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Factual and Procedural Background

This suit was initiated by Raymond Mitchell, a grandson of Aurelia Mitchell, as a class action under Rule 42 of the Texas Rules of Civil Procedure, seeking construction of a will executed by Aurelia Mitchell. The will created a testamentary trust involving an undivided one-half interest in certain Liberty County land, with life estates devised to certain children and remainder interests to descendants. The plaintiffs sought to have the trustees hold oil royalties intact as part of the trust corpus for the remaindermen, preventing distribution of those royalties to life tenants or excluded heirs. The trial court ruled against the plaintiffs and intervenors, and the Court of Civil Appeals affirmed that judgment. The petitioners then sought review by the Supreme Court of Texas.

Legal Issues Presented

  1. Whether royalties received under oil and gas leases executed after the testatrix's death by her testamentary trustees constitute income distributable to the life tenants, or are part of the principal (corpus) of the trust estate to be preserved for the remaindermen.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Swayne v. Lone Acre Oil Co., 98 Tex. 597, 86 S.W. 740 Definition of income, royalties, and proceeds arising from sale and leasing of lands; distinction between income and corpus. Used to interpret the testatrix's use of legal terms and to support the conclusion that royalties are part of the corpus, not income.
State v. Hatcher, 115 Tex. 332, 281 S.W. 192 Minerals are part of the land; royalties are consideration for sale of mineral estate. Supported the conclusion that royalties represent corpus proceeds and should be preserved for remaindermen.
Theisen v. Robison, 117 Tex. 489, 8 S.W.2d 646 Legal definition and treatment of royalties and mineral interests in trust estates. Reinforced the legal understanding of royalties as corpus proceeds.
Parker v. Riley, 250 U.S. 66, 39 S.Ct. 405 Authority of trustees to lease mineral estate; distinction between life tenant income and corpus. Confirmed that royalties from leases executed by trustees are corpus proceeds benefiting remaindermen.
Meredith v. Meredith, 193 Ky. 192, 235 S.W. 757 Interpretation of income and corpus in testamentary trusts involving mineral royalties. Supported the interpretation that royalties belong to corpus, not income.
Barnes v. Keys, 36 Okla. 6, 127 P. 261 Similar principles regarding royalties and trust corpus. Used as persuasive authority for construction of trust terms.
Blakley v. Marshall, 174 Pa. 425, 34 A. 564 Legal meaning of income and corpus in trusts with mineral interests. Supported the court's conclusion on the nature of royalties.
Avis v. First National Bank of Wichita Falls, 141 Tex. 489, 174 S.W.2d 255 Construction of wills using terms "income" and "corpus"; trustee powers to lease mineral estates. Key precedent interpreting similar testamentary language and authorizing trustees to lease minerals while preserving corpus for remaindermen.
Texas Company v. Daugherty, 107 Tex. 226, 176 S.W. 717 Minerals as part of the land (corpus) in trust estates. Supported the inclusion of minerals in the corpus to be preserved.
Sheppard v. Stanolind Oil Gas Co., 125 S.W.2d 643 Mineral interests and royalties as corpus. Confirmed the corpus nature of mineral royalties.
Sheffield v. Hogg (Federal Royalty Co. v. State), 124 Tex. 290, 77 S.W.2d 1021 Legal status of mineral royalties in trust estates. Supported corpus characterization of royalties.
Thompson v. Thompson, 236 S.W.2d 779 (Tex. Sup.) Non-applicability of 'open mine' doctrine to leases executed post-death. Clarified that rights under 'open mine' doctrine did not apply, framing the core legal question.
Stephens County v. Mid-Kansas Oil Gas Co., 113 Tex. 160, 254 S.W. 290 Mineral interests and royalties as part of the land corpus. Supported the legal understanding of royalties as corpus proceeds.
Davis v. Atlantic Oil Producing Co., 5 Cir., 87 F.2d 75 Federal case on mineral royalties and trust corpus. Used as persuasive authority consistent with Texas law.
Commissioner v. Wilson, 5 Cir., 76 F.2d 766 Federal interpretation of mineral royalties in trusts. Supported the corpus characterization of royalties.
Chesson v. Commissioner, 5 Cir., 57 F.2d 141 Federal case on royalties and trust income versus corpus. Persuasive authority consistent with court’s analysis.
Davis v. Bond, 138 Tex. 206, 158 S.W.2d 297 Trustee powers and income versus corpus distinctions. Supported the court’s construction of the will.
Texas Company v. Marlin, 5 Cir., 109 F.2d 305 Mineral leases and trust corpus. Consistent with the court’s reasoning on royalties as corpus proceeds.
Long v. Rike, 7 Cir., 50 F.2d 124, cert. denied 284 U.S. 657 Presumption that technical legal terms in wills are used correctly and intentionally. Supported the interpretation that terms in the will were used with their legal meaning.

