holding quitclaim deed effective as conveyance if grantor held title when deed was executed
How later courts described this case
- holding quitclaim deed effective as conveyance if grantor held title when deed was executed
- “In determining the legal effect of a deed, whether as to grant, exception, reservation, consideration, or other feature, the inquiry is not to be determined alone from a single word, clause, or part but from every word, clause, and part that is pertinent.”
- referring to the benefits of “a pooling agreement which binds all of the royalty owners”
- holding deed language referring to fractional interests in “land described in the deed” will result in different royalty calculation than language referring to fractional interests in “land conveyed by the deed”
Written by the judges who cited it.
The opinion
Supreme Court of Texas
══════════
No. 23-0024
══════════
ConocoPhillips Company,
Petitioner,
v.
Kenneth Hahn,
Respondent
═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Thirteenth District of Texas
═══════════════════════════════════════
Argued September 12, 2024
JUSTICE BUSBY delivered the opinion of the Court.
This appeal concerns the amount of royalty petitioner
ConocoPhillips Company owes respondent Kenneth Hahn, who owns a
non-participating royalty interest (NPRI) in production from a mineral
estate leased by ConocoPhillips. ConocoPhillips’s petition asks whether
Hahn’s right to a 1/8 fixed share of production was reduced when Hahn
either (1) ratified a subsequent lease by the owner of the mineral estate
that includes its own royalty term, or (2) signed a later stipulation and
cross-conveyance agreeing to accept a different royalty. The court of
appeals held that neither the ratification nor the stipulation and cross-
conveyance reduced Hahn’s NPRI. We agree with the court of appeals
regarding ratification but disagree regarding the stipulation.
We hold that Hahn’s NPRI was not altered by the royalty term of
the ratified lease, in which the fee owners of the mineral estate granted
ConocoPhillips their rights to possess and extract minerals in exchange
for a royalty. As we explained in Hysaw v. Dawkins, a non-possessory
royalty interest “conveys a fixed share of production” rather than “a
fraction of the total royalty interest” and thus “remains constant
regardless of the amount of royalty contained in a subsequently
negotiated oil and gas lease.” 483 S.W.3d 1, 9 (Tex. 2016).
We also hold, however, that Hahn later reduced his NPRI by
conveying part of it to the mineral fee owner in the stipulation and cross-
conveyance. The court of appeals’ failure to give effect to the stipulation
and cross-conveyance was contrary to our recent decision in Concho
Resources, Inc. v. Ellison, 627 S.W.3d 226 (Tex. 2021). We therefore
reverse the court of appeals’ judgment in part and render judgment that
ConocoPhillips correctly calculated Hahn’s share of proceeds from the
production on the pooled unit.
BACKGROUND
A. The creation of Tract A and Tract B
Following the death of their father, Kenneth Hahn and his three
siblings owned varying interests in a 74.15 acre tract of land. Hahn and
his brother, George, owned the tract’s surface estate as cotenants while
each of the four Hahn siblings owned a 1/4 undivided share of the tract’s
severed mineral estate.
2
In August 2002, the two brothers executed and recorded two
deeds (the 2002 Partition Deeds) through which Hahn received exclusive
surface ownership of the northeast 37.07 acres (Tract A) and his brother,
George, received surface ownership of the southwest 37.07 acres
(Tract B).
B. The Gips Deed and Gips Lease
Later that year, Hahn executed and recorded a general warranty
deed conveying Tract A to William and Lucille Gips. The Gips Deed
includes the following reservation:
SAVE AND EXCEPT [that] there is hereby reserved unto
[Kenneth Hahn], his heirs and assigns, an undivided one-
half (1/2) non-participating interest in and to all of the
royalty [Kenneth] now owns, (same being an undivided
one-half (1/2) of [Kenneth’s] one-fourth (1/4) or an
undivided one-eighth (1/8) royalty) in and to all of the oil
royalty, gas royalty and royalty in other minerals in and
under and that may be produced from the herein described
property.
This 1/8 NPRI was for a term of 15 years, concluding in June
2017. The deed also provides that Hahn and his heirs and assigns “shall
not participate in the making of any oil, gas or mineral lease covering
said property, nor shall they participate in any rental or shut-in gas well
royalty to be paid under such lease.”
In July 2010, the Gipses entered into an oil, gas, and mineral
lease with ConocoPhillips for Tract A.1 The Gips Lease provides that
“[t]he royalties to be paid by Lessee” on oil and gas production are “1/4th
1The actual signatory was ConocoPhillips’s subsidiary, Burlington
Resources Oil & Gas. We refer to both entities collectively as ConocoPhillips.
3
of that produced and saved from said land.”2 The lease also contains a
pooling clause, which grants ConocoPhillips “the right and power to pool
or combine the acreage covered by th[e] lease” and, upon pooling,
requires the pro rata allocation of royalties on an acreage basis. The
lease is for a primary term of three years and “as long thereafter as oil,
gas or other mineral is produced from said land or land with which said
land is pooled hereunder or as long as this lease is continued in effect as
otherwise provided herein.”
The Gips Lease imposes various limits on pooling, including that
“[p]rior to exercising its right to pool or unitize any part of the lease
premises, [ConocoPhillips] must obtain ratification of [the] lease by all
holders of outstanding royalty, if any,” and that ConocoPhillips would
“bear any excess royalty occasioned by [its] failure to obtain such
ratification.” The lease also includes paragraphs that (1) expressly
disclaim any warranty of title by the Gipses, (2) address the effect of any
division orders, and (3) provide ConocoPhillips’s breach of any obligation
will not be grounds for canceling the lease.
C. The Lease Ratification and Stipulation
In July 2011, Hahn and the Gipses executed a document titled
“Ratification of Oil, Gas and Mineral Lease.” The Lease Ratification
recites that Hahn owns an NPRI and includes the following language:
NOW, THEREFORE, in consideration of the premises and
other valuable consideration, the receipt of which is hereby
acknowledged, I, Kenneth Hahn, do hereby ADOPT,
RATIFY, and CONFIRM the Lease in all of its terms and
2 The Gips Lease separately provided for a 1/4 royalty on gas and for all
other minerals mined and marketed from said land.
4
provisions, and do hereby LEASE, GRANT, DEMISE and
LET unto [ConocoPhillips], its successors and assigns,
subject to and in accordance with all of the terms and
provisions of the Lease as fully and completely as if I had
originally been named as Lessor in the Lease and had
executed, acknowledged and delivered the same. And I do
hereby agree and declare that the Lease in all of its terms
and provisions are binding on me and is a valid and
subsisting oil, gas and mineral lease.
According to Hahn, ConocoPhillips later approached him about
the need to formally clarify certain aspects of the royalty interest he
reserved in the Gips Deed. The resulting “Stipulation of Interest,” which
Hahn and the Gipses signed on November 11, 2011, and recorded,3
recites that the parties “wish to stipulate for the record the respective
royalty interest owned by Kenneth Hahn in and to the Subject Lands.”
The Stipulation also provides that
for and in consideration of the premises, and other valuable
considerations, the receipt and sufficiency of which are
hereby acknowledged, each of the undersigned does hereby
acknowledge, stipulate and agree that it was the intent of
the parties in the deed from Kenneth Hahn to William Paul
Gips and Lucille Fay Gips, recorded in Volume 121, Page
625, Official Public Records, DeWitt County, Texas, that
the interest reserved was a one-eighth (1/8) “of royalty” for
a term of 15 years from June 9, 2003.
To effectuate the purposes of this Stipulation of Interest,
each of the parties hereto does hereby grant, bargain, sell,
convey, quitclaim and deliver unto each of the other
respective parties any interest in the Subject Interest (as
herein stipulated) necessary to vest in each of said
respective parties the interest set opposite their name
above, together with all rights incident thereto, to have and
3 ConocoPhillips is not a signatory to the Stipulation.
5
to hold the same to each of said parties and their respective
successors, heirs and assigns forever.
