Benedict G. Wenske and Elizabeth Wenske, Petitioners,
Steve Ealy and Deborah Ealy, Respondents
March 22, 2017
Petition for Review from the Court of Appeals for the
Thirteenth District of Texas
Justice Brown delivered the opinion of the Court, in which
Chief Justice Hecht, Justice Green, Justice Johnson, and
Justice Guzman joined.
Jeffrey V. Brown Justice.
case we construe a deed that conveyed a mineral estate and
the surface above it. Doing so allows us to reinforce a trend
in our mineral-deed jurisprudence. Over the past several
decades, we have incrementally cast off rigid, mechanical
rules of deed construction. We have warned against quick
resort to these default or arbitrary rules. And we do so
again today by reaffirming the paramount importance of
ascertaining and effectuating the parties' intent. We
determine that intent by conducting a careful and detailed
examination of a deed in its entirety, rather than applying
some default rule that appears nowhere in the deed's
specific issue in this case is whether the language of the
deed passed the entire burden of an outstanding
non-participating royalty interest to the grantees or whether
the NPRI proportionately burdened the grantor's reserved
trial court concluded that the deed burdened both parties
with an outstanding NPRI. And it ruled that the parties must
share the burden of the NPRI in proportion to their
respective fractional mineral interests. The court of appeals
affirmed, evaluating the case in light of our holding in
Bass v. Harper, 441 S.W.2d 825 (Tex. 1969), and
reasoning that Bass did not control. We affirm the
court of appeals' judgment, though we clarify that the
parties' intent, not Bass or default rules,
decides the case.
1988, Benedict and Elizabeth Wenske purchased a 55-acre
mineral estate from Marian Vyvjala, Margie Novak, and others.
From that 55-acre conveyance, Vyvjala and Novak each reserved
a 1/8th NPRI, resulting in a combined 1/4th NPRI over all of
the oil, gas, and other minerals produced from the property
for a period of 25 years (Vyvjala NPRI).
2003, the Wenskes sold the property to Steve and Deborah Ealy
by warranty deed. The deed purported to grant all of the
surface estate to the Ealys and, by operation of a
reservation, effectively divided the mineral estate between
the parties: 3/8ths reserved to the Wenskes and 5/8ths
conveyed to the Ealys. The relevant parts of the deed are:
For Grantor and Grantor's heirs, successors, and assigns
forever, a reservation of an undivided 3/8ths of all oil,
gas, and other minerals in and under and that may be produced
from the Property. If the mineral estate is subject to
existing production or an existing lease, the production, the
lease, and the benefits from it are allocated in proportion
to ownership in the mineral estate.
Exceptions to Conveyance and Warranty:
Undivided one-fourth (1/4) interest in all of the oil, gas
and other minerals in and under the herein described
property, reserved by Marian Vyvjala, et al for a term of
twenty-five (25) years in instrument recorded in Volume 400,
Page 590 of the Deed Records of Lavaca County, Texas,
together with all rights, express or implied, in and to the
property herein described arising out of or connected with
said interest and reservation, reference to which instrument
is here made for all purposes.
Grantor, for the Consideration and subject to the
Reservations from Conveyance and the Exceptions to Conveyance
and Warranty, grants, sells, and conveys to Grantee the
Property, together with all and singular the rights and
appurtenances thereto in any way belonging, to have and to
hold it to Grantee and Grantee's heirs, successors, and
assigns forever. Grantor binds Grantor and Grantor's
heirs and successors to warrant and forever defend all and
singular the Property to Grantee . . . except as to the
Reservations from Conveyance and the Exceptions to Conveyance
2011, the Wenskes and Ealys entered into oil-and-gas leases
that provided for a royalty on production. In 2013, a dispute
arose concerning from whose share of the royalties the 1/4th
Vyvjala NPRI would come. The Wenskes sought a declaratory
judgment that their 3/8ths interest was unburdened by the
NPRI. The Ealys counter claimed and sought a declaratory
judgment that the NPRI burdened both the Ealys' and the
Wenskes' mineral estates in proportion to each
party's fractional interest in the minerals.
