On February 17, 2023, the Texas Supreme Court reached a pivotal verdict in Van Dyke v. The Navigator Group, a case that began roughly a decade ago, revolving around a contested mineral interest reservation. The implications of this ruling could be far-reaching, potentially affecting transactions and leases dated back to the early 20th century.
The Origin of the Case
This protracted legal battle originated from a 1924 deed where the Mulkeys transferred their ranch land to White and Tom. The language in the deed reserved:
“One-half (1/2) of one-eighth (1/8) of all minerals and mineral rights…”
For decades, both parties and their successors acted as though each owned a 50% share of the mineral rights. But in 2012, after Endeavor Energy drilled a well, a legal dispute erupted. The White successors contested that they owned 15/16 of the mineral interests, while the Mulkeys insisted they had reserved half.
The Legal Journey
Initially, the trial court ruled in favor of the White parties, a decision that was upheld by the appellate court. However, the Texas Supreme Court had a different interpretation. They reversed the earlier verdicts, remanding the case back to the trial court for further examination. The High Court reasoned that the Mulkeys did, in fact, reserve half of the entire mineral estate.
Key Points of the Supreme Court’s Decision
The Court’s verdict rested on two pivotal arguments:
- Textual interpretation matters. Words should be understood based on the common understanding when the deed was created.
- Both sides had, over a long period, mutually accepted that they each owned half of the mineral estate.
The Importance of the Estate Misconception Theory
This case put a spotlight on the ‘estate misconception theory,’ which suggests that the term “1/8” has evolved over time to mean different things. In the past, “1/8” was a term of art that effectively referred to the entire mineral estate. This becomes tricky when later generations try to interpret these documents with modern understandings, leading to the sort of dispute we see here.
Applying the Presumed-Grant Doctrine
The Court also touched upon the presumed-grant doctrine, a sort of common-law equivalent to adverse possession. The Court observed that both parties had demonstrated a mutual understanding of ownership for about 90 years, confirming the Mulkeys’ claim of a 50% share.
The Takeaway
This landmark decision is likely to shape future interpretations in Texas oil and gas title disputes. It essentially sets a new precedent: when faced with a “double fraction,” modern-day lawyers and judges should presume that “1/8” means the entire mineral estate, unless there is explicit evidence to the contrary. By clarifying the interpretive challenges around historic deeds and introducing guidelines for future disputes, this ruling has set a new course for Texas oil and gas law.
For personalized guidance on oil and gas matters, including title opinions and transactions, consider reaching out to Patrick Herring and David Schaffer at Schaffer Herring PLLC. With their expertise in energy law, they can provide tailored advice to help you navigate complex legal issues and achieve your goals in the oil and gas industry. Contact Patrick Herring or David Schaffer today for trusted legal representation and strategic solutions.
