Executive Rights Under a Warranty Deed In Texas

In Day & Co. v. Texland Petroleum, Inc., 786 S.W.2d 667 (Tex. 1990), the granting party, Day, Inc., leased an 80-acre tract of land from a third party by general warranty deed. Id. at 668. The entire 80-acre tract was subject to the third party's one-half non-executive mineral interest. Id. The third party expressly conveyed all executive rights to Day, Inc. Id. Later, when Day, Inc. leased ten of the 80 acres to the Shoafs, Day, Inc. excepted the third party's one-half mineral interest, as well as Day, Inc.'s own one-fourth mineral interest. Id. The deed, however, did not mention the executive right previously granted to Day, Inc. by the third party. Id. The Shoafs and Day, Inc. later executed mineral leases. Id. Texland acquired the leases covering all 80 mineral acres and completed a well on the Shoafs 10-acre tract. Id. Later, Day, Inc., suspecting Texland's predecessor-in-interest did not properly pay delay rentals to maintain its lease to the non-executive one-half interest owned by the third party, attempted to exercise executive right to the interest by leasing the minerals to the president of Day, Inc. Id. The Supreme Court held the executive right in the mineral estate passed to the Shoafs under the general warranty deed even though it was previously severed from the mineral estate and conveyed to another party, but unmentioned in the general warranty deed. Day, 786 S.W.2d at 669. The Court found, although the executive right was severed from the mineral estate, "it remains an interest in property, an incident and part of the mineral estate like the other attributes such as bonus, royalty and delay rentals." Id. The Court held the previously severed, but not reserved or excepted, executive rights were conveyed under the general warranty deed. Day, 786 S.W.2d at 669-70.