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James H. DAVIS d/b/a JD Minerals, Walter Allison Baen, Santos J. Dominguez, and Dixie L. Hester, Appellants, v. COG OPERATING, LLC, Neal Brusenhan Properties, LP; Neal Brusenhan Management, LLC, as General Partner of Neal Brusenhan Properties, LP; Robert L. Neal as Trustee of the Neal Robert L. Management Trust; and Jesse Frances Neal, Appellees.
In this appeal we are asked to construe a 1939 warranty deed entered into between Andreas Sessler and his wife, Johanna Sessler, as grantors, and Dora Roberts as grantee. The deed is four paragraphs long, and while no party claims it is ambiguous, the parties disagree about whether a 1/4 nonparticipating royalty interest (NPRI) was reserved. The subject property is a section of land in Upton County, Texas (Section 45).1 Appellants James H. Davis d/b/a JD Minerals, Walter Allison Baen, Santos J. Dominguez and Dixie L. Hester, (collectively, Appellants or the Sessler Successors 2 ), challenge the trial court's grant of summary judgment in favor of Appellees, Neal Brusenhan Properties, LP, Neal Brusenhan Management, LLC as General Partner of Neal Brusenhan Properties, LP, Robert L. Neal as Trustee of the Neal Robert L. Management Trust, and Jessie Frances Neal (collectively, the Neals) and COG Operating, LLC (COG)3 . We reverse and render in part, and reverse and remand in part.
I. FACTUAL & PROCEDURAL BACKGROUND
A. The relevant factual history
The parties agree that Andreas Sessler and his wife, Johanna, purchased the entire surface and mineral estate of Section 45 from Volney Johnson in 1908. In March 1926, the Sesslers signed a mineral lease in favor of F. K. Campbell covering Section 45 (the Campbell Lease). Later that year, on November 1, 1926, the Sesslers executed an instrument titled “ROYALTY DEED” (the 1926 Deed), which conveyed part of their interest in Section 45 to W. H. Haun. Then, on May 3, 1939, the Sesslers executed an instrument titled “WARRANTY DEED” (the 1939 Deed), which purported to convey to Roberts the remainder of their interest in Section 45, except for a 1/4 NPRI. The 1939 Deed to Roberts twice mentioned an interest in the land had previously been conveyed to Haun.
From briefing, it appears that Haun and his successors-in-interest have been paid 1/4 of all mineral royalties since the 1926 Deed was executed. Haun's successors are not a party to this case, and neither the Sessler Successors nor the Neals argue those payments were incorrect, or that any future payments should change. Since the execution of the 1939 Deed, the remaining 3/4 of the royalties have been paid to Roberts and her successors including the Neals, while no royalties have been paid, since 1939, to the Sesslers, or their heirs or successors.
In 1984, a number of the Sessler descendants (the Sessler Heirs) sent, through their attorney, a letter to Saxon Oil, who was at that time the mineral lessee of Section 45. The letter asserted claims to the Sessler NPRI under the 1939 Deed. In three letters from late 1984 and early 1985, Saxon Oil responded, disputing the Sessler Heirs’ claims. The Sessler Heirs themselves never pursued legal action regarding the Sessler NPRI after that time.
In 2017 and 2018, some of the Sessler Heirs sold their claimed interest in the Sessler NPRI to the Sessler Successors. The Sessler Successors notified COG Operating, LLC, lessee of Section 45's minerals, and the Neals of their claim to part of the Sessler NPRI. Like Saxon Oil in 1984, COG did not recognize the Sessler NPRI.
B. The procedural history
On April 13, 2018, the Sessler Successors filed the underlying lawsuit against the Neals and COG. Amended petitions soon followed. Eventually, the Sessler Successors’ live pleading alleged ownership of a portion of the Sessler NPRI along with eleven related causes of action asserted as follows: five against the Neals only, three against COG only, and four against both.4 The Sessler Successors’ first cause of action sought a declaratory judgment, asking the trial court to determine the ownership rights under the deeds executed with some of the Sessler Heirs in 2017 and 2018, and as potential third-party beneficiaries under COG's oil-and-gas lease from the Neals. The Sessler Successors’ second cause of action was a trespass-to-try-title claim against the Neals only, alleging they “wrongly asserted possession over [the Sessler Successors’] interest” in a portion of the Sessler NPRI. The remaining ten causes of action included conversion, unjust enrichment, money had and received, breach of contract, tortious interference with an existing contract, breach of fiduciary duty, breach of the duty of good faith and fair dealing, unpaid royalties, negligence, and conspiracy.
