As presented by amended pleadings, this was a suit instituted by defendant in error against plaintiffs in error to cancel a conveyance of oil, gas and other minerals in 102-4/10 acres of land in Navarro County and to recover damages.
It was alleged by defendant in error that J.A. Thompson, the owner, leased 160 acres of land which embraced the 102-4/10 acres to P.M. Lea in 1907; that said lease was executed for the purpose of exploring said land for oil and operating for and mining the minerals thereon, for a term of twenty-five years, reserving to the lessor a royalty of one-eighth the oil produced; that Lea assigned his rights to plaintiffs in error Will Robinson and Mrs. A.S. Robinson in 1910; that plaintiff in error, Howard Marr, claimed to have purchased the rights of plaintiffs in error Will Robinson and Mrs. A.S. Robinson during the pendency of this suit; that while Lea owned the oil lease he had drilled several oil wells, which produced oil in paying quantities, but that for a long time before the suit was brought none of the wells had been operated, and the wells and lease had been completely abandoned; that wells on adjacent lands had drained the oil from defendant in error's land to his damage. *Page 236
The plaintiffs in error filed an answer containing a general denial, a plea of not guilty, and a special plea that they owned the minerals and incidental rights in the land in fee simple, under an executed contract, being under no obligation with respect to drilling wells or producing minerals in order to maintain their rights. Plaintiffs in error also specially denied that they had abandoned or had intended to abandon their rights under the contract.
By direction of the District Court, a verdict was returned for plaintiffs in error, over defendant in error's objections, on which judgment was entered that defendant in error take nothing by his suit. On appeal, the Dallas Court of Civil Appeals, in an able opinion of Special Justice Jones, announced the conclusion that the rights granted Lea and his assigns were of such a nature that they could be lost by abandonment, and, that the evidence made the issue of abandonment one for determination by the jury, and hence there was error in the peremptory charge against defendant in error. The Court of Civil Appeals reversed the judgment of the district court and remanded the cause for a new trial. 241 S.W. 241.
It was proven that Thompson, being the owner of the 102-4/10 acres of land, executed an instrument to Lea, as follows:
"Know all men by these presents that Jno. A. Thompson, the party of the first part, in consideration of the sum of $1.00 paid by P.M. Lea, the party of the second part, the receipt of which is hereby acknowledged, and the further consideration hereinafter mentioned, have granted, bargained, sold and conveyed, and by these presents do grant, bargain, sell and convey, unto the said party of the second part his heirs or assigns, all of the oil, gas, and coal and other minerals in and under the following described land, together with the right of ingress and egress at all times for the purpose of drilling, mining, and operating for minerals and to conduct all operations and to lay all pipe necessary for the production, mining and transportation of the oil, gas, water, coal, or other minerals, with the right to use sufficient water, gas, or oil to operate said property, and shall have the right to remove all fixtures, machinery, and improvements placed thereon at any time, reserving, however, to the party of the first part one-eighth of all oil produced and saved upon said premises, to be delivered in tank or pipe lines to the credit of the party of the first part free of charge. If gas or other minerals are found, second party agrees to pay the first party one-eighth of the product each year, payable quarterly, for the product of each well while the same is being used off the premises, and the party of the first part, by furnishing his own pipe and connections, shall have sufficient gas free of cost for use in one dwelling house on the premises so long as the gas is utilized off the premises, but at his own risk. Whenever first party shall request it, second party shall bury all oil and gas lines and *Page 237 pay all damages done to the growing crops by reason of burying and removing same. No well shall be drilled within _____ feet from any building now on said premises without the consent of the first party. Said land being of the following description, to-wit: (here follows description of the 160 acres). To have and to hold the above-described premises unto the said party of the second part, heirs and assigns, on the following conditions: In case operations for either the drilling of a well for oil or mining for other minerals are not begun and prosecuted with due diligence within 60 days from this date, then this grant shall immediately become null and void as to both parties. In case the party of the second part should bore and discover either water, oil, or other minerals, then in that event this lease, incumbrance or conveyance shall be in full force and effect for twenty-five years from the time of the discovery of said product and as much longer as oil, water, gas, or other minerals can be produced in paying quantities thereon. Whenever sales are being made of the product on the land above described a settlement thereof shall be made at the end of each quarter. This lease is not intended as a mere franchise, but is intended as a conveyance of the property above described for the purposes herein mentioned, and it is so understood by both parties to this agreement. It is understood between the parties to this agreement that all conditions between the parties hereunto shall extend to their heirs, executors, administrators, and assigns. Witness our hands this the 20th day of March, A.D., 1907."
