Face Challenges Confidently

260 Corine, Inc. v. Harris

Monday, August 31st, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
In Corine, Inc. v. Harris, 252 S.W.3d 657 (Tex. App.—Texarkana 2008, no pet.), the Harrises purchased a 528.14 acre tract of land from Marie Stevens, Mary Lou Stevens McDonald, and Judy Nell Stevens Ellis in 1970. In the conveyance to the Harrises, the three grantors retained, altogether, a 1/16 royalty interest that would last for twenty years and thereafter until there was no mineral production. In 1983, the Harrises conveyed the same land to Charles Stephens, retaining the following:
all of those royalty rights reserved by Marie Stevens, her heirs, executors and administrators, in [the 1970 deed], so that if the reversion described therein occurs, then the Grantors, their heirs, executors and administrators, will then be vested with said royalty rights described in said deed.
Corine, Inc., appellant, claimed under Charles Stephens, while Chris Harris and Jack E. Harris, Jr., Individually and as Co-Trustees under the 2004 Grady Harris Children’s Trust (collectively “Harris Interests”) stood as appellees. The substance of the 1983 reservation was the central issue of the appeal, specifically, to what extent, if any, the Harris Interests, by virtue of the 1983 reservation, own a royalty interest in the property.
The first issue was whether the language in the two deeds is ambiguous. All parties agreed that there was no ambiguity; however, they disagreed on the interpretation of the deeds. The court struggled as to whether the 1983 reservation was similarly limited as the 1970 deed was by size (1/2 of 1/8 royalty) and duration (for twenty years and so long thereafter as mineral production continues). The court’s first finding was that the Harrises’ royalty reservation adopted the size of Marie’s royalty interests but not its duration. The court stated that the 1970 deed purports to reserve a 1/16 royalty-“one-half of the usual one-eighth royalty on all oil, gas, casing head gas and gasoline.” This reservation is good for only twenty years and as long thereafter as there is production on the land. If no such production occurs, or if production ceases after that twenty-year period, then the reservation terminates and the interests reserved would revert to the Harrises, who were the grantees in the Stevens’ conveyance. The court did not find the language susceptible to more than one reasonable interpretation.
The court found that the 1983 deed specifically referred to the reservation that Marie made in 1970 and excepts it from the 1983 conveyance. Corine contended the 1983 deed conveyed fee simple in the real property from the Harrises to Stephens. The court, however, stated that Corine did not take into account that deed’s Exhibit B, which contained a list of easements and reservations which are excluded from the conveyance. The above language was included in that list of reservations. The court found that after reviewing the 1983 deed, the only interpretation was that in the Harrises’ conveyance to Stephens,  they  specifically  referenced  the  reservation  held  by  Marie  in  the  1970 conveyance and made a reservation based on that interest.
The court held, “Clearly, the 1983 deed language demonstrates the intent to reserve something. The only logical conclusion…giving meaning to all parts of the 1983 deed, is that the Harrises intended to reserve a royalty interest which was the size of Marie’s reservation but which would be applicable after Marie’s interest would terminate.” By definition, the court stated, that interest retained by the Harrises could not be burdened with the duration of Marie’s royalty interest; otherwise, the Harrises’ 1983 reservation would have been a nullity. The court, therefore, held that the 1983 reservation adopted the size of the 1970 reservation by Marie without adopting its duration.
The parties also argued over the size of the royalty interest. The Harris Interests contended that the interest should be the full 1/16 royalty interest retained in the 1970 deed; whereas, Corine contended that, if any interest remained, the size should be limited to the 1/32 interest retained by Marie. The court sided with Corine and held that the Harris Interests’ royalty should be measured by only Marie’s royalty interest. The court noted that the 1970 reservation of a 1/16 royalty was in favor of Marie (who was allocated 1/2 of it), Mary Lou (who was allotted 1/4), and Judy (who was allotted 1/4), while the 1983 reservation was defined by the 1970 reservation in favor of Marie, “her heirs, executors, and administrators.”
The court stated that ordinarily, language referring to an individual’s “heirs and assigns” is understood to describe the quality of the interest in land, as including rights of inheritance and alienability, rather than to be a literal reference to the individual’s heirs. The court held that “heirs and assigns” are words of limitation, not words of purchase. Thus, the words used in the 1983 reservation were words of limitation and did not refer to Mary Lou and Judy Nell for the purpose of incorporating their interests. The court, therefore, held that the 1983 deed reserved only a royalty interest equal to Marie’s 1/32 royalty.