Brown v. Havard
In Brown v. Havard, 593 S.W.2d 939 (Tex. 1980), a clause in a 1963 warranty deed reserved "in perpetuity an undivided one-half non-participating royalty (Being equal to, not less than an undivided 1/16th) of all the oil, gas and other minerals." Id. at 940.
After a lease with a 3/8 royalty was executed, the Browns claimed a 3/16 royalty interest. Id. at 941.
The court concluded that the clause was ambiguous and upheld the jury's finding that the parties' intent was to reserve a royalty equal to 1/16 based on extrinsic evidence. See id. at 942.
The court reasoned that, "without the parenthesis, the reservation is either a 1/2 royalty or 1/2 of royalties," that is, a fractional royalty or a fraction of royalty, although it did conclude that the language without the parenthetical would reserve 1/2 of all oil, gas, and other minerals produced, i.e., a fractional interest, and not 1/2 of any outstanding or future royalty. Brown, 593 S.W.2d at 942.
The parenthetical presented further ambiguity: either (1) the parties intended to reserve 1/2 of the conventional 1/8 royalty, "being equal to" a 1/16, with the "not less than" insuring that the reservation was 1/2 of the conventional 1/8 and that, if the royalty were reduced, the Browns would still receive their 1/16; or (2) the parties intended to reserve 1/2 of the royalties contained in future leases, providing further that such share must not be less than 1/16. Id.
The majority discounted the second interpretation because it "must ignore the presence of the 'comma' between the phrase 'Being equal to' and the phrase 'not less than an undivided 1/16th.'" Id.
Justice McGee, dissenting, stated that the provision was not ambiguous and interpreted the parenthetical as an indication that the Browns had contemplated future leases and had attempted to make sure that their royalty interest would never be less than the 1/16 interest under the current lease, an unambiguous minimum. Id. at 946 (McGee, J., dissenting).
Justice McGee hinged this analysis on the words "heirs and assigns in perpetuity" to indicate that the parties intended to reserve a perpetual royalty and not one coincident only with the duration of the existing lease on the property and "not less than an undivided 1/16th" to indicate that the Browns contemplated future leases on the property after the expiration of the current lease. Brown, 593 S.W.2d at 946 (McGee, J., dissenting).
Furthermore, Justice McGee observed the absence of any language to indicate that the royalty was to be limited to a maximum of, or not more than, 1/16, but also the presence of specific language that the royalty was to be not less than 1/16. Id. (McGee, J., dissenting).
He noted, "Describing a variable amount as being equal to not less than 1/16 has the same result as describing it as equal to or greater than 1/16," and the absence of a comma between "equal to" and "not less than" did not change that meaning. Id. (McGee, J., dissenting).