The Duhig Rule is back, this time in Echols Minerals LLC, et al v. Green et al.

Framing the discussion, Duhig v. Peavy Moore Lumber Company and Trial v. Dragon

In Duhig the grantor in a general warranty deed warranted title and reserved half of the minerals. The deed did not mention that a third party owned half of the minerals. Duhig breached the warranty the moment he conveyed the property because he could not both retain half the minerals and convey half when the third party owned that half. Duhig was estopped from claiming ownership of the mineral interest he had reserved for himself.

There is a two-part test to determine if Duhig applies to a warranty deed that reserves an interest. First, did the grantor convey an interest greater than what he or she possessed such that there is an overconveyance and therefore a failure of title?

If the answer is yes, then under Dragon, Duhig does not apply if the grantor did not own the interests required to remedy the breach at the time of execution. Duhig is narrow in scope and confined to the specific facts in that case, say the courts.

The transactions

The court refers to several transactions. Here are the most important. By a 1952 General Warranty Deed, the Haynes grantors conveyed 278.5 acres in the north half of Section 1 to Madison, reserving a 33.25/278.5 NPRI. The deed stipulated that grantors did not own the minerals in the NW/4 of the NE/4 and the deed did not convey those minerals. There was no reference to a prior 1944 Mineral Deed conveying ½ of the minerals to Regan. In 1949 Haynes et al had stipulated that Roselyn owned 1/6th and the others owned 5/6ths.

In another 1952 deed, Haynes, guardian for the minor Roselyn, conveyed to Madison all of Roselyn’s RTI in the N/2 of Section 1, described as a 1/6th interest, “subject to all outstanding royalty or mineral conveyances.”

The suit

Echols claimed an interest through the Haynes grantors for half of the 33.25/278.5 NPRI retained in the 1952 Haynes et al deed. Defendants Green and Fortis counterclaimed as successors to Madison that the NPRI reservation by Haynes et al in the 1952 deed was ineffective under Duhig because the Haynes grantors failed to except the ½ mineral interest conveyed to Regan in 1944.

The trial court granted summary judgment in favor of Green/Fortis that the reservation was ineffective, applying Duhig. The court of appeals reversed and rendered. Duhig did not apply

The Haynes grantors in the 1952 general warranty deed conveyed more interest in the mineral estate than they owned, reserving a mineral interest, creating a “Duhig problem”. But there was no remedy available. The exact mineral interest to remedy the grantors’ failure of title would be 1/2. They conveyed a 5/6 interest to Madison while they only owned 1/3rd. The Haines grantors did not own the exact interest to remedy their failure of title.  

The court also denied Echols’ argument that the 1952 guardian deed and the 1952 NPRI deed should be read together as a single, unified transaction. The deeds had different grantors, conveyed different interests and had different terms.

A concurring opinion would read the two transactions together.

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