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Energy & the Law

Mistaken Reference in a Deed to a Mineral Reservation Does Not Reserve the Minerals

Posted in Land Titles

“If you want a successful gathering of long-lost kinfolks, just manage to find oil on the old homestead. They will come out from under logs, down trees, from out of the blue and down every road and byway, but they’ll get there — even some nobody ever suspected were kinfolks.”

Judge R. T.Brown, who presided over suits against Dad Joiner and H L Hunt over the Daisy Bradford No. 3 in the 1930’s.

I suggest to you that this observation also applies to claims over ancient, musty, faded property conveyances.

In 1963 (or, as the court aptly noted, “Almost a half century ago …”) Mr. Nix, the owner of property in East Texas, executed a deed that contained the following language:

“It being understood and agreed that all oil, gas, and other minerals, excluding coal, lignite, and clay, in and under the above described tract have heretofore been reserved and excepted, together with the right of ingress and egress for the purpose of exploring and drilling for, producing[,] storing [,] and removing the same herefrom.”

 Oops! The declaration that the minerals had been reserved was incorrect. No mineral interests had actually been reserved or conveyed before the deed was executed. The question before the court was whether the provision reserved the mineral estate for the grantor.

In Roberson v. El Paso Exploration & Prod. Co. the court held that it did not. The language merely stated, incorrectly, that the mineral estate had previously been conveyed. It did not reserve the mineral estate for the grantor. And, because courts construe deeds to convey the greatest estate permissible under its language, the deed conveyed the mineral estate to the grantee.

The Ambiguity Conundrum

The court’s job in a contract dispute is to determine the intent of the parties from the four corners of the deed. Sometimes that is not possible. A deed is ambiguous if it is subject to two or more reasonable interpretations. Here, both sides claimed that the deed was not ambiguous (that it can be given a definite or certain meaning), and was to be interpreted in their favor. Non-lawyers (you engineers particularly) who don’t make a living playing with words ask, How can this be?  I tend to agree in this case that it can’t be.

The losing party gets an “A” for effort, but a lower grade, shall we say, for the result. Where in the deed language do you see a reservation of minerals?

Thanks to Bill Drabble for his help on ths post.

Big Tex, 1952-2012, R.I.P.