J. Hiram Moore, Ltd. v. Greer

172 S.W.3d 609, 171 Oil & Gas Rep. 163, 48 Tex. Sup. Ct. J. 662, 2005 Tex. LEXIS 428, 2005 WL 1186334

• Court: Texas Supreme Court
• Decided: May 20, 2005
• Docket: 02-0455
• Status: Published

Opinions

Chief Justice JEFFERSON

delivered the opinion of the Court,

in which Justice HECHT, Justice O’NEILL, Justice WAINWRIGHT, and Justice BRISTER joined.

We deny the motion for rehearing. We withdraw our opinion of December 31, 2004 and substitute the following in its place.

Mary Greer, her three sisters, and their widowed mother partitioned an 80-acre tract into four 20-acre tracts, designated 1 through 4. The land is all in the I. & G.N. R.R. Survey No. 6, A-232 (“the Railroad Survey”), in Wharton County. Each sister received title to the surface and minerals in one tract and one-fourth of a non-participating royalty interest in each of the other three tracts. Greer received Tract 3.

In 1988, the two sisters who owned Tracts 1 and 2 leased their minerals to Larry K. Childers. The SixS Freís # 1 Well was completed on an adjacent 106-acre tract in the Wm. Barnard Survey No. 14, A-801 (“the Barnard Survey”), and in 1991 that tract was pooled with Tracts 1 and 2 and four other tracts, at a specified horizon, to form the 350-acre SixS Freís Gas Unit. The following schematic drawing depicts Tracts 1-4 and the SixS Freís Gas Unit:

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After 1991, Greer was thus entitled to receive 1/4 of the royalty for each of Tracts 1 and 2 from the SixS Freís #1 Well. There was no production — hence no royalty due Greer — with respect to Tracts 3 and 4.

In May 1997, Greer and her sister leased the minerals in Tracts 3 and 4, respectively, to J. Charles Holliman, Inc. The following September, Greer executed a royalty deed to Steger Energy Corp. At the time, there was still no production with respect to Tracts 3 and 4, and despite her lease to Holliman four months earlier, Greer was unaware of any drilling activity planned for the future. Greer’s royalty deed to Steger consisted of nine numbered paragraphs in small print on a single page. The first paragraph conveyed all mineral royalties—

that may be produced from the following described lands situated in the County of Wharton, State of Texas, to wit:

All of that tract of land out of the AB 801 SEC 14/W M BARNARD #14 SURVEY, Wharton County, Texas known as the MEDALLION OIL — • SIXS FRELS UNIT. Grantor agrees to execute any supplemental instrument requested by Grantee for a more complete or accurate description of said land. Reference is made to this unit(s) for descriptive purposes only and shall not limit this conveyance to any particular depths or wellbores. In addition to the above described lands, it is the intent of this instrument to convey, and this conveyance does so include, all of grantors [sic] royalty and overriding royalty interest in all oil, gas and other minerals in the above named county or counties, whether actually or properly described herein or not, and all of said lands are covered and included herein as fully, in all respects, as if the same had been actually and properly described herein.

The first quoted sentence, a specific grant, describes land “known as the ... SIXS FRELS UNIT” in the Barnard Survey. As already noted, the SixS Freís unit comprised tracts in both the Barnard Survey and the adjacent Railroad Survey, but Greer owned no interests in the Barnard Survey.¹ Greer’s only royalty interests in the SixS Freís unit were in Tracts 1 and 2, both of which were in the Railroad Survey. But the fourth sentence, a general grant, refers to all Greer’s interests in Wharton County, thus including not only her royalty interests in Tracts 1 and 2 in the SixS Freís Unit, but her interests in Tracts 3 and 4 as well.

During September and October, Steger acquired other royalty interests in Wharton County, and in December it sold twenty-five such interests, including the one acquired from Greer, to J. Hiram Moore, Ltd. for $360,000, which was market value. At that time, there was no production from Greer’s Tract 3, nor was it pooled with any producing property.

Two years later, in December 1998, Kaiser-Francis Oil Co., successor to the working interest in Tract 3 that Greer conveyed to Holliman, pooled about 313 acres, including Tracts 1-4, at a different horizon than the SixS Freís Gas Unit, for production from the Greer # 1 Well which had been completed in Tract 3. Moore claimed all royalties with respect to the interests partitioned to Greer in Tracts 1-4, and when Greer disputed the claim, Kaiser-Francis suspended payments for those tracts.

Moore sued Greer to determine their respective rights, and Greer counterclaimed for declaratory relief as well as rescission and reformation based on mutual mistake and fraud. Moore moved for summary judgment, contending that it had acquired all of Greer’s royalty interests in Wharton County by purchasing her royalty deed to Steger. Greer responded that she had intended to convey to Steger only her interests in the SixS Freís Unit in the Barnard Survey. In her supporting affidavit, she stated: “I did not intend to convey any other property. I specifically did not intend to convey any of my interest in the I&GNRR Co. Survey No. 6, Abstract 232 Wharton County, Texas.” The trial court granted Moore’s motion for summary judgment and severed Greer’s claims for rescission and reformation. Those claims remain pending.