D. ConocoPhillips pools Tract A
In March 2012, ConocoPhillips amended the designation of its
production unit “Maurer Unit B” to include Tract A and other
surrounding land,4 retroactive to October 1, 2011. Hahn was provided
with a division order dated May 3, 2012, which he asserts “correctly
reflected” the fixed 1/8 NPRI he claims. Several months later, a
representative for ConocoPhillips called Hahn to inform him of
ConocoPhillips’s belief that Hahn no longer owned any interest in Tracts
A or B, although Hahn claims he did not learn ConocoPhillips’s
reasoning at that time.
E. Initial proceedings in the trial court
Hahn sued Conoco and the Gipses in March 2015, asserting a
multitude of claims.5 As relevant here, Hahn alleged a cause of action
for trespass to try title to confirm his mineral ownership in Tracts A and
B and sought declaratory relief. ConocoPhillips and the Gipses each
filed answers generally denying Hahn’s allegations.6
Hahn and the Gipses filed cross-motions for summary judgment
to confirm their respective ownership interests in Tract A, among other
4 Maurer Unit B also included separately executed leases for Tract B.
5 Hahn’s petition also named several other individuals as necessary
parties, including two of his siblings, Charles Hahn and Doris Steubing.
6 The Gipses’ answer included special exceptions to allegations
regarding Hahn’s entitlement to attorney’s fees and pleaded the affirmative
defenses of limitations, estoppel, ratification, and waiver.
6
relief. ConocoPhillips also moved to strike portions of two affidavits
Hahn submitted as summary judgment evidence, arguing that they
were inadmissible parol evidence.
Following a hearing, the trial court denied Hahn’s motion for
partial summary judgment, instead granting the Gipses’ motion and
striking portions of the affidavits. The trial court declared that (1) the
2002 partition deeds conveyed each brother’s interest in Tracts A and B
to the other brother, and (2) the Gips Deed conveyed all of Hahn’s then-
existing ownership in Tract A to the Gipses, except for a floating “of
royalty” equal to 1/8 of the landowner’s royalty set forth in any existing
or future oil and gas leases.
F. Hahn’s first appeal (Conoco 1)
In his initial appeal, Hahn obtained reversal of the summary
judgment. Hahn v. Gips, No. 13-16-00336-CV, 2018 WL 771908 (Tex.
App.—Corpus Christi–Edinburg Feb. 8, 2018, pet. denied) (Conoco 1).
Hahn argued the trial court erred in construing the deeds executed in
2002 and by giving effect to the Stipulation, which Hahn argued failed
as a conveyance, correction deed, or contract and did not estop him from
relying on the four corners of the Gips Deed. Hahn also argued the trial
court’s exclusion of the affidavits constituted harmful error.
Agreeing with Hahn, the court of appeals reversed and rendered
judgment in part, holding that (1) following his execution of the 2002
partition deeds, Hahn owned a one-fourth undivided interest in the
mineral estate of Tracts A and B, and (2) the Gips Deed unambiguously
reserved to Hahn a fixed 1/8 NPRI in Tract A. Id. at *9. The court of
appeals further held that the Stipulation could not be considered
7
because it was outside the four corners of the unambiguous Gips Deed,
and therefore the Gipses were estopped from claiming more than a 1/4
mineral interest under the Gips Deed. Id. at *8 & n.5. The court did
not reach Hahn’s remaining issues, including his challenge to the trial
court’s evidentiary ruling, and remanded to the trial court for further
proceedings. Id. at *9. This Court denied review.
G. Post-remand proceedings in the trial court
The parties returned to the trial court and Hahn filed an amended
petition. In addition to his previously asserted causes of action, Hahn
added a claim for statutory underpayment of royalties under Chapter 91
of the Texas Natural Resources Code, contending he was entitled to
additional proceeds from the sale of oil and gas attributed to Tract A and
Tract B. ConocoPhillips and the Gipses each filed amended answers
generally denying Hahn’s allegations and asserting several affirmative
defenses, including ratification.
ConocoPhillips also asserted a counterclaim for relief under the
Uniform Declaratory Judgments Act (UDJA), TEX. CIV. PRAC. & REM.
CODE § 37.001 et seq. Relying on Hahn’s execution of the Lease
Ratification, ConocoPhillips sought a declaration that Hahn’s
ratification of the Gips Lease made his share of the proceeds from
production subject to the royalty stated in the lease, as well as an award
of costs and reasonable attorney’s fees under the UDJA. Hahn filed his
original answer to ConocoPhillips’s counterclaim on April 13, 2020,
generally denying its allegations and pleading several affirmative
defenses. In addition to challenging whether the counterclaim was
8
proper under the UDJA, Hahn alleged the counterclaim was barred by
laches, waiver, estoppel, and the law of the case.
The parties filed new cross-motions for summary judgment on
their competing royalty calculations for Tract A. They primarily
disputed whether the royalty stated in the Gips Lease applied to Hahn’s
share of proceeds from the pool and the extent to which the court of
appeals’ decision in Conoco 1 foreclosed certain arguments.
ConocoPhillips contended that Hahn’s execution of the Lease
Ratification and his receipt of benefits under the Gips Lease—including
the ability to receive a royalty on the entire pooled acreage of the Maurer
Unit B (and not just from the unpooled Tract A)—bound him to the
remaining lease terms, including its royalty provision.
Conversely, Hahn argued he had conclusively established each
element of his statutory underpayment claim for royalties from
production on Tract A and sought summary judgment that
ConocoPhillips is liable on that claim. Hahn’s motion also challenged
the viability of ConocoPhillips’s counterclaim under the UDJA,7 which
he argued was untimely, contrary to the law of the case, and barred by
the doctrines of estoppel, waiver, and laches. On the merits, Hahn
argued the “fixed” nature of his NPRI means it is not capable of being
diminished by the lease’s landowner royalty and that the Lease
Ratification was effective only as to the lease’s pooling provision.
7 According to Hahn, the counterclaim was an impermissible vehicle for
attorney’s fees because it duplicated defensive theories already at issue and
therefore sought a declaration of non-liability in tort.
9
The trial court again granted summary judgment in the
defendants’ favor, declaring that ConocoPhillips’s royalty calculations
were correct.8 The court concluded that Hahn ratified the Gips Lease
and is therefore bound by all terms within the lease, including its royalty
provision. The court also concluded that ConocoPhillips was entitled to
attorney’s fees under the UDJA. The parties entered into a stipulation
regarding the amount of attorney’s fees, and the trial court signed a
judgment in favor of ConocoPhillips.
H. Hahn’s current appeal (Conoco 2)
The court of appeals reversed the trial court a second time,
holding that the Lease Ratification did not reduce Hahn’s NPRI from a
fixed fractional interest in production to a floating fraction of the lease
royalty then in effect. See 698 S.W.3d 274, 296-97 (Tex. App.—Corpus
Christi–Edinburg 2022) (Conoco 2). Accordingly, the 1/4 landowner’s
royalty stated in the Gips Lease was inapplicable to Hahn’s 1/8 NPRI in
Tract A’s share of production from Maurer Unit B. The court also
reaffirmed its prior holding in Conoco 1 that the 2011 Stipulation was
incapable of diminishing Hahn’s interest as reserved in the Gips Deed,9
distinguishing our intervening decision in Concho Resources, Inc. v.
8 By separate orders, the trial court also sustained ConocoPhillips’s
objections to an email and spreadsheet Hahn had submitted in response to its
motion to strike and ordered that Hahn should take nothing from his claims
for money had and received or unjust enrichment against the Gipses.
9 In their briefing below, the parties continued to dispute the extent to
which Conoco 1 resolved the appeal under the law of the case doctrine. See
Conoco 2, 698 S.W.3d at 285. But in his briefing in this Court, Hahn
abandoned his argument that ConocoPhillips’s defense of ratification was
barred by the law of the case.
10
Ellison, 627 S.W.3d 226 (Tex. 2021). See Conoco 2, 698 S.W.3d at 285-
87. The court of appeals rendered judgment in part that Hahn’s
calculation of the applicable royalty decimal was correct and remanded
for the trial court to consider Hahn’s request for attorney’s fees. Id. at
295-97. The court also agreed with Hahn that ConocoPhillips’s UDJA
claim was improper because it duplicated defensive matters already
before the court. Id. at 296.10 This appeal followed.