trial court granted summary judgment for the Ealys,
concluding that they and the Wenskes must share the
NPRI's burden in proportion to their interests. The court
of appeals affirmed. ___ S.W.3d ___, ___ (Tex. App.-Corpus
Christi-Edinburg 2016) (mem. op.). We granted the
Wenskes' petition for review.
construction of an unambiguous deed is a question of law for
the court." Luckel v. White, 819 S.W.2d 459,
461 (Tex. 1991). When construing an unambiguous deed, our
primary duty is to ascertain the intent of the parties from
all of the language within the four corners of the deed.
Id. The parties' intent, "when ascertained,
prevails over arbitrary rules." Id. at 462
(quoting Harris v. Windsor, 294 S.W.2d 798, 800
(Tex. 1956)). In Luckel, we rejected mechanical
rules of construction, such as giving priority to certain
clauses over others, or requiring the use of so-called
"magic words." See Concord Oil Co. v. Pennzoil
Expl. & Prod. Co., 966 S.W.2d 451, 465 (Tex. 1998)
(citing Luckel, 819 S.W.2d at 462).
neither party contends the deed is ambiguous, and we agree.
See Heritage Res., Inc. v. NationsBank, 939 S.W.2d
118, 121 (Tex. 1996) (explaining that ambiguity is a question
of law for the court). So we begin by attempting to ascertain
the parties' intent as expressed in the language of the
deed. And generally, if we can ascertain their intent, that
should also be the end of our analysis.
Wenskes argue, however, that our treatment of a
"subject-to" clause in Bass v. Harper
should control this case. They contend we must give the same
effect to the subject-to clause in the deed here as we gave
the subject-to clause in Bass. So we take a brief
detour to explain why Bass does not compel a
specific outcome in this case.
Bass v. Harper, Thomas Bass owned the surface of a
tract of land, the executive rights, and 8/14ths of the 1/8th
royalty under the existing lease. 441 S.W.2d at 825. The
other 6/14ths of the 1/8th royalty had been reserved by third
parties. Id. Bass executed a warranty deed granting
an undivided 1/2 interest in the minerals to a grantee.
Id. at 826. A subject-to clause in the deed excepted
from the conveyance various mineral interests totaling the
other 6/14ths of the royalty. Id.
dispute arose over royalty payments and Bass argued that (1)
the deed conveyed half of his entire estate and (2) that half
(7/14ths) was made subject to the outstanding 6/14ths
royalty. Id. at 825. In other words, the 7/14ths was
burdened with, or subject to, all of the outstanding royalty
interests. Id. This, in effect, left the grantee
with just a 1/14th interest. Id. The grantee's
successor argued that although the grant was for an undivided
one-half interest in the mineral estate (7/14ths), Bass meant
to convey a half of the interest he owned, that is,
1/2 of Bass's 8/14ths royalty (4/14ths). Id. He
argued that the subject-to clause was included merely to
protect Bass from a warranty claim based on the outstanding
agreed with Bass, holding that the deed's granting clause
conveyed 1/2 of the 1/8 royalty because it contained no
language limiting the grant to 1/2 of the interest Bass
owned. Id. at 827; see also Averyt v. Grande,
Inc., 717 S.W.2d 891, 894 (Tex. 1986) (interpreting
Bass). We further held that the grant of 7/14ths of
the royalty was subject to the exception of 6/14ths, leaving
the grantee with 1/14th of the royalty. Bass, 441
S.W.2d at 828. We reasoned that the exception of 6/14ths of
the royalty in the subject-to clause was "tied
specifically to the grant." Id. at 827.
Therefore, it operated to limit the estate granted and not
simply to protect Bass against warranty claims. Id.
