358 S.W.3d 834
Tex. App.2012Background
- In 1961, G.P. Wood conveyed 191.12 acres in Rusk County subject to a 1953 oil and gas lease; the deed reserved an undivided 1/8 of oil and gas royalties.
- The deed’s reservation stated the grantor would receive 1/8 of all royalties and 1/8 of the royalties provided for in any future leases, with a floor of at least 1/8 of the usual 1/8 royalty (i.e., a minimum floor).
- The 1953 lease expired; Welch later signed 1976 and 1981 leases with a 3/16 royalty, increasing the royalty in effect.
- In 1981, Welch signed a division order showing Coghill and Welch would receive 1/8 of the 3/16 royalty.
- In 2004, the Griffiths purchased the property and began receiving 1/8 of the 3/16 royalty, with Coghill also receiving that same amount.
- By 2007, Griffiths contended Coghill’s and their interests were not equal, arguing Coghill had only 1/8 of 1/8 and sought two 1/64 interests; Coghill sought to enforce a broader fraction of royalty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1961 deed reserved a fraction of royalty or a fractional royalty. | Coghill: reserve is a fractional royalty (1/8 of 1/8 floor). | Griffiths: reserve is a fixed 1/64 royalty (fractional) regardless of future leases. | Coghill’s construction; reservation is a fraction of royalty (1/8 of royalty) in future leases. |
| Whether the language yields a floor but not a fixed 1/64 in future leases. | Coghill: language sets a floor guaranteeing at least 1/64 of all royalties, not a fixed 1/64. | Griffiths: language caps the grantor at 1/64 as a fixed fraction. | Deed language creates a floor, not a fixed 1/64; future leases may yield more than 1/64. |
| Whether attorney’s fees should be remanded for reconsideration. | Coghill prevailed on appeal and seeks remand to reconsider fees. | Griffiths oppose remand; discretionary award not mandatory. | No remand; discretionary denial of fees sustained. |
Key Cases Cited
- Luckel v. White, 819 S.W.2d 459 (Tex. 1991) (four-corners rule; harmonize all provisions of deed)
- Range Res. Corp., 266 S.W.3d 490 (Tex.App.-Fort Worth 2008) (minimum royalty clause creates floor, not fixed fraction)
- Schlittler v. Smith, 101 S.W.2d 543 (Tex. 1937) (similar provision construed as a fraction of royalty)
- Garza v. Prolithic Energy Co., L.P., 195 S.W.3d 137 (Tex.App.-San Antonio 2006) (minimum royalty language contemplates larger future leases)
- Advanced Polymer Scis., Inc. v. Sava Gumarska, 128 S.W.3d 304 (Tex.App.-Dallas 2004) (remand possible for attorney’s fees in declaratory actions)