Deborah J. Greer, Diana MacY, Marvin Greer, Jr. and MAP2004, LLC D/B/A MAP2004-OK, Wolf Bone Ranch Partners LLC, Sapphire Royalties, Inc., Stephen Flanagan, Trustee of the Midland Trust, John G. Harper, John P. Wandel, Jr. v. Glenn David Shook, Sheila Lucile McCrea, Esq. on Behalf of the Marguerite A. McCrea Trust, as Co-Trustee, Carl A. Crowley, as of the Estate of Annie Lee Crowley, Christopher Lance Trigg, Cecily Trigg Ortenberg, Lynn D. Hughes
503 S.W.3d 571
| Tex. App. | 2016Background
- In 1927 Lynn Eddins (Grantor) deeded interests to John Borden (Grantee) concerning Reeves County land that was then under a 1925 Ross oil & gas lease reserving a 1/8 royalty to Eddins. The 1927 deed contains seven short paragraphs using both “1/16” and “1/2” fractions and grants ingress/egress and mineral language.
- The central ambiguity: whether the deed conveyed (a) a fixed 1/16 fractional royalty of total production, (b) a floating 1/2 of the royalty (i.e., 1/2 of whatever royalty a lease provided), or (c) two separate estates (a temporary 1/2 royalty under the Ross Lease and a permanent 1/16 mineral interest thereafter).
- Later leases (Patriot Leases) set royalty at 1/4, so a floating 1/2 royalty yields a 1/8 of production; a fixed 1/16 royalty yields 1/16 of production; the two-estates theory could yield a 1/64 share under current leases.
- Patriot interpleaded funds and was dismissed; cross-motions for partial summary judgment followed. Trial court ruled the Borden successors hold a floating 1/2 royalty (i.e., 1/2 of lease royalty), giving them 1/8 of production under Patriot Leases.
- On de novo review the Court of Appeals affirmed, concluding the deed conveyed a 1/2 mineral interest (producing a 1/2 floating royalty), harmonizing the mixed fraction language via the historical “legacy of the 1/8 royalty” and estate-misconception doctrines.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What interest did the 1927 deed convey (fixed fractional royalty, floating royalty, or two estates)? | Eddins successors: deed conveyed either (1) two estates — temporary 1/2 of the existing Ross royalty and upon lease expiration a permanent 1/16 mineral interest; or (2) alternatively a fixed 1/16 royalty. | Borden successors: deed conveyed only a floating 1/2 royalty (1/2 of whatever royalty a lease provides), derived from a 1/2 mineral interest. | Court: deed conveys a 1/2 mineral estate (and thus a 1/2 floating royalty). The mixed 1/16 references are shorthand from the 1/8 legacy/estate-misconception; harmonize whole deed to give floating 1/2 royalty. |
| Whether the deed conveyed a mineral (possessory) interest or only a royalty (non‑possessory) interest | Eddins successors: various clauses (¶6) show future 1/16 mineral interest; some argued only fixed royalty. | Borden successors: emphasize paragraphs referring to royalty; contend no mineral estate conveyed. | Court: deed conveys a mineral interest (rights of ingress/egress, mining, and reservation of rentals show mineral estate), not merely a royalty. |
| Proper method of construction when deed uses conflicting fractions | Eddins successors: read the 1/16 language in ¶6 in isolation to limit Borden’s future interest. | Borden successors: rely on royalty references and trial-court ruling. | Court: must construe deed as whole; apply historical context (legacy of 1/8 and estate‑misconception doctrines) to harmonize conflicting fractions. |
Key Cases Cited
- Hysaw v. Dawkins, 483 S.W.3d 1 (Tex. 2016) (deed construction requires harmonizing all provisions; discusses legacy of the 1/8 royalty and estate‑misconception).
- Luckel v. White, 819 S.W.2d 459 (Tex. 1991) (interpretation of oil and gas conveyances: examine instrument as a whole to discern intent).
- Concord Oil Co. v. Pennzoil, 966 S.W.2d 451 (Tex. 1998) (use deed‑wide analysis to determine whether language conveys mineral estate or royalty and how to treat double fractions).
- Garrett v. Dils Co., 299 S.W.2d 904 (Tex. 1957) (harmonized use of 1/16 and 1/2 fractions as shorthand for 1/2 of the 1/8 royalty).
- French v. Chevron U.S.A., Inc., 896 S.W.2d 795 (Tex. 1995) (language conveying “in and under” indicates a mineral interest).