Eventually, the Sessler Successors, the Neals, and COG each filed various competing motions for summary judgment. The trial court heard the Neals’ and Sessler Successors’ motions for summary judgment on November 18, 2019. On February 27, 2020, the trial court granted summary judgment on all claims in favor of the Neals and denied the Sessler Successors’ motion for summary judgment. COG's motion for summary judgment was then heard on August 18, 2020. Days afterwards, the trial court issued a Final Summary Judgment (the Order), in which the court reiterated its ruling on the Neals’ and Sessler Successors’ cross-motions for summary judgment and further granted summary judgment in favor of COG, rendering a take nothing judgment against the Sessler Successors’ claims against COG. This appeal followed.
After this appeal was initiated, but while the trial court retained plenary power, it changed course regarding the claims against COG, granting the Sessler Successors’ motion to sever and abate defendant COG. As a result of that order, the trial court reinstated the Sessler Successors’ claims against COG under a new case number but then abated that case “until such time as a final determination as to title is had or a settlement agreement as to title has been made.” This appeal followed.
Appellants raise four issues, a primary issue followed by three contingent issues. As a primary issue, Appellants contend they own—under the 1939 Deed—a portion of the Sesslers’ NPRI based on well-established principles of deed construction. As part of that issue, they assail the application of the Duhig doctrine, the presumed-grant theory, and time limitations, which are all grounds relied upon by Appellees to oppose their title claim. In Appellants’ three contingent issues, they contend that fact issues remain—ancillary to the title issue—but those issues can be remanded for disposition by the trial court.
We begin with the primary issue of the appeal.
A. Whether Appellants own a portion of the Sesslers’ 1/4 NPRI
In their first issue, Appellants contend they conclusively established as a matter of law an undisputed chain of title to the Sessler NPRI.
1. Standard of review
We review a trial court's summary judgment de novo. Provident Life & Accident. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A traditional summary judgment is proper when a movant establishes that no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c). When reviewing a traditional summary judgment, we take as true all evidence favorable to the nonmovant. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When, as here, the parties file competing motions for summary judgment and the trial court grants one motion and denies the other, we consider the evidence presented by both sides, determine all questions presented, and render the judgment the trial court should have rendered. Id.
2. Applicable law
a. Mineral interests overview
“An instrument conveying land in fee simple transfers both the surface estate and all minerals and mineral rights, unless the instrument contains a reservation or expresses a contrary intention.” Hysaw v. Dawkins, 483 S.W.3d 1, 8 (Tex. 2016) (citing Schlittler v. Smith, 101 S.W.2d 543, 544 (Tex. 1937)). The mineral estate includes five severable rights: “1) the right to develop, 2) the right to lease, 3) the right to receive bonus payments, 4) the right to receive delay rentals, and 5) the right to receive royalty payments.” French v. Chevron U.S.A. Inc., 896 S.W.2d 795, 797 (Tex. 1995). With regard to these differing mineral rights, the holder of the leasing privilege is the executive-interest holder. Hysaw, 483 S.W.3d at 9. That mineral right holder enjoys the exclusive right to make and amend mineral leases. Id. In that role, the executive negotiates for the payment of bonuses, delay rentals, and royalties, subject to a duty of utmost good faith and fair dealing to non-executive interest holders. Id. “In Texas, a typical oil and gas lease actually conveys the mineral estate (less those portions expressly reserved, such as royalty) as a determinable fee, with the possibility of reverter as a future interest.” Id. (citing Luckel v. White, 819 S.W.2d 459, 464 (Tex. 1991)).
“A royalty interest derives from the grantor's mineral interest and is a nonpossessory interest in minerals that may be separately alienated.” Id. When a party possesses a royalty interest that does not include other attributes, such as the right to lease the mineral estate, or the right to receive delay rentals or bonus payments, it is referred to as a non-participating royalty-interest—that is, an NPRI. Id. Royalty interests, including NPRIs, may be fixed (fractional) royalties or floating (fraction of) royalties. Id. at 11. A fixed royalty “remains constant regardless of the amount of royalty contained in a subsequently negotiated oil and gas lease.” Coghill v. Griffith, 358 S.W.3d 834, 838 (Tex. App.—Tyler 2012, pet. denied). A floating royalty, in contrast, “varies in accordance with the size of the landowner's royalty in a mineral lease and is calculated by multiplying the fraction in the royalty reservation by the royalty provided in the lease.” Hysaw, 483 S.W.3d at 9 (internal quotation marks omitted).
