Anderson v. Mayberry
661 P.2d 535 (1983)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
When a grantor reserves a mineral interest that is explicitly "non-participating in bonus and rental rights on oil and gas leases," they have impliedly conveyed the executive right to execute leases for that retained interest, as holding otherwise would negate the non-participating nature of the reservation.
Facts:
- In 1966, Herbert S. Mayberry and three co-owners executed warranty deeds to convey surface rights to certain Logan County property.
- The deeds included a reservation for the grantors of "an undivided one-half (½) interest in and to all of the oil, gas and other minerals... the said interest in the oil, gas and other minerals so reserved shall be nonparticipating in bonus and rental rights on oil and gas leases."
- Robert C. Anderson subsequently obtained oil and gas leases for the property from the grantees of the 1966 deeds.
- Anderson did not obtain a lease from Mayberry for Mayberry's retained mineral interest.
- The leases executed by Mayberry's grantees reserved a ⅛ of the oil and gas produced to the mineral owners.
- Proceeds from the sale of the oil and gas produced from the property were being held in a suspense account.
- Mayberry asserted he did not convey his right to execute oil and gas leases for his retained mineral interest.
Procedural Posture:
- Robert C. Anderson initiated an action in the trial court to quiet title to two tracts of Logan County property.
- Herbert S. Mayberry demurred to Anderson’s evidence at trial and stood on his demurrer.
- The trial court found that Mayberry had impliedly conveyed the right to execute leases and quieted title in favor of Anderson.
- The trial court also determined that Mayberry was entitled to his proportionate share (⅛2) of any oil or gas production.
- The trial court denied Mayberry's counterclaim for damages and an accounting.
- Mayberry appealed the trial court's decision regarding the quieting of title and the denial of his counterclaim (Case No. 57,041).
- Anderson had appealed a denial of attorney fees (Case No. 57,702), which was later dismissed after consolidation with Mayberry's appeal.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a grantor who reserves a mineral interest explicitly stated as "non-participating in bonus and rental rights on oil and gas leases" impliedly convey the executive right to execute oil and gas leases for that retained interest?
Opinions:
Majority - Reynolds, Judge
Yes, a grantor who reserves a mineral interest that is "non-participating in bonus and rental rights on oil and gas leases" has impliedly conveyed the executive right to execute oil and gas leases for that retained interest. The court affirmed the trial court's finding, reasoning that to conclude otherwise would "negate the whole idea of a non-participating interest." The court distinguished this situation from cases like McVey v. Hines, where the grantor reserved the right to collect bonuses and delay rentals, thereby retaining executive rights. Here, Mayberry conveyed the right to collect bonuses and delay rentals, while retaining a non-participating mineral interest, which implies the conveyance of executive rights. The court also found no error in the denial of Mayberry's counterclaim for damages and an accounting, as no evidence of conversion was presented since Anderson was holding proceeds from production in a suspense account. Mayberry is entitled only to his proportionate share (⅛2) from that suspense account.
Analysis:
This case provides crucial guidance on the interpretation of mineral deed reservations, particularly concerning the executive right to lease when a mineral interest is designated as "non-participating" in bonus and rental rights. It establishes a default rule that such a designation implies the relinquishment of executive rights, promoting clarity and preventing fragmented control over mineral estates. The decision reinforces the principle that the language used in a reservation must be interpreted in a way that gives effect to its stated purpose, rather than undermining it. Future cases will likely cite this precedent when adjudicating disputes over ambiguously worded mineral reservations, especially where executive rights are not explicitly addressed.