We rendered judgment for Bass "under the specific
wording of the instrument" at issue. Id. at
reasoning in Bass should remain limited to the
specific wording of the instrument in that case. Our analysis
relied, in large part, on the location of the subject-to
clause in the deed. Id. at 827 ("The instrument
in question does not relate the outstanding mineral royalty
interests to the warranty. It could have done so, but it is
tied specifically to the grant."). We have said for
decades, even before Bass, that:
The strictness of ancient rules for construing deeds and like
instruments has been relaxed, and it is now well settled that
all parts of the instrument will be given effect when
possible, and the intention of the parties will be gathered
from the whole without reference to matters of mere form,
relative position of descriptions, technicalities, or
Sun Oil Co. v. Burns, 84 S.W.2d 442, 444 (Tex.
Bass, our rules for deed construction have moved
even more decisively toward (1) a focus on the intent of the
parties, expressed by the language within the four corners of
the deed, and (2) harmonizing all parts of an instrument,
even if particular parts appear contradictory or
inconsistent. See Luckel, 819 S.W.2d at 462; see
also Anadarko Petroleum Corp. v. Thompson, 94 S.W.3d
550, 554 (Tex. 2002). As we recently reaffirmed,
"[i]ntent must be determined by a careful and detailed
examination of the document in its entirety, rather than by
application of mechanical rules of construction that offer
certainty at the expense of effectuating intent."
Hysaw v. Dawkins, 483 S.W.3d 1, 16 (Tex. 2016).
not reject Bass as mistaken jurisprudence and we do
not overrule it. But today, in light of our evolving
mineral-deed-construction jurisprudence, courts and
practitioners should view Bass as limited to the
specific language at issue in that case.
explained Bass's inapplicability, we turn to the
deed language in this case. The court of appeals correctly
stated that its primary duty was "to ascertain the
intent of the parties within the four corners of the
deed." ___ S.W.3d at ___ (citing Altman v.
Blake, 712 S.W.2d 117, 118 (Tex. 1986)). Yet the court
was quick to turn to a "default rule" to decide the
case. Id. at ___. It held that because the deed
provided no guidance on how to allocate the burden of the
Vyvjala NPRI, the alleged "default
from Pich v. Lankford should apply: "Ordinarily
the royalty interest . . . would be carved proportionately
from the two mineral ownerships . . . ." Id.
(quoting Pich v. Lankford, 302 S.W.2d 645, 650 (Tex.
1957)). For that reason, and others we need not address here,
the court affirmed.
disagree with the court of appeals' analysis. The
parties' intent, when ascertainable, prevails over
arbitrary rules. Luckel, 819 S.W.2d at 462. And we
can ascertain the parties' intent here by careful
examination of the entire deed. See Hysaw, 483
S.W.3d at 16. Applying default rules or other mechanical
rules of construction to determine the deed's meaning is,
therefore, both unnecessary and improper. See id.;
Luckel, 819 S.W.2d at 462.
Wenskes granted the estate "subject to the Reservations
from Conveyance and the Exceptions to Conveyance and
Warranty." Under the heading "Reservations from
Conveyance, " they reserved "an undivided 3/8ths of
all oil, gas, and other minerals in and under and that may be
produced from the Property." Under the heading
"Exceptions to Conveyance and Warranty, " the
Wenskes identified an "[u]ndivided one-fourth (1/4)
interest in all of the oil, gas and other minerals in and
under the herein described property, reserved by Marian
Vyvjala, et al for a term of twenty-five (25) years in
instrument recorded in [county deed records] . . . reference
to which instrument is here made for all purposes."
to the Wenskes, the deed conveyed 5/8ths of the mineral
estate and the entire burden of the 1/4th Vyvjala NPRI, in
effect leaving the Ealys with only 3/8ths of the production
royalty. That is, 8/8ths minus 3/8ths reserved to the Wenskes
minus the 2/8ths NPRI. According to the Ealys, the Wenskes
conveyed the minerals and effectively reserved 3/8ths to
themselves, but both the Wenskes' and Ealys'
fractional interests are proportionally burdened by the
outstanding 1/4th NPRI (e.g., the Wenskes must satisfy 3/8ths
of the 1/4th NPRI and the Ealys must satisfy 5/8ths of the
parties present a wide range of arguments, but they both
understand that the construction of this deed turns, in large
part, on the meaning of the subject-to clause. That is, the
precise effect of this conveyance being "subject to the
Reservations from Conveyance and the Exceptions to Conveyance
and Warranty" in the deed.
words 'subject to, ' used in their ordinary sense,
mean subordinate to, subservient to or limited by."