Court's Reasoning and Analysis

The Court analyzed the testamentary will of Aurelia Mitchell, emphasizing that it was professionally drafted and employed legal terms with established judicial meanings. The will created a trust of an undivided one-half interest in land, including oil and gas leases, with income to be paid to life tenants (her children and grandchildren by her daughter Theresa Perkins) and the corpus to be preserved for remaindermen (descendants including unborn children). The Court noted that minerals are legally part of the land corpus and royalties derived from leases executed by trustees represent proceeds from the sale of corpus, not income.

The Court rejected the argument that royalties should be treated as income distributable to life tenants, instead holding that the testatrix's expressed intent was to accumulate the corpus for future generations. The will’s language explicitly directed that the principal be kept intact and that income be paid to the life tenants. The Court relied on prior Texas cases and persuasive authorities to interpret the terms "income" and "royalties" in the context of mineral interests, concluding that royalties received post-death under leases executed by trustees are corpus proceeds to be held for the remaindermen.

The Court emphasized that the testatrix intended to protect the interests of remaindermen, particularly due to concerns about one daughter’s improvident sale of her share. The will’s provisions against alienation or encumbrance of shares further supported this protective intent. The Court thus reversed the judgments below and remanded the cause for further proceedings consistent with this construction.

Holding and Implications

The judgments of the trial court and Court of Civil Appeals are reversed, and the cause is remanded for further proceedings.

The Court held that royalties received from oil and gas leases executed after the testatrix's death by her testamentary trustees are part of the corpus of the trust estate, not income distributable to life tenants. This decision directly affects the parties by requiring the trustees to hold such royalties intact for the benefit of the remaindermen. The opinion does not establish new precedent beyond the construction of the specific testamentary trust at issue but reaffirms established principles regarding mineral interests and trust corpus in Texas law.

MITCHELL et al. v. MITCHELL et al.

SHARP, Justice.

This suit was brought by Raymond Mitchell, a grandson of Aurelia Mitchell, as a class suit under Rule 42, Texas Rules of Civil Procedure, for construction of a will executed by Aurelia Mitchell, wherein plaintiffs' attorneys intervened and sought to have their rights in the suit determined and protected. The trial court rendered judgment adverse to the claims of plaintiffs and intervenors, and upon appeal the Court of Civil Appeals affirmed the judgment of the trial court. 235 S.W.2d 744.

Petitioners' application for writ of error presents only one point, and that is that the Court of Civil Appeals erred in holding that royalties received under oil and gas leases were income distributable to the life tenants, and were not part of the principal or corpus of the trust estate to be held intact for the remaindermen.

Petitioners alleged in the trial court that Aurelia Mitchell had by her will created a testamentary trust devising a life estate in an undivided one-half interest in certain land in Liberty County to all of her children, except one, and devising the share that would have otherwise gone to that child to that child's children. They further alleged that said testatrix provided that the trustees should distribute the remainder, after the termination of the life tenancies, to her surviving descendants. It was alleged that the remaindermen consisted of adults, minors, and children yet unborn, and petitioners estimate that the number of the remaindermen will total, upon the termination of the trust, not less than four hundred. The suit was brought to require the trustees to carry out the alleged terms of the will with respect to the testamentary trust, and to hold large sums of money received by said trustees as oil royalties intact, and to require said royalties to be accumulated for the benefit of the trust estate, and to prevent the trustees from distributing said royalties to themselves and other children of the testatrix and to the children of the daughter of the testatrix who had been excluded.

This case involves the construction of the will executed by Aurelia Mitchell, dated July 18, 1932, the essential parts of which are as follows:

"II.

"I direct that all of may property in Liberty County of which I may die seized or possessed of, both real and personal, including oil and gas leases, be held in trust and I hereby give, devise and bequeath said above property in Liberty County to my sons, Leon Mitchell and Fuhr Mitchell as trustees for the benefit of the beneficiaries to be named hereinafter and on the terms and conditions as hereinafter set out, the income from said trust to be for the benefit of my children, Leon Mitchell, Fuhr Mitchell, Sostan Mitchell, Joe Mitchell, Lezina Prophet, Cornelius Mitchell, Willie Mitchell, Vick Mitchell, Alphonsine Cormier, Agnes King and my grandchildren by my daughter, Theresa Perkins, share and share alike.