ANALYSIS
As our starting point, we assume without deciding that the court
of appeals correctly held in Conoco 1 that the Gips Deed reserved a fixed
1/8 NPRI for Hahn.11 Raising a defense of ratification, ConocoPhillips
contends this fixed NPRI was later converted into 1/8 of the 1/4 royalty
in the Gips Lease—that is, a floating NPRI—for two separate and
independent reasons: (1) Hahn ratified the Gips Lease; and (2) Hahn
signed the Stipulation. Hahn defends the court of appeals’ holdings that
the Lease Ratification did not reduce his NPRI and that our decision in
Concho Resources does not permit ConocoPhillips to rely on the
Stipulation. Hahn also urges us to affirm the court of appeals’ judgment
because the Stipulation is ineffective on alternative grounds.
We first agree with the court of appeals that the Lease
Ratification did not subject Hahn’s NPRI to the Gips Lease’s royalty
provision. As explained below, the ratification does not subject the NPRI
10 In this Court, ConocoPhillips has not assigned error to this holding
or to the resulting reversal of its award of attorney’s fees.
11 Neither party has asked us to disturb this holding or the court of
appeals’ judgment in Conoco 1 as part of our review of its decision in Conoco 2.
11
to lease provisions that are otherwise inapplicable to non-possessory
interests in production. We therefore reject ConocoPhillips’s contention
that the Lease Ratification supports reinstatement of the trial court’s
judgment.
Turning to the Stipulation, however, we disagree with the court
of appeals’ conclusion that our holding in Concho Resources “does not
bear on” its prior interpretation of the 2011 Stipulation in Conoco 1 or
other documents outside the four corners of a deed. 698 S.W.3d at 287.
Finally, we reject Hahn’s arguments that the Stipulation is ineffective
as a conveyance.
I. The Lease Ratification did not change Hahn’s NPRI from
fixed to floating.
The first issue is what happened when Hahn—who owned a
1/8 fixed non-participating royalty interest (NPRI) in production from
Tract A—ratified the entirety of the Gips Lease, which pays the Gipses
a 1/4 royalty on production in exchange for the lease of their mineral
estate in Tract A. The trial court’s final judgment in Conoco 2 declared:
(1) “Hahn has ratified the Gips Lease and is therefore bound by all terms
in that Gips Lease”; and (2) “based on that ratification, and as it applies
solely to Kenneth Hahn’s ownership interest in Tract A,” ConocoPhillips
correctly identified the applicable unit decimal interest for calculating
Hahn’s share of production from Maurer Unit B.
Reversing, the court of appeals held that Hahn, in ratifying the
Gips Lease, “agreed to have his fixed one-eighth NPRI [in production]
subject to Tract A’s tract participation rate in [the pooled] Maurer Unit
B” but not to have that interest diminished by the landowner’s royalty
12
fraction under the lease. Id. at 290, 292. “As an NPRI owner, [Hahn]
has no executive rights and is, therefore, due none of the entitlements
owed to the lessor under the lease”—including “a landowner’s royalty.”
Id. at 294. Thus, it is “obviously unsound” to apply the terms of those
entitlements to Hahn’s interest in production. Id. We agree.
Texas has adopted the view “that pooling effects a cross-
conveyance among the owners of minerals under the various tracts of
royalty or minerals in a pool so that they all own undivided interests
under the unitized tract in the proportion their contribution bears to the
unitized tract.” Montgomery v. Rittersbacher, 424 S.W.2d 210, 213 (Tex.
1968). “Though governed by contract, pooling involves property rights,”
Samson Explor., LLC v. T.S. Reed Props., Inc., 521 S.W.3d 766, 775 (Tex.
2017), and “pooling on the part of the holder of the executive rights
cannot be binding upon the non-participating royalty owner in the
absence of his consent,” Montgomery, 424 S.W.2d at 213.12
Instead, an NPRI owner like Hahn “has the option to ratify or
repudiate a lease containing provisions which as to his interest the
holder of the executive rights had no authority to insert in the lease.”
Id. at 215. But if an NPRI owner “ratifies” a separate “pooling
agreement” or a lease containing such an agreement, “either by joining
in the execution of the agreement or by accepting royalties from the pool,
his interest is bound by the pooling agreement.” Id.; see also Verble v.
Coffman, 680 S.W.2d 69, 70 (Tex. App.—Austin 1984, no writ)
12 An NPRI owner who refuses to consent to pooling “must be paid on a
nonpooled basis while pooled interests share pro rata,” such that “a lessee may
owe different royalty obligations with respect to the same lands.” Samson
Explor., LLC, 521 S.W.3d at 775.
13
(“Ratification of an oil and gas lease by non-participating royalty
interest owners . . . has been construed as an offer made by the lessor,
and accepted by the royalty owners to apportion all proceeds from the
lease.”).
“A party ratifies an agreement when—after learning all of the
material facts—he confirms or adopts an earlier act that did not then
legally bind him and that he could have repudiated.” White v. Harrison,
390 S.W.3d 666, 672 (Tex. App.—Dallas 2012, no pet.).13 “Express
ratification—in writing, for example—typically makes the parties’
intentions clear.” BPX Operating Co. v. Strickhausen, 629 S.W.3d 189,
197 (Tex. 2021). Additionally, “[r]atification may occur when a
principal, though he had no knowledge originally of the unauthorized
act of his agent, retains the benefits of the transaction after acquiring
full knowledge.” Land Title Co. of Dallas, Inc. v. F.M. Stigler, Inc., 609
S.W.2d 754, 756 (Tex. 1980).14
“[R]atification is a plea in avoidance and thus is an affirmative
defense which must be pleaded.” Petroleum Anchor Equip., Inc. v. Tyra,
419 S.W.2d 829, 834 (Tex. 1967). “When the facts are uncontroverted
13 See also BPX Operating Co. v. Strickhausen, 629 S.W.3d 189, 196
(Tex. 2021) (“Ratification is the adoption or confirmation by a person with
knowledge of all material facts of a prior act which did not then legally bind
him and which he had the right to repudiate.” (internal quotation marks
omitted)); White, 390 S.W.3d at 672 (“The elements of ratification are: (1)
approval by act, word, or conduct; (2) with full knowledge of the facts of the
earlier act; and (3) with the intention of giving validity to the earlier act.”).
See also Samson Explor., LLC, 521 S.W.3d at 785 (“The lessors’
14
awareness followed by acceptance of royalties without challenging the
amendment constituted ratification.”).
14
. . . the court may decide the question of ratification as a matter of law.”
BPX Operating Co., 629 S.W.3d at 196.
Each party’s briefing devotes significant space to arguing about
whether the other party is giving appropriate effect to the Lease
Ratification. But the proper rule is straightforward: a ratifier is bound
to the “entire transaction” and “may not, in equity, ratify those parts of
the transaction which are beneficial and disavow those which are
detrimental.” Land Title Co., 609 S.W.2d at 757.15 Thus, an NPRI
holder’s ratification of an oil and gas lease means any lease provision
that can apply to an NPRI is binding on the holder. As ConocoPhillips
correctly recognizes, applying this rule requires “filtering [Hahn’s]
royalty interest through a lease agreement that covers a plurality of
interests (surface, mineral, and royalty)—some provisions of which can
conceivably apply to some of those interests (including Hahn’s), and
others that cannot.”
Our conclusion that the Gips Lease’s royalty provision does not
apply to Hahn’s non-possessory interest in production flows from the
15 “[U]nder longstanding common law, a void act is not susceptible of
ratification.” Concho Res., 627 S.W.3d at 234 (internal quotation marks
omitted); see also Cummings v. Powell, 8 Tex. 80, 85 (1852) (“A void act . . . is
one which is entirely null, not binding on either party, and not susceptible of
ratification . . . .”). Because we hold in Part II below that the 2011 Stipulation
was not void, we need not address whether a contrary holding would foreclose
ConocoPhillips’s defense of ratification. See Concho Res., 627 S.W.3d at 234
n.10 (noting that a void deed may be ratified under certain circumstances by a
formal recognition of its validity); see also Cummings, 8 Tex. at 85 (“[A]
voidable act is one which is obligatory upon others until disaffirmed by the
party with whom it originated and which may be subsequently ratified or
confirmed.”).