The court of appeals reversed the summary judgment with this explanation:

Here the question is not whether the property [claimed by Moore] was described specifically enough [in Greer’s royalty deed to Steger], but whether the “catch-all” language is sufficient to effect a conveyance of a significant property interest that Greer contends she had no intention of conveying by this deed. Jones v. Colle[, 727 S.W.2d 262 (Tex.1987) ] sets forth the longstanding rule in Texas that a clause, like the one at issue here, can only convey small interests that are clearly contemplated within the more particularly described conveyance, and they are not effective to convey a significant property interest not adequately described in the deed or clearly contemplated by the language of the conveyance. Because the interest in Tract 3 was a substantial one, we hold that the rule disallowing such “cover-all” clauses to effectively convey a substantial property interest is the controlling law in this case.

72 S.W.3d 436, 441.

We granted the petition for review to determine the extent of the interest conveyed in the deed. 46 Tex. Sup.Ct. J. 793 (June 19, 2003).

We may construe the deed as a matter of law only if it is unambiguous. See Westwind Exploration, Inc. v. Homestate Sav. Ass’n, 696 S.W.2d 378, 381 (Tex.1985). Citing Holloway’s Unknown Heirs v. Whatley, 133 Tex. 608, 131 S.W.2d 89, 92 (Com.App.1939), Moore argues that the deed is unambiguous and that the general description establishes that the parties intended the deed to convey all of Greer’s royalty interests in the county. Pointing to a line of cases in which our courts have recognized the validity of geographic grants, Moore contends that the general description falls into that category of conveyances and thus enlarges the specific grant. See, e.g., Holloway’s Unknown Heirs, 131 S.W.2d at 90.

Greer, on the other hand, contends that she intended a specific conveyance only. She argues that the second grant does not enlarge the first. Citing Jones v. Colle, 727 S.W.2d 262 (Tex.1987), and Smith v. Allison, 157 Tex. 220, 301 S.W.2d 608 (1957), she argues, and the court of appeals agreed, that the language following the specific grant was intended to convey only small unleased strips of land adjacent to the described property. 72 S.W.3d at 441.

In Smith v. Allison, 157 Tex. 220, 301 S.W.2d 608, 611 (1956), we held that a deed was ambiguous when its general description conveyed a significantly greater interest (surface and minerals in land included within the specific description) than the specific grant (minerals only) and when the amount paid for that conveyance appeared to relate only to the mineral interest specifically described. Accordingly, we noted that “the deed under question contain[ed] material inconsistent provisions that rendered] it uncertain as to the property conveyed.” Smith, 301 S.W.2d at 612. We noted:

The deed grants 1/2 of the minerals in two specifically described sections, and although the granting clause, habendum clause, and warranty clause confine the conveyance to minerals, yet, the general description fails to limit the conveyance to minerals in the northeast 1/4 and Sections 123 and 145. These recitations clearly indicate an inconsistency between the general description and the descriptive matter identifying the particular tracts described and mentioned in the deed.

Id. Because the deed was ambiguous, it was correctly submitted to the jury, and we affirmed the judgment on that verdict. Id. at 615.

We face a similar problem here. The specific description in Greer’s deed points to a survey in which Greer apparently owns no interest. The deed purports to convey “[a]ll of that tract of land out of the AB 801 SEC 14/W M BARNARD # 14 SURVEY,... known as the MEDALLION OIL — SIXS FRELS UNIT.” As previously noted, Greer owns a 1/4 nonparticipating royalty interest in Tracts 1 and 2, which were pooled in the SixS Freís Unit; however, neither tract is in the W M Barnard Survey. Therefore, the specific description either does not describe any royalty interests owned by Greer, or it incorrectly describes her royalty interests in Tracts 1 and 2 that are part of the SixS Freís Unit by stating that they are in the W M Barnard Survey instead of the I. & G.N. R.R. Survey. The general description conveys “all of grantors [sic] royalty and overriding royalty interest in all oil, gas and other minerals in the above named county or counties, whether actually or properly described herein or not, and all of said lands are covered and included herein as fully, in all respects, as if the same had been actually and properly described herein.” The deed in effect states that Greer conveys nothing, and that she conveys everything. We cannot construe this deed as a matter of law.

Given the deed’s ambiguity, the trial court erred in granting summary judgment. A jury should therefore hear evidence and determine the parties’ intent. See Columbia Gas Transmission Corp. v. New Ulm Gas, 940 S.W.2d 587, 589 (Tex.1996). Accordingly, we affirm the court of appeals’ judgment² and remand to the trial court for further proceedings consistent with this opinion.

Justice HECHT filed a concurring opinion.

Justice OWEN filed a dissenting opinion, in which Justice Medina joined. Justice GREEN and Justice JOHNSON did not participate in the decision.

1 . We do not address whether, via pooling, Greer may have owned some interest in the Barnard Survey, as Moore stipulated below that "Greer owns no interest in the W.M. Barnard No. 14 Survey.”

2 . In doing so, we express no opinion on the court of appeals’ holding that "a clause, like the one at issue here, can only convey small interests that are clearly contemplated within the more particularly described conveyance, and they are not effective to convey a significant property interest not adequately described in the deed or clearly contemplated by the language of the conveyance.” 72 S.W.3d at 441 (citing Jones v. Colle, 727 S.W.2d 262 (Tex.1987)).