"That is, each of my children except Theresa Perkins is to take one share each and the other share, which would otherwise go to my daughter, Theresa Perkins, is to go to the children of my daughter, Theresa Perkins, jointly, by name, Matthew Young, Abe Young, Charlie Moore, Johnnie Moore, Johnson Moore, W. T. Moore, and Mary Helen Moore, and at the death of my above named children and above named grandchildren, the income is to go for the benefit of my grandchildren, and great grandchildren; the principal of the trust to be kept intact and held in trust until the death of all of my children and until the death of all of the above named children of my daughter, Theresa Perkins, and until twenty-one (21) years after the death of the last of my children and/or until twenty-one (21) years after the death of the above named children of my daughter Theresa Perkins when said estate and property in Liberty County shall be divided among and shall be vested in the children, grand children, and great grand children of my children named in this will and the children and grand children of the children of my daughter, Theresa Perkins named in this will; the children and grand children and great grand children of each of my children to benefit share and share alike in whatever the share of their parent, grand parent, or great grand parent may be. It is my desire, as far as possible, that this part of my estate be allowed to accumulate for the benefit of my grand children and great grand children, provided, however, that after payment of my debts, the income from said property shall be paid to my children and the children of Theresa Perkins, share and share alike, that is, one share jointly to all of the children of Theresa Perkins, and one share to each of my children except Theresa Perkins. In case of the death of any of my children, the income which would have been paid to them shall be paid jointly to the children of said deceased child of mine, share and share alike.

"No child, grand child, or great-grandchild of mine shall be able to sell or otherwise anticipate or encumber his or her share.

"It is my will that my daughter Theresa Perkins, take nothing from this trust, but what she would take shall go to her children. I deliberately do this because my daughter, Theresa Perkins, unwisely sold her share of my beloved husband's estate, and on this account I take this action to protect her and her children from similar action. Instead, I give devise and bequeath to my daughter Theresa Perkins, the sum of One Hundred Dollars ($100.00).

* * * * * *

"IV.

"It is my will and desire and I hereby direct that the Trustees of his estate pay the share of the children of Theresa Perkins to the said children of Theresa Perkins, or to my daughter, Theresa Perkins, for the benefit of her said children, as in their judgment, they deem best, and a receipt from my daughter, Theresa Perkins, shall be sufficient to relieve the trustees of any responsibility for the amount so receipted for, and it is my desire that no guardianship proceedings or bond be required of her.

* * * * * *

"VI.

"I give, devise and bequeath all the rest and the residue of may estate, both real and personal, which I may have any interest in of whatever consisting and whereever located, to have and to hold unto them forever, to my children, Leon Mitchell, Fuhr Mitchell, Sostan Mitchell, Joe Mitchell, Lezina Prophet, Agnes King, Cornelius Mitchell, Willie Mitchell, Vick Mitchell, Alphonsine Cormier, and Theresa Perkins, share and share alike. In the event that any or all of them predecease me, then the children of any or all of them shall take the share of the parents, share and share alike."

The subject matter of the trust created by Aurelia Mitchell in her will is her undivided one-half interest in the tract of land of about 400 acres in Liberty County. This was community property, the homestead of Aurelia Mitchell and her husband, Joseph Mitchell. Prior to the execution of the will, the husband died testate, leaving his half of the property to Aurelia Mitchell for life, with remainder in fee to the children. Since Aurelia's death his half is now owned by them, and they are receiving the royalties thereon.

This controversy involves royalties arising from Aurelia Mitchell's one-half interest in 200 acres of the Liberty County land covered by the oil and gas lease executed by her testamentary trustees to C. S. Gainer, Jr. During her lifetime another 100 acres, off the west side, had been leased to the Sun Oil Company. Still another 100 acres have not been leased. Prior to Aurelia Mitchell's death the 200 acres covered by the Gainer lease had not been leased or drilled, and rights acquired under the 'open mine' doctrine are not applicable here. Thompson v. Thompson, Tex.Sup., 236 S.W.2d 779; Swayne v. Lone Acre Oil Co., 98 Tex. 597, 86 S.W. 740, 69 L.R.A. 986, 8 Ann.Cas. 1117; Petrus v. Cage Bros., Tex.Civ.App., 128 S.W.2d 537, writ refused. Therefore the main question presented here is whether royalty received from an oil and gas lease executed after the death of the testatrix by her testamentary trustees, and after the creation of the life estate, is 'income,' distributable to the life tenants, or is a part of the corpus of the estate, to be received by the remaindermen.