15
different nature of the property interests involved.16 An NPRI is a
fractional non-possessory interest in oil and gas produced from the
tract.17 It is not ownership of the mineral fee itself, which comes with
the rights to possess oil and gas in the ground, to extract it, and to lease
those property rights to others. Hysaw, 483 S.W.3d at 9. Nor is it a
fractional title to that mineral fee—a so-called non-executive mineral
interest (NEMI).18
This understanding of Hahn’s interest informs which provisions
of the Gips Lease can apply to that interest. Some provisions in a
standard mineral lease certainly apply to an NPRI: for example, as
discussed above, we have long held that an NPRI can be pooled.19 And
16 Cf. Luckel v. White, 819 S.W.2d 459, 464 (Tex. 1991) (recognizing that
“[a]n undivided royalty interest may be conveyed as a fixed fraction of total
production or as a fraction of the total royalty interest, and if conveyed as a
fraction of the total royalty interest its amount (as a percentage of production)
depends upon the royalty reserved in future leases”).
17 See KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 75 (Tex. 2015)
(defining an NPRI as “an interest in the gross production of oil, gas, and other
minerals carved out of the mineral fee estate as a free royalty”); Plainsman
Trading Co. v. Crews, 898 S.W.2d 786, 789 (Tex. 1995) (“A non-participating
royalty interest, however, is non-possessory in that it does not entitle its owner
to produce the minerals himself. It merely entitles its owner to a share of the
production proceeds, free of the expenses of exploration and production.”).
18 Cf. Lesley v. Veterans Land Bd., 352 S.W.3d 479, 487 (Tex. 2011) (“The
non-executive mineral interest owner owns the minerals in place but does not
have the right to lease them.”); Altman v. Blake, 712 S.W.2d 117, 118-19 (Tex.
1986) (“This court has before recognized that a mineral interest shorn of the
executive right and the right to receive delay rentals remains an interest in
the mineral fee.”).
19 See, e.g., Samson Explor., LLC, 521 S.W.3d at 774 (“A lessee’s
authority to pool requires the lessor’s consent, which is typically furnished via
a pooling provision in the mineral lease.”); Montgomery, 424 S.W.2d at 213
16
the parties seem to agree that other provisions do not apply to an NPRI:
for example, that Hahn would not be entitled to share in delay rentals
or shut-in royalties, which involve no production.20
Does a standard lease provision obligating the lessee to pay
royalties to the mineral fee owner also apply to a pre-existing fixed
NPRI, making it a floating NPRI? Under our cases, the answer is no.
As we explained in Hysaw v. Dawkins,
[r]oyalty interests may be conveyed or reserved as a fixed
fraction of total production (fractional royalty interest) or
as a fraction of the total royalty interest (fraction of royalty
interest). A fractional royalty interest conveys a fixed
share of production and remains constant regardless of the
amount of royalty contained in a subsequently negotiated
oil and gas lease. In comparison, a fraction of royalty
interest (as a percentage of production) varies [or “floats”]
in accordance with the size of the landowner’s royalty in a
mineral lease and is calculated by multiplying the fraction
in the royalty reservation by the royalty provided in the
lease.
483 S.W.3d at 9 (internal quotation marks and citations omitted,
emphasis added). Because Hahn’s interest is a fixed share of production,
(holding pooling allowed with consent of NPRI holder); Brown v. Smith, 174
S.W.2d 43, 47 (Tex. 1943) (referring to the benefits of “a pooling agreement
which binds all of the royalty owners”); MCZ, Inc. v. Triolo, 708 S.W.2d 49, 52
(Tex. App.—Houston [1st Dist.] 1986, writ ref’d n.r.e.) (explaining that consent
to pool may be provided by agreement or by participation in a lease that
contains a pooling provision).
20Indeed, the lease’s pooling provision explicitly states that “[t]he
formation of any unit hereunder shall not have the effect of changing the
ownership of any delay rental or shut-in production royalty which may become
payable under this lease.”
17
it remains constant regardless of the amount of royalty stated in the
subsequently negotiated Gips Lease.21
Our conclusion comports with the general rule that an NPRI
holder’s interest in oil and gas produced from the tract is not leasable.
See Nat. Gas Pipeline Co. of Am. v. Pool, 124 S.W.3d 188, 192 (Tex. 2003)
(“A royalty interest, as distinguished from a mineral interest, is a non-
possessory interest.”); Hawkins v. Tex. Oil & Gas Corp., 724 S.W.2d 878,
888 (Tex. App.—Waco 1987, writ ref’d n.r.e.) (explaining that lease
executed by royalty owner is void because “the doctrine of estoppel
cannot create rights where none exist”); see also 1 H. Williams & C.
Meyers, OIL & GAS LAW § 303.3 (2023 ed.) (“A royalty owner has no
power to lease, and a purported lease from him is void.” (footnotes
omitted)). Indeed, the Gips Deed itself expressly prohibits Hahn from
“participat[ing] in the making of any oil, gas or mineral lease covering
said property.” Instead, ConocoPhillips agreed to pay the mineral fee
owners a 1/4 royalty in exchange for fee simple determinable ownership
of the minerals themselves. That ownership includes the rights to
possess the oil and gas in place under the tract and to extract it—rights
that were held entirely by the Gipses. See Lightning Oil Co. v. Anadarko
E&P Onshore, LLC, 520 S.W.3d 39, 49 (Tex. 2017); Coastal Oil & Gas
21 See also KCM Fin. LLC, 475 S.W.3d at 81 (“[T]he value of a non-
participating royalty interest is not left exclusively to the whims of the
executive.”).
18
Corp. v. Garza Energy Tr., 268 S.W.3d 1, 15 (Tex. 2008). Thus, the lessor
royalty provision in the Gips Lease does not apply to Hahn’s NPRI.22
Of course, as the court of appeals noted, a non-possessory royalty
interest in production can easily be affirmatively modified or transferred
in whole or in part in other ways, including by assignment. See 698
S.W.3d at 292 (citing Montgomery, 424 S.W.2d at 214). But the Gips
Lease that Hahn ratified does not purport to do so. To the contrary,
certain language in the Gips Lease supports the conclusion that the
lease royalty does not apply to an NPRI.
For example, the pooling clause provides that when “computing
the royalties to which owners of royalties and payments out of
production and each of them shall be entitled on production of oil and
gas . . . from the pooled unit,” ConocoPhillips’s pro rata allocation “shall
be on an acreage basis.” The lease’s pooling clause thus distinguishes
between (1) royalties and (2) payments out of production, which
suggests that the lease’s provision fixing the amount of the mineral
interest owner’s royalty does not apply to the payments out of production
owed to an NPRI. We cannot agree with ConocoPhillips that an NPRI
holder’s ratification of the entire lease negates the operative effect of
language within the pooling clause distinguishing between the two types
of payments. For these reasons, the royalty provision of the Gips Lease
does not reduce Hahn’s NPRI.
22 In light of this conclusion on the merits, we need not reach Hahn’s
argument that ConocoPhillips’s reliance on the Lease Ratification is
procedurally barred under the doctrines of waiver, estoppel, or laches.
19
II. The Stipulation changed Hahn’s NPRI from fixed to
floating.
ConocoPhillips’s second challenge to the court of appeals’
judgment in Conoco 2 concerns the Stipulation that the NPRI reserved
to Hahn in the Gips Deed “was a one-eighth (1/8) ‘of royalty.’” All parties
agree that if this Stipulation was effective, Hahn’s NPRI in Tract A is
floating rather than fixed—that is, the 1/4 royalty fraction in the Gips
Lease reduces the 1/8 NPRI fraction.
