Face Challenges Confidently

610 Alford v. McKeithen, No. 12-14-00262-CV, 2016 WL 1253902 (Tex. App.—Tyler Mar. 31, 2016, no pet.)

Monday, November 7th, 2016

Richard F. Brown

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

Alford v. McKeithen, No. 12-14-00262-CV, 2016 WL 1253902 (Tex. App.—Tyler Mar. 31, 2016, no pet.) (mem. op.) (Deed incorporating less than all of Exhibit A into the deed) is a deed construction case holding that the reservation of a mineral interest on Exhibit A to a deed was ambiguous requiring a fact finding as to the intent of the parties. The parties aligned as successors-in-interest to Grantor and Grantee under a 2003 deed. The mineral estate was not discussed or even mentioned during the negotiations or at closing. The title company prepared the deed. The deed conveyed Tract One “more particularly described by metes and bounds on Exhibit A attached hereto” and the metes and bounds description included a reservation of 1/2 of the mineral rights. Grantee did not read the deed and would have bought the property with or without the minerals. Although the opinion is not entirely clear, the litigation which followed apparently involved only the 1/2 of the minerals that was or was not reserved to Grantor. Grantee contended that Exhibit A was attached for the sole purpose of providing a metes and bounds description and the mineral reservation should be ignored.

Grantor countered that the deed “plainly referred” to Exhibit A and that all of its provisions, including the mineral reservation, should be included in the deed under established contract law. Grantee cited a line of cases supporting the concept that when a document is incorporated by reference for a particular purpose, it is a part of the document only for the purpose specified. The court did not find the precedents cited to be compelling and certainly not enough to determine as a matter of law that it should ignore the mineral reservation. However, when the court considered other factors, such as different font sizes and different treatment of reservations on other tracts, it could not say Grantee’s construction was unreasonable. Given that there were two reasonable interpretations of the deed, the court agreed with the trial court in treating the deed as ambiguous and submitting mutual mistake to the jury. The jury found against Grantee on all of Grantee’s claims. Therefore, the court affirmed the reservation of 1/2 of the minerals in Grantor.

This is a deed construction case highlighting the risks of incorporating documents by reference and placing reservations on exhibits.