Originally published by Charles Sartain.
Co-author Rusty Tucker
In Susan Davis Van Dyke et al. v. The Navigator Group. et al., the Eastland court of appeals applied recent fixed-versus-floating NPRI principles to a double-fraction mineral interest reservation.
In a 1924 Deed Mulkey conveyed property to White and Tom and reserved “one-half of one-eighth of all minerals …”
Davis (heirs and assigns of Mulkey) claimed ownership of half of the minerals pursuant to the reservation. Navigator (heirs and assigns of White and Tom) claimed that Davis only owns 1/16th and that Navigator owns the rest. Ruling on dueling motions for summary judgment, the trial court agreed with Navigator and declared, among other things, that the Deed was unambiguous and that the Mulkeys reserved 1/16th of the minerals (1/2 of 1/8th) and conveyed 15/16ths to White and Tom.
Davis asserted claims under the estate misconception theory and the presumed grant doctrine and asserted estoppel defenses. This post can’t do justice to the court’s deep dive into these theories. See this long form summary for more detail.
The Estate Misconception Theory
Davis maintained that the trial court failed to construe the deed in light of the “estate misconception” prevalent at the time of the 1924 Deed. This theory refers to a once-pervasive misunderstanding that the Babe’s home run record was forever, floridation was a Communist plot an owner who executed a mineral lease retained only 1/8th of the minerals rather than a fee simple determinable with the possibility of reverter in the whole. The theory is not new to oil and gas jurisprudence in Texas, but the court reasoned it would be new if it were applied to construe a reservation in which clear language was employed and in which there was an absence of contradictory fractions or terms.
Moreover, the Mulkeys could not have been operating under the misconception because they owned all the attributes of the mineral estate. The court further opined that as a general rule courts construe simple fractions, such as a fraction of 1/8th (or a variation thereof), as a fixed royalty interest, which is calculated simply by multiplying the fractions.
Because the 1924 Deed was unambiguous and contained no inconsistencies to be harmonized (in which long-ago scriveners are able to torment modern-day litigants and courts from beyond the grave), the Mulkeys reserved a 1/16th interest in the mineral estate, not one-half.
The Presumed Grant Doctrine
Davis maintained that the trial court failed to interpret the Deed in accordance with the presumed grant doctrine, which would have established their ownership of half of the minerals or, at the very least, a fact issue. This doctrine operates as a common law form of adverse possession and can establish title by circumstantial evidence. (See the long summary for the elements.) If established, the law permits an inference that the apparent owner has parted with his title.
The court opined that reliance on the doctrine was misplaced because Davis’s claim was not based on a gap or missing link in the chain of title that would necessitate a presumed grant but, rather, solely on their mistaken interpretation of the unambiguous 1924 Deed.
Further, Davis’ claims were not made in conjunction with a claim of superior right to the land on which the minerals were being produced. Davis applied the doctrine to establish the quantum of the ownership in the mineral estate. But the quantum of interest was already established under the 1924 Deed. The presumed grant doctrine cannot be used to reinterpret and alter the Deed’s unambiguous terms.
Estoppel
Davis asserted various species of estoppel. In summary, the trial court erred in granting Navigator’s motion on a legal theory that was not the subject of the summary judgment motion. Because the court of appeals could not reverse the judgment on the core issue on appeal (construction of the Deed), any error in granting judgment on the estoppel defenses did not cause the rendition of an improper judgment.
And your musical interlude.
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.
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