25Oct
Mystery Solved! 100+ Year Old Instrument Ruled to be a Mineral Deed

100+ Year-Old Title Dispute: Instrument Ruled a Mineral Deed, Not a Lease

Think your early chain of title has been cured by the passage of time?  As this recent case shows, even 100+ year-old instruments can be the subject of new disputes. The Tyler Court of Appeals, in Richardson v. Mills [1] Richardson v. Mills, 12-15-00170-CV, 2016 WL 5800261 (Tex. App.—Tyler Oct. 5, 2016, no. pet. h.)   recently reviewed whether a 100+ year-old instrument was a lease or a mineral deed, and the effect of a release entered approximately two years later.

This is an appeal from the 145th Judicial District Court in Nacogdoches County, Texas.  This suit involves the construction of both a 1906 instrument that was executed in favor of Robert Lindsey and June C. Harris of a one-half mineral interest and a 1908 release executed by Lindsey and Harris.  For years, Appellees, who are the successors-in-interest to the grantors in the 1906 instrument, received royalty payments for one-half of the oil, gas and other minerals in and under the property.  When those payments stopped in 2010, they filed suit against Appellants. [2] Notice: This Opinion has not been released for publication in the permanent law reports.  Until released, it is subject to revision or withdrawal.

At issue was whether the 1906 instrument, dated July 9, 1906, was an oil and gas or a mineral deed and what effect, if any, the 1908 release had upon the 1906 instrument.

The trial court determined that the 1906 instrument and the 1908 release were ambiguous when construed together and that extrinsic evidence was admissible to determine the parties’ intent.  The trial court determined that the 1908 release was intended to, and did in fact, release the 1906 instrument.  Thus, the one-half mineral interest reverted to the grantors in the 1906 instrument.

1906 Instrument

Appellees contended that the 1906 instrument was an oil and gas lease or, the alternative, that if the instrument were a mineral deed then the minerals reverted back to the grantors because of a failure of consideration.  Both arguments were accepted by the trial court, but rejected on appeal.

The appellate concluded that the instrument was a mineral deed, not a lease.  This conclusion was based on the plain language of the 1906 instrument which purported to grant the minerals to the grantee without any condition or limitation placed on the grant.  The appellate court explained that the trial court erred by construing the 1906 instrument and the 1908 release together in order to find them both ambiguous and then permitting parol evidence.  The appellate court explained that the 1906 instrument should have been reviewed by itself (ie, the “four corners rule”), which resulted in the instrument being found unambiguous.

After concluding that the 1906 instrument was a mineral deed (not a lease), the court turned to the Appellees’ alternative theory that had also been accepted by the trial court.  By way of the alternative theory, Appellees argued that a conveyance by deed should declared void for failure of the stated consideration.  Specifically, Appellees claimed that the deed required certain actions be taken by the grantees in consideration for the grant, but that these actions never occurred.  This theory was also rejected.  Although the appellate court noted that the original grantors could have plausibly brought suit to set aside the deed if there was a  failure of consideration, it was telling that no suit was ever brought.  Because the original grantors did not bring suit (or anyone else that would have had personal knowledge of the transaction) the court concluded that the deed was enforceable.

1908 Release

Appellants contended that the 1908 release refers to an unrecorded oil and gas lease while the Appellees contended that the release related to the 1906 instrument.  The full language of the 1908 release is as follows:

WHEREAS on the 9th day of July A.D. 1907, R.E. Mills, Tom Hills and Sam Mills executed and delivered to the Nacogdoches Land Company, a firm composed of Robt Lindsey and June C. Harris, a certain contract or lease covering land described in said contract or lease, a part of the John Cooper, T.J. Cooper and the M.J. Mills surveys in Nacogdoches County, Texas, providing for the development and exploitation of said property for oil and other mineral, and

WHEREAS by the terms of said contract or lease the time for said development has expired rendering null and void said lease.

THEREFORE this is to acknowledge a full and complete release and relinquishment of my right or claim held or claimed by Nacogdoches Land Co., Robt. Lindsey or June C. Harris by virtue of said contract, lease or agreement, and the same is hereby declared to be extinguished and of no further force or effect.

The court examined the 1908 release to determine if it connected itself with an unrecorded oil and gas lease or the 1906 instrument.  Upon review, the court concluded that the recital in the 1908 release did not reference the 1906 mineral deed because, among other things, (i) the 1908 release states that it is releasing an instrument dated July 9, 1907, not 1906; (ii) the 1908 release refers to the document being released as a “contract” or “lease,” not a “deed;” (iii) the 1908 release provided that the term to development had “expired,” but there was no such term in the 1906 instrument; (iv) and the “grantee” referenced in the 1906 instrument was different than the grantee in the instrument that was released.

Based on these numerous differences, the court held that the 1906 instrument and 1908 release were unambiguous on their face and that the 1908 release refers to some instrument other than the 1906 instrument and could not be construed to affect the 1906 mineral conveyance.

Accordingly, the Tyler Court of Appeals reversed the trial court’s judgment, rendered judgment that the Appellees take nothing, and that no minerals reverted to their predecessors from the 1906 instrument.

Ian McNeill
Ian McNeill's practice focuses on the oil and gas industry advising clients on division orders, title defects, curative requirements, royalty and rental issues as well as lease maintenance provisions and assignments analysis. Ian has also rendered division order opinions and title opinions involving complex ownerships, leases held by production, depth and mineral severances and pooling agreements in Texas and Ohio.
Ian McNeill

Footnotes   [ + ]

© Copyright 2014, Austin W. Brister. All Rights Reserved. DISCLAIMER: The information in this article is for general information purposes only. This article should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading this article does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided in this article.
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