dissenting. The majority first ignores that the gas purchase contract between Diamond Shamrock and Arkla was of record in Pope County, Arkansas when the Harris lease was executed. The public records disclose the fact that the contract would cover the Harris’s lands. Although the contract was perhaps technically not in their chain of title, the Harrises were constructively notified of its existence.
The majority also ignores the plain meaning of the lease. First the gas was sold at the well. Butler v. Exxon Corp., 559 S.W.2d 410 (Tex. Ct. App., 1977); Skaggs v. Herd, 172 F. Supp. 813 (D.C. Tex., 1959). The lease provides that for gas sold at the wells, the royalty shall be one-eighth the amount realized from the sale. That is exactly what Diamond Shamrock paid the Harrises.
Apparently, the majority is finding the Harrises defrauded by Diamond Shamrock. This is contrary to the findings of the trial court. Had the court found otherwise, the trial court would have awarded rescission as requested by the Harrises. I certainly find nothing in the record or in the majority opinion which indicates that the chancellor was clearly erroneous on that issue.
I would reverse on direct appeal.
Dudley, J., joins in this dissent.