b. Double fractions and differing fractions
In the era including the 1920s and 1930s, the prevailing landowner's royalty in oil-and-gas leases would provide for a 1/8 royalty. Concord Oil Co. v. Pennzoil Exploration and Prod. Co., 966 S.W.2d 451, 457 (Tex. 1998); Luckel, 819 S.W.3d at 462. The Texas Supreme Court even took judicial notice of this practice given its prevalence during that period. See Garrett v. Dils Co., 299 S.W.2d 904, 907 (Tex. 1957); see also State Nat. Bank of Corpus Christi v. Morgan, 143 S.W.2d 757, 761 (Tex. 1940) (“The fact stated in the foregoing quotation, that the usual royalty in oil and gas leases is 1/8, is in our opinion one so generally known that judicial knowledge may be taken of it.”). It was not until the mid-1970s that leases containing royalties larger than 1/8 became more commonly seen. See Graham v. Prochaska, 429 S.W.3d 650, 657 (Tex. App.—San Antonio 2013, pet. denied). Texas courts have recognized that the common use of 1/8 royalty “has sometimes created confusion in the construction of deeds from that period, where the use of conflicting fractions suggests the parties mistakenly assumed the landowner's royalty would always be one-eighth.” Id. The confusion commonly led lessors to think that, after executing an oil-and-gas lease, they had conveyed 7/8 of the minerals to the lessee and retained 1/8 for themselves. Id. In actuality, “the lessor has conveyed all the mineral estate (8/8) but has retained a possibility of reverter in the entire mineral estate (8/8),” in addition to all other rights bargained for in the lease, such as royalties, delay rentals, and bonuses. Concord Oil, 966 S.W.2d at 460.
A decision of the Supreme Court of Texas—in a case decided during that era and a few years prior to the signing of the deed at issue here—went so far as to say that, when describing mineral interests in a deed, multiplying the fraction of mineral ownership to be conveyed by 1/8 was the proper method of conveyance when a mineral lease remained outstanding at the time of the grant. See Tipps v. Bodine, 101 S.W.2d 1076, 1079 (Tex. 1936). There, Tipps, an owner in fee simple to a certain tract of land, had executed an oil-and-gas lease providing for the customary 1/8 royalty. Id. at 1076. Months later, Tipps executed a mineral deed in favor of Bodine that purported to “grant, sell, convey, assign and deliver ․ an undivided 1/16 interest in and to all of the oil, gas and other minerals in and under ․” Id. When royalties were set to be paid out, Tipps began receiving 15/16 of the royalties, and Bodine received 1/16. Id. at 1077. Bodine, believing she had purchased a half-interest in the minerals, and thus, all future royalties, then filed suit. Id. The Supreme Court ultimately sided with Bodine, stating, “[n]o language has been suggested, and we know of none, that would more clearly and accurately express the intention of the parties or that would have the legal effect intended by them than that used in the deed itself thus far.” Id. at 1079. More recently, in Hysaw, the Supreme Court reiterated that “the estate-misconception theory and the historical use of 1/8 as the standard royalty may inform the meaning of fractions stated in multiples of 1/8, but these considerations are not alone dispositive.” Hysaw, 483 S.W.3d at 13.
Here, we are primarily asked to construe the 1939 Deed from the Sesslers to Dora Roberts. The parties offer differing interpretations of the nature and size of the interest conveyed and whether a certain interest was reserved. To answer that question of interpretation, however, the earlier conveyance in 1926 from the Sesslers to W.H. Haun—referenced in the 1939 Deed—remains pertinent and relevant to the parties’ claims. Over time, the waters have been muddied as to whether the 1926 Deed conveyed to Haun an interest in the mineral estate or merely a royalty interest. This confusion arises in part due to the contradiction between the title of the 1926 Deed and the corresponding language used in the body of the instrument.
a. Principles of deed construction
When construing the language of a deed, we must first address whether it is ambiguous. Determining whether a deed is ambiguous is a question of law for the court. ConocoPhillips Co. v. Koopman, 547 S.W.3d 858, 874 (Tex. 2018). Ambiguity does not arise merely because parties assert differing interpretations. N. Shore Energy, L.L.C. v. Harkins, 501 S.W.3d 598, 602 (Tex. 2016). If the language of a deed can be given a certain or definite meaning, then the deed is not ambiguous. Endeavor Energy Res., L.P. v. Discovery Operating, Inc., 554 S.W.3d 586, 601 (Tex. 2018). Ambiguity only arises where a deed is susceptible to two or more reasonable interpretations. ConocoPhillips, 547 S.W.3d at 874.
