Hausser v. Cuellar – Case Brief Summary (Texas)

In Hausser v. Cuellar, 345 S.W.3d 462 (Tex. App.--San Antonio, 2011, pet. denied), the granting clause of the 1936 deed in question conveyed an undivided 1/2 interest "in and to all of the oil royalty . . ." 345 S.W.3d at 467-68.

The existing lease clause stated that the deed conveyed "one-half (1/2) of all the oil and other royalty." Id. at 468. However, the pertinent part of the future lease clause of the 1936 deed read:

"In the event a future lease or leases are executed . . . then the Grantees shall receive under such future lease or leases one-sixteenth (1/16) part of all oil, gas and other minerals taken and saved . . . under such lease or leases, and shall receive the same out of the royalty therein provided for . . ." Id. at 468.

The existing lease provided for a 1/8th royalty, and it was undisputed that grantees had received 1/16th of production (1/2 of 1/8th) under the existing lease for years. Id. at 465.

In 2006, a new lease was executed with a 1/4 royalty. Id.

Grantors' successors asserted that, pursuant to the terms of the future lease clause, the grantees' royalty should be limited to a fixed 1/16 royalty interest (1/16th of production). Id.

Grantees' successors argued that pursuant to the granting clause, grantees were entitled to an undivided 1/2 royalty received under the 2006 lease (1/2 of 1/4th, or 1/8th of production). Id.

The Court, en banc, rejected the grantors' argument that the future lease clause should control the amount of royalty reservation because the 2006 lease was executed after the deed. Id. at 469-70. Instead, the Court held that under a proper analysis, the 1936 deed must be harmonized to give effect to all its provisions by ascertaining the parties' intent from the four corners of the instrument and to determine whether the granting clause or future lease clause controlled the amount of royalty reservation. Hausser, 345 S.W.3d at 470.

After harmonizing all the provisions of the deed, we held the deed conveyed an undivided 1/2 (the grant clause fraction) of the 1/4th royalty (the new lease royalty), or 1/8th of production. Hausser, 345 S.W.3d at 470.

The Court reasoned that the 1936 deed involved a single conveyance with fixed rights because the deed did not contain any language suggesting two different estates were conveyed. Id.