Co-author Caleb White*
Davis v. COG Operating, LLC, in construing a Warranty Deed with a reservation of minerals, applied the estate-misconception doctrine and denied the presumed grant doctrine. At issue were three instruments:
- A 1926 mineral lease from the Sesslers to Campbell.
- A 1926 “Royalty Deed” from Sesslers to Haun.
- A 1939 Warranty Deed from the Sesslers to Roberts, in which the parties acknowledged that Haun had been conveyed 1/32 of the minerals.The conveyance did not include that interest. The Sesslers reserved “one fourth (1/4) of the 1/8 royalty usually reserved …” in an oil and gas lease.
Davis (Sesslers’ successor) sued the Neals and COG (Roberts’ successors) for trespass-to-try-title and a dog’s breakfast of other claims – 11 in total – asserting that she owned a portion of the Neals’ NPRI. The trial court granted summary judgment for the Neals. Having denied Davis’s trespass-to-try-title claim, the court denied Davis’s remaining claims.
The Court of Appeal concluded that the 1926 “Royalty Deed” actually conveyed a 1/32 mineral interest, as the deed did not strip away any traditional mineral rights from Haun. The 1/32 in the deed was the conveyance of 1/4 of the remaining typical 1/8 reserved by the Sesslers as a result of their lease to Campbell.
Davis argued that the 1926 Deed put Roberts on notice of Haun’s preexisting interest in the mineral estate. The Neals responded that the Sesslers and Roberts intended a literal meaning of the 1/32 fraction and consequently, Roberts was not put on notice of the extent of Haun’s ownership. The Court did not accept the Neals’ argument.
The intention of the parties in using 1/32 in the 1939 Deed to identify what was reserved to Haun depended on whether they were operating under an estate-misconception. If they were not, then the Sesslers failed to provide adequate notice to Roberts of the interest previously conveyed to Haun. If they were, both parties would have understood that the 1/32 was simply a stand-in for the 1/4 mineral interest conveyed to Haun.
The Court concluded that the parties had been operating under estate-misconception, relying on three reasons:
- 1939 was the height of the time estate-misconception was prevalent.
- 1/32 is the product of multiplying 1/4 by 1/8, creating the expectation of a 1/8 lease (citing Hysaw v. Dawkins).
- The double fraction found in the reservation links the reservation to estate-misconception.
Considering those factors and harmonizing the Deed’s provisions, the Court determined the parties executed the 1939 Deed under an estate-misconception.
The deed effectively put Roberts on notice of the 1/4 interest in the mineral estate previously conveyed to Haun. The intent of the parties was to give Roberts notice of the previous transfer to Haun.
The Neals argued that even if the 1939 Warranty Deed reserved a 1/4 NPRI to the Sesslers, the reservation was ineffective. First, the 1/4 floating NPRI was an over-conveyance because they had already sold the same 1/4 interest to Haun. In such a case, the Duhig doctrine directs courts to make the grantee whole by awarding the missing title to the grantee out of the grantor’s remaining estate. The Court rejected this argument because the Sesslers did not convey more than they owned. The 1939 Deed did not purport to convey a 3/4 interest in future royalties to Roberts.
The Court denied Neals’ presumed-grant doctrine defense. It is an equitable doctrine that applies only in the case of a gap in title. And laches does not apply to a trespass-to-try-title claim.
The trial court erred in granting summary judgment for the Neals because the Sessler successors had clear title to a portion of the Neals’ NPRI. The Court reversed the summary judgment, rendered judgment on trespass-to-try-title in favor of Davis, and remanded the remaining claims to the trial court for further proceedings.
Your post-St. Patrick’s Day musical interlude.
*Caleb is a 3L at Baylor Law School and a Gray Reed intern.