Averyt v. Grande, Inc.
95 Oil & Gas Rep. 350, 29 Tex. Sup. Ct. J. 468, 717 S.W.2d 891 (1986)
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Rule of Law:
When a deed reserves a fractional mineral interest from "the lands described," the reservation applies to the entire mineral estate under the physical tract, not just the fractional interest owned and conveyed by the grantor. A "subject to" clause noting a pre-existing interest limits the estate granted but does not alter the physical description of the land for the purpose of interpreting the reservation.
Facts:
- Prior to the conveyance at issue, a one-half mineral interest in the subject property was owned by a third party, Texas Osage Cooperative Royalty Pool.
- Grande, Inc. owned the surface estate and the remaining undivided one-half of the mineral estate in two tracts of land in Fayette County, Texas.
- On September 30, 1977, Grande, Inc. executed a general warranty deed conveying the property to Gordon and Clarice Fogelman.
- The deed described the two tracts by metes and bounds, followed by a clause stating the conveyance was 'LESS, HOWEVER, AND SUBJECT TO' the pre-existing one-half mineral interest.
- The deed also contained a reservation clause stating: 'There is hereby excepted from this conveyance and reserved to Grantor... an undivided ¼th of the royalty covering all of the oil, gas and other minerals... in, to and under or that may be produced from the lands above described'.
- The Fogelmans subsequently conveyed the property to James R. Averyt.
Procedural Posture:
- James R. Averyt sued Grande, Inc. in a Texas trial court, seeking a declaratory judgment to construe the mineral reservation in the deed.
- The trial court held that the reservation reserved a fraction of the entire mineral estate.
- Averyt, as appellant, appealed to the Texas Court of Appeals.
- The Court of Appeals affirmed the judgment of the trial court.
- Averyt, as petitioner, appealed to the Supreme Court of Texas.
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Issue:
Does a mineral reservation for a fraction of the royalty 'from the lands above described' reserve a fraction of the royalty from the entire physical tract, even when the grantor owned and conveyed only a fractional mineral interest in that land?
Opinions:
Majority - Justice Spears
Yes. The deed reserves an undivided one-fourth of the royalty from the minerals produced from the whole of the tracts described in the deed. The court follows the established distinction between a reservation from the interest 'conveyed' versus a reservation from the 'land described.' When a reservation refers to the 'land described,' as it does here, it applies to the entire physical tract defined by its boundaries, regardless of the fractional interest the grantor owned. A 'subject to' clause limits the estate being granted and warranted, but it does not change the physical description of the land itself. To hold otherwise would disrupt long-standing rules of property law upon which countless deeds and mineral ownerships rely, prioritizing the stability and predictability of the law over a potentially more intuitive reading of a single instrument.
Dissenting - Justice Kilgarlin
No. The reservation should only apply to the one-half mineral interest that Grande, Inc. actually owned and conveyed. It is illogical to conclude that Grande could reserve a royalty interest in a mineral estate it did not own. The majority misinterprets precedent like 'King v. First National Bank,' which required looking at all provisions between the granting and reservation clauses to determine what land is 'described.' Here, the 'subject to' clause is between those clauses and is therefore part of the land's description, limiting it to the one-half interest Grande actually owned. The interest 'described' in this deed is functionally the same as the interest 'conveyed.'
Dissenting - Justice Kilgarlin
No. The dissent on rehearing elaborates that under a 'four corners' analysis of the deed, the 'subject to' clause is an integral part of the property's 'description' because it defines the quantity of the mineral estate being conveyed. A description must be sufficiently full to identify the property, and for minerals, this includes quantity. The deed's vendor's lien clause, which applies to the 'above described premises,' would absurdly apply to property Grande did not own under the majority's reasoning, further proving the parties intended 'described' to mean the fractional interest Grande actually conveyed.
Analysis:
This case solidifies a critical, formalistic rule of deed construction in Texas oil and gas law, reinforcing the distinction between reserving an interest from 'the land described' versus 'the land conveyed.' By prioritizing stare decisis and the predictability of title examination, the court affirmed a bright-line rule that may sometimes conflict with the likely, unstated intent of the parties. The decision serves as a stern warning to legal drafters about the importance of precise language in fractional mineral conveyances, as the choice between 'conveyed' and 'described' can have significant financial and ownership consequences.
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