The will executed by Aurelia Mitchell is dated July 18, 1932. While she was not an educated person, the record indisputably shows that she had her will drawn by an attorney at Houston, Texas. It is quite obvious from the terms of the will that she was deeply concerned about preserving certain rights in favor of certain of her heirs then unborn. One of her daughters had unwisely and improvidently sold her share of the estate derived from her father's estate, and she specifically provided in the will 'that all my property in Liberty County of which I may die seized or possessed of, both real and personal, including oil and gas leases, be held in trust,' and she gave, devised, and bequeathed said property to her sons Leon Mitchell and Fuhr Mitchell as trustees for the benefit of the beneficiaries and on the terms described in the will, and that 'the income from said trust to be for the benefit of my children * * * and my grandchildren by my daughter, Theresa Perkins, share and share alike.' The will also provides that 'no child, grandchild, or great-grandchild of mine shall be able to sell or otherwise anticipate or encumber his or her share.' When this will was written and executed, the public, and particularly the legal profession, was familiar with the decisions of this Court in the following cases: Swayne v. Lone Acre Oil Co., 98 Tex. 597, 86 S.W. 740, 69 L.R.A. 986, 8 Ann.Cas. 1117; State v. Hatcher, 115 Tex. 332, 281 S.W. 192; Theisen v. Robison, 117 Tex. 489, 8 S.W.2d 646. See also the decisions of courts in other jurisdictions in the following cases: Parker v. Riley, 250 U.S. 66, 39 S.Ct. 405, 63 L.Ed. 847; Meredith v. Meredith, 193 Ky. 192, 235 S.W. 757; Barnes v. Keys, 36 Okla. 6, 127 P. 261, 45 L.R.A., N.S., 178; Blakley v. Marshall, 174 Pa. 425, 34 A. 564. The cases cited above determined the meaning of income, royalties, rents, and proceeds arising from the sale and leasing of lands, and such terms were given a definite meaning by judicial decisions, and the testatrix was bound to know that the law of this State had defined what was income of her estate.

We are not here dealing with a will written in her own handwriting by an uneducated person, unfamiliar with the use of technical legal terms. On the contrary, this will clearly shows that it was drawn for the testatrix by an attorney, who was familiar with the decisions of the courts, and he used the technical terms to carry out the intentions of the testatrix; and it may be assumed that such terms used in the will were used correctly and intentionally. 2 Page on Wills, Lifetime Edition (1941), p. 822, § 921; Long v. Rike, 7 Cir., 50 F.2d 124, 81 A.L.R. 521, certiorari denied 284 U.S. 657, 52 S.Ct. 35, 76 L.Ed. 557.

The testatrix used legal terms in her will that had been defined and sanctioned by judicial decisions to express her intentions as to the disposition of her estate, and it is the duty of the courts to construe such terms in connection with the entire will, to ascertain her intentions. In Corpus Juris, Vol. 69, Wills, p. 80, § 1136, a rule, which is supported by many authorities, is stated as follows: '* * * where the meaning of the language used in the will has been settled by usage and sanctioned by judicial decisions, it is presumed to be used in the sense that the law has given to it, and should be so construed, unless the context of the will shows a clear intention to the contrary.' See Avis v. First National Bank of Wichita Falls, 141 Tex. 489, 174 S.W.2d 255.

Aurelia Mitchell knew that at her death the heirs described in her will would own outright, independent of and aside from her will, an undivided interest in the property. Knowing that the children had already been provided for, she was very careful to protect the interests of the remaindermen. The will particularly provided that 'the principal of the trust is to be kept intact and held in trust' until the expiration of the trust period. 'The principal of the trust' is the land, and the minerals are part of the land. Texas Company v. Daugherty, 107 Tex. 226, 176 S.W. 717, L.R.A. 1917F, 989; Sheppard v. Stanolind Oil Gas Co., Tex.Civ.App., 125 S.W.2d 643, writ refused; State v. Hatcher, 115 Tex. 332, 281 S.W. 192; Sheffield v. Hogg (Federal Royalty Co. v. State), 124 Tex. 290, 77 S.W.2d 1021, 80 S.W.2d 741; Thompson v. Thompson, Tex.Sup., 236 S.W.2d 779. The testatrix by her will gave the land to the remaindermen at her death. There is nothing in the will to indicate that she was giving them the land exclusive of the minerals. After the expiration of the trust, it was provided that 'said estate and property in Liberty County shall be divided among and be vested in' the remaindermen described in the will. In order to make clear her intention, the will also provided, 'It is my desire, as far as possible, that this part of my estate be allowed to accumulate for the benefit of my grandchildren and great grandchildren, provided, however, that after the payment of my debts, the income from said property shall be paid to my children' and other life tenants. (Emphasis supplied.)

