Face Challenges Confidently

433 Chesapeake Exploration, L.L.C. v. BNW Prop. Co.

Tuesday, September 1st, 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.
Chesapeake Exploration, L.L.C. v. BNW Prop. Co., 393 S.W.3d 852 (Tex. App.—El Paso 2012, pet. denied),  held that Grantor’s express conveyance by deed of his 3/9 mineral interest, with no mention of Grantor’s executive rights, presumptively conveyed all of Grantor’s 4/9 of the executive rights.  Grantor, owning a 3/9 mineral interest and 4/9 of the executive right, executed two separate deeds that expressly conveyed the 3/9 mineral interest to Grantee; however, the deeds were silent as to the 4/9 executive right.  The parties, who were aligned as successor to the Grantor and successor to the Grantee, contested whether the full 4/9 executive right passed under the two deeds or whether Grantor retained 1/9 of the executive rights.
The court began by observing that the executive right is a separate and distinct property interest that may be conveyed or reserved with or without any of the other interests comprising the mineral estate.   Under Texas law, “when an undivided mineral interest is conveyed, reserved, or excepted, it is presumed that all attributes remain with the mineral interest unless a contrary intention is expressed.”
The court reviewed two Texas Supreme Court opinions it found dispositive of the issue: Day & Co., Inc. v. Texland Petroleum, Inc.  and Lesley v. Veterans Land Board of State.   In Day & Co., the grantor, who owned a 1/2 mineral interest and the entire executive right in the described lands, executed a deed that reserved 1/4 of the mineral interest, but which was silent as to the executive right.  The Texas Supreme Court held that the grantor conveyed all his executive rights (or an undivided 3/4 of the executive right) except the 1/4 of the executive rights included in the reserved 1/4 mineral interest.   In Lesley, the grantor, who owned a portion of the mineral interest and the entire executive right in the described lands, executed deeds containing a restrictive covenant that limited oil and gas development.  The deeds in Lesley expressly conveyed grantor’s mineral interest, but were silent as to the executive right.  The Texas Supreme Court again held that because the deeds did not except the executive right, but merely subjected its exercise to the restrictive covenant’s limitations, the associated executive rights passed with the mineral interest under the deeds.
The court noted that the present case, like Day & Co. and Lesley, dealt with deeds that conveyed a mineral interest without mentioning the executive right.   The court noted that the granting clauses, the subject to clauses, and the future lease clauses in the two deeds consistently identified the 3/9 mineral interest, and that the habendum clause in both deeds granted “the [3/9] mineral estate and all the rights and appurtenances ‘thereto in anywise belonging . . . .’”   However, the court observed that none of these clauses revealed the parties’ intent with respect to the executive right.  Therefore, in the absence of an expressed intention to the contrary, the full 4/9 executive right passed with the lands conveyed.
This case is significant because it reaffirms the presumption that any conveyance of land will include the executive rights in the described land appurtenant to the interest conveyed, unless the parties make clear their intention to the contrary.