This conveyance, however, is made and accepted subject [to] any OIL, GAS AND OTHER MINERALS, including, but not limited to BUILDING STONE, LIMESTONE, CALICHE, SURFACE SHALE, WATER, SAND, GRAVEL, AND LIGNITE, IRON AND COAL and to any and all validly existing encumbrances, conditions and restrictions, relating to the hereinabove described property as now reflected by the records of the County Clerk of Fayette County, Texas.[2]
At issue was whether the above “subject-to” language reserved or excepted the mineral estate from the conveyance or whether it merely served as notice to the Grantee of prior outstanding interests potentially burdening the conveyed property.[3] In other words, was the “subject-to” clause merely a Duhig-esque warranty limitation or an actual reservation/exception?
The parties aligned as grantors, Anthony and Barbara Ross (“the Rosses”), and the successors to the grantees, John and Melissa Flower (“the Flowers”). In 1999, the Rosses owned both the surface and mineral estate of a 20-acre tract of land in Fayette County, Texas. Following the 1999 Deed and a subsequent series of conveyances the Rosses’ interest ultimately landed in the Flowers.[4] The question – what interest, if any, was retained by the Rosses in the 1999 Deed?
The Austin Court of Appeals began its analysis by discussing the modern rule of deed interpretation, noting that the Court’s primary duty when construing an unambiguous deed is to ascertain the intent of the parties within the four corners of the document.[5] The Court was thus tasked with harmonizing all parts of the deed, understanding that the parties to an instrument intend every clause to have some effect. Although the “traditional” rules of deed construction have ostensibly given way to this four-corners analysis, courts continue to invoke these venerable guidelines. Here, for example, the Court employs what is sometimes referred to as the “greatest possible estate” rule. Under this traditional canon, deeds are construed to confer upon a grantee the greatest estate that the instrument will allow.[6] Hence, a deed will pass all of the estate owned by a grantor at the time of the conveyance unless there is a clear reservation or exception that reduces the interest conveyed.
The Court noted that the 1999 Deed did not contain any limitation on the property, but rather, explicitly described the land as “[a]ll that certain tract or parcel of land….”[7] It then looked to the plain meaning of the words “subject to” and their principal function in a deed, noting that those words are typically used to protect a Grantor against a claim for breach of warranty (and not a reservation or exception). Further, it would be inconsistent with construing the clause as both a limitation of warranty and a reservation or exception of the mineral interest. Conversely, construing the entire clause as a limitation of warranty would harmonize the clause because it would protect the Rosses from a claim of breach of warranty arising from an outstanding mineral interest.[8]
The Court’s decision was reinforced by the lack of evidence within the four corners of the 1999 Deed that the parties’ intended for the clause to operate as a reservation of mineral interest. In addition, it would be contradictory to interpret the clause as a reservation of a mineral interest when the clause explicitly states, “building stone, limestone, caliche, surface shale, water,” which are part of the surface estate. To interpret the “subject to clause” as a reservation would have reserved all or a portion of the surface estate to the Rosses, which both the Rosses and Flowers agreed had been conveyed in the 1999 Deed.[9]
Ultimately, the Court concluded that the 1999 Deed reflected the Rosses’ intent to convey their entire interest in the real property, which included the mineral interest. The “subject to” language did not clearly and unequivocally reserve or accept all or any portion of the minerals.[10] Although this case, as most deed interpretation cases, turns on the specific language of the instrument, it supports a broader proposition. Namely, that even within the modern Luckel v. White four-corner analysis, the traditional rules of deed construction are alive and well and continue to influence judicial decisions. It also serves as a reminder that in the face of conflicting interpretations, a court will generally adopt the reading that confers upon a grantee the greatest possible estate.
[1] 2021 Tex. App. LEXIS 1759 (Austin, Mar. 10, 2021, no pet.).
[2] Id. at 4.
[3] Id. at 2.
[4] Id. at 1-2.
[5] Id. at 2. See also Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991).
[6] Ross v. Flower at 3.
[7] Id. at 4.
[8] Id.
[9] Id.
[10] Id. at 5.
Brad represents clients in connection with upstream energy transactions, complex mineral titles, pooling issues, lease analysis, joint operating agreements, surface use issues, title curative and general oil and gas business matters.