Construing an unambiguous deed is also a question of law for the court. See Altman v. Blake, 712 S.W.2d 117, 118 (Tex. 1986). We apply our own judgment and give no deference to the trial court's decision. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998). Our primary duty is to ascertain the intent of the parties from all the language found in the four corners of the deed itself. Luckel, 819 S.W.2d at 461. We examine the entire instrument, seeking to harmonize and give effect to each provision so that none are rendered meaningless. Id. at 462; Altman, 712 SW.2d at 118. To discern intent, we construe words and phrases together and in context, not in isolation. Hysaw, 483 S.W.3d at 13. Although surrounding circumstances may inform the meaning of words, we may not use those facts and circumstances to “make the language say what it unambiguously does not say or to show that the parties probably mean, or could have meant, something other than what their agreement stated.” URI, Inc. v. Kleberg Cnty., 543 S.W.3d 755, 757 (Tex. 2018).
b. Construing the 1926 and 1939 Deeds
i. The 1926 deed
To aid in the construction of the 1939 Deed, we first clear up the lingering confusion as to the 1926 Deed. Although the 1926 Deed is titled, “Royalty Deed,” Texas courts look to the language of the deed itself, not merely its title, when determining the nature and character of interests conveyed. See Reed v. Maltsberger/Storey Ranch, LLC, 534 S.W.3d 51, 64 (Tex. App.—San Antonio 2017, pet. denied). Relevant to this case, the 1926 Deed provides as follows:
That We, Andreas Sessler and wife Johanna Sessler ․ have and by these presents, do grant, bargain, sell, convey, set over and assign, and deliver unto W.H. Haun the following to-wit:
1/32 interest in and to all of the oil, gas, and other minerals, in and under and that may be produced from [Section 45] together with the right of ingress and egress at all times for the purpose of mining, drilling and exploring said lands for oil, gas and other minerals, and removing the same therefrom.
And said above described lands being now under an oil and gas lease originally executed in favor of F.K. Campbell, and now held by said Campbell et al it is understood and agreed that this sale is made subject to the said lease, but covers and includes 1/4 of all the oil royalty and gas rentals, or royalty due and to be paid under the terms of said lease.
It is agreed and understood that 1/4 of the money rentals, which may be paid to extend the terms within which a well may [ ] begin under the terms of said lease is to be paid to said W.H. Haun, and in the event that the said above described lease for any reason becomes cancelled or forfeited, then and in that event, the lease interests and all future rentals, on said land, for oil, gas and mineral privileges shall be owned jointly by the said Sessler, [ ], each owning 1/4 interest in all oil, gas and other minerals, in and upon said land together with their record 1/4 interest in all future rents.
This deed is made in place of and is a deed of correction by the grantors herein to grantee, ․ 1926, ․ whereas, in said deed or conveyance by error or mistake the interest owned by said grantee was specified as being 1/8 of said oil, gas and royalty etc., when in truth and in fact the said interest and oil, gas and royalty conveyed unto the said grantee was and is 1/4 therein, and this instrument is made by grantors and so accepted by grantee herein in order to correct said mistake, and in all other respects confirming said former deed and sale.
Traditionally, the language used to create an interest in the mineral estate—as opposed to merely an interest in the royalties only—is a reference to the oil, gas, and other minerals “in and under” the described land. Reed v. Maltsberger/Storey Ranch, LLC, 534 S.W.3d 511 (Tex. App.—San Antonio 2017, pet. denied); Garza v. Prolithic Energy Co., 195 S.W.3d 137, 142 (Tex. App.—San Antonio 2006, pet. denied); Laura H. Burney, Interpreting Mineral and Royalty Deeds: The Legacy of the One-Eighth Royalty and Other Stories, 33 St. Mary's L.J. 1, 30-31 (2001). On the other hand, a royalty is “typically created simply by using the word ‘royalty.’ ” Id. § 3–22.4. Even where a deed uses “in and under” language, but then goes on to take away certain traditional rights of mineral fee ownership, the deed conveys an interest in the mineral estate less those rights specifically excluded. See Altman, 712 S.W.2d at 119-20 (holding that the interest conveyed was an interest in the mineral estate because it used “in and under” language, even though it specifically stripped the grantee of the rights to enter leases or receive delay-rental payments).
