385 Elder v. Anadarko E & P Co.

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.
 
Elder v. Anadarko E&P Co., L.P., No. 12-10-00250-CV, 2011 WL 2713817 (Tex. App.—Tyler July 13, 2011, no pet.) (mem. op.), held that the rules of construction can be applied to a contract in order to avoid a finding of ambiguity.  A royalty contract conveyed a royalty interest in “the following described lands situated in the County of Rusk, to wit: (see Exhibit ‘A’ attached hereto and made a part hereof).”  However, the description contained in Exhibit A described “twelve tracts, four in Rusk County and eight in Gregg County.”  The parties aligned as successors to Grantor and Grantee, and Grantor contended that the tracts in Gregg County were not conveyed.  None of the parties contended the contract was ambiguous.
 
Grantor argued that the court’s analysis should follow a two-step process whereby the conveyance is first interpreted using the “rules of interpretation.”  If this step yields an ambiguity, the court then turns to the “rules of construction” to resolve the ambiguity, presumably with parol evidence.  The court recognized that the Eastland Court of Appeals had used this approach, but concluded that it was not the law in Texas.   The court held that canons of construction may be used to resolve an ambiguity, and they may also be used to avoid a finding of ambiguity.
 
The court discussed generally that there is no difference between “rules” of construction and “canons” of construction and that there is no difference between “interpretation” and “construction.”  The principal task is to determine the intent of the parties as expressed in the instrument.  The court first applies common sense, an understanding of the English language, and all the available rules to determine the intent of the parties.  If it cannot, then the instrument is ambiguous and the court applies parol evidence, as well as common sense, an understanding of the English language, and all the available rules, to determine the intent of the parties.   There is a fundamental reluctance to resort to extrinsic evidence because of the possible inconsistent results and increased difficulty in examining title.
 
The court then used multiple canons of construction that were relevant to this case.  According to the court, the contract must be interpreted to give effect to all of its parts.   If “‘there is a repugnance between a general and a particular description in a deed, the latter will control . . . .’”   Further, “‘typewritten matter in a contract must be given effect over printed matter.’”   Applying these canons, the court said that giving effect to the granting clause in isolation would violate “one of the cardinal rules of construction—that we consider the entire writing and attempt to harmonize and give effect to all its provisions.”   Accordingly, the court held that the contract conveyed the tracts in both Rusk and Gregg County.   The court further noted in dicta that its result was consistent with, but not dependent on, two additional canons of construction, namely: that (1) deeds shall be interpreted to confer upon the grantee the greatest estate its terms will permit  and that (2) grants are liberally . . . construed against the grantor.
 
This case is significant because it clarifies that the court will employ rules, canons, interpretation, and construction without distinction to first determine whether a conveyance is ambiguous.  If the conveyance is ambiguous, it will use them all again, plus extrinsic evidence, to determine the intent of the parties as expressed in the document.  The case continues a pronounced trend toward a “four corners” analysis of every document without deference to any particular rule or presumption.