Graham v. Prochaska

• Decision Date: 15 January 2014
• Docket Number: No. 04–12–00755–CV.,04–12–00755–CV.
• Parties: Roger L. GRAHAM, John B. Graham, John Regmund, Glenn Regmund, Wilma Regmund, Raellen Regmund Mattingly, Rayanne Regmund Chesser, Albert O. Menn, and Irene C. Menn, Appellants v. George J. PROCHASKA, Jr., Patricia Prochaska Holland, Jeanette Prochaska Mazza, Dawn Prochaska Snyder, Frederick James Prochaska, II, and Rebecca Prochaska Willis, Appellees.
• Court: Texas Court of Appeals

429 S.W.3d 650

Roger L. GRAHAM, John B. Graham, John Regmund, Glenn Regmund, Wilma Regmund, Raellen Regmund Mattingly, Rayanne Regmund Chesser, Albert O. Menn, and Irene C. Menn, Appellants

v.George J. PROCHASKA, Jr., Patricia Prochaska Holland, Jeanette Prochaska Mazza, Dawn Prochaska Snyder, Frederick James Prochaska, II, and Rebecca Prochaska Willis, Appellees.

No. 04–12–00755–CV.

Court of Appeals of Texas, San Antonio.

Dec. 31, 2013.

Dissenting Opinion by Justice Barnard Jan. 15, 2014.

Robert S. Ballentine, Burleson LLP, Houston, TX, Thomas Ciarlone Jr., Burleson LLP, San Antonio, TX, for Appellant Attorney.

Jonathan D. Baughman, Christopher Lance Halgren, McGinnis, Lochridge & Kilgore, LLP, Houston, TX, for Appellee Attorney.

Sitting: SANDEE BRYAN MARION, Justice MARIALYN BARNARD, Justice LUZ ELENA D. CHAPA, Justice.

OPINION

Opinion by LUZ ELENA D. CHAPA, Justice.

In this appeal, we must construe a 1950 warranty deed to determine the nature and size of the royalty interest retained by the grantors. The trial court rendered summary judgment in favor of the Prochaskas, who are the appellees and heirs of the grantors, and ruled they own a “floating” one-half royalty interest. The Regmunds, who are the appellants and heirs of the grantees, contend the trial court misconstrued the warranty deed and ask us to reverse and render judgment that the Prochaskas are entitled to a “fixed” one-sixteenth royalty interest. We affirm.

Background

The Warranty Deed

In 1950, George and Elsie Ann Prochaska conveyed a tract of land in Karnes County, Texas, to John and Frances Regmund. The granting clause conveyed “all that certain tract or parcel of land.” But the Prochaskas reserved ¹ a royalty interest that is the center of this dispute:

SAVE AND EXCEPT, however, there is reserved unto George Prochaska, his heirs and assigns, one-half (1/2) of the one-eighth (1/8) royalty to be provided in any and all leases for oil, gas and other minerals now upon or hereafter given on said land, or any part thereof, same being equal to one-sixteenth (1/16th) of all oil, gas and other minerals of any nature, free and clear of all costs of production, except taxes;

* * * ²

AND PROVIDED this reservation is burdened with paying the two outstanding mineral royalty reservations, each of One–Fourth (1/4) of one-eighth (1/8) royalty, one of which reservations is described in the deed from John Hancock Mutual Life Insurance Company to E.S. Joslin, now of record in Vol. 141, page 161, Deed Records of Karnes County, Texas, and the other reservation is described in the deed from E.S. Joslin, et ux to A.W. Powell, Jr., et al now of record in Vol. 165, page 80 of the Deed Records of Karnes County, Texas; And this reservation shall only be effective to the extent that one or both of said outstanding reservations become terminated.

It being the intent of the parties hereto that John W. Regmund and wife, Frances E. Regmund, as of the effective date hereof, shall be vested with and entitled to one-half (1/2) of the usual one-eighth (1/8) royalty in and to all oil, gas and other minerals in on and/or under the property herein conveyed, and the reservation herein above recited in favor of the grantor herein, shall relate to and cover only the one-half (1/2) of one-eighth (1/8) royalty interest previously reserved in favor of John Hancock Mutual Life Insurance Company and Ennis Joslin, if, as and when said interest in favor of said parties terminate.

The “save and except” clause excludes a royalty interest from passing under the deed. The “provided” clause identifies previously reserved “mineral royalty” interests, with which the Prochaskas' royalty interest is “burdened.” The deeds creating those interests were offered as summary judgment evidence. The “intent” clause clarifies the relationship between the Prochaskas' reserved interest, the Regmunds' received interest, and the previously reserved interests identified in the “provided” clause.

