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Graham v. Prochaska

Court of Appeals of Texas, Fourth District, San Antonio

December 31, 2013

Roger L. GRAHAM, John B. Graham, John Regmund, Glenn Regmund, Wilma Regmund, Raellen Regmund Mattingly, Rayanne Regmund Chesser, Albert O. Menn, and Irene C. Menn, Appellants
George L. PROCHASKA, Jr., Patricia Prochaska Holland, Jeanette Prochaska Mazza, Dawn Prochaska Snyder, Frederick James Prochaska, II, and Rebecca Prochaska Willis, Appellees

From the 81st Judicial District Court, Karnes County, Texas Trial Court No. 12-02-00023-CVK Honorable Donna S. Rayes, Judge Presiding.

Sitting: Sandee Bryan Marion, Justice, Marialyn Barnard, Justice Luz Elena D. Chapa, Justice.

Dissenting Opinion by: Marialyn Barnard, Justice (to follow).



In this appeal, we must construe a 1950 warranty deed to determine the nature and size of the royalty interest retained by the grantors. The trial court rendered summary judgment in favor of the Prochaskas, who are the appellees and heirs of the grantors, and ruled they own a "floating" one-half royalty interest. The Regmunds, who are the appellants and heirs of the grantees, contend the trial court misconstrued the warranty deed and ask us to reverse and render judgment that the Prochaskas are entitled to a "fixed" one-sixteenth royalty interest. We affirm.


The Warranty Deed

In 1950, George and Elsie Ann Prochaska conveyed a tract of land in Karnes County, Texas, to John and Frances Regmund. The granting clause conveyed "all that certain tract or parcel of land." But the Prochaskas reserved[1] a royalty interest that is the center of this dispute:

SAVE AND EXCEPT, however, there is reserved unto George Prochaska, his heirs and assigns, one-half (1/2) of the one-eighth (1/8) royalty to be provided in any and all leases for oil, gas and other minerals now upon or hereafter given on said land, or any part thereof, same being equal to one-sixteenth (1/16th) of all oil, gas and other minerals of any nature, free and clear of all costs of production, except taxes;
**** [2]
AND PROVIDED this reservation is burdened with paying the two outstanding mineral royalty reservations, each of One-Fourth (1/4) of one-eighth (1/8) royalty, one of which reservations is described in the deed from John Hancock Mutual Life Insurance Company to E.S. Joslin, now of record in Vol. 141, page 161, Deed Records of Karnes County, Texas, and the other reservation is described in the deed from E.S. Joslin, et ux to A.W. Powell, Jr., et al now of record in Vol. 165, page 80 of the Deed Records of Karnes County, Texas; And this reservation shall only be effective to the extent that one or both of said outstanding reservations become terminated.
It being the intent of the parties hereto that John W. Regmund and wife, Frances E. Regmund, as of the effective date hereof, shall be vested with and entitled to one-half (1/2) of the usual one-eighth (1/8) royalty in and to all oil, gas and other minerals in on and/or under the property herein conveyed, and the reservation herein above recited in favor of the grantor herein, shall relate to and cover only the one-half (1/2) of one-eighth (1/8) royalty interest previously reserved in favor of John Hancock Mutual Life Insurance Company and Ennis Joslin, if, as and when said interest in favor of said parties terminate.

The "save and except" clause excludes a royalty interest from passing under the deed. The "provided" clause identifies previously reserved "mineral royalty" interests, with which the Prochaskas' royalty interest is "burdened." The deeds creating those interests were offered as summary judgment evidence. The "intent" clause clarifies the relationship between the Prochaskas' reserved interest, the Regmunds' received interest, and the previously reserved interests identified in the "provided" clause.

The Present Controversy

The original mineral leases providing a one-eighth landowner's royalty in effect at the time of the 1950 conveyance have expired. The Regmunds have executed new leases that provide a one-fifth landowner's royalty, and they filed the underlying lawsuit seeking a declaratory judgment that the Prochaskas reserved a "fixed" one-sixteenth royalty interest from the 1950 deed. According to the Regmunds, the Prochaskas' allegedly fixed royalty interest limits them to receiving one-sixteenth of production, regardless of the landowner's royalty set by the newly executed mineral leases. The fixed one-sixteenth royalty would be deducted from the Regmunds' one-fifth landowner's royalty. Under the Regmunds' interpretation, the Prochaskas would receive one-sixteenth of production and the Regmunds would keep the remaining eleven-eightieths of production from the landowner's royalty (1/5 – 1/16 = 11/80).

The Prochaskas counterclaimed for declaratory relief, contending they were entitled to a "floating" one-half royalty interest. Under their interpretation, they should receive one-half of whatever royalty the Regmunds have secured on the conveyed lands, now and in the future. Accordingly, the Prochaskas contend they should currently receive one-tenth of production, which is one-half of the landowner's royalty, and the Regmunds would take the remaining one-tenth of production (1/5 × 1/2 = 1/10).

The trial court held a hearing on the parties' competing motions for summary judgment. The court rendered judgment for the Prochaskas, construing the deed to reserve a floating one-half royalty ...

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