Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 17, 2013 at 14:11

Statement of the Duhig Rule

The Duhig Rule of interpreting mineral reservations is applied to con-
veyances of mineral ownership by warranty or mineral deed (but not quit-claim deed) in which the owner of a fractional mineral interest reserves a fractional share of the mineral estate without also stating in the deed thatthere are outstanding mineral interests. The effect of the rule is to estop the grantor, by his warranty, from claiming the total fractional share of the minerals he reserved in the deed.

The Duhig Rule does not apply.  Therefore the question is, what does state law require in the way of specific language regarding the reservation of a mineral interest in a conveyance instrument.

• ▶ Reply

Permalink Reply by adubu on December 17, 2013 at 14:30

Skip--of course IANL -- but everything I read says you must state in deed you are reserving X%( only if you have 100% prior ownership) of the minerals and if not stated the minerals go with land to Grantee if not previous severed and reserved prior sells. If you split the minerals you must list prior reserved and % reserved by Grantor and % conveyed to Grantee -- they must = 100% Duhig says you can not over convey if so Grantee wins-----I agree this case is not a Duhig case it's about interpret of original ambiguity deed and since no ones know intent of first grantor the deed must stand on it' own

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on December 17, 2013 at 14:51

There is no prior reservation.  At the time of the sale the grantor owned 100%.  In that case specific language conveying a 25% interest with the surface does not relinquish grantor's title to the remainin 75%.  In any subsequent conveyance of the mineral interest the Duhig rule would apply and specific language would be required to specify what was owned and what was conveyed.  Just my opinion. If you have some legal opinion or case law to support your contention, please post it.  Otherwise let us all know the O&G attorney's opinion when it is available. IANAL either.

• ▶ Reply

Permalink Reply by Dion Warr, CPL on December 17, 2013 at 14:45

Skip:

I would submit that Duhig in fact does apply in this regard, provided that the owner of the 75% minerals that conveys 50% of all the minerals and reserves 50% of all the minerals and warrants the sale, as there is an outstanding 25% of the minerals previously conveyed. From this, we can reasonably deduce that the owner cannot convey an undivided 50% of all while reserving 50% of all. Duhig then functions to limit the reservation of seller to only the remaining portion of his interest not warranted in his sale to purchaser, as he in effect warrants a 50% of all minerals being delivered to purchaser. Thus the 25% of the whole previously conveyed is seller's problem, not that of the purchaser.

The issue with "silence" in the deed as to the minerals is not applicable to sales which specifically define conveyances involving minerals, it only applies as to conveyances of rights in real property in which no reference to minerals are made; in such cases, the presumption is to convey as to fee, not limited solely to the surface. A conveyance of mineral rights in real property specifically and solely (without reference to surface rights) does not invoke a corollary conveyance in the surface estate because of "silence" as to surface in the deed.

Duhig is inapplicable to quitclaim deeds specifically because of the lack of warranty associated with such deeds("I give you whatever I may have at this moment, whatever that might be"), as opposed to warranty deeds or cash sales with warranty ("Seller hereby warrants and defends the title of the property so conveyed..."). Sales made with warranty require that the seller must "make good" on the property and rights conveyed - after-acquired title which would make up any deficit in the conveyance would instantly transfer to purchaser, and where title should fail, purchaser would have remedies to pursue (possible return of monies paid, applicable damages, etc.). Where this occurs in mineral and royalty purchases (or leases) from individual landowners, this usually just incurs return of monies paid, but where there is no warranty of title, good luck with that insofar as the purchaser of said rights (generally adjudged to be reasonably sophisticated, especially compared to the seller / lessor).

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on December 17, 2013 at 14:54

Dion, my comments are limited to the original owner (100%) specifically conveying 25%.  Duhig should not apply until subsequent conveyances.

• ▶ Reply

Permalink Reply by Dion Warr, CPL on December 17, 2013 at 15:15

Skip:

Sorry for the misunderstanding. Your prior post appeared unclear to me as to what you were responding.

Permalink Reply by adubu on December 17, 2013 at 16:11

Skip  and Et Al --- BTW since activity in Dry HS gas is slow I like to find topics to stimulation interesting discussion for the site> I enjoy them and this one is getting some good thoughts and opinions    :-))

Permalink Reply by adubu on December 17, 2013 at 15:57

Dion--- you may have miss read--- let me summarize the title run---     from land grant until the 1937 sell the minerals had not been severed so Grantor 1937 had 100% of minerals              1937 sell Grantor conveyed 1/4 undivided minerals with nothing in deed about reservation of any minerals---             sell of land follow three time before final sell-- 1942, 1949 1952 nothing in deed about minerals                                  then the sell in 1968-- states 50% minerals conveyed and 50% reserved.          Mineral leased in 1999 with Grantor/Grantee heirs listed in deed 1968 sell--  50% grantor's heirs and 50% grantee heirs undivided minerals------- land still in 1968 Grantee name---- wells drilled 2002 and division order from operator to heirs leased after Title Opinion by operators Attorney ---- Therefore the Attorney's opinion must be that the grantee in the 1937 sell received ALL 100% minerals per language in deed nothing stated re: any reservation of minerals----- for easy calculation assume 100 acres in tract so each Heirs group  have 50 acres minerals each--- So the question was the Title Opinion Correct ?? Or does the 1937 Heirs have a claim to the 75%--- but can they win a suit since minerals not stated to be reserved in 1937 Deed.

