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                                                                                                 631




                       OFFICE OF THE ArrORNLEy BRNSRIL OF v
                                                    AUSTIN




Konoeable         A.    IL   Sqtton
countyAwlitor
-roll       Qounty
PaleitlIlb,    Texan

Dear    'BiFt                                      opinion     ~0.   o-3938
                                                   Raa    Tanbillty   of 011 andgae
                                                          leaeo, leeeeo having execut-
                                                          ed gae pizrahaee oontraot.
          This uill aaknovledge your letter of August 29, 1941,
&al~eing   oopy of gas pumhaee  oontraot)  pquerting the opinion
of thie dagwtiaant a8 follovet
                "Attached hereto ie a gae purohare oontraot
       . weouted br lh#k.Ul Oil COrpOPatlOn, Anao Oas Cor-
         poration and l?. v. lseeling, et ux. You pill note
         from the oontente of thie aontrrcrt that Am0 @a8
         Wrporation agree8 to purohaee a aertaln amount OS
         gre.froa Oarkill Oil Corporation and pay Oeakill
         Of1 Corporation 50 per sent ot the groee prooeeds
         derived from the eale of the oondensate     01r the pro-
         dust made by t@ prooeeeiag Oi. the gae.      In a eup-
         plemntU      agrweent  Wtveen   Qagk%ll Oil corpora-
         tion and W. V. Keeling, et ox., H. 8. Keeling et
                    ee to aeoept one-efghth or the net prooeeds
         Er       eklll Oil Corporation receive6 from the
         leaee .
              "ho0 C&s Corporation aontende that they own
        no mlnerale in plaoe under the lease and can be tax-
        ed only ior the reeyu1in.g plant.     Oaekill Oil Cor-
        poration oontende that they own only l/2 of the
        eeven-e&bthe oontraoted for under the terms of
        the lease withU.V.      Keeling etux.   and that Anco
        C&e Corporation owns the motherl//a OS the eeven-
        e%ghthe .OP eeven-sixteenthe.    The Coem.le8ionere1
         court         deeice     to   knov   to   whoa      the   l/2   of   the   value
         of tihir, leeee          should be charged, elnee no one ad-
         tit.8 Uabilitp            for the l/2 that it i8 costing to




            3r-   -.
Eonorable A, .E. Sutton, page. 2



     get the gae procreased, and no doubt under the term                 cl
     of Um lttaahed oontraot the Auoo Oar Corporation
     attempted to drav it in eu$a a manner that it vould
     not be ohargeable to them.
          Ue underetand that the faote are eubetantially      an iol-
lovet ‘ihe Oeekili Oil Corporation, an leaeee, hae a valid an4
lubeietiug oil a.gae       leaee to a traot oi lend in Andereon Cqunty,
               elope, Y. V. Keeling and Vito, ban retained #A@
             mineral intereat end leeeee haa a ?/8the intereat.
              11 Oil Cobporatlon, ha8 v       vell on the land vhioh
produaee gae-dibtillete.       This leeeee hae ente?ed into a oontraot
vith a ~~yoling    plant, &a0 Oar Corporation,. to sell to the lent
                      i gae prodwed, @ayment to be made from 9 a OS
                      derived from eale by the plqt ,oS the oonden-
              c produ6te~of the gee. .The eeller-leasee     ban reeerv-
              to be paid in kind..
                                                                        >
          Uhile you do not no etate,~ ve preeuw eat you deeire to
knov~~vhetheror not intereate in realty haves been created by this
              oontraat upon vhioh ad valorem taxea my be qolleot-
                     of the gae, the Am0 Ctae Corporation.
                    146 of the Revieed Oiril~gtatutea    of 1925, pro-

            ’Veal property for the purpoee of taxation,
      eh6ll be oonetpued to include the land itrelf,    vheth-
      em laid out iu tovn lota or othervine, aud all build-
      iugr; ltruoturee ‘and lmprovemente, qr other fixtures       ‘.’
      of vhateoever kind .thereon, +nd all the right8 and
      privilegie  belonging or ip any vine appertaining
      themeto, and a     mlnee, mineral*, quarries and foa-
      vile in and under the mme.”
                    e nov firmly settled in Texan that either the
                    n of vhat 18 coauwnly referr.ed to an an “oil
                   erect in realty eubjeot to ad valorem taxation.
                    l24,Tex. 290, 77 8. U. (ad) 1021, 80 S.W. (2d)
        uuant v. Duuu, 130 Tex.       110 9. Y. (26) 53; State v.
          Petroleum Co., (Sup. Ct. 133 S.W. (26) 112.
           We have been able to find no aasee paeaing upon the pm-
              8 oi gae-diet&llate.  18 suah a rale similar to a re-
 Servation OP aeeigonmnt of au “oil payment”?
                                                                .
                                                                      633



Ewarable   &. E. Sutton, page 3



           The proper 0oantNbtioa   of mineral lnrtruwntr ati with
any other oqntraot OP deed 4epende upon the intent of the putiee
to be gathered by lookiq   at the inmtruwnt fmm it8 four oornwe.
Thuee, Texan Iav of Oil aa&Oaa (2nd Ed.), page 9. ‘The ln~Wr
in all eaeee in, 18 there a grant OP reeervation    of .the adnerale
in planet   Leokin at the lnrtmetent in queetion ve do mt believe
it to be the intent of the Oaekill Oil Ooqmation      to convey any
intmet’ln    the gae la plaae under  thm leue.   Title ,to the gae
doe8 not pee until reaelved by the buyer at the d#liveFy plme.
goMtere in the oontpmt aan ve dieaover an intent to oomrey ga8 or
mineral8 in p&we.    Indeed, if now 8uoh intent oould be dieoovw-
ed the moat pertinent in+&uipy vould be, how muoh? fop the oontwot
18 oxpreeely mada lubjeat to a pries gu purahaee oontmwt * and
betvean the.~Oeeklll ml Oovporatiau and the Iat* Star Oar Oompany.’

           lt 18 therefore our opinion and you are ad~leed that thi
.-a purahaee oontr88t JOU have lubmitted areatee no ceti p.vopePty
intePeete, and inrorar an malt    ad valoreei taxation 18 eowerned,
the value of the leiabtild  rhoUId be determlned &nd tree   levied
Just an before the inatruwnt was exeauted - the Qaekill Oil COP-
poration owning a ?/&he intemet and the leeeoM. a l/&h int?reet.
           We do not i;mderitand y&a inquiry to relate .to ph8ona.l
ppopmty    taxation ahd expwee  no oplnlon thereon.
                                         Your8 very truly
