Schlittler v. Smith

Schlittler v. Smith, 128 Tex. 628, 101 S.W.2d 543, 545 (Tex. 1937) involved a dispute over the meaning of the word "royalty" in a general warranty deed. The grantor claimed that the reservation of a "royalty" interest included bonuses and rental payments 101 S.W.2d at 544. Nonetheless, we held that the word "royalty" has a specific meaning in oil and gas law that does not include bonuses and rental payments. Id. And, although the deed did not explicitly state the royalty interest amount the grantor would receive if the land were developed, we stated that "self-interest on the part of the grantee may be trusted to protect the grantor as to the amount of royalty reserved. Of course, there should be the utmost fair dealing on the part of the grantee in this regard." 101 S.W.2d at 545. Smith involved a very narrow duty in which a grantee, after executing a mineral lease, owes a duty of the utmost fair dealing to protect the amount of the grantor's royalty. 101 S.W.2d at 545. The Smith duty, therefore, arises in conjunction with the execution of a lease.