Face Challenges Confidently

321 Winegar v. Martin

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.
Winegar v. Martin, 304 S.W.3d 661 (Tex App.—Fort Worth 2010, no pet.), held that a deed reserving a 1/3 royalty to grantor out of grantor’s conveyance of a 1/3 mineral interest reserved to grantor a 1/9 royalty. Grantor conveyed all of grantor’s 1/3 interest to grantee and then provided: “Out of the undivided mineral interest conveyed, Grantor reserves to himself . . . an undivided ONE-THIRD (1/3) of royalty . . . .” The issue was whether grantor owned 1/3 or 1/9 royalty

Specific rules of construction apply to cases in which a grantor owns an undivided mineral interest and reserves a fraction of that interest. . . . Courts have drawn a distinction between reservations from the land ‘conveyed’ and reservations from the land ‘described.’ . . . If a deed reserves a fraction of the minerals under the land conveyed, then the deed reserves a fraction of the part of the mineral interest actually owned by the grantor and conveyed by the deed. . . . On the other hand, when the deed reserves a fraction of the minerals under the land described, then the deed reserves a fraction of the minerals under the entire tract of land, regardless of the part of the mineral estate actually conveyed.

Under these well-established rules, grantor’s interest should be only a 1/9 interest, because the interest reserved (1/3) is out of the interest conveyed (1/3), which should equal 1/9. However, the grantor attempted to distinguish this particular conveyance by arguing that he actually first conveyed his mineral interest and then reserved a royalty interest out of the mineral interest already conveyed. Grantor argued that he conveyed all of his 1/3 interest in the minerals, including the rights to develop, lease, receive bonus payments, receive delay rentals, and receive royalty payments (the entire bundle of sticks), and then he reserved one of those sticks out of the bundle (i.e., the entire royalty interest of 1/3). The court held that the distinction did not change the result. The reservation was still 1/3 of royalty “out of the undivided [1/3] mineral interest conveyed.” In effect, the grantor reserved “a fraction-1/3-out of the entire 1/3 interest in royalty that he owned.”
The significance of the case is that it preserves the well-established rule of construction applicable to deeds by grantors owning a fractional interest who reserve a fractional interest out of the interest conveyed or the land described. The established rule of construction does not change if the interest conveyed is a mineral interest and the interest reserved is a royalty.