Supreme Court of Texas
195 S.W.2d 123 (Tex. 1946)
The State of Texas sold to John Oates (defendant) the surface of a tract of land. The state retained the mineral estate in the land. The Texas Relinquishment Act (Act) gave purchasers like Oates, as an agent of the state, the right to lease the state’s minerals and receive a portion of the resulting lease income. Oates, as the state’s agent, leased the mineral rights to Pure Oil Company (Pure) for a period ten years. Subsequently, Oates contracted with Tryon Lewis (plaintiff), granting Lewis a perpetual royalty interest in the land. Pursuant to their agreement, Oates paid Lewis a portion of Pure’s lease payments. There was no production on the land during the lease term and Oates executed a new ten-year lease with Pure. Oates did not pay Lewis any of Pure’s lease payments under the second lease. Lewis brought suit. The trial court ruled that the Oates-Lewis contract was void. The Texas Court of Civil Appeals affirmed, holding that Oates did not own a permanent royalty interest in the land and thus could not assign such interest to Lewis. Lewis appealed.
Rule of Law
Holding and Reasoning (Taylor, J.)
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