Their dispute concerns whether the Stipulation was effective.
The court of appeals held in Conoco 1 that because the Gips Deed
unambiguously reserved a fixed NPRI for Hahn, the Stipulation was
immaterial to the deed’s meaning and the trial court violated the four
corners rule by considering it. 2018 WL 771908, at *8 n.4. Then, in
Conoco 2, the court of appeals concluded our intervening decision in
Concho Resources did not warrant reconsidering this holding because
that case (1) concerned a boundary that (2) was uncertain or ambiguous
in the minds of the parties. 698 S.W.3d at 287. The parties disagree
about whether Concho Resources is distinguishable for these reasons, as
well as whether the Stipulation is ineffective on alternative grounds
urged by Hahn. We address these issues in turn.
A. A written agreement to settle matters of property
ownership can be enforced without proof of
uncertainty.
In Concho Resources, we considered a written boundary
stipulation that recited “[o]n its face” the parties’ desire to answer a
“question that has arisen among the owners of the adjacent mineral
estates” regarding the physical location of the two tracts and the
20
boundary line between them. 627 S.W.3d at 234 (cleaned up). The
stipulation described the boundary line to which the parties agreed in
return for adequate consideration and provided for conveyances as
necessary to transfer ownership accordingly. Rejecting the lower court’s
holding that such agreements are void unless there is some ambiguity
or error in the underlying instrument(s) of conveyance, we held that the
boundary stipulation “is enforceable between the parties according to its
terms.” Id. Although “the boundary stipulation could not by itself bind
others who had an interest in the tracts and were not parties to the
agreement,” it constituted “a valid agreement between the mineral
owners of the two tracts at issue.” Id. at 236.
Similarly here, the written stipulation recites Hahn’s and the
Gipses’ “wish to stipulate” as to their interests “for purposes of clarifying
their ownership.” It then provides that for adequate consideration, the
parties agree Hahn’s reserved interest was a 1/8 “of royalty,” and it
includes cross-conveyance language to effectuate the stipulation.
Yet the court of appeals concluded this stipulation was not
enforceable under Concho Resources for two reasons. First, the court
reasoned there was “no evidence in the 2011 stipulation of interest or
elsewhere” of “ambiguity in the minds of the parties” as to Hahn’s
correct royalty. 698 S.W.3d at 287. To the contrary, we observe that the
Stipulation recites its purpose of “clarifying” the parties’ interests.
But more importantly, we disagree with the court of appeals that
proof of subjective uncertainty regarding the correct property interests
21
is required before such a written stipulation can be given effect.23 In
Concho Resources, we declined to bind parties equitably to recitals in the
underlying deeds, rejecting that estoppel theory as “a modified version
of the argument that objective ambiguity is required to justify a
boundary agreement.” 627 S.W.3d at 238. Adjacent owners’ “free[dom]
to resolve uncertainty amongst themselves,” id., we said, is meaningless
if a factfinder can “second-guess the owners’ decision to bind themselves
in that manner,” id. at 235. “Settlement agreements are highly favored
in the law because they are a means of amicably resolving doubts and
preventing lawsuits.” Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 60
n.33 (Tex. 2008). Requiring proof of ambiguity—whether objective or
subjective—“would scuttle” agreements between property owners as to
their respective interests “as a mechanism to avoid litigation because
parties will never know whether their informal settlement of a boundary
dispute is effective until it is declared so by a court.” Concho Res., 627
S.W.3d at 235 (internal quotation marks omitted). We declined to
impose such a requirement in Concho Resources and decline again
today.
Second, the court of appeals read Concho Resources as limited to
agreements establishing the physical location of a property boundary.
698 S.W.3d at 287 (declining to apply Concho Resources “outside the
boundary dispute context”). Hahn urges that boundary agreements are
governed by a special set of relaxed rules because they do not convey
23 As we described in Concho Resources, a different rule applies to oral
or implied agreements. 627 S.W.3d at 226 n.12.
22
interests in real property24 and remedy the historical unreliability of
land surveys.
But Concho Resources did not attribute any favored status to
concerns particular to land boundaries. Instead, we emphasized
deference to the owners’ “ch[oice] to resolve . . . the boundary location
informally by executing [a] stipulation” despite their ability to obtain a
court’s determination of the boundary. 627 S.W.3d at 235. We chose to
recognize “agreements as a mechanism to avoid litigation” rather than
making agreements the subject of potential litigation. Id. And we have
specifically encouraged the use of stipulations about the nature or
amount of an NPRI to avoid the need for judicial clarification.25
Accordingly, neither of the court of appeals’ two distinctions of
Concho Resources provides a reason for concluding that the Stipulation
is unenforceable. We therefore turn to Hahn’s other arguments against
enforcing the Stipulation. The court of appeals did not reach these
alternative grounds, but we exercise our discretion to do so in the
interest of judicial economy.26
24 In fact, the boundary stipulation in Concho Resources did include
conveyance language.
25 See, e.g., Van Dyke v. Navigator Grp., 668 S.W.3d 353, 368 n.10 (Tex.
2023) (“[I]t is a misfortune that the contract or replacement deed was not filed,
because that simple step would have removed the need for the present
litigation.”).
26 See TEX. R. APP. P. 53.4; Reid Road Mun. Util. Dist. No. 2 v. Speedy
Stop Food Stores, Ltd., 337 S.W.3d 846, 855 (Tex. 2011).
23
B. The Stipulation contains adequate descriptions
from which the relevant property interests may be
identified with reasonable certainty.
Hahn raises two other arguments against enforcing the
Stipulation that are not resolved by our discussion of Concho Resources.
First, he contends the Stipulation is not enforceable as a conveyance
because “[i]ts incoherent description of the interest to be conveyed
renders its ‘operative’ language equally unintelligible.” Second, Hahn
argues that the Stipulation is not enforceable as a contract for various
reasons, including that his affidavit testimony rebutted the presumption
of consideration arising from the instrument’s recitals. Because we
conclude the Stipulation does not fail as a conveyance for the reason
Hahn advocates, we need not address whether it is also enforceable as a
contract.
A valid conveyance of an interest in land “must satisfy the
requirements of both the statute of conveyances, Property Code section
5.021, and the statute of frauds, Business and Commerce Code section
26.001.” Gordon v. W. Houston Trees, Ltd., 352 S.W.3d 32, 43 (Tex.
App.—Houston [1st Dist.] 2011, no pet.). Otherwise, “it is not necessary
to have all the formal parts of a deed formerly recognized at common
law or to [include] technical words.” Harlan v. Vetter, 732 S.W.2d 390,
392 (Tex. App.—Eastland 1987, writ ref’d n.r.e.).27
27 See also TEX. PROP. CODE § 5.022(c) (“The parties to a conveyance
may insert any clause or use any form not in contravention of law.”); Luckel,
819 S.W.2d at 463 (“In particular, the labels we have given the clauses of
‘granting,’ ‘warranty,’ ‘habendum’ and ‘future lease’ are not controlling,” and
we will instead “give effect to the substance of unambiguous provisions.”).
24
Thus, we have “eschew[ed] reliance on mechanical or bright-line
rules as a substitute for an intent-focused inquiry rooted in the
instrument’s words,” Hysaw, 483 S.W.3d at 13, and “rejected mechanical
rules of construction, such as giving priority to certain clauses over
others, or requiring the use of so-called ‘magic words,’” Wenske v. Ealy,
521 S.W.3d 791, 794 (Tex. 2017).28 Although we endeavor to “giv[e] the
deed’s words their plain meaning, reading it in its entirety, and
harmonizing all of its parts,” id. at 797, “[w]hen part of a deed’s property
description is incorrect, we will disregard that part as surplusage and
enforce the deed if the remainder of the description identifies the land
with sufficient certainty,” Piranha Partners v. Neuhoff, 596 S.W.3d 740,
745 n.12 (Tex. 2020).29 “[It] is not the actual intent of the parties that
governs, but the actual intent of the parties as expressed in the
instrument as a whole, without reference to matters of mere form,
relative position of descriptions, technicalities, or arbitrary rules.”
