Altman v. Blake
91 Oil & Gas Rep. 346, 29 Tex. Sup. Ct. J. 457, 712 S.W.2d 117 (1986)
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Rule of Law:
A conveyance of a fractional interest "in and to all of the oil, gas and other minerals" creates a mineral interest, not a royalty interest, even if the deed reserves certain rights of mineral ownership, such as the executive right to lease and the right to receive delay rentals.
Facts:
- W.R. Blake, Jr. was the sole owner of both the surface and the unsevered mineral estate of a 348-acre tract of land.
- On May 30, 1938, Blake, Jr. executed a mineral deed to his father, W.R. Blake, Sr.
- The deed conveyed 'an undivided one-sixteenth (1/16) interest in and to all of the oil, gas and other minerals in and under and that may be produced from' the land.
- A clause in the deed specified that the grantee 'does not participate in any rentals or leases'.
- The deed also explicitly granted Blake, Sr. 'the rights of ingress and egress at all times for the purpose of mining, drilling, exploring, operating and developing said lands'.
- On January 14, 1939, Blake, Jr. conveyed the 348-acre tract to D.A. Clark, reserving 'one-sixteenth (1/16) of the minerals, non-participating, which has previously been sold.'
- The land was subsequently leased, a producing oil well was completed, and the lease reserved a one-eighth royalty for the mineral owners.
Procedural Posture:
- The heirs of D.A. Clark sued the heirs of W.R. Blake, Sr. in a Texas trial court to construe the 1938 deed.
- Both parties moved for summary judgment.
- The trial court granted summary judgment for the Blake heirs, holding that the deed conveyed a one-sixteenth royalty interest.
- The Clark heirs, as appellants, appealed to the Texas Court of Appeals.
- The Court of Appeals affirmed the trial court's judgment.
- The Clark heirs, as petitioners, sought and were granted review by the Supreme Court of Texas.
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Issue:
Does a deed that grants a fractional "interest in and to all of the oil, gas and other minerals" but states that the grantee "does not participate in any rentals or leases" convey a mineral fee interest or a royalty interest?
Opinions:
Majority - Justice Kilgarlin
Yes, a deed that grants an interest 'in and to all of the oil, gas and other minerals' conveys a mineral fee interest, even when certain attributes are reserved. The court must ascertain the intent of the parties from within the four corners of the instrument. The language 'interest in and to all of the oil, gas and other minerals' is the classic phrasing for creating a mineral interest. A mineral estate comprises five attributes: the rights to develop, lease, receive bonus payments, receive delay rentals, and receive royalty payments. While this deed reserved the rights to lease and receive rentals, it expressly granted the right to develop. Precedent, specifically Delta Drilling Co. v. Simmons, establishes that a mineral interest remains a mineral interest even when stripped of the executive right and the right to rentals. Unlike in cases such as Watkins v. Slaughter, this deed contains no language, such as the word 'royalty,' to indicate an intent to convey anything other than a mineral interest. For the sake of stability and certainty in Texas property law, a conveyance of 'minerals' is interpreted as a conveyance of a mineral interest.
Analysis:
This decision reinforces the formalistic approach to interpreting mineral deeds in Texas, emphasizing the specific legal terms used over a functional analysis of the rights conveyed. It clarifies that a mineral interest is a 'bundle of sticks' and that removing some sticks (like the right to lease or collect rentals) does not automatically transform the interest into a different type of property right, like a royalty. The ruling solidifies the precedent that to create a royalty interest, parties must use explicit language, such as the word 'royalty,' providing certainty for title examiners and future transactions. This case is a foundational lesson in the critical distinction between mineral interests and royalty interests in oil and gas law.
