Navigator Group, et al. v. Van Dyke, et al.* is the latest stopover in the journey of the double-fraction mineral conveyance through the Texas courts. The Eastland Court of Appeals rejected challenges to the Supreme Cout of Texas’ 2023 pronouncement in Van Dyke v. Navigator Group (Van Dyke II).

The history

In a 1924 deed, the Mulkeys conveyed property to the Whites. The deed said:

It is understood and agreed that one half of one eighth of all minerals and mineral rights in said land are reserved in grantors … and are not conveyed herein. “

Is the reservation to be interpreted as a mathematical expression, preserving only 1/16th of the minerals, or was the intent of the Mulkeys to reserve one-half of their mineral interests?  

Applying logic known to third graders everywhere, the trial court held that by the plain language of the reservation the Mulkeys reserved a 1/16th interest in the “minerals and mineral rights,” which was affirmed by the Eastland court. In Van Dyke II, the Supreme Court reversed, determining that the Mulkeys reserved one half of the mineral estate. On remand leading to this appeal, the trial court signed a judgment confirming that the Mulkeys’ reservation. In other words, math is out and Van Dyke II stands. The term “one-eighth” was properly understood as a description of the entire mineral estate.   

The “rules”

Before addressing the challenge of the White successors (Navigator, et al. We will call them White), we should revisit the rules of interpretation of antiquated deeds set forth in Van Dyke II and Hysaw v. Dawkins.

  • A court should adopt the ordinary meaning of a word unless otherwise defined in the text and, more specifically, the court should adhere to the meaning at the time of drafting. What did the text of the conveyance reasonably mean to an ordinary speaker of the language at that time?  
  • When a deed describes an interest as a double fraction, the intent of the parties must be determined by a careful and detailed examination of the document in its entirety, rather than by application of mechanical rules of construction that offer certainty at the expense of effectuating intent.
  • In the context of antiquated deeds there were two widespread and related faulty conceptual culprits that worked in tandem to lead parties to use the term “one eighth” other than as a literal eighth.
  • The estate misconception theory reflects the prevalent but mistaken belief at the time that in entering into an oil and gas lease a lessor retained only a one eighth interest in the minerals rather than the entire mineral estate in fee simple determinable with the possibility of reverter of the entire estate. Thus, grantors often mistakenly used the term one eighth to refer to the entirety of their mineral interest.
  • At the time, the term “one eighth” had acquired a special meaning in the context of a standard royalty. Since the use of one eighth royalty was near ubiquitous, the parties would use “one eighth” as a placeholder for future royalties generally without anyone understanding that reference to one eighth set an arithmetic value. This is the historical standardization of the term “one eighth” (a/k/a the “legacy of the one eighth royalty”).

This appeal

White argued that that the trial court misapplied Van Dyke II when it failed to distinguish the reservation of the Mulkey’s royalty (1/16th according to White) from the reservation of the remaining mineral rights (one-half according to White). White conceded that the trial court correctly determined the Mulkeys own an undivided one half of the entire mineral estate. But to maintain consistency with Van Dyke II the trial court should have held that, in addition to one half of the mineral estate the Mulkeys also reserved a fixed 1/16th royalty interest. This is based on the prevalent belief at the time that a royalty interest will always be one eighth, which informs the quantum of royalty the Mulkeys intended to reserve.

The assertion was that royalties should be treated as a separate matter from the right to the remainder of the mineral estate. White argued Van Dyke II treated the estate misconception theory and historical standardization of royalty as distinct and separate issues. Unlike estate misconception, royalty misconception presumes that the Mulkeys believed the royalty was forever one eighth.  By laboring under this misconception, the Mulkeys’ intent was to reserve a fixed 1/16th royalty.  

The Court rejected this reasoning. Van Dyke II held that the Mulkeys hold title to one half of the mineral estate without further qualification. In doing so the court was referring to the entire set of severable mineral rights attributable to one half of the mineral estate, including the corresponding rights to royalties rather than, as White contended, all of the mineral rights except for royalties. There was no severance or carveout of the Mulkeys’ royalty interest from the mineral estate.

The Eastland court affirmed the trial court. The Supreme Court believed that its interpretation of the mineral reservation was also dispositive of the royalties. Moreover, White’s alternative reading failed to harmonize the relationship between the estate misconception theory and the legacy of the one eighth royalty. Those are interrelated concepts that work together toward the same result.

Other theories rejected

In what is possibly the mother of all Hail Marys, the Whites argued that Van Dyke II was wrongly decided by the Supreme Court. On the basis of stare decisis and the law of the case the Eastland court declined the extraordinary step of correcting the court that grades its papers.

The Court declined to consider the presumed grant doctrine (title by circumstantial evidence, a common-law form of adverse possession). Because summary judgment was affirmed on another theory, the Court did not need to address this alternative ground.

*Gray Reed lawyers Jim Ormiston and Gabe Vick represented two of the prevailing parties.

Your musical interlude. The original boogie woogie.