In the 1926 Deed, the Sesslers used “in and under” language, and the deed does not purport to strip Haun of any of the traditional interests included in the mineral estate. Read as a whole, and notwithstanding the title of the deed itself, we determine the 1926 Deed clearly and unambiguously conveyed an interest in the mineral estate itself, not merely a royalty interest.
Having addressed the nature of the interest, we next consider the conflicting fractions that appear in the terms of the instrument. The Neals argued in the court below that the 1926 Deed effectively conveyed two interests: first, a 1/32 interest in the mineral estate; and second, a 1/4 royalty interest. We disagree. This “two-grant” theory surrounding deeds of this era has been rejected by the Supreme Court of Texas. See Concord Oil, 966 S.W.2d at 457 (holding a deed conveyed a single interest where the opening paragraph of the deed described a 1/96 interest in the “estate” and the second paragraph stated the interest “covers and includes one-twelfth (1/12) of all rentals and royalty of every kind and character”).
Here, the 1926 Deed fits the structure and pattern of the deed in Concord Oil: the 1/32 fraction found a single time in the granting clause represents exactly 1/8 of the 1/4 interest used in the rest of the deed to describe the mineral interest conveyed. And, here, the 1/4 fraction is used four times throughout the remainder of the deed applied to: (1) “all the oil royalty and gas rentals,” (2) “the money rentals,” (3) “interest in all oil, gas and other minerals,” and (4) “interest in all future rents.” Like the holding in Concord, we determine here the intent of the parties to the 1926 Deed was to convey one interest only: a 1/4 interest in the mineral estate, not two separate interests.
ii. The 1939 Deed
Thirteen years later—and a few years after the Supreme Court's opinion in Tipps—the Sesslers executed the 1939 Deed in favor of Roberts. The 1939 Deed contains four paragraphs. The first paragraph identifies the parties, states the consideration paid, includes granting language, describes the property according to its block and section in the Texas and Pacific Railway Company Survey, and further includes identification of the property by metes and bounds. By the granting clause, the Sesslers conveyed, “all that certain tract, parcel and piece of land ․ in the County of Upton and State of Texas, and being all of [Section 45][.]” Following that clause, the second paragraph contained the following exception for the interest in the property previously conveyed to Haun:
It is understood, however, that 1/32 of the oil, gas and other minerals has heretofore been conveyed to W. H. Haun, and this conveyance does not include such mineral interests so conveyed;
Next, the third paragraph states:
It is further understood and agreed that we [the Sesslers] reserve unto ourselves, our heirs and assigns, one-fourth (1/4) of the 1/8 royalty usually reserved by and to be paid to the land owner in event of execution of oil and gas leases, so 1/4 of the 1/8 royalty to be paid to us, our heirs or assigns, if, as and when produced from the above described land, but it is understood that the mineral interest so reserved by and for us is a royalty interest only and in the event said land shall be leased for oil and gas, we are not to participate in any down payment, bonus or rentals, nor will it be necessary, in order to make a valid oil and gas lease on said land, that we join in said lease, but in case of production, we are to receive 1/4 of the 1/8 royalty, and this conveyance is executed subject to the mineral interest heretofore conveyed to W. H. Haun, and also to the 1/4 royalty interest reserved by us as hereinbefore stated.
Finally, the fourth paragraph contains language conveying the property interest in fee-simple, as well as other warranty language.
Here, no party asserts the 1939 Deed is ambiguous. As a preliminary matter, we agree with that determination. However, despite a lack of ambiguity, questions of interpretation arise, particularly with regard to the deed's use of a 1/32 fraction to describe the interest previously conveyed to Haun. The Sessler Successors argue the second paragraph of the 1939 Deed effectively put Roberts on notice of Haun's pre-existing interest in the mineral estate resulting from the conveyance in the 1926 Deed. In the era of the 1926 and 1939 deeds, they argue that “drafters commonly expressed the size of an undivided mineral interest conveyed or reserved as multiples of the once-common 1/8th landowner's lease royalty.” Countering, the Neals argue the parties to the 1939 Deed—the Sesslers and Roberts—intended a literal meaning of the 1/32 fraction and, consequently, that Roberts was not put on notice of the extent of Haun's ownership.
The Sesslers’ and Roberts’ intent behind the use of the 1/32 fraction in the 1939 Deed turns on whether they were operating under an estate-misconception. If they were not, then the Sesslers failed to provide adequate notice to Roberts of the extent of their prior conveyance to Haun. However, if Roberts and the Sesslers were operating under the estate-misconception, Roberts would have understood this paragraph to mean the Sesslers had previously conveyed a 1/4 interest in the minerals to Haun. As evidenced by the plain language of the 1939 Deed itself and its context, we determine the parties were operating under the estate-misconception.