• ▶ Reply

Permalink Reply by Dion Warr, CPL on December 18, 2013 at 9:03

Adubu:

Based upon what you have written in this thread, neither. Let's go through the chain, as you have written:

A sells to B 25% minerals in Blackacre. This is a mineral conveyance. No need to reserve anything - B owns 25% of the minerals, A owns everything else in Blackacre.

A sells all RTI in Blackacre (no mention of minerals, positive or negative) to C. Similarly, through subsequent conveyances, C sells all RTI to D, D to E. At this point, B owns undivided 25% mineral interest in Blackacre, E owns the balance of Blackacre (all of the surface, 75% undivided mineral interest).

If Blackacre is in TX, there is no reversionary right back to A, E, or anyone else in the chain of title. B owns what it owns, until they sell, convey, or quitclaim same to someone else, or through confusion of title or through probate (e.g., B was the heir, successor or ancestor of A or another party in the surface and remaining mineral chain through which title passed back into either A, C, D, or E such that E ends up with full fee interest again at the time of the sale to F) or some other function of law. Short of this or some other tidbit of information, I don't see how one quashes the claim of B as an undivided 25% interest in the minerals.

Now as to the sale from E to F: provided that the conclusion of ownership to this point is correct, E conveys to F all of the surface and an undivided 50% of the minerals (as you state, 50% of ALL). Assuming a sale with full warranty of title, the reservation of 50% of ALL of the minerals represents the classic Duhig quandary. According to Duhig, E must fulfill its warranted obligation to F as to it's conveyance of 50% of ALL the minerals before reserving 50% of ALL the minerals to itself. Thus, with E only possessing 75% of the minerals before the sale, the ownership in Blackacre would stand thus:

B: undivided 25% minerals
E: undivided 25% minerals
F: 100% surface, undivided 50% minerals (per Duhig)

As to the lease: E, F, or their heirs and successors can enter into the lease, and do own surface and mineral rights, thus allowing the company to capture minerals by using the surface. But you still have the outstanding interest of B, it's heirs or successors. Unless there is something else at play here to which I am currently unaware.

Permalink Reply by Dion Warr, CPL on December 17, 2013 at 15:09

Addendum: Duhig is subject to interpretation (judicial determination) in cases where there may be ambiguity. IMO, (IANAL), conveyances and reservations amounting to 125% of the mineral rights, where conveyance A not only conveys a 1/4 mineral interest and further stipulates a conveyance of 1/4 of the royalties due under a prior subject lease (expectation of 1/4 of full mineral right, irrespective of the existence of the prior existing lease and correlative royalty right in the whole created by the seller), and then subsequent conveyances.

In my experience, the O&G company does not want to wait on patent abstracts with severance materials prior to taking the lease. From a field perspective, one usually ends up having to concede to a certain point in history that where the possibility of loss or adjudication of rights to the sovereign, or claim made by the sovereign for lack of severance, is minimized, and where the presence of intervening existing mineral transfers is minimal (for East Texas, this is probably around 1890-1895, nearly and commensurate to the discoveries made in Corsicana). In LA, this date is generally determined by weighing(a) the effective date of the 1921 Constitution, after which the State cannot divest itself of minerals, (b) approximately 1934, after the date that the US began to routinely reserve minerals in patented or acquired property in states not being the "Western States", and being prior to Act 315 of 1940, (c) 55 years, being the sum of prescriptive periods pursuant under various private claims and by various encumbrances after which such claims and encumbrances would generally be deemed as unenforceable, (d) 30 years, which would eliminate adverse title claims and unreinscribed federal tax liens, and (e) least 10 years prior to the first actual production activity occurring in the general vicinity.

• ▶ Reply

Permalink Reply by adubu on December 17, 2013 at 16:47

Dion --so you saying since it been more than 30 years no adverse title claims can be filed so regardless of intent of 1937 Grantor the present title opinion holds and present Royalty owners are the true owners today--- this makes sense since unit wells have been sold twice by operators and each time their in house attorney reviews leases with title runs to verify without raises questions about the decimal interest of each owner

• ▶ Reply

Permalink Reply by adubu on December 19, 2013 at 2:28

Dion--" A" only makes one sell in 1937 to B 100% all land with conveyance in deed of 1/4 minerals to B. "A" did not reserve any minerals via written in deed for nothing mention about the other 3/4 . B then starts a chain of sells to C. A never sells anything after 1937 deed to B because they never knew anything about possible owning any minerals. There were no leases prior to 1999. Nothing mentioned in later deeds about minerals until E sells land to F with 50% reserved and 50% conveyed of all minerals in or around 1968. Then in about 1999 minerals leased, wells drilled productions, DO to Heirs of E and F 50/50-- multiple sells between several operator and review by each operators Title Attorneys-- there has never been any questions about original Title opinion-- decimal interest continues to be paid now for > 12 years to same mineral owners ( E & F Heirs) Nothing paid to 1937 "A" Heirs.----------------So question is Title Opinion wrong?? Does " A" heirs after 76 years have a claim?? I know Attorney for A needs to review, But just looking for opinion discussion only   --- does this clarify the chain of events and the question for discussion ?

• ▶ Reply

• ‹ Previous
• 1
• 2
• 3
• 4
• 5
• Next ›
• Page