Luckel, 819 S.W.2d at 462 (internal quotation marks omitted).
28 See also Reynolds v. McMan Oil & Gas Co., 11 S.W.2d 778, 781 (Tex.
Comm’n App. 1928, holding approved, judgm’t adopted) (“The relative
positions of the different parts of the instrument are not necessarily
controlling; the modern and sounder reason being to ignore the technical
distinctions between the various parts of the deed, and to seek the grantor’s
intention from them all without undue preference to any . . . .”).
29 Accord In re Off. of Att’y Gen. of Tex., 456 S.W.3d 153, 156 (Tex. 2015)
(“[C]ourts should resist rulings anchored in hyper-technical readings of
isolated words or phrases. The import of language, plain or not, must be drawn
from the surrounding context . . . .”); Hahn v. Love, 394 S.W.3d 14, 25 (Tex.
App.—Houston [1st Dist.] 2012, pet. denied) (“We are also mindful that a deed
should not be declared void for uncertainty if it is possible, by any reasonable
rules of construction, to ascertain from the description, aided by extrinsic
evidence, what property the parties intended to convey.”).
25
Under these principles, the following elements are generally
required for a deed to accomplish a legally effective conveyance:30 (1) the
instrument of conveyance is in writing;31 (2) the interest to be conveyed
is sufficiently described;32 (3) the grantor and grantee can be ascertained
from the instrument as a whole;33 (4) there are operative words or words
of grant showing an intention by the grantor to convey title to a real
30 Depending on the circumstances at issue, other factors concerning the
execution of a deed may affect the deed’s validity, such as fraud, duress,
mistake, forgery, mental incapacity, or lack of notice. See TEX. PROP. CODE
§ 13.001(a) (a conveyance is void as to creditors and bona fide purchasers as
“without notice unless the instrument has been acknowledged, sworn to, or
proved and filed for record as required by law”); TEX. JUR. 3d Deeds § 183.
31 See TEX. PROP. CODE § 5.021; TEX. BUS. & COM. CODE § 26.01(a),
(b)(4).
32 See Pick v. Bartel, 659 S.W.2d 636, 637 (Tex. 1983) (“It is well settled
that in order for a conveyance or contract of sale to meet the requirements of
the Statute of Frauds, it must, insofar as the property description is concerned,
furnish within itself or by reference to other identified writings then in
existence, the means or data by which the particular land to be conveyed may
be identified with specific certainty.”); Republic Nat’l Bank of Dallas v. Stetson,
390 S.W.2d 257, 261 (Tex. 1965) (“There being no land described in the deed,
it could not operate as a conveyance.”); but see Long Trs. v. Griffin, 222 S.W.3d
412, 416 (Tex. 2006) (“Extrinsic evidence may be used only for the purpose of
identifying the [property] with reasonable certainty from the data contained in
the contract, not for the purpose of supplying the location or description of the
[property].” (internal quotation marks omitted)).
33 See, e.g., Haile v. Holtzclaw, 414 S.W.2d 916, 927 (Tex. 1967) (“Since
W. B. Haile was dead when the deed was executed, his ‘estate’ or heirs were
capable of being ascertained; therefore, under the above authorities we hold
the grantee was sufficiently described.”); Vineyard v. O’Connor, 36 S.W. 424,
425 (Tex. 1896) (holding “grantee need not be named” so long as he is
“described” and “may be definitely ascertained” from that description).
26
property interest to the grantee;34 (5) the instrument is properly signed
and acknowledged by the grantor;35 and (6) the instrument is delivered
to and, if necessary, accepted by36 the grantee.37 “A covenant of
warranty is not required in a conveyance,” TEX. PROP. CODE § 5.022(b),38
34 See, e.g., Luckel, 819 S.W.2d at 462 (holding language at issue was
“as effective to grant an interest as the formal ‘do hereby grant, bargain, sell
and convey’ language of what we have designated as the ‘granting’ clause”);
Baker v. Westcott, 11 S.W. 157, 158 (Tex. 1889) (“[T]he form of the instrument
is a matter of no moment if it manifests the intention of the grantor to convey
to the grantee the entire title by the very terms of the instrument itself.”);
Vineyard, 36 S.W. at 425 (looking to whether “the instrument itself makes it
manifest that it was the purpose of the grantor to convey the property to
another, who in the deed itself is designated with reasonable certainty”).
35 See, e.g., Haile, 414 S.W.2d at 927 (holding “execution and delivery of
the deed was a gift of the property described therein”).
36 See TEX. PROP. CODE § 5.021 (providing instrument of conveyance
“must be subscribed and delivered by the conveyor or by the conveyor’s agent
authorized in writing”); Steffian v. Milmo Nat’l Bank, 6 S.W. 823, 824 (Tex.
1888) (“[T]he delivery of a deed is requisite to its validity as a conveyance. To
take effect, it is quite as necessary that it should be delivered as that it should
be signed.”); McLaughlin v. McManigle, 63 Tex. 553, 556 (1885) (“It may be an
actual or constructive delivery; and if it be not actually delivered to the grantee
or his authorized agent, it is essential to its validity to prove notice to the
grantee of its execution and such additional circumstances as will afford a
reasonable presumption of its acceptance.”).
37 Accord Gordon, 352 S.W.3d at 43 (“[I]f (1) from the instrument as a
whole a grantor and grantee can be ascertained and (2) there are operative
words or words of grant showing an intention by the grantor to convey to the
grantee title to a real property interest, (3) which is sufficiently described, and
(4) the instrument is signed and acknowledged by the grantor, then the
instrument of conveyance is a deed that accomplishes a legally effective
conveyance.”); Masgas v. Anderson, 310 S.W.3d 567, 570 (Tex. App.—Eastland
2010, pet. denied); Green v. Canon, 33 S.W.3d 855, 858 (Tex. App.—Houston
[14th Dist.] 2000, pet. denied); TEX. JUR. 3d Deeds § 13.
38 Instead, “[a]s a matter of longstanding common law, in the absence of
any qualifying expressions, the covenant of seisin is read into every conveyance
27
and “[w]e have long recognized the validity of quitclaim deeds, even if it
turns out that they convey nothing,” Geodyne Energy Income Prod.
P’ship I-E v. Newton Corp., 161 S.W.3d 482, 486 (Tex. 2005).
Here, Hahn primarily attacks the Stipulation’s compliance with
the second and third elements. As in some of our past cases, the
Stipulation “is not a model of clarity,” but when “read in its entirety, we
see only one reasonable interpretation of its words.” Wenske, 521 S.W.3d
at 798.39 Under that construction, “all parts of the description are
reconciled and the [property interest] is identified with reasonable
certainty,” Gates v. Asher, 280 S.W.2d 247, 249 (Tex. 1955), as are the
respective grantor and grantee. Accordingly, we adopt the unifying
construction we articulate below, which we conclude is sufficient to
support a valid conveyance.
“While the Statute of Frauds provides that all contracts for the
sale of real estate must be in writing, . . . [i]t has been left to the courts
to determine the substance and form the written instrument must
satisfy before it is enforceable.” Kmiec v. Reagan, 556 S.W.2d 567, 569
(Tex. 1977). As we have previously recognized, Texas courts “employ[]
of land or an interest in land, except in quitclaim deeds.” Chi. Title Ins. Co. v.
Cochran Invests., Inc., 602 S.W.3d 895, 901 (Tex. 2020) (internal quotation
marks omitted).
39 See also Dahlberg v. Holden, 238 S.W.2d 699, 701 (Tex. 1951) (“[I]t is
a rule universally recognized that if an instrument admits of two constructions,
one of which would make it valid and the other invalid, the former must
prevail.”); Hahn v. Love, 394 S.W.3d 14, 25 (Tex. App.—Houston [1st Dist.]
2012, pet. denied) (“We are also mindful that a deed should not be declared
void for uncertainty if it is possible, by any reasonable rules of construction, to
ascertain from the description, aided by extrinsic evidence, what property the
parties intended to convey.”).