Kokernot v. Caldwell, 231 S.W.2d 528, 531 (Tex. Civ.
App.-Dallas 1950, writ ref'd) (citations and quotation
marks omitted). And although the subject-to clause in
Bass was tied to the grant and not the warranty, in
general, the principal function of a subject-to clause in a
deed is to protect a grantor against a claim for breach of
warranty when some mineral interest is already outstanding.
See Walker v. Foss, 930 S.W.2d 701, 706 (Tex.
App.-San Antonio 1996, no writ); Ernest E. Smith, The
"Subject To" Clause, 30 Rocky Mtn. Min. L.
Inst. § 15.01 (1984); see also Richard W.
Hemingway, The Law of Oil and Gas § 9.1 (3d ed. 1991)
(collecting cases from multiple jurisdictions to that
"the beguiling simplicity of the 'subject to'
clause has often misled conveyancers into using it for quite
different purposes." Smith, "Subject To"
Clause at § 15.01. "As a long series of cases
has made painfully clear[, use of a subject-to] clause to
perform some function other than a limitation on the deed
warranty is likely to introduce an element of ambiguity into
the deed which may be resolved only through litigation."
recognize, as has Professor Smith, that subject-to clauses
are widely used for other purposes. In Averyt v.
Grande, for example, we held "that a 'subject
to' clause that excepts fractional mineral interests from
lands and minerals conveyed does not form part of the
description of the land[, ]" but does limit the estate
granted and warranted. 717 S.W.2d at 894. Subject-to clauses
are also used when the property to be conveyed is subject to
an outstanding mineral lease and that lease is to be
maintained after the conveyance. See, e.g.,
Hoffman v. Magnolia Petroleum Co., 273 S.W. 828, 829
(Tex. Comm'n App. 1925, holding approved, judgm't
no question exists that the interest granted to the Ealys was
"limited by" or "subservient to" the
Vyvjala NPRI. See Kokernot, 231 S.W.2d at 531. But
in this transaction between individual citizens for 55 acres
in Lavaca County, we think "[t]he best construction is
that which is made by viewing the subject of the contract as
the mass of mankind would view it; for . . . it may be safely
assumed that such was the aspect in which the parties
themselves viewed it." Dunham v. Kirkpatrick,
101 Pa. 36, 43 (1882) (citation omitted). Giving the
deed's words their plain meaning, reading it in its
entirety, and harmonizing all of its parts, we cannot
construe it to say the parties intended the Ealys'
interest to be the sole interest subject to the
NPRI. See id.; Hysaw, 483 S.W.3d at 16;
see also In re Office of the Att'y Gen. of Tex.,
456 S.W.3d 153, 155-56 (Tex. 2015) ("Given the enormous
power of context to transform the meaning of language, courts
should resist rulings anchored in hyper-technical readings of
isolated words or phrases. The import of language, plain or
not, must be drawn from the surrounding context . . .
."). And, declining to apply mechanical rules or require
the use of "magic words, " we will not read such an
intent into this document. See Luckel, 819 S.W.2d at
principles of oil-and-gas law inform our interpretation.
Generally, "the conveyance of an interest in the
minerals in place carries with it by operation of law the
right to a corresponding interest in the royalty."
Wood v. Sims, 273 S.W.2d 617, 621 (Tex. 1954);
see also Benge v. Scharbauer, 259 S.W.2d 166, 169
(Tex. 1953) ("The fractional part of the bonuses,
rentals and royalties that one is to receive under a mineral
lease usually or normally is the same as his fractional
mineral interest . . . ."). As the dissent correctly
notes, this means when a deed conveys or reserves a 3/8ths
interest in the minerals, the nature of that interest, by
operation of law, includes the right to receive 3/8ths of the
royalties. See Wood, 273 S.W.2d at 621. And under
the same principle, a severed fraction of the royalty
interest-like the Vyvjala NPRI-generally would burden the
entire mineral estate because it necessarily limits the
royalty interests attached to the underlying mineral
interests. See post at ___.
that principle does not compel an outcome in this case.
