Andretta v. West
In Andretta v. West, 415 S.W.2d 638 (Tex. 1967), the Wests executed an oil and gas lease for a ten-year primary term which provided for the payment of a one-eighth royalty. Id. at 639.
Six months after this lease, the Wests conveyed an undivided one-fourth NPRI to Jenkins, who several days later conveyed it to Andretta. Id.
Although no production was ever realized on the lands in the lease and the lands were not included within a producing unit, the lessee, Superior, had drilled a producing well on the land adjoining the West property. A dispute arose between the Wests and Superior as to whether Superior was obligated to drill an offset well on their property. Id.
To resolve the dispute, they agreed to a lease amendment wherein Superior agreed to pay the Wests a substitute payment from the other unit which was equivalent to one-eighth of the proceeds from the sale of all oil produced and sold from the well on the adjoining tract. Id.
Pursuant to the terms of the lease amendment (which was promptly recorded), Superior paid a total of $27,978.16 to the Wests from 1944 to 1957. Id.
During that time period, no payments were made to Andretta by either Superior or the Wests. Id.
A few months after learning of the lease amendment and the existence of the payments by Superior to the Wests, Andretta filed suit, alleging that under his NPRI, he was entitled to one-fourth of the amount paid to the Wests. Id.
The Texas Supreme Court agreed with Andretta and held that the royalty payments from the other tract in lieu of royalties in the tract in which Andretta held an interest were subjected to the NPRI held by Andretta and "in view of the relationship between the parties to the present case, the Wests are accountable to Andretta for the latter's one-fourth of the compensatory royalty payments." Id. at 641. While the Texas Supreme Court did not go so far as to require the holder of the executive rights to search the title records and determine the name and address of the NPRI owner, the court made clear that if the holder of the executive rights knows the name and whereabouts of the NPRI owner, "it was their duty to notify him of the lease amendment and account to him for his share of the payment as received." Id. at 641-42.