## Facts

- L. D. Parks owned an undivided one-half interest in a tract of land and executed an oil and gas lease covering the tract; the lease was later assigned to The Texas Company.
- The lease set an annual delay rental of $160 if no well was commenced on “said land” by the specified date.
- The lease also contained a proportionate-reduction clause stating rentals and royalties would be reduced proportionately if the lessor owned less than the entire fee simple estate or less than the interest purportedly leased.
- No drilling was commenced during the first rental year.
- The Texas Company tendered $80 (one-half of $160), asserting Parks’s one-half ownership reduced the required delay rental.
- Parks rejected the tender, claimed default for failure to pay the full $160, and sued to cancel the lease and assignment as a cloud on title.
- The trial court cancelled the lease as to the tract at issue; The Texas Company appealed.

## Issues

1. Whether the proportionate-reduction clause authorized reducing the stated $160 annual delay rental to $80 because the lessor owned only an undivided one-half interest.
2. Whether tender of $80 satisfied the lease’s delay-rental condition so as to prevent termination and cancellation.

## Decision

- The appellate court affirmed the judgment cancelling the lease and removing it as a cloud on title.
- The court held the lease required payment of the full $160 delay rental to keep the lease in force during the primary term when no well was commenced.
- The proportionate-reduction clause did not reduce the specifically stated delay-rental amount under the lease language as a whole.
- Tender of $80 was noncompliant and constituted default, permitting cancellation.

## Legal Principles

- A lease is construed to ascertain the parties’ intent from the instrument read as a whole.
- Specific, definite payment obligations (such as a stated delay-rental sum tied to continuation of the lease) control over more general boilerplate language unless the instrument clearly provides otherwise.
- Ambiguities in an oil and gas lease are construed against the lessee/drafter, particularly where the lessee seeks to lessen a stated obligation.
- Although forfeitures are disfavored, delay-rental provisions requiring strict compliance with a stated sum as a condition of continuation are enforceable as written.

## Conclusion

The court enforced the lease’s express $160 annual delay-rental requirement and held that a general proportionate-reduction clause did not authorize halving that payment based on the lessor’s fractional ownership; the lessee’s insufficient tender supported cancellation of the lease and assignment as clouds on title.


Texas Co. v. Parks, 247 S.W.2d 179 (Tex. Civ. App.—Fort Worth 1952)