The Present Controversy

The original mineral leases providing a one-eighth landowner's royalty in effect at the time of the 1950 conveyance have expired. The Regmunds have executed new leases that provide a one-fifth landowner's royalty, and they filed the underlying lawsuit seeking a declaratory judgment that the Prochaskas reserved a “fixed” one-sixteenth royalty interest from the 1950 deed. According to the Regmunds, the Prochaskas' allegedly fixed royalty interest limits them to receiving one-sixteenth of production, regardless of the landowner's royalty set by the newly executed mineral leases. The fixed one-sixteenth royalty would be deducted from the Regmunds' one-fifth landowner's royalty. Under the Regmunds' interpretation, the Prochaskas would receive one-sixteenth of production and the Regmunds would keep the remaining eleven-eightieths of production from the landowner's royalty (1/5 - 1/16 = 11/80).

The Prochaskas counterclaimed for declaratory relief, contending they were entitled to a “floating” one-half royalty interest. Under their interpretation, they should receive one-half of whatever royalty the Regmunds have secured on the conveyed lands, now and in the future. Accordingly, the Prochaskas contend they should currently receive one-tenth of production, which is one-half of the landowner's royalty, and the Regmunds would take the remaining one-tenth of production (1/5 x 1/2 = 1/10).

The trial court held a hearing on the parties' competing motions for summary judgment. The court rendered judgment for the Prochaskas, construing the deed to reserve a floating one-half royalty interest in the current, and any future, mineral leases.

Standard of Review

We review a trial court's ruling on motions for summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). If competing motions for summary judgment were filed, with one being granted and the other denied, we review all the issues presented and render the judgment the trial court should have rendered. Id. To determine whether the prevailing party below was entitled to summary judgment, we view the evidence in the light most favorable to the party against whom summary judgment was rendered. Id.

Deed Construction

Rules of Construction

The parties contend the deed is unambiguous, although they offer competing constructions of the reserved royalty interest. The construction of an unambiguous deed is a question of law for the court to decide de novo. Luckel v. White, 819 S.W.2d 459, 461 (Tex.1991). When construing an unambiguous deed, the court ascertains the intent of the parties from the “four corners” of the deed. Id. Under circumstances such as those presented by this case, the court may consider other instruments that are incorporated by reference into the deed. See Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10, 299 S.W.2d 672, 676 (1956) (holding the “subject to” clause in a deed incorporated mineral leases to define the estate conveyed, and the nature, extent and character of such estate); Petty v. Winn Exploration Co., Inc., 816 S.W.2d 432, 434 (Tex.App.-San Antonio 1991, writ denied); see also Johnson v. Fox, 683 S.W.2d 214, 216 (Tex.App.-Fort Worth 1985, no writ) (“[C]ourts can construe an instrument containing a reservation or exception together with other instruments to which it refers.”) (citing Williams v. J. & C. Royalty Co., 254 S.W.2d 178 (Tex.Civ.App.-San Antonio 1952, writ ref'd)).

We harmonize all parts of the deed, understanding that the parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement. Luckel, 819 S.W.2d at 462. If different parts of the deed appear contradictory or inconsistent, we strive to harmonize all of the parts and construe the instrument to give effect to all of its provisions. Id. The deed's terms are given their plain, ordinary, and generally accepted meanings unless the deed itself shows them to be used in a technical or different sense. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996). We determine the parties' intent from the whole document, “not by the presence or absence of a certain provision.” Concord Oil Co. v. Pennzoil Exploration & Prod. Co., 966 S.W.2d 451, 457 (Tex.1998). Arbitrary rules of construction should not be applied absent some ambiguity or irreconcilable conflict that cannot be resolved through harmonization. See Luckel, 819 S.W.2d at 462;Hancock v. Butler, 21 Tex. 804, 816 (1858); Stewman Ranch, Inc. v. Double M. Ranch, Ltd., 192 S.W.3d 808, 811 (Tex.App.-Eastland 2006, pet. denied); see also Bruce M. Kramer, The Sisyphean Task of Interpreting Mineral Deeds & Leases: An Encyclopedia of Canons of Construction, 24 Tex. Tech. L.Rev. 1, 72 (1993) (“[A]s a general matter, courts take the position that they should initially attempt to harmonize the deed language within the four corners of the instrument. Only upon their inability to harmonize within the four corners, should the courts resort to anti-harmonizing canons.”).

Reservations and Exceptions

“[A] warranty deed will pass all of the estate owned by the grantor at the time of the conveyance unless there are reservations or exceptions which reduce the estate conveyed.” Cockrell, 299 S.W.2d at 675. Property “excepted” or “reserved” under a deed is “never included in the grant” and is “something to be deducted from the thing granted, narrowing and limiting what would otherwise pass by the general words of the grant.” King v. First Nat'l Bank of Wichita Falls, 144 Tex. 583, 192 S.W.2d 260, 262 (1946). Reservations must be made by “clear language,” and courts do not favor reservations by implication. Monroe v. Scott, 707 S.W.2d 132, 133 (Tex.App.-Corpus Christi 1986, writ ref'd n.r.e.). Exceptions “must identify, with reasonable certainty, the property to be excepted from the larger conveyance.” Angell v. Bailey, 225 S.W.3d 834, 840 (Tex.App.El Paso 2007, no pet.).

Mineral Estates & Royalty Interests

Mineral Estates & Leases Generally

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