330 Masgas v. Anderson

CASE NOTE

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Masgas v. Anderson, 310 S.W.3d 567 (Tex. App.—Eastland 2010, pet. denied) held that a conveyance of all of grantor’s interest in the leases described in Exhibit “A” to the conveyance conveyed all of grantor’s interest, even if each named lease was labeled on Exhibit “A” with a percentage working interest that may be less than all of grantor’s interest. The conveyance provided that:

[Grantor] . . . CONVEYS . . . all of [grantor’s] right, title and interest in and to the oil and gas leases described in Exhibit “A” attached hereto and made a part hereof for all purposes. . . .

[Grantor] . . . does covenant . . . that [grantor] is the lawful owner of said leases described in Exhibit “A.” . . . [Grantor] further warrants that it is the owner of the working interest as set out beside each leasehold estate named in Exhibit “A.”

Grantor may or may not have owned a disputed interest at the time of the conveyance. It was claimed that only the specified working interest on Exhibit “A” (which did not include the disputed interest) was conveyed.

The court held that the plain grammatical meaning of the conveyance provided that the Grantor conveyed all of its interest in the leases described on Exhibit “A.” “The reference to [grantor’s] fractional interest was in the warranty provision. While [grantor] assigned all of its interests, it only warranted that it owned the fractional interests described in Exhibit ‘A.’”

The significance of the case is that it validated a common practice in drafting purchase and sale agreements and conveyances when the terms include a warranty, but grantor either does not own all of the leases or grantor intends to limit grantor’s liability on the warranty to a specified interest. The intended result could be made more certain if the warranty clause began with:  “Without limiting the terms of the grant herein, Grantor warrants . . . .”