defendant's Exhibit 9), and there was no evidence presented that

showed that any delay rentals had ever been paid. Appellee's position is that the reason

James, Jr. and Frances leased one-fourth interest each is that they (and W. A. Bridges)

thought that was all they owned.

The same is true of Frances' mineral deed to Shelby in 1948 (Plaintiffs Exhibit 14)

of a one-fourth mineral interest. Appellant contends that she still had another one-fourth

interest after that, but the Inventory and Appraisal filed in her probate proceedings did not

list any interest in this property, while it did list numerous much smaller interests in other

properties in Sabine County and other counties. Defendant's position is that she deeded all

that she ever owned in this property, which was a one-fourth mineral interest. Surely,

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Frances' son who was executor of her estate would not have "overlooked" his mother's one-

fourth interest in 492 acres ofland if she had still owned such an interest at the time of her

death.

THE OIL AND GAS LEASE AND THEN
THE MINERAL LEASE WITH RECITALS

On February 12, 1931, J. 0. Payne and wife, Gertrude Payne, executed an oil and gas

lease to Sun Oil Company, and this lease is in evidence as Plaintiffs Exhibit 8 and also as

Defendant's Exhibit 7.

Then 28 days later, on March 12, 1931, an instrument purports to convey a one-half

interest in the minerals under the subject property to James 0. Payne, Jr. and Frances Payne

Casey. This instrument is in evidence as Plaintiffs Exhibit 9, and contains the following

recital:

"Said land being now under an oil and gas lease, executed in favor of
the Sun Company, it is understood and agreed that this sale is made
subject to the terms of said lease, but covers and includes one-half of
all of the oil royalty, and gas rental or royalty, due and to be paid under
the terms of said lease, insofar as it covers the above-described
property.

It is understood and agreed that one-half of the money rentals which
may be paid to extend the terms within which a well may be begun
under the terms of said lease is to be paid to the said grantees, and in
event that the above-described lease for any reason becomes canceled
or forfeited, then and in that event an undivided one-half of the lease
interest and all future rentals on said land for oil, gas and all other
mineral privileges shall be owned by said grantees, they owning one-
half of oil. gas and other minerals in and under said lands, together with
one-half interest in all future rents". (Emphasis Defendants')

-11-
 The above recital clearly indicates that the grantees after the execution of this

instrument owned only one-half of the minerals, and the grantors owned the other one-half.

This was recognized by James 0. Payne, Jr. and Frances Casey by the fact that in 1938,

James, Jr. leased to W. A. Bridges his one-fourth interest in the minerals and Frances

Payne Casey leased her one-fourth interest in the minerals. (J. 0. Payne Bridges was the

same person as James 0. Payne, Jr. following his name change to James Payne Bridges).

These leases are in evidence as Plaintiffs Exhibits 9 and 10.

The position of Appellant Consolidated in this case is that J. 0. Payne and Gertrude

Payne owned no minerals after the 1931 instrument, while the position of Defendants is that

they owned one-half of the minerals and always have owned them. These 1938 leases by

James 0. Payne, Jr. and Frances Payne Casey clearly show that they were only claiming

one-fourth of the minerals each, with their father owning the other one-half. Opposing

counsel and "lawyer-witness" Moffett argue that they could only lease one-fourth each

because their "other one-fourth" was tied up by the 1931 lease to Sun Oil (which they did not

sign), and that lease had a I 0-year term which would not expire until 1941. That argument

overlooks the fact that the Sun Oil lease provided for annual "delay rental payments" and

provided that the lease would expire if and when there was no annual payment made. This

provision in the lease is in paragraph 2 of the Sun Oil lease, which is in evidence as

Plaintiffs Exhibit 8. This was the reason for the objections to the repeated efforts of

opposing counsel to get Mrs. Payne to agree with him that the effect of the 1931 oil and gas

-12-
lease was to prevent James 0. Payne, Jr. and Frances Payne Casey from leasing more than

one-fourth of the minerals until 1941.

Also, if the intent of the parties to the mineral deed had intended for the grantees

Frances and James to own all the minerals after the execution of the deed, how was Sun Oil

Company going to handle payment of delay rentals, if any, or royalties, if any? The recital

says that after the deed, one-half of the minerals and/or royalties will be paid to the grantees.

If so, who would the other one-half be paid to, if not the grantors?

The recital in the 1931 mineral deed made it clear that the Plaintiffs after the

execution of such mineral deed would indeed only own a one-half interest in the minerals.

It is certainly logical that J. 0. Payne and his wife Gertrude would not intend that the two

children of J. 0. Payne by his prior man-iage (then aged 24 and 22), would end up with all

of the minerals under almost 500 acres ofland, when that would result in their children (then

aged 14, 11, 9, 9 and 19 months) having no minerals after their parents died. The recital in

the 193 1 instrument therefore made it clear that the two children would only own one-half

of the minerals after the 1931 instrument. The execution of such an instrument was

obviously the result of the grantors wanting to make it clear that the two children by the first

marriage of J. 0. Payne would then together own one-half of the minerals, and J. 0. Payne

and Gertrude Payne together, and their children after they died, would own the other one-half

of the minerals.