28
a rather strict application of the statutes of frauds and conveyances,”
but “the words of description are given a liberal construction in order
that the conveyance may be upheld.” Gates, 280 S.W.2d at 248.
The instrument itself must contain “the essential terms of a
contract, expressed with such certainty and clarity that it may be
understood without recourse to parol evidence to show the intention of
the parties.” Wilson v. Fisher, 188 S.W.2d 150, 152 (Tex. 1945). “No
part of the instrument is more essential than that which identifies the
subject matter of the agreement.” Pick v. Bartel, 659 S.W.2d 636, 637
(Tex. 1983). Accordingly, external evidence cannot be used “for the
purpose of supplying the location or description of the land.” Wilson,
188 S.W.2d at 152. But if the contract “refers to another instrument
which contains a proper description of the property, such [] instrument
may be looked to in aid of the description.” Maupin v. Chaney, 163
S.W.2d 380, 383 (Tex. 1942).40 Thus, it is sufficient if the instrument
“furnish[es] within itself or by reference to other identified writings then
in existence, the means or data by which the particular land [or interest
in land] to be conveyed may be identified with specific certainty.” Pick,
659 S.W.2d at 637 (emphasis added). If the instrument inadequately
describes the land and contains no such reference to external evidence,
40 Accord Long Trs., 222 S.W.3d at 416 (“Extrinsic evidence may be used
only for the purpose of identifying the [property] with reasonable certainty
from the data contained in the contract, not for the purpose of supplying the
location or description of the [property].” (internal quotation marks omitted));
Pickett v. Bishop, 223 S.W.2d 222, 223-24 (Tex. 1949).
29
however, parol evidence cannot be used to satisfy the statute of frauds.
Id. at 638.41
Turning to the instrument before us, the first paragraph of the
Stipulation states that “the undersigned are the respective present
owners of a mineral interest in, under and to the land more particularly
described in Exhibit ‘A’ attached hereto and incorporated herein for all
purposes, which land shall be hereinafter referred to as ‘Subject Lands.’”
The attached Exhibit A references the recorded Gips Deed and includes
that deed’s description of Tract A under the title “Subject Lands.” Thus,
the Stipulation identifies Hahn and the Gipses as the present owners of
a mineral interest in Tract A and furnishes, “by reference to other
identified writings then in existence, the means or data by which” to
identify Tract A “with specific certainty.” Id. at 637.
The second and third paragraphs state that the parties “wish to
stipulate for the record the respective royalty interests owned by
Kenneth Hahn in and to the Subject Lands,” further noting that non-
signatory ConocoPhillips is the “present owner” of the “Subject Lease”42
and “has requested the undersigned to stipulate as to their ownership
in Subject Lands for purpose of clarifying their ownership.” Those
statements explain the parties’ relationship to one another through
41 See also Matney v. Odom, 210 S.W.2d 980, 984 (Tex. 1948) (“Since the
description, or the key thereto, must be found in the language of the contract,
the whole purpose of the statute of frauds would be frustrated if parol proof
were admissible to supply a description of land which the parties have
omitted from their writing.” (internal quotation marks omitted)).
42 Like the Stipulation’s incorporation of the Gips Deed, the Subject
Lease is further defined in Exhibit B to mean the Gips Lease.
30
their respective ownership interests in Tract A, as well as the
agreement’s purpose as to ConocoPhillips.
Next, the fourth paragraph of the Stipulation states that Hahn
and the Gipses “do[] hereby acknowledge, stipulate and agree that it was
the intent of the parties in the deed from Kenneth Hahn to William Paul
Gips and Lucille Fay Gips, recorded in Volume 121, Page 625, Official
Public Records, DeWitt County, Texas [(i.e., the Gips Deed)] that the
interest reserved was a one-eighth (1/8) ‘of royalty’ for a term of 15 years
from June 9, 2002,” and it recites that the agreement is made “for and
in consideration of the premises and other valuable considerations, the
receipt and sufficiency of which are hereby acknowledged.” (emphasis
added). Because the Gips Deed contains only one reservation, the
Stipulation sufficiently identifies its subject as “the interest reserved” in
the Gips Deed.43 As a whole, then, the Stipulation’s fourth paragraph is
an agreement between Hahn and the Gipses as to their subjective intent
at the time of executing the Gips Deed, which was to create and reserve
for Hahn a floating 1/8 NPRI in Tract A.
The Stipulation’s operative language of conveyance then appears
in the fifth paragraph:
To effectuate the purposes of this Stipulation of Interest,
each of the parties hereto does hereby grant, bargain, sell,
convey, quitclaim and deliver unto each of the other
respective parties any interest in the Subject Interest (as
herein stipulated) necessary to vest in each of said
respective parties the interest set opposite their name
above, together with all rights incident thereto, to have and
43 Cf. Pick, 659 S.W.2d at 637 (holding property descriptions such as
“‘my property,’ ‘my land,’ or ‘owned by me’” are sufficient when the party to be
charged owns a tract and only one tract of land which satisfies the description).
31
to hold the same to each of said parties and their respective
successors, heirs and assigns forever.
(emphases added). Although Hahn concedes the Stipulation contains
language of cross-conveyance, Hahn complains this language is not a
coherent description of the interests to be conveyed because the
Stipulation does not elsewhere define “Subject Interest” or “set out” any
interest opposite the name of any party. We disagree.
We read the phrase “Subject Interest (as herein stipulated)” as an
unambiguous reference to the parties’ “stipulat[ion] and agree[ment]” in
the preceding paragraph regarding the intended scope of “the interest
reserved in” the Gips Deed. See Dahlberg v. Holden, 238 S.W.2d 699,
701 (Tex. 1951) (“If . . . the language of the deed is reasonably
susceptible of a construction which would identify any definite interest
in the land in suit, we should give it that construction . . . .”). The
Stipulation does not expressly link “Subject Interest” to the preceding
paragraph, but the capitalization is consistent with the usage of “Subject
Lands” and “Subject Lease,” both of which are likewise named
immediately following a more detailed description.44
Although Hahn is correct that the Stipulation does not explicitly
enumerate any interest opposite the name of any party, the fourth
paragraph does refer to (1) a reservation in (2) a deed from Hahn to the
44 Cf. Reynolds, 11 S.W.2d at 781 (“In determining the legal effect of a
deed, whether as to grant, exception, reservation, consideration, or other
feature, the inquiry is not to be determined alone from a single word, clause,
or part but from every word, clause, and part that is pertinent.”).
32
Gipses.45 “[A] reservation is a form of ‘exception’ through which the
grantor excludes for itself a portion of that which would otherwise fall
within the deed’s description of the interest granted.” Piranha Partners,
596 S.W.3d at 748. By definition, a reservation will always create for
the grantor an interest that did not previously exist, the existence of
which reduces or encumbers the interest in property otherwise described
as being conveyed to the grantee. In other words, “a reservation carves
out of the grant a new thing or estate.” Reynolds v. McMan Oil & Gas
Co., 11 S.W.2d 778, 781 (Tex. Comm’n App. 1928, holding approved,
judgm’t adopted) (emphasis added).46 Hahn is the only possible grantor
under the 2011 Stipulation because he was the grantor in the Gips
Deed.47
We likewise disagree with Hahn’s view that missing information
is needed to ascertain the interests being conveyed and the interests
45 Cf. Maupin, 163 S.W.2d at 431 (“[E]ven though the reference to the
other instrument is itself in some respects erroneous, or the instrument is
otherwise misdescribed in some particular, yet such other instrument may
nevertheless be looked to in ascertaining what property was intended to be
conveyed if it corresponds with the reference in other respects . . . .”).
46 See also Arden v. Boone, 187 S.W. 995, 997 (Tex. Civ. App.—Fort
Worth 1916) (“A reservation is the creation in behalf of the grantor of a new
right issuing out of a thing granted, something which did not exist as an
independent right before the grant; while an exception operates to withdraw
some part of the thing granted which would otherwise have passed to the
grantee under the general description.” (quoting 8 R.C.L. p. 1090, § 147)), aff’d,
221 S.W. 265 (Tex. Comm’n App. 1920, judgm’t approved).
47 Vineyard, 36 S.W. at 425 (holding “grantee need not be named” so
long as he is “described” and “may be definitely ascertained” from the
description); see also Wilson v. Fisher, 188 S.W.2d 150, 154 (Tex. 1945) (“When
the description of the property to be conveyed is of doubtful sufficiency,
ownership is an important element.” (internal quotation marks omitted)).
