This Isn't Math Class: Texas Supreme Court Holds Mineral Reservation Of "One-Half Of One-Eighth" Does Not Reserve A One-Sixteenth Interest

• Jurisdiction: Texas,United States
• Law Firm: Baker Botts
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Energy and Natural Resources, Energy Law, Oil, Gas & Electricity, Trials & Appeals & Compensation, Construction & Planning
• Author: Laura Shoemaker McGonagill and Macey Reasoner Stokes
• Published date: 23 May 2023

On February 17, 2023, the Texas Supreme Court issued its decision in Van Dyke v. Navigator Group, No. 21-0146, 2023 WL 2053175 (Tex. Feb. 17, 2023), which analyzed the meaning of double fractions in mineral reservations.¹ Construing a 1924 deed, the Texas Supreme Court held that the grantors' reservation of "one-half of one-eighth of all minerals and mineral rights" reserved one half of the mineral interest, not one sixteenth of the mineral interest as simple arithmetic would suggest. Van Dyke at *1. In so holding, the Court focused on the meaning of "1/8" at the time of execution. See id. at *5-7.

The Court analyzed the meaning of double fractions looking to the meaning of contract language at the time of execution.

The dispute arose when an oil and gas operator drilled a well on the subject ranch land in 2012'88 years after the deed at issue was executed'and paid production royalties on the assumption that both grantors' successors and grantees' successors held a ' mineral interest. Id. at *2.The grantees' successors objected to this royalty division, asserting that the "one-half of one-eighth" reservation language in the deed reserved only 1/16 of the mineral estate to the grantors, giving the grantees' successors a 15/16 ownership interest. Id. On the other hand, the grantors' successors argued that the language reserved half of the mineral interest because the double fraction reflects a term of art common at the time the deed was drafted where 1/8 referred to the entire mineral estate. Id.

With at least $44 million in accumulated disputed royalties at stake, the parties filed dueling motions for summary judgment. Id. The trial court agreed with the grantees and held that the deed's reservation of "one-half of one-eighth" in the mineral estate unambiguously reserved only a 1/16 interest. Id. The Eastland Court of Appeals agreed and affirmed the trial court's decision. Id.

The Texas Supreme Court reversed. Id. at *3.In holding that the language "one-half of one-eighth" reserved one half of the mineral interest to the grantors (rather than a 1/16 interest), the Court reasoned that at the time the parties executed the deed, "'1/8' was widely used as a term of art to refer to the total mineral estate." Id. at *5. Building upon its opinion in Hysaw v. Dawkins, 483 S.W.3d 1, 13 (Tex. 2016), the Court offered this guidance to courts interpreting similar language in the future:

[W]hen courts confront a double fraction involving 1/8 in an instrument, the logic...