We reach this conclusion for three reasons. First, we consider the date of the deed: 1939. This date places the deed during the height of the period when the estate-misconception was prevalent. In fact, it was executed only three years after Tipps, where the Supreme Court of Texas sanctioned the multiplication of fractional mineral ownership by 1/8 when the land was currently subject to an oil-and-gas lease. See Concord Oil, 966 S.W.2d at 464–65. Second, we note 1/32 is a product of multiplying 1/4 of 1/8. As the Supreme Court has recently noted, “though not inexorably so, the reality is that use of 1/8 (or a multiple of 1/8) in some instruments undoubtedly embodies the parties’ expectation that a future lease will provide the typical 1/8th landowners’ royalty ․” Hysaw, 483 S.W.3d at 10. Third and finally, we look at the use of a double fraction in the reservation found in the third paragraph of the deed. In Hysaw, the Supreme Court cited favorably to secondary-source material linking double fractions—especially where one fraction is 1/8, as is the case here—to the estate-misconception. Id. at 10–11 (citing 2 Howard R. Williams & Charles J. Meyers, Oil and Gas Law § 327.2, at 90-91 (Patrick H. Martin & Bruce M. Kramer eds., 2015)).
Of course, neither the date of the deed, the fact that 1/32 is a multiple of 1/8, or the use of a double fraction alone demonstrate conclusively that the parties were operating under the misconception. However, viewing the deed as a whole, taking these three indications together, and harmonizing the deed's plain language within its applicable context, as we must, we determine that Roberts and the Sesslers executed the 1939 Deed under the estate-misconception. And in light of the estate-misconception, we determine the parties’ intent behind the second paragraph of the 1939 Deed was to place Roberts on notice that the conveyance excluded the 1/4 interest in the mineral estate which had been previously conveyed to Haun.
As for the third paragraph, the Sesslers expressly reserved, for themselves and their heirs and successors, a floating, 1/4 NPRI in Section 45. As stated above, “[a] party possessing a royalty interest that does not include the right to lease the mineral estate, receive delay rentals, or bonus payments is referred to as a non-participating royalty-interest holder.” Hysaw v. Dawkins, 483 S.W.3d 1, 9 (Tex. 2016). Here, the third paragraph unequivocally reserves a royalty interest that is explicitly detached from the rights to lease, to receive bonus payments, and to receive delay rentals. The plain language of the third paragraph also makes clear that it is describing a different and separate interest than that described in the second paragraph. The third paragraph begins with the phrase, “[i]t is further understood ․” The use of the word “further” shows that what is described thereafter is something different from what was described before. Additionally, the end of the third paragraph, the deed reiterates the conveyance to Roberts is subject to both Haun's fractional mineral ownership and Sessler's NPRI.
Before concluding, however, we must first consider several arguments advanced by the Neals.
c. Applicability of certain doctrines and defenses
i. The Duhig doctrine
The Neals argue the Sesslers’ reservation of a one-quarter floating NPRI was an overconveyance because they had already sold the same 1/4 interest to Haun. To support that argument the Neals rely on the Duhig doctrine, which originates from a decision of the Supreme Court of Texas in Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (Tex. 1940). In Duhig, the grantor owned the surface estate and a one-half interest in the mineral estate of a tract of real property, having conveyed the other half of the mineral estate to a purchaser years earlier. 144 S.W.2d at 878. The grantor purported to convey the surface estate and the mineral estate to a subsequent purchaser by warranty deed, while attempting to reserve a one-half interest in the mineral estate for himself. Id. The reservation stated that “it is expressly agreed and stipulated that the grantor [Duhig] herein retains an undivided one-half interest in and to all mineral rights or minerals of whatever description in the land.” Id. at 879. But the deed to the subsequent purchaser did not mention the prior owner's one-half reservation, nor did it make any indication that Duhig did not own all the minerals. See id.
The Supreme Court of Texas explained that Duhig breached his general warranty in the deed to the subsequent purchaser by appearing to convey more than he owned. Instead of requiring Duhig to pay damages for the shortfall in his warranty, the Court held that the subsequent purchaser had good title to Duhig's reservation of 1/2 of the minerals because it was the very interest required to remedy the breach of warranty. Id. at 880. The Supreme Court has recently held that Duhig stands for the limited proposition that “if a grantor reserves an interest and breaches a general warranty at the very time of execution, then an immediate passing of title is triggered to the grantee for that property that was described in the reservation—in other words, if the grantor owns the exact interest to remedy the breach at the time of execution ․” Trial v. Dragon, 593 S.W.3d 313, 319 (Tex. 2019) (citing Duhig, 144 S.W.2d at 880).