That it was the testatrix' intention to keep intact for future heirs the corpus of her estate, and that it should be allowed to accumulate, is clearly reflected in the will. The land and leases make up the corpus of the estate, and the land, excluding the oil, has but a nominal value. It is quite obvious that the land would not accumulate, but the oil royalties would. What was it that the testatrix intended to accumulate? The land produced only nominal revenue, except the revenue from oil wells. It is clear that the only construction that can be given to this will which would carry out her policy of accumulating a fund for the remaindermen is that the royalties were to go into the corpus of the estate. It is shown by the record that for the period from the filing of the suit in March, 1949, to the time of the trial in March, 1950, the pipe line company had impounded $100,000 or more, representing royalties accruing to the Aurelia Mitchell trust. The half interest accruing to her husband's devisees or assigns for the same period was an equal amount. The royalties from the Mitchell land were averaging $20,000 or more per month. In addition, the income from said property was to be paid to her children. Certainly this record does not support the contention that this is an unnatural will and that those of the heirs who are now living are neglected and are in financial need.

In this State it is held that minerals are a part of the land, and that royalties received by trustees authorized to sell are the consideration for the sale of the mineral estate. The royalties represent the purchase price received from the sale of the trust principal or corpus. State v. Hatcher, 115 Tex. 332, 281 S.W. 192; Sheffield v. Hogg (Federal Royalty Co. v. State), 124 Tex. 290, 77 S.W.2d 1021, 80 S.W.2d 741; Theisen v. Robison, 117 Tex. 489, 8 S.W.2d 646; Stephens County v. Mid-Kansas Oil Gas Co., 113 Tex. 160, 254 S.W. 290, 29 A.L.R. 566; Sheppard v. Stanolind Oil Gas Co., Tex.Civ.App., 125 S.W.2d 643, writ refused; see also Chesson v. Commissioner, 5 Cir., 57 F.2d 141; Commissioner v. Wilson, 5 Cir., 76 F.2d 766; Davis v. Atlantic Oil Producing Co., 5 Cir., 87 F.2d 75.

The case of Avis v. First National Bank of Wichita Falls, 141 Tex. 489, 174 S.W.2d 255, 257, involved the construction of a will, in which the testator employed the term 'income' as distinguished from the term 'corpus.' He directed that his debts be paid, and 'After this is done, I direct that my trustee shall keep the corpus of my estate intact, if possible, and so far as practical, until the death of my wife * * *; and shall pay over to said Minnie Ola Avis, the entire net income from my estate during her lifetime.' The main question involved in that case was whether the trustee was authorized to execute an oil and gas lease. This Court held that the power to sell the land included the power to sell the oil and gas in place by means of a lease. It was contended that to lease the land for the benefit of the life tenant would involve waste and destroy the corpus of the estate. In reply thereto it was said: 'An oil and gas lease executed by the trustee under the terms of this will would not be one executed in the interest of the life tenant. The substantive rights of the life tenant and the remaindermen would still be preserved. The royalty would go to the remaindermen, and the interest on the royalty would go to the life tenant. Swayne v. Lone Acre Oil Co., 98 Tex. 597, 86 S.W. 740, 69 L.R.A. 986, 8 Ann.Cas. 1117; State v. Hatcher, 115 Tex. 332, 281 S.W. 192; Parker v. Riley, 250 U.S. 66, 70, 71, 39 S.Ct. 405, 63 L.Ed. 847; Meredith v. Meredith, 193 Ky. 192, 235 S.W. 757; Barnes v. Keys, 36 Okla. 6, 127 P. 261, 45 L.R.A., N.S., 178, Ann.Cas. 1915A, 515; Blakley v. Marshall, 174 Pa. 425, 34 A. 564.' See also Davis v. Bond, 138 Tex. 206, 158 S.W.2d 297; Davis v. Atlantic Oil Producing Co., 5 Cir., 87 F.2d 75; Texas Company v. Marlin, 5 Cir., 109 F.2d 305.

When the language of the will involved here is considered, we think it is clear that it was intended that only the income derived from the estate as well as from the royalties would be distributed to the life tenants, and that by the term 'royalty' is meant a part of the corpus of the estate to be held and received by the remaindermen.

The judgments of the trial court and Court of Civil Appeals are reversed, and this cause is remanded to the trial court for further proceedings.

SMITH, J., not sitting.

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MITCHELL v. MITCHELL
(Jan 23, 1952)