Lewis v. Oates

The State of Texas sold Oates (defendant) the surface of a tract while retaining the mineral estate, and under the Texas Relinquishment Act, Oates, as the state's agent, gained the right to lease the state's minerals and share in the resulting lease income. Oates leased the mineral rights to Pure Oil for ten years and separately contracted with Tryon Lewis (plaintiff), purporting to grant him a perpetual royalty interest, paying Lewis a share of Pure's lease payments accordingly. When the first lease produced nothing and Oates signed a second ten-year lease with Pure, he stopped paying Lewis any share of the new lease payments, and Lewis sued. The trial court voided the Oates-Lewis contract, and the court of civil appeals affirmed, holding Oates never owned a permanent royalty interest capable of assignment.