In the case of Wichita Royalty Co. et al. v. City National Bank of Wichita Falls et al., 1938, the Supreme Court dealt with a dispute over oil and gas royalties in Texas between two parties: The City National Bank of Wichita Falls (as trustee) and several individuals who had sold their land to the bank but retained mineral rights. The sellers claimed that they were entitled to receive royalty payments from any oil or gas produced on their former property, while the bank argued that it was not obligated to pay these royalties because it held legal title to the land as trustee for another party. The court ruled in favor of the sellers, holding that under Texas law, an individual selling land could retain a "possibility of reverter" - i.e., a right to regain ownership if certain conditions are met - even when selling his or her property interest outright rather than leasing it out for exploration purposes. This meant that despite having sold their lands outright, these individuals still maintained some form of ownership over them which entitled them to receive royalty payments from any minerals extracted therefrom. This decision clarified how mineral rights work within this context and set precedent for future cases involving similar disputes.

In the dissenting opinion for Wichita Royalty Co. v. City National Bank of Wichita Falls, Justice Black argued that the majority's decision was inconsistent with previous rulings and principles of equity. He contended that a lienholder should not be allowed to benefit from oil produced by a leasehold without bearing any responsibility for costs associated with production, such as taxes or operating expenses. This would result in an unjust enrichment at the expense of other parties who had contributed to producing the oil but were left unpaid due to bankruptcy proceedings. Furthermore, he disagreed with allowing liens on future-acquired property because it could potentially deprive debtors of their livelihoods and discourage entrepreneurship by making it too risky for individuals or businesses to take on new ventures if they already have outstanding debts.