The Sessler Successors argue Duhig has never been—and cannot be—applied to non-possessory royalty interests. They further argue Duhig is not applicable because the Sesslers reserved a completely different interest for themselves in the 1939 Deed than what they had previously conveyed to Haun in 1926. Finally, they argue the 1939 Deed put Roberts on full notice of the Sesslers’ prior conveyance to Haun and that Roberts’ interest was subject to the prior conveyance to Haun and the Sesslers’ reservation of a 1/4 NPRI.
Even if we assume without deciding the Duhig doctrine can be applied to royalty interests, and it did not matter that the interest reserved in the 1939 Deed was of a different character than the interest conveyed to Haun in 1926, we still cannot say that the Sesslers purported to convey more to Roberts than they owned. At the outset, we must note that nowhere in the 1939 Deed did Sessler purport to convey a 3/4 interest in future royalties. We must also note that, unlike in Duhig, the deed here does mention the Sesslers’ prior conveyance to Haun. Because the second paragraph of the 1939 Deed gave Roberts notice of Haun's 1/4 interest in the mineral estate, and the third paragraph further reserved a 1/4 NPRI for the Sesslers, there are two separate interests described by the deed's terms. The conveyance to Roberts was made subject to both and the Duhig doctrine does not apply.
ii. The presumed grant doctrine
The Neals also point out that for over 80 years, they and their predecessors have asserted themselves as the owners of a 3/4 royalty interest in Section 45. As a result, they argue, the presumed-grant doctrine supports the trial court's summary judgment on the Sessler Successors’ trespass-to-try-title claim. We disagree. As the Neals point out, the doctrine exists as an equitable device to “settle titles where the land was understood to belong to one who does not have a complete record title[ ] but has claimed a long time.” Conley v. Comstock Oil & Gas, LP, 356 S.W.3d 755, 765 (Tex. App.—Beaumont 2011, no pet.) (citing Purnell v. Gulihur, 339 S.W.2d 86, 92 (Tex. App.—El Paso 1960, writ ref'd n.r.e.)). However, the very cases the Neals cite to indicate the presumed-grant doctrine is only used as a presumption of ownership where there is a gap in title, particularly regarding ancient documents, usually from the nineteenth or very-early twentieth centuries at the latest. Conley, 356 S.W.3d at 765.
Here, the parties agree on the chain of title for Section 45 up until the 1939 Deed, and, although the parties disagree on the effect of that instrument, there are no gaps in any party's title after that conveyance. Thus, the presumed grant doctrine has no applicability here; the Sessler Successors have clear record title to their proportional share of whatever the Sesslers owned immediately after their 1939 conveyance to Roberts. Because we have already determined the Sesslers effectively reserved a 1/4 NPRI in Section 45, the Sessler Successors hold clear title to their share of that NPRI.
iii. The statute of limitations and doctrine of laches
Finally, to the extent the Neals argue the Sessler Successors trespass-to-try-title claim is barred by a limitations or laches defense, we disagree. While various statutes of limitation and the doctrine of laches may apply to some of the Sessler Successors’ other claims, neither applies to a trespass-to-try-title action where the plaintiff's right is based on legal title. See Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 80 (Tex. 1989).
In sum, we conclude the Sesslers effectively placed Roberts on notice of Haun's ownership interest in the 1939 deed, and in that same deed, the Sesslers reserved a separate 1/4 NPRI in Section 45. We have also determined the Sesslers did not breach their warranty to Roberts, and thus the Duhig doctrine is inapplicable here. Finally, we have determined that, because the Sessler Successors have clear title to a portion of the Sesslers’ NPRI, the presumed-grant doctrine, statute of limitations, and laches, are all inapplicable.
Accordingly, we conclude the trial court erred in granting the Neals several motions for partial summary judgment, while denying the Sessler Successors’ cross motion for partial summary judgment. Thus, we sustain the Sessler Successors’ first issue.
B. The remaining three issues
In addition to dismissing the trespass-to-try-title claim, the trial court's order also rendered a take nothing judgment against the other eight claims filed by the Sessler Successors against the Neals. The order itself, however, does not explicitly indicate whether such claims were adjudicated based on the trial court's ruling on the trespass-to-try-title claim, or whether the court rendered judgment on those claims individually based on the merits. At the end of the hearing of November 18, 2019, which was held on the Neals’ and Sessler Successors’ competing motions for summary judgment, the following exchange occurred between the trial court and counsel for the Neals (Mr. Baker):
Mr. Baker: The reason we agreed with the Plaintiffs to do this dispositive hearing now is because we both agree that the -- how the Court rules on the title questions will effect what we do later in the case.