The proof showed that defendant in error acquired the title of Jno. A. Thompson to the 102-4/10 acres of land, and that plaintiffs in error are the assigns of P.M. Lea.
The uncontradicted evidence disclosed that operations for drilling a well for oil were begun by Lea within 60 days from the date of the lease and were prosecuted with diligence. Lea drilled a number of producing wells on the 102-4/10 acres.
We approve the conclusion of the Court of Civil Appeals that the evidence raised an issue of fact, for the jury's determination, as to whether the estate once owned by P.M. Lea had been lost by abandonment. The action of that court in reversing the trial court's judgment for error in peremptorily directing a verdict against defendant in error was therefore correct, unless we should sustain plaintiffs in error's earnest contention that Lea and his assigns, on the completion of a well producing oil in paying quantities, as expressly stipulated for in the writing, acquired an absolute, indefeasible title to the oil, with incidental rights, for a term of twenty-five years from the time the oil was discovered and as much longer as oil could be produced in paying quantities, and that such title could not be lost by abandonment. *Page 238
Thompson granted nothing save for purposes of mineral exploration and production. He was careful to insert a stipulation in the writing he signed to the effect that such was the understanding of both parties. There was a possibility of endless mineral production, with profit, so that the grant might continue forever. The intent is as plain from all the terms of the instrument as if it had been expressly declared that the land was to be used for no other purpose than for mineral exploration, development and production, and that on termination of such use nothing should be held or owned under the grant. Hence, the grant passed no absolute fee. It created a determinable fee, leaving a possibility of reverter to the grantor or his assigns. Abandonment of the enterprise, which it was the sole object and purpose of the grant to accomplish, would necessarily end the estate created by the grant. Stephens County v. Mid-Kansas Oil Gas Co., decided today, 113 Tex. 160, 254 S.W. 290; 4 Kent's Commentaries, pp. 8, 9; 1 Tiffany's Real Property, 334; 21 C.J., 922.
We construed and determined the legal effect of a grant in substantially the language of that here involved in the case of The Texas Company v. Davis, 113 Tex. 321, 254 S.W. 304. We determined in the Davis case that the obligations of the grantee were not fulfilled by merely proving the existence of minerals which could be profitably mined, and, that thereafter the grantee could not abandon production of the minerals and enjoy or hold an estate under the grant. Further discussion of this question is rendered unnecessary by the opinions in that case and in the case of Stephens County v. Mid-Kansas Oil Gas Company, supra.
Plaintiffs in error contend that defendant in error wholly failed to show any title to, or interest in, the minerals in the land. Defendant in error has a regular chain of title to the land, containing the minerals, under Thompson, who executed a general warranty deed to the 102-4/10 acres unto a remote vendor of defendant in error, subsequent to the date of the grant to Lea. At the date Thompson executed the warranty deed, he owned the possibility of reverter qualifying the estate of Lea or of his assigns. By Thompson's deed, subsequent to the grant to Lea and his assigns, that certainly passed. Defendant in error having acquired this possibility of reverter, cessation of use of the property for the purposes of the grant, or abandonment of the contemplated mineral exploration and production, enured to the benefit of defendant in error, just as such cessation of use or abandonment would have enured to the benefit of Thompson but for his warranty deed. McBride v. Farmers' Merchants Gin Co.,152 S.W. 1135; Slegel v. Lauer, 148 Pa. St., 245. Besides, if it could be said that Thompson acquired an estate in the minerals or land, subsequent to the date of his deed with covenant of warranty, the *Page 239 same passed eo instanti to his warrantee. Baldwin v. Root,90 Tex. 553; Donnell v. Otts, 230 S.W. 864.
The pleadings and evidence raise the issue of termination of plaintiffs in error's title and rights, through cessation of use for the purpose of the grant, whether or not defendant in error should prevail on the issue of abandonment. We conclude, however, that the issue ought not to be determined here as one of law, it seeming probable that the evidence has not been fully developed.
It is ordered that the judgment of the Court of Civil Appeals be affirmed and that the cause be remanded to the District Court for further proceedings in accordance with this opinion.
Affirmed and remanded to District Court.