444 Dupnik v. Hermis

Richard F. Brown

 
The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
 
Dupnik v. Hermis, No. 04-12-00417-CV, 2013 WL 979199 (Tex. App.—San Antonio Mar. 13, 2013, pet. denied) held that a conveyance of the surface only was effective to reserve the mineral estate.  Four individuals owned an undivided 1/4 interest in a one hundred-acre tract in Karnes County, Texas.  In 1983, they partitioned the surface estate into four equal parts of 24.68 acres, but each retained an undivided 1/4 mineral interest in the entire one hundred-acre tract.  In 1991, Hermis conveyed one divided acre to Dupnik.  In 1994, Hermis conveyed five divided acres to Dupnik.  Each time Hermis conveyed both the surface estate and the undivided mineral interest in the corresponding tract.  In 1998, Hermis conveyed to Dupnik 24.68 acres “fully described in Exhibit A” with the blank for reservations on the form deed completed as “none.”  Exhibit A described the 24.68‑acre interest conveyed as “Tract No. Two (the surface only).”  The parties apparently used the same exhibit that was used for the 1983 surface partition deed.  In 2011, Dupnik sought a declaration that Dupnik acquired an undivided 1/4 mineral interest in the entire one hundred-acre tract because the grantor failed to specifically reserve the mineral interest and because prior conveyances between the parties demonstrated an intent to convey the mineral interest.  Hermis defended based on the statute of limitations and deed interpretation.
 
Whether a deed is void or voidable determines the applicable statute of limitations in a trespass to try title suit.  The statute of limitations does not bar a void deed.  “A deed is void if it is ‘without vitality or legal effect.’”  However, voidable deeds are subject to the four year statute of limitations.  A voidable deed “‘operates to accomplish the thing sought to be accomplished, until the fatal vice in the transaction has been judicially ascertained or declared.’”  A legally effective and facially valid deed is voidable and thus subject to the statute of limitations.  Dupnik argued that the grant of the surface estate only and the reservation of “none” are irreconcilable.  The court disagreed, determining that because the deed could simply be read as reserving no rights in the surface estate, the deed was facially effective and thus voidable.
 
Alternatively, Dupnik alleged that the discovery rule delayed the accrual of the cause of action.  Generally, “a cause of action accrues when the legal injury occurs,” however, the discovery rule defers accrual “until the plaintiff ‘knew or through the exercise of diligence should have known of the wrongful act or resulting injury.’”  Although Dupnik first argued that the deed was void because of facially inconsistent terms, Dupnik argued in the alternative that the discovery rule applied because Dupnik could not have known of the legal harm suffered or the meaning of the inconsistent terms in the deed until Hermis asserted an adverse claim.  Regardless, the court found that because the terms of the deed appeared problematic, Dupnik had to exercise due diligence.  The deed described the conveyance as “surface only,” and as such, did not constitute the type of undiscoverable injury that the discovery rule protects against.  Dupnik also admitted that Dupnik did not read the entire 1998 deed, and the court held that Dupnik failed to exercise the due diligence required to rely upon the discovery rule.
 
Although the court barred the suit under the statute of limitations, the court also interpreted the deed.  A reservation of mineral interests requires the use of clear language, but at least one Texas court has held that a grant of only the surface estate with no reservation can reserve the mineral estate.  A reservation serves to narrow, limit, or reduce what otherwise passes in the grant.  To harmonize the “surface only” grant with the reservation of “none,” the court held that the grantor intended to convey the surface estate without reserving any surface interests that the grantor had in the surface estate.
 
The significance of the case is the holding that a conveyance of the surface estate only may be effective to reserve the minerals to the grantor.  The case also highlights the distinction between void and voidable deeds, the applicable statute of limitation in trespass to try title, and the application of the discovery rule.