Let’s begin with some Texas law on what a seller sells when he executes a deed:
Generally, a Texas real property deed will confer upon the grantee the greatest estate as the terms of the instrument will permit. This “greatest estate …” differs in concept from the “greatest estate possible”.
A deed will pass whatever interest the grantor has in the land unless the deed contains language showing a clear intention to grant a lesser estate. Such a clear intention can be accomplished by withholding part of the estate by express reservation or by granting only the portion the grantor desires to convey.
Translation: you’ve got to read the entire document to know.
So said the court of appeals in Mark S. Hogg, LLC v. Blackbeard Operating LLC.
1994 the Hoggs granted an oil and gas lease on a 160-acre tract in Winkler County to Three-B. In 1998 they granted a lease on 120 of those acres to Three-B. Three B assigned several leases to Stanolind. The granting clause transferred all identified “properties and assets” and then defined 10 “Assets” in eight subparagraphs:
(a) Leases and Lands; (b) Wells; (c) Units and Properties; (d) Contracts; (e) Surface Contracts; (f) equipment, machinery, fixtures and other intangible personal property and improvements on the Properties; (g) oil, gas and condensate and other minerals produced from the Leases, Lands Wells; and (h) Records.
References were made to Exhibits A and A-1. Exhibit A named the 1994 lease and others but did not name or include the 1998 lease. However, Exhibit A-1 named the Hogg #2 Well, which was located on the 1998 lease.
The 1998 lease was assigned to Blackbeard by a Stanolind successor via an assignment that expressly identified the 1998 lease.
Hogg claimed that the Stanolind-to-Blackbeard assignment did not include the 1998 lease. Blackbeard sued Hogg for trespass to try title and to quiet title in the disputed interest in the 1998 lease and for declaratory judgment; Hogg counterclaimed for the same relief. The court granted Blackbeard’s motion for summary judgment.
On appeal, Hogg alleged that the Stanolind-to-Blackbeard assignment did not convey the 1998 lease, that the conveyance language limited “Leases” to those specifically defined; alternatively, the assignment could not have conveyed the unnamed lease when A-1 merely identified the name of a unit.
Blackbeard prevailed. The court examined each category of Assets in the eight subparagraphs (too much detail to discuss here). The Court determined that the subparagraphs made clear that the assignor intended to transfer all the interests in the Assets described.
The question still remained whether the 1998 lease was included as an “Asset”. It was. Nothing in the granting clause or Exhibit A precluded other leasehold interests from being conveyed by some additional provision. By describing the Lands as including the acreage covered by the 1998 lease, the definition of “Lands” in subparagraph A included all of the assignor’s interest in the 120 acres covered by the 1998 lease. And there was sufficient language in subparagraph C conveying all “leasehold interests …. “ to include the 1998 lease.
Further, the court concluded that the assignment satisfied the statute of frauds requirement that a conveyance must contain a valid legal description of the land to be conveyed with reasonable certainty. The assignment satisfied this requirement by referencing recordation information in the Real Property Records of Winkler County.
Your musical interlude, a harmonica blow-off. Pick your winner.