Mr. Bumble and Oliver Twist
In a delightful (that is, unless you’re on the losing side) opinion by Justice Young, the Texas Supreme Court has ruled that the use of the term “one-half of one-eighth” in a 1924 deed reserving a mineral interest reserved one-half of the interest, not one-sixteenth.
Susan Davis Van Dyke, et al. v. The Navigator Group, et al. (No. 21-0146) arose from a 1924 transaction in which the Mulkeys (predecessors in interest to Van Dyke) conveyed their ranch and underlying minerals to the Whites (predecessors in interest to The Navigator Group). The deed reserved “one-half of one-eighth of all minerals and mineral rights” in the land to the Mulkeys. For nearly 90 years after that, the parties, their assignees, and other third parties “engaged in numerous transactions and filings reflecting that each side of the original conveyance had an equal ½ interest in the minerals.” In 2013, however, the White parties decided that the Mulkey parties only reserved a 1/16 interest (1/2 x 1/8) and filed suit for 15/16 of a whopping $44 million in accrued royalty payments. The trial court and Eastland Court of Appeals agreed, applying a straight-up arithmetical calculation to reach that conclusion. The Mulkey parties appealed.
SCOTX reversed on two independent grounds. First, the Court held that in 1924 the double fraction “1/2 x 1/8” was a term of art meaning that the grantor reserved one-half of the mineral interests. As Justice Young observed, “[t]he meaning of an unamended text . . . is unaffected by the passage of time, linguistic developments, or the evolution of usage. These phenomena may affect our language by giving new meanings to (or subtracting old meanings from) any given word or phrase. But the original text does not evolve with the broader language. The test is what the text reasonably meant to an ordinary speaker of the language who would have understood the original text in its context. Whatever that meaning was then remains the meaning today” (emphasis added). Pointing out that Texas case authority exists for the proposition that a “thousand” rabbits really means 1200 rabbits or that a “day” means 10 hours, not 24, the Court found that the ordinary meaning of the double fraction in a mineral deed executed in 1924 was “1/2,” and that anyone searching the deed in public records would have understood it that way. Indeed, Justice Young pointed to the importance of “a consistent and stable judicial construction of terms used in deeds” to the public, not just the parties.
The Court further relied on its recent analysis in Hysaw v. Dawkins, 483 S.W.3d 1 (Tex. 2016), which found that the term “one-third of one-eighth royalty” in a will meant to bequeath “a floating 1/3 interest in the royalty.” According to the Court, the “dilemma” presented by double fractions in the oil and gas industry stems from the “estate misconception theory,” which reflected a “belief that, in entering into and oil-and-gas lease, a lessor retained only a 1/8 interest in the minerals rather than the entire mineral estate in few simple determinable with the possibility of a reverter in the entire estate.” Thus, the fraction 1/8 came to represent 8/8 of the estate. This usage found its way into thousands of mineral deeds, “so much so that the courts have taken judicial notice of the widespread phenomenon.” In addition to the estate misconception theory, the overwhelming frequency of this usage produced an “historical standardization” having nothing to do with the “arithmetical value” of 1/8. That “1/2 x 1/8 = 1/2” is thus the objectively correct “plain meaning” of the language in the deed. The Court added, as it did in Hysaw, that this construction could be rebutted based on other language in the deed, but no such “textually demonstrable basis” for reading the double fraction as a simple arithmetical expression existed here.
As to the second ground, the Court found that between 1924 and 2013 the parties and their successors in interest consistently and continuously acted “in reliance on each having a ½ mineral interest conclusively satisfies the presumed-grant doctrine’s requirements.” The presumed-grant doctrine, or “title by circumstantial evidence,” is akin to adverse possession. It requires “its proponent to establish three elements: (1) a long-asserted and open claim, adverse to that of the apparent owner; (2) nonclaim by the apparent owner; and (3) acquiescence by the apparent owner in the adverse chain.” The Court easily found that the parties’ history of transactions based on the original deed satisfied this test. The Court remanded to the trial court for further proceedings.
In Charles Dickens’ novel Oliver Twist (1837-39), Mr. Bumble says, “If the law supposes that, the law is a [sic] ass—a idiot. If that’s the eye of the law, the law is a bachelor; and the worst I wish the law is that his eye may be opened by experience—by experience.” While neither Dickens nor Mr. Bumble had much use for lawyers and judges, this opinion at least demonstrates that the law’s “eye” is quite capable of being opened by “experience.” The Court could have done what the trial court and court of appeals did and simply multiplied the two fractions. But language is not always as it seems, and the Court’s thoughtful, scholarly, and historically conscious opinions in this case and Hysaw show, among other things, that the law is not a mechanical apparatus but a living body with its own past.