33
each party will hold following the Stipulation. By stipulating that the
“interest reserved [to Hahn] was a one-eighth (1/8) ‘of royalty,’” the
fourth paragraph adequately sets forth “[a] general description [that]
may be looked to in aid of a particular description [in the fifth
paragraph] that is defective or doubtful.” Sun Oil Co. v. Burns, 84
S.W.2d 442, 446 (Tex. [Comm’n Op.] 1935).
Finally, contrary to Hahn’s contention, our cases do not require
that the property description clearly specify whether the royalty is fixed
or floating or identify the quantum of royalty being conveyed that would
result in Hahn holding the stipulated interest.48 Accordingly, we read
the phrase “necessary to vest in each of said respective parties the
interest set opposite their name above” to mean a conveyance of
whatever interest is necessary to result in Hahn’s ownership of an NPRI
that adheres to the intended scope of the reservation stated in the
preceding fourth paragraph—that is, of a floating 1/8 NPRI.49
48 See, e.g., Hysaw, 483 S.W.3d at 4 (recognizing that “[m]ineral deeds
employing double fractions give rise to disputes about whether the instrument
creates a fixed (‘fractional’) royalty or a floating (‘fraction of’) royalty”); Luckel,
819 S.W.2d at 463 (holding that because assumption that the parties
contemplated the usual one-eighth royalty was “equally consistent” with
language fixing the royalty interest as it was with language suggesting a
floating royalty interest, the court of appeals erred in favoring one construction
over the other); Middleton v. Broussard, 504 S.W.2d 839, 842 (Tex. 1974)
(holding deed language referring to fractional interests in “land described in
the deed” will result in different royalty calculation than language referring to
fractional interests in “land conveyed by the deed”); Schlitter v. Smith, 101
S.W.2d 543, 544 (Tex. 1937) (construing reservation of “royalty rights” to mean
“an interest in oil, gas, or minerals paid, received, or realized as ‘royalty’ under”
existing and future leases).
49 Indeed, the reference to “any interest in the [reservation] necessary
to vest in each of said respective parties” the interests set forth in the preceding
34
The 2011 Stipulation’s effectiveness as a conveyance finds further
support in its inclusion of “quitclaim” language in the operative granting
clause. Whereas “[a] warranty deed to land conveys property[,] a
quitclaim deed conveys the grantor’s rights in that property, if any.”
Geodyne Energy, 161 S.W.3d at 486.50 Thus, “[a] quitclaim deed, on its
own, does not establish any title in the grantee; it merely conveys any
interest the grantor may have.” Cowan v. Worrell, 638 S.W.3d 244, 261
(Tex. App.—Eastland 2022, no pet.). “[F]or the quitclaim to be a
conveyance, title in the grantor must be shown.” McMahon v. Fender,
350 S.W.2d 239, 240 (Tex. Civ. App.—Waco 1961, writ ref’d n.r.e.).
“In deciding whether an instrument is a quitclaim deed, courts
look to whether the language of the instrument, taken as a whole,
conveyed property itself or merely the grantor’s rights.” Geodyne
Energy, 161 S.W.3d at 486. “But if a deed, taken as a whole, discloses a
purpose to convey the property itself, as distinguished from the mere
right, title, or interest of the grantor, then the instrument is not a
quitclaim deed.” Chicago Title, 602 S.W.3d at 901 (internal quotation
marks omitted).
paragraph is similar to the common practice of conveying any interest in land
“now owned” by the Grantor. See, e.g., Perryman v. Spartan Tex. Six Cap.
Partners, Ltd., 546 S.W.3d 110, 117 (Tex. 2018) (holding phrase “‘now owned
by Grantor’ modifie[d] the term premises” and “served to further identify the
premises that the deeds purported to convey”).
50 See also Black v. Washington Mut. Bank, 318 S.W.3d 414, 418 (Tex.
App.—Houston [1st Dist.] 2010, pet. dism’d w.o.j.) (“[A] quitclaim deed, by its
very nature, only transfers the grantor’s right in that property, if any, without
warranting or professing that the title is valid.”).
35
Here, neither side has argued that any interim act—aside from
the disputed effect of the Lease Ratification discussed above—would
have diminished the nature or quantum of Hahn’s ownership interest in
Tract A between his execution of the Gips Deed and the 2011
Stipulation. It is therefore immaterial whether the Stipulation
conveyed the property itself or merely Hahn’s rights in the property. Cf.
McMahon, 350 S.W.2d at 240 (holding quitclaim deed effective as
conveyance if grantor held title when deed was executed).
But viewing the Stipulation through the lens of a quitclaim deed
helps illustrate the flawed nature of Hahn’s contention that an
instrument cannot effect a valid conveyance without identifying the
specific quantum of royalty being conveyed.51 To the contrary,
“[q]uitclaim deeds are commonly used to convey interests of an unknown
extent or claims having a dubious basis.” Geodyne Energy, 161 S.W.3d
at 487.52 We are mindful that the Stipulation’s granting clause employs
language of cross-conveyance to accomplish a conveyance that—in light
of our holdings today and those of the court of appeals in Conoco 1—
51 Cf. Burns v. Goodrich, 392 S.W.2d 689, 692 (Tex. 1965) (holding
deed’s reference to an interest in certain premises “which [grantor] inherited
from his [parents]” was “not an intention clause restricting the granting clause
to a conveyance of the grantor’s interest, whatever it might be,” but rather “an
identifying reference to the interest in land which was the subject of the
conveyance”).
52 See also Jackson v. Wildflower Prod. Co., Inc., 505 S.W.3d 80, 89 (Tex.
App.—Amarillo 2016, pet. denied) (“Typically, a quitclaim deed is used when
the interest of the grantor is unknown or uncertain and the grantor wants to
limit or extinguish potential liability arising from any claim the grantee might
assert against the grantor pertaining to the grantor’s ownership interest.”
(emphasis added)).
36
could be viewed as a unilateral transfer to the Gipses of part of the NPRI
originally retained by Hahn. But “[w]e have long recognized the validity
of quitclaim deeds, even if it turns out that they convey nothing.” Id. at
486 (emphasis added).
The inclusion of quitclaim language here is consistent with and
further supports our conclusion that, read as a whole, the Stipulation
contains an adequate description of any interest in property being
conveyed. Accordingly, we hold that the Stipulation is not rendered
unenforceable as a conveyance for the reasons urged by Hahn.
CONCLUSION
We hold that the court of appeals erred in reversing the trial
court’s judgment and rendering judgment in Hahn’s favor because the
Stipulation supports ConocoPhillips’s entitlement to summary
judgment on its affirmative defense of ratification, and Hahn failed to
raise any fact issues on elements of that defense. We therefore reverse
the portion of the court of appeals’ judgment with respect to the Tract A
royalty calculation, as requested by ConocoPhillips. We render
judgment that as a result of the Stipulation, Hahn maintained a floating
1/8 NPRI in Tract A, and his royalty decimal interest in and to the
proceeds of production from the Maurer Unit B pooled unit was
.00376838 from first production until June 9, 2017.53
53 ConocoPhillips requested this partial reversal in its prayer for relief
but did not further specify the appropriate disposition. Having concluded that
ConocoPhillips is entitled to the reversal it prayed for, we look to the appellate
rules for the appropriate disposition, which in this case is to render the
judgment the lower court should have rendered. See TEX. R. APP. P. 60.2(c);
37
J. Brett Busby
Justice
OPINION DELIVERED: December 31, 2024
Garza v. Cantu, 431 S.W.3d 96, 108-09 (Tex. App.—Houston [14th Dist.] 2013,
pet. denied).
38