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French v. Chevron U.S.A. - 896 S.W.2d 795 (Tex. 1995)

Rule:

A mineral estate consists of five interests: 1) the right to develop, 2) the right to lease, 3) the right to receive bonus payments, 4) the right to receive delay rentals, and 5) the right to receive royalty payments. A conveyance of a mineral estate need not dispose of all interests; individual interests can be held back, or reserved, in the grantor. However, when an undivided mineral interest is conveyed, reserved, or excepted, it is presumed that all attributes remain with the mineral interest unless a contrary intent is expressed. 

Facts:

The controversy in this case is over the size of an interest conveyed by a mineral deed. Grantee's successor-in-interest claims to own a royalty interest equal to the value of 1/656.17 of all oil and gas produced from the entire tract of land involved. Grantor's successors-in-interest contend that the deed conveyed only a 1/656.17 portion of the royalty to be paid by the lessor. Petitioner Fuller Trust, the successor-in-interest to the grantee, brought suit against Grantor Calvert's successors to construe the deed as conveying a royalty interest. Fuller Trust maintains the deed conveyed a pure fixed royalty interest of 1/656.17 of all production. Respondent Chevron claims the deed conveyed a mineral interest with a reservation of all rights stated in paragraph II. If the deed conveyed a mineral interest reduced by reservations, the grantee would receive only a 1/656.17 fraction of any royalty payable under a lease.

Issue:

Was the Grantor's successors-in-interest correct when it contended that the deed in question conveyed only a 1/656.17 portion of the royalty to be paid by the lessor?

Answer:

Yes

Conclusion:

On appeal, the court found that in reconciling the language of paragraph one of the deed, which appeared to convey a mineral estate, with the language in paragraph two, which stated that only a royalty interest was being conveyed, it would use the "four corners" canon of construction of the entire deed to determine the intent of the parties. The court affirmed and held that the transfer conveyed a mineral interest stripped of all appurtenant rights other than the right to receive royalties, thus conveying only the royalty portion of the mineral interest and not the conveyance of production as royalty. The court affirmed the construction of the deed by the court of appeals, which affirmed the trial court, that by looking to the "four corners" of the deed to ascertain the intent of the parties it was determined that the deed conveyed only the royalty portion of the mineral interest and not the production as royalty.

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