## Facts

- Texas sold the surface of Relinquishment Act land to John Oates while reserving the mineral estate to the State.
- Under the Texas Relinquishment Act of 1919, the surface owner serves as the State’s statutory agent to lease the State’s reserved minerals and is entitled to a statutory share of lease benefits (bonus, rentals, royalties).
- Acting as the State’s agent, Oates executed a ten-year oil and gas lease to Pure Oil Company.
- Oates later entered a written agreement with Tryon Lewis purporting to grant Lewis a “perpetual royalty interest” tied to the tract; Oates paid Lewis some amounts received under the first Pure lease.
- No production occurred, and the first lease expired by its own terms.
- Oates then executed a new ten-year lease with Pure Oil Company and stopped paying Lewis any portion of the consideration under the new lease.
- Lewis sued to enforce the purported perpetual royalty and to obtain a share of benefits from the second lease; the trial court rendered a take-nothing judgment, and the court of civil appeals affirmed.

## Issues

1. Whether a surface owner of Relinquishment Act land holds an assignable, permanent mineral or royalty interest that can be conveyed as a “perpetual royalty.”
2. Whether a contract purporting to grant a perpetual royalty in State-reserved minerals is void as inconsistent with the Relinquishment Act and Texas public policy.
3. Whether such an agreement entitles the grantee to payments from a later lease executed after expiration of the original lease.

## Decision

- The Supreme Court of Texas affirmed the take-nothing judgment for Oates.
- The court held Oates owned no permanent mineral or royalty estate in the tract; his relevant rights arose only from his statutory agency under the Relinquishment Act.
- Because Oates had no permanent mineral or royalty interest to convey, the purported “perpetual royalty” grant to Lewis was void and unenforceable.
- Lewis therefore had no right to receive any part of the consideration or benefits under the second lease.

## Legal Principles

- Under the Relinquishment Act, the surface owner is the State’s statutory leasing agent for State-reserved minerals and receives only the compensation the statute allows from leases executed in that role.
- The statutory share of lease benefits is not a mineral or royalty estate in fee and does not support a conveyance of a perpetual royalty in the State’s minerals.
- A purported conveyance that attempts to create a perpetual private royalty interest in State-owned Relinquishment Act minerals is void for lack of an underlying estate and as contrary to the statutory scheme and public policy.
- A grantee under such a void instrument cannot compel payments from a later lease executed after the prior lease expires.

## Conclusion

The court concluded that a surface owner of Relinquishment Act land has only a statutory agency interest in leasing proceeds, not an assignable permanent mineral or royalty estate, and therefore cannot validly grant a perpetual royalty that reaches subsequent leases; the asserted grant was void and Lewis recovered nothing.


Lewis v. Oates, 195 S.W.2d 123 (Tex. 1946)