-13-
 It is also interesting to note that the evidence showed that Mr. and Mrs. Payne

received a $246,000.00 bonus for their lease of their one-half interest in the minerals to the

492 acre tract in 2008. This is when they executed a lease to Chesapeake. The evidence

showed that this was a lease for $1,000.00 an acre, and of course $246,000.00 is one-half of

492 acres. Moffett's only response to this was to say that Chesapeake was notorious for

throwing away huge amounts of money. The fact is that the attorneys for Chesapeake

obviously had a quite different view of this title than Mr. Moffett seems to have.

Appellee respectfully submits that ifthe parties had intended for the grantees to own

all of the minerals after the 1931 instrument, they would have ended it by saying that all of

the delay rentals and royalties would now be paid to the grantees, "they now owning all of

the minerals".

The law in Texas concerning recitals in deeds and estoppel by deed has been

recognized for well over 100 years. In the case of Williams vs. Hardie, 22 SW 399 (Tex.

1893), the Supreme Court at 22 SW 401 quoted from an old English case as follows:

"A recital or allegation in a deed or bond which is certain in its
terms, and relevant to the matter in hand, will therefore be
conclusive between the parties in any controversy growing out
of the instruments itself, or the transaction in which it was
executed."

Our Supreme Court then followed with this statement:

"The doctrine of an estoppel by deed is essentially different
from that of an estoppel in pais, and is founded upon the theory
that the parties have contracted upon the basis of the recited facts."

-14-
 In the case of Henderson vs. Book, 128 SW2d 117 (San Antonio Ct. of Civil Appeals

1939, writ refused), the Court stated at 128 SW2d 120:

"It has been held many times that recitals in deeds bind both
parties and parties claiming under such deeds."

In the case of Greene vs. White, 153 SW2d 575 (Tex. 1941), our Texas Supreme

Court stated, at 153 SW2d 583:

"The general rule is that the grantee in a deed accepted by him
is a party to the deed, even though he does not sign it, and that
he is concluded by recitals in the deed and by reservations
contained therein in favor of the grantor. Martin v. Roberts,
57 Tex. 564, 568; Orbeck v. Alfei, Tex. Civ. App. 276 SW 947;
21 Corpus Juris. p. 1095, § 81; 19 Am. Jur., p. 627, Sec. 29, p.
624, Sec. 26. 'The obligations undertaken by the parties to a
deed are binding contractually; and where the conveyance is by
way of deed poll - that is, one executed by the grantor along -
obligations are enforceable against the grantee by virtue of his
acceptance of the deed.' 16 Am. Jur., p. 645, Sec. 358. The
recitals in the deed that the vendor's lien is retained to secure
payment of notes executed by Garrett are contractual. Pridgen
v. Furnish, Tex. Com. App., 23 SW2d 307. The recitals which
give the surface estate to Garrett and reserve the mineral estate
to Greene are likewise contractual. They define the character
and extent of the ownership and interests of the parties in the
land affected by the deed. Kahn v. Kahn, 94 Tex. 114, 58
SW 825."

In the case of Chandler vs. Hartt, 467 SW2d 629 (Tyler Ct. of Civil App. 1971, writ

ref. N.R.E.), the Court stated, at 467 SW2d 633:

"Even though Mrs. Hartt did not sign the 1929 deed, nevertheless
she was a party to the deed and by accepting it, she is precluded
by recitals therein in favor of the grantors."

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The Court went on to say, at 467 SW2d 633 - 634:

"The obligations undertaken by the parties to a deed are binding
contractually; and where the conveyance is by way of deed
executed by the grantor alone - obligations are enforcible against
the grantee by virtue of his acceptance of the deed."

Then in 1982, our Supreme Court said, in Westland Oil Development Corporation

vs. Gulf Oil Comoration, 637 SW2d 903 (Tex. 1982), at 637 SW2d 908:

"It is well settled that a purchaser is bound by every recital,
reference and reservation contained in or fairly disclosed by
any instrument which forms an essential link in the chain of
title under which he claims."

The trial court has the exclusive right to award or not award attorney fees in a

declaratory judgment case, and 'none were awarded in this case to either party. If any

attorney fees are to be awarded, the trial court has the exclusive right to decide the amount.

PRAYER

WHEREFORE, Appellee prays that the Judgment of the trial court be affirmed.

Respectfully submitted,

SEALE, STOVER & BISBEY
P. 0. Box 480
Jasper, Texas 75951
Telephone No: (409) 384-3463
Fax No: (409) 384-3017
Email: katiecmorgan@yahoo.com
Attorneys for Appellee

By: flrl
Jlls;ale a
/J, ~
SBN: 17946000

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 CERTIFICATE OF SERVICE

On November 10, 2015, this Brief of Appellee was eServed on the following

counsel for Appellant.

Gregory D. Smith - gsmith@rameyflock.com

Brent L. Watkins - bwatkins@skeltonslusher.com

Jfhn H. Seale

-17-
 WORD COUNT CERTIFICATION

I certify that the number of words in this Brief for Appellee, as defined in Texas Rule
of Appellate Procedure 9.4(I), is 3452.

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