February of 2023, the Texas Supreme Court issued its decision in Van Dyke v. Navigator Group[1] in which they addressed the meaning of a disputed mineral reservation in a 1924 Deed and its creation of a “double-fraction dilemma”. The 1924 deed provided:
It is understood and agreed that one-half of one eighth of all minerals and mineral rights in said land are reserved in grantors… [Emphasis added.][2]
The dispute essentially turned on whether said reservation was of a 1/16th mineral interest or a 1/2 mineral interest. The Texas Supreme Court held that the 1924 Deed reserved a 1/2 mineral interest by focusing on the meaning of 1/8th at the time of execution in 1924.
As the court suggests, “only in a legal text could the formula “one-half of one-eighth” mean anything other than one-sixteenth”. The Texas Supreme Court relied on the estate misconception theory, which reflected the early belief that, by entering an oil-and-gas lease, “a lessor retained only a 1/8 interest in the minerals rather than the entire mineral estate in fee simple determinable with the possibility of reverter of the entire estate.”[3] At the time of execution, 1/8th was often used purposefully to reflect the entire mineral estate, not just 1/8 of it.”[4] However, the Court does not define what makes a deed antiquated, other than the theory was a historical and prevalent belief at one time.
It is extremely important to note that this is a rebuttable presumption. The Court notes such a presumption may be rebutted by other express language within the four corners of an instrument or even other extrinsic evidence if the deed itself is ambiguous. Here, however, there was nothing within the 1924 Deed to rebut the presumption, and the Court concluded the 1924 Deed “did not use 1/8 in its arithmetical sense but instead reserved to the … grantors a 1/2 interest in the mineral estate.”
The Texas Supreme Court then focused its analysis on the presumed grant doctrine, which proved title to the remaining 7/16 was reserved even if the language within the 1924 deed failed to do so. The three elements of presumed grant consisted of: “(1) a long-asserted and open claim adverse to that of the apparent owner; (2) nonclaim by the apparent owner; and (3) acquiescence by the apparent owner in the adverse claim.”[5] The Court found the grantors in the 1924 Deed satisfied these elements from the parties’ history of repeatedly acting in reliance on each having a 1/2 mineral interest over the past 90 years evidenced by numerous recorded instruments.
Van Dyke v Navigator is an extremely important case, the Supreme Court has now made the estate misconception theory law and created a rule to follow when interpreting a deed containing a double fraction. Every time a deed includes a reference to 1/8th, one must presume that this refers to the entire mineral estate unless there is language evidencing a contrary intent by the parties. On the other hand, should we also presume that the parties already did the math? In the absence of any rebutting language, is a 1/16th the same as a 1/2 of 1/8th and therefore 1/2 interest? In a scenario like this, application of the presumed-grant doctrine would likely help determine the outcome. It will be interesting to see how Texas Courts address these issues going forward under the new guidance set forth in Van Dyke v. Navigator.
[1] Van Dyke v. Navigator Grp., No. 21-0146, 2023 WL 2053175 (Tex. Feb. 17, 2023)
[2] Id. at 1.
[3] Hysaw v. Dawkins, 483 S.W.3d 1 (Tex. 2016) at 10.
[4] Id.
[5] Magee v. Paul, 110 Tex. 470, 221 S.W. 254, 257 (1920).