374 S.W.3d 644
Tex. App.2012Background
- Deed dated May 17, 1955 conveyed 160 acres in Wheeler County, TX to the Veterans’ Land Board with a reservation of a one-half non-participating royalty interest (one-half of one-eighth of production).
- Reservation language does not expressly state “oil, gas and minerals,” but parties agree it applies to natural gas and to a non-participating royalty interest.
- Dispute arose over the quantum of the reserved royalty under a 2003 Noble Energy lease (3/16 royalty).
- Moore successors (Moores) sought a declaration that the reservation was ambiguous and could be read as 1/16 or as a fraction of future lease royalty; Noble Energy and Russells argued it unambiguously reserves 1/16 of production.
- Trial court granted summary judgment in favor of Noble Energy and the Russells. Appellants appeal the decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the reservation ambiguous under the deed language? | Moores argue ambiguity due to conflicting interpretations. | Noble Energy/Russells contend language unambiguously reserves a fixed 1/16. | No ambiguity; language fixed at 1/16. |
| What is the correct quantum/interpretation of the reserved royalty? | Two reasonable readings: (a) 1/2 of the future lease royalty; (b) fixed 1/16; (Moores favor (a)). | Language supports a fixed 1/16; no basis for “half of future lease royalty.” | Reservation reads as a fixed 1/16 non-participating royalty. |
| Does the parenthetical phrase alter the interpretation of the reserved royalty? | Parenthetical could support a floating fraction tied to future leases. | Parenthetical does not create ambiguity; it explains the fixed 1/16 interpretation. | Parenthetical defines the 1/16 interpretation; does not create ambiguity. |
Key Cases Cited
- Brown v. Havard, 593 S.W.2d 939 (Tex.1980) (ambiguity from practical interpretation of vested royalty)
- Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587 (Tex.1996) (ambiguity determined by examining deed as executed)
- Range Resources Corp. v. Bradshaw, 266 S.W.3d 490 (Tex.App.-Fort Worth 2008) (distinguishes fractional royalty vs. fraction of royalty)
- Nugent v. Freeman, 306 S.W.2d 167 (Tex.Civ.App.-Eastland 1957) (illustrates language suggesting both fractional royalty and fraction of royalty)
- Plainsman Trading Co. v. Crews, 898 S.W.2d 786 (Tex.1995) (nonparticipating royalty interest fundamentals)
- Arnold v. Ashbel Smith Land Co., 307 S.W.2d 818 (Tex.Civ.App.-Houston 1957) (cited for nonparticipating royalty concepts)
- Schlittler v. Smith, 128 Tex. 628, 101 S.W.2d 543 (Tex.1937) (early example of fraction of royalty language)