Parties are free to contract for whatever division of the
interests suits them. Their intent, as expressed in the deed,
controls. If they want their agreement to operate differently
from this basic principle of mineral conveyance, this Court
has said they should "plainly and in a formal way
express that intention." Benge, 259 S.W.2d at
169. We see no expression of such intent, plain or not, in
the deed here.
the exceptions to conveyance and exceptions to warranty are
combined into one clause in this deed ("Exceptions to
Conveyance and Warranty"). That combined clause, read
with the subject-to clause and compared with the
reservations-from-conveyance clause, indicates an intent to
avoid a breach of warranty (and therefore an over-conveyance
problem), rather than a clear attempt to reserve a full
3/8ths interest, free of the Vyvjala NPRI, to the Wenskes.
in their arguments to this Court, the Wenskes emphasized the
fact that the reference to the outstanding Vyvjala NPRI was
"made for all purposes." "For all
purposes" language may indeed put a grantor on notice
that he is receiving an interest subject to all restrictions
and reservations contained in the deed. See Harris v.
Windsor, 294 S.W.2d 798, 800 (Tex. 1956). But again, the
Ealys do not contend their interest is free of the Vyvjala
NPRI. They merely argue that their interest is not solely
responsible for satisfying it. We agree that the deed here
cannot be reasonably construed as conveying the entire burden
of the outstanding NPRI to the Ealys.
the mineral-reservation paragraph concludes with this
sentence: "If the mineral estate is subject to existing
production or an existing lease, the production, the lease
and the benefits from it are allocated in proportion to
ownership in the minerals." This language strengthens
our confidence that the parties intended to split the
benefits and burdens of the minerals in the same proportion
as their ownership of them.
deed (1) granted the minerals to the Ealys, (2) reserved
3/8ths of the minerals to the Wenskes, and (3) put the Ealys
on notice that the entirety of the minerals are subject to
the outstanding 1/4th Vyvjala NPRI to avoid a warranty claim.
Giving the words of this deed their plain meaning, reading it
in its entirety, and harmonizing all of its parts, we cannot
construe it to say that the parties intended the Ealys'
interest to be the sole interest subject to the
NPRI. "[A] careful and detailed examination of the
document in its entirety" leads us to conclude that the
only reasonable reading of the deed results in the Wenskes
and Ealys bearing the Vyvjala NPRI burden in shares
proportionate to their fractional interests in the minerals.
See Hysaw, 483 S.W.3d at 16.
clear, we do not hold that all conveyances of a fractional
mineral interest subject to an outstanding NPRI will, by
default, result in the various fractional-interest owners
being proportionately responsible for satisfying the NPRI.
Analytically, our holding is just the opposite. In construing
an unambiguous deed, the parties' intent-determined by a
careful and detailed examination of the document in its
entirety-is paramount. Rigid, mechanical, arbitrary, and
arcane rules, which at one time offered certainty at the
expense of effectuating intent, are relics of a bygone era.
We disfavor their use.
are acutely aware that parties who draft agreements rely on
the principles and definitions pronounced by this Court. They
rightly depend on us for continuity and predictability in the
law, especially in the oil-and-gas field. See
Averyt, 717 S.W.2d at 895; Davis v. Davis, 521
S.W.2d 603, 608 (Tex. 1975). Our decision today does not
vitiate the established background principles of oil-and-gas
law nor does it open for debate the meaning of clearly
defined terms in every deed dispute. See, e.g.,
Moser v. U.S. Steel Corp., 676 S.W.2d 99, 102 (Tex.
1984) (defining, definitively, "minerals");
Clifton v. Koontz, 325 S.W.2d 684, 690-91 (Tex.
1959) (defining the standard for "production" and
"production in paying quantities"). Giving effect
to the ...