Co-authors Chance Decker and Ethan Wood

Marsha Ellison v. Three Rivers Acquisition, LLC, et al. reminds us what is required for an instrument to be a conveyance and what is required for a stipulation to be effective.

When J.D. Suggs died in 1925, his heirs agreed to swap land with the Noelkes, and executed the Suggs Deed conveying several tracts to the Noelkes. One tract was described as “all of … the lands located North and West of the public road which now runs across the corner of [the survey], containing 147 acres more or less.”  There was a problem: There were actually 301 acres in the section northwest of the public road.

The  parties and their successors always treated the Suggs Deed as conveying 301 acres, not 147. Nevertheless, in 2008 Samson Oil and Gas asked Jamie Ellison (who had acquired a mineral lease on the Northwest Tract), to sign a letter confirming acceptance of a Boundary Stipulation purporting to resolve the discrepancy in the Suggs Deed. The Boundary Stipulation would have moved the property line to a new location consistent with an original conveyance of just 147 acres, but neither it nor the letter contained words of conveyance. The letter promised a more formal and recordable document after his acceptance. No such document was prepared, but the letter accompanying the Boundary Stipulation was signed by Ellison.

Was the Boundary Stipulation a legal conveyance? If not, was it an agreement to correct an ambiguity that was subsequently ratified by Ellison? The answers are no and no.

Necessary Elements of a Conveyance

A conveyance need not have all the “formal parts” of a deed or contain the right “technical words.” An instrument signed by the “grantor” will act as a conveyance of real property if a grantor and grantee can be identified and there are words of grant showing an intention of the grantor to convey an interest to the grantee. The Boundary Stipulation had none of these elements, and therefore was not a legal conveyance.

To Have a Stipulation You Need an “Ambiguous” Deed

Turning to whether the Boundary Stipulation was binding to settle “uncertainty, doubt or dispute” as to the location of a boundary line, the court noted that such uncertainty must exist on an objective basis and is an essential element to permit “stipulation agreements” to change the boundary line. In Texas, where a discrepancy exists between a metes-and-bounds description and a recited acreage number, the metes and bounds description controls. Thus, there was no objective uncertainty as to the location of the boundary line. Because the Boundary Stipulation was effectively “void,” and because void deeds cannot be ratified, Ellison’s signing of the letter accompanying the Boundary Stipulation was not a ratification of the “new” boundary line.

Correction Deeds

The opinion contains dicta (non-lawyers: expression of opinion on a point other than the precise issue involved in determining a case) that may give pause to oil and gas and real estate practitioners. The court noted that the Boundary Stipulation was “close in nature to a correction deed,” and in the case of correction deeds, “the underlying deed must … possess some ‘ambiguity or error’ to correct.” According to the court, there was no ambiguity as to what the Suggs Deed conveyed.

Free Practice Tip

Would a “Correction Deed” instead of a “Boundary Stipulation” have been effective to change the legal description in the Suggs Deed? Given the difficulties in determining whether an instrument is actually “ambiguous,” practitioners should consider including words of cross-conveyance in correction deeds that make material corrections.

The scriveners needed The Man in Black.