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WILLIAM HATHORN AND R. C. SPEIGHTS, JR. v. AMOCO PRODUCTION COMPANY AND SYSTEM FUELS

JUNE 05, 1985

WILLIAM HATHORN AND R. C. SPEIGHTS, JR.
v.
AMOCO PRODUCTION COMPANY AND SYSTEM FUELS, INC.



BEFORE WALKER, DAN LEE AND ANDERSON

DAN LEE, JUSTICE, FOR THE COURT:

This is an appeal from the Chancery Court of Jefferson Davis County wherein the chancellor entered an order establishing the rights of the parties as to the various mineral leases and deeds on the subject lands. From the chancellor's order the appellants, William Hathorn and R. C. Speights, Jr. bring this appeal asserting that the chancellor erred in defining their interest in the subject property. All of the facts in this litigation were stipulated to by the parties. The chancellor's opinion provides a readable explanation of the facts. We borrow from that opinion here and have made only minor additions which the record before us requires.

That the facts, as stipulated by the parties, are as follows:

 Title to the W 1/2 of the NE 1/4 of NW 1/4 of Section 19, Township 6 North, Range 17 West, Jefferson Davis County, Mississippi was patented by the United States of America to James M. Clark on December 13, 1884 and passed by mesne conveyances to Mrs. L. M. Clark on December 30, 1935. Mrs. L. M. Clark, on May 1, 1945, conveyed an undivided one-half of all oil, gas and other minerals in, on and under the subject land to W. M. Vaughey. This undivided one-half mineral interest is not involved in the suit. Thereafter, title to the surface and an undivided 1/2 mineral interest in the subject land passed by mesne conveyances and inheritance to Sallie B. Clark on August 20, 1973.

 On August 29, 1973, Sallie B. Clark

 conveyed her interest in the subject property to Robert E. Burns and wife, Eva Mae Burns, as an estate by the entirety with full right of survivorship, by deed of record in Book 95 at page 666 in the office of the Chancery Clerk of Jefferson Davis County, Mississippi. In this deed the grantor, Sallie B. Clark, made the following reservation, to-wit:

 "RESERVING unto the grantor herein, however, a LIFE ESTATE in and to all of the above land, including, but the same not being exclusive, the rights to use, possession, rents and profits from said land during the natural lifetime of grantor."

 Eva Mae Burns was killed in an automobile accident on September 8, 1974. Her estate was administered in Cause No. 5910 of the Chancery Court of Jefferson Davis County, Mississippi. Robert E. Burns later married Martha Jane Burns.

 On December 23, 1980, Robert E. Burns and wife, Martha Jane Burns, executed an oil, gas and mineral lease covering the subject lands in favor of the Defendant, Amoco Production Company, which lease appears of record in Book 140 at page 118 in the office of the Chancery Clerk of Jefferson Davis County, Mississippi. The said lease provides for a primary term of five years from January 26, 1981, and entitled Burns to a 3/16ths royalty.

 Thereafter, on June 2, 1981, Robert E. Burns and wife, Martha Jane Burns and Sallie B. Clark, conveyed their entire mineral interest in the subject lands to R. C. Speights, Jr. by mineral deed of record in Book 143 at page 636 in the office of the Chancery Clerk of Jefferson Davis County, Mississippi. This conveyance was for a period of five years from the date thereof and so long thereafter as oil, gas and other minerals are produced from said lands.

 Also on June 2, 1981, R. C., Speights, Jr. executed an oil, gas and mineral lease covering the subject land in favor of the Complainant, William E. Hathorn, which lease appears of record in Book 143 at page 638 in the office of the Chancery Clerk of Jefferson Davis County, Mississippi.

 This lease provides for a primary term of one year from the date thereof and contains the following clause:

 "It is understood and agreed that this oil, gas and mineral lease covers the life estate interest in the above described lands purchased this date by Lessor from Sallie B. Clark, et al."

 On August 20, 1981, Order No. 406-81 on Docket No. 312-81-420 of the State Oil and Gas Board or Mississippi was entered, wherein the entire Section 19, Township 6 North, Range 17 West, Jefferson Davis County, Mississippi, was established as a drilling unit for the drilling of System Fuels, Inc. of a 17,000 foot well, the System Fuels, Inc. Gas Unit 19-13 No. Well, to test the Harper and Booth sands of the Hosston formation. All interests in said unit were unitized, integrated, and force pooled for the drilling, completion, production, development, and operation of said well.

 On October 12, 1981, R. C. Speights, Jr. executed a one-year primary term oil, gas and mineral lease in favor of William E. Hathorn, covering the subject lands, which lease appears of record in Book 147 at page 567 in the office of the Chancery Clerk of Jefferson Davis County, Mississippi. Speights reserved a 1/4 royalty interest.

 In 1981, System Fuels, Inc. drilled the System Fuels, Inc. Gas Unit 19-13 No. 1 Well in Section 19, Township 6 North, Range 17 West, Jefferson Davis County,

 Mississippi, which was productive of oil and gas from the Booth Sand of the Hosston formation. Thereafter, in 1982, said well was placed on production and since that time has been producing oil and gas from the Hosston formation. Said well was not drilled on the lands subject to this suit, but the lands subject to this suit are a part of the unit acreage assigned to said well and, therefore, production from said well is attributable to the lands subject to this unit.

 By Assignment dated May 3, 1982, recorded in Book 157 at page 707 in the office of the Chancery Clerk of Jefferson Davis County, Mississippi, Amoco Production Company assigned a part of its leasehold interest in the ...


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