The Court: Okay.
Mr. Baker: For instance, if their claims survive, then we're going to have to do a lot of discovery and we're going to have to have a trial. If we prevail on the title questions, then it's basically going to be a matter of appeal at that point.
At the August 19, 2020 hearing on COG's motion for summary judgment, the following exchange occurred between the trial court and counsel for the Sessler Successors (Mr. Benton):
Mr. Benton: ․ I think he [counsel for COG] stated it properly that we did have, basically, two parts. This is a very complex title issue and the first part of the litigation that needs to be held on -- the first part that needs to be discerned would be the title, and so, obviously, if plaintiffs are not awarded title, we have no causes of action against the operators, which would be COG.
Now, there's a plethora of issues of why we're here. One being is we tried to work with COG and sever them out because the only way that we can only address title would be to sever them out, you know. So we can't take that up until we have either a final unappealable [sic] judgment as to title or a settlement agreement between the parties, which neither has happened.
So we could just address title, we approached them [COG] to try to avoid this whole hoopla to sever them out, but for whatever reason, they decided they weren't agreeable to that, but now we move forward, and because I would like to point out to the Court, it's very complex in that the Neal defendants have asserted a plethora -- a slew of equitable defenses and statutory defenses and plaintiffs don't have an understanding of what the Court's ruling was, whether it was based on one of their equitable defenses or anything like that.
So I can narrow the scope of this argument to that because, first of all, its title, then it goes to -- you know, if we have title, the bad actions by the Neal defendants.
So that this Court could address the title issue only, counsel for the Sessler Successors suggested the Court sever the claims against COG into a separate case, which would make the trial court's earlier summary judgment on the claims against the Neals final and appealable. Initially, the trial court took a different path after the August 19, 2020 hearing, choosing instead to grant summary judgment in favor of the Neals and COG. However, after filing this appeal, but while the trial court still had plenary power, the Sessler Successors filed a motion to reinstate their claims against COG, sever them into a new cause of action, and abate those claims pending this appeal. That motion was granted.
When the trial court reinstated, severed, and abated the claims against COG, it explicitly stated in its order that the case between the Sessler Successors and COG would remain abated “until such time as a final determination as to title is had or settlement as to title has been made. If the underlying case is remanded to this Court from the appellate courts, the [case against COG] shall be consolidated with the underlying case [against the Neals] for disposition.”
The record indicates the trial court has not considered the merits of the other eight claims against the Neals or the seven claims against COG; instead, the trial court rendered judgment on the other eight claims against the Neals simply because it determined the trespass-to-try-title issue in favor of the Neals. Because we have reversed the trial court's summary judgment on the trespass-to-try-title claim and rendered summary judgment on that issue in favor of the Sessler Successors, we agree the claims ancillary to title should be remanded to the trial court for disposition. Therefore, we do not reach the Sessler Successors’ second, third, or fourth issues challenging whether fact issues existed on the remaining claims against the Neals or COG.
Based on the foregoing, we reverse and render in part, and reverse and remand in part. We reverse the trial court's partial summary judgment in favor of the Neals on the trespass-to-try-title claim and render summary judgment on that claim in favor of the Sessler Successors. Additionally, we reverse and remand the trial court's summary judgment in favor of the Neals on the Sessler Successors’ other eight claims for further proceedings consistent with this opinion.
1. The legal description of the subject property, taken from the 1939 warranty deed, is as follows: “Section No. Forty-five (45), in Block No. Forty (40), Township 5-South, Certificate No. 5556, T. & P. Ry. Co. Survey ․”
2. As their shorthand name indicates, the Sessler Successors are some of the successors-in-interest to the Sesslers; the Neals are successors-in-interest to Roberts.
3. After this appeal was filed, the trial court reinstated the claims against COG, severed them into a new cause of action, and abated that action pending the resolution of this appeal.
4. As of the date of filing, the live pleading asserted the plaintiffs were record title holders of 34/40ths of the Sessler NPRI, amounting to a 34/320th floating NPRI in the property.
GINA M. PALAFOX, Justice
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Docket No: No. 08-20-00205-CV
Decided: December 06, 2022
Court: Court of Appeals of Texas, El Paso.
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