BNSF Railway Co. v. Chevron Midcontinent, LP
This dispute arises from a deed executed in 1903 from W.H.C. Goode to BNSF’s predecessor covering land in Upton County, Texas. When Chevron began producing from underneath BNSF’s railway tracks, BNSF sued for trespass of title, arguing that the 1903 deed conveyed fee simple title. Chevron argues that BNSF acquired only an easement. Thus, the issue before the Court was whether the parties to the 1903 deed intended to convey fee simple title or only an easement. Although the deed contained the term “fee simple” in the habendum clause, the court ultimately decided the deed conveyed an easement because it contained terms throughout the deed that suggested the parties intended to convey only an easement.
The 1903 Deed begins with the following:
WITNESSETH, That the said party of the first [Goode], for and in consideration of One Dollar . . . And of the benefits which will accrue to the party of the first party by reason of the construction of a line of railroad over the land hereinafter described . . . Has GRANTED, BARGAINED, SOLD AND RELINQUISHED, and by these presents does GRANT, BARGAIN, SELL, RELINQUISH and CONVEY unto the said party of the second part [Panhandle], and unto its successors and assigns, for a right of way, that certain strip of land hereinafter described, as the same has been finally located over, through or across the following tracts of land situated in Upton County in the State of Texas . . .
In describing the width of the right of way, the 1903 Deed states:
The said railway right of way being 100 feet wide on each side of the center line thereof except [for certain sections where the right of way varies between 50 feet and 150 feet] . . . Said railway right of way containing an area of 28 and 55/100 acres. Together with the right and privilege of taking and using all of the wood, water, stone, timber and other materials on said strip of land, or appertaining thereto, which may be useful or convenient in the construction and maintenance of said railway or any part thereof.
The 1903 Deed contains the following habendum clause:
TO HAVE AND TO HOLD the said premises, together with all appurtenances thereunto belonging, in fee simple, unto the said part of the second part [Panhandle] its successors and assigns forever.
Chevron argues that use of the term “right of way” in the granting clause is indicative of an easement while BNSF argues that the term refers to that strip of land which railroad companies take upon which to construct their roadbed in accordance with Tex. Elec. Ry. Co. v. Neale, 252 S.W.2d 451, 454 (Tex. 1952). Refusing to draw broad conclusions, the Court recognizes that the term “right of way” can mean two different things in a railroad deed. Thus, the Court had to interpret the deed to determine whether the parties intended to convey fee title or only an easement.
The Court begins its analysis by focusing on the granting clause in accordance with the following rule set forth in Neale:[A] deed which by the terms of the granting clause grants, sells and conveys to the grantee a ‘right of way’ in or over a tract of land conveys only an easement [but] a deed which in the granting clause grants, sells and conveys a strip of land conveys the title in fee, even though in a subsequent clause or paragraph of the deed the land conveyed is referred to as a right of way.
Here, the granting clause contains both the term “right of way” and “strip of land.” Because it contains language indicative of an easement and a fee conveyance, the Court concludes that the granting clause is ambiguous.
Upon examining the remaining portions of the deed, the Court determined that the deed conveys only an easement. It supports its decision with the following factors:
- Use of the word “over” in the opening clause shows that the grantor intended to convey an easement;
- At the time the deed was written, the placement of “for a right of way” in front of the phrase “that strip of land” would have been understood as limiting the nature of any subsequently described premises;
- Use of the words “over, through and across” suggests that the parties intended to convey an easement;
- Use of the term “premises” in the habendum clause suggests that the parties conveyed only an easement; and
- “Together with the right and privilege of taking and using . . .” would not be necessary if the deed conveyed fee title because these rights would pass automatically.
The Court notes, however, that the habendum clause contains the term “fee simple,” which appears to contradict its conclusion that the deed conveys only an easement. Thus, the Court was tasked with reconciling its conclusion that the deed conveys an easement with the presence
of “fee simple” in the habendum clause. Discussing one possible way to reconcile this apparent contradiction, the Court explains that while the phrase “fee simple” is often used to explain all the rights associated with owning property, it does not necessarily only refer to the size of an estate or how many rights were conveyed in a transaction. Relying on Black’s Law Dictionary, the Court recognizes that “fee simple” also refers to how long and under what conditions a given interest in land will endure. The Court acknowledges that other states recognize the concept of an “easement in fee simple,” and have held that language mixing an easement and the phrase “fee simple” means that easement is held in perpetuity and may be disposed of at will. Thus, the Court could have adopted this approach of treating the phrase “fee simple” as a durational or conditional qualifier rather than an expression of an estate’s size to reconcile the use of “fee simple” in the habendum clause with the remaining portions of the deed that appeared to convey an easement. Although, the Court finds this approach to be “rational, intuitive, and sensible;” it recognizes that there is no Texas authority to support this approach and that this approach would conflict with Texas case law that draws a sharp distinction between easements and fee simple conveyances. Therefore, the Court ultimately does not adopt this approach.
Instead, the Court applies the guidance from the decision in Neale to conclude that the deed conveys only an easement. In applying Neale, the Court recognizes that the decision in Neale provided for rules of deed construction that are no longer followed today. The test set forth in Neale largely revolves around the granting clause. Today’s approach, however, requires a court to look at the four corners of the deed. Here, the Neale approach does not suffice because the granting clause is ambiguous. Looking at the four corners of the deed, the Court identifies the factors described above and determines that the deed conveys only an easement.