## COURT OF APPEALS SECOND DISTRICTOFTEXAS FORT WORTH
NO. 2 - 0 7 - 2 6 3 - CV
RAN GE RE SOU RCES CORPO RATI O N APPE L L AN TS AND R ANG E P R ODU CT I ON I , L . P . AN D S T E A D F A S T F IN A N C IA L , L L C , R .J . S IK E S , K A T H Y S IK E S , C H R IS T Y R O M E , G R E G L O U V IE R , P AM L OUV I E R , AN D D AC OT A I N V ESTM EN T H O LDI N G S, LL P AND R . CR I S T VI AL V . BETTY LOU BRA D SH A W A PPELL EE

----- ----- -- FR O M THE 355TH DI STRI CT CO URT O F HO O D CO UN TY

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### OP I NI ON ON R E HEAR I NG

----- ----- -- W e d enyA ppe l l ant s’ m ot i on f or r ehe ar i ng, but w e w i t hdr aw ouropi ni on
a n d j u d g m e n t o f M a y8 , 2 0 0 8 a n d s u b s ti tu te th e fo l l o w i n g . W e a ffir m .1 ... A n o n -p a rt ic ip a t in g ro y a lt y is n o n -p o s s e s s o r y in t h a titd o e s n o te n t it le

i t s o wn e rt o p r o d u c e t h e mi n e r a l s h i ms e l f . I tme r e l ye n t i t l e s i t s o wner t o a sh ar e o ft he pr oduc t i on pr oce eds , f r ee oft he exp ens esofex p l o ra ti on a nd p ro d u c ti o n . S e ePl a i n sm a n T

ra d i ngCo . v. Cre ws, 8 9 8 S .W .2 d 786, 789 (T e x . 1 9 9 5 ); L u ck el v. W h ite, 8 1 9 S .W .2 d 4 5 9 , 4 6 3 (T e x . 1 9 9 1 ); Ham i lton v. Mor r i s Res . , Ltd. , 2 2 5 S .W .3 d 3 3 6 , 3 4 4 ( T e x . A p p .— S a n A n to n i o 2 0 0 7 , p e t. d e n i e d ). 2 I . I nt r oduc t i on I n t hr ee i ss ues , A ppe l l ant s Range Res our ce s C or por at i on, Range Pr odu ct i on I , LP, S t eadf ast Fi nanci al , LLC , R. J. Si kes, Ro gerSi kes, K at hy S i kes, C hr i st y Rom e, G r eg Lou vi er , P a m L o uvi er , D ac ot a I nve st m entH ol di ngs , LL P,
a n d R . C ri s t V i a l (c o l l e c ti v e l y“ R a n g e ” ) a p p e a l th e tri a l c o u rt’s p a rti a l s u m m a ry ju d g m e n tin f a v o ro fA p p e lle e , B e t t y L o u B r a d s h a w . W h ile t h e u n d e r ly in g s u it br oughtby Br ads ha w i n v o l v es cl ai m s f orbr ea ch off i duc i ar y du t y a nd conspi r acy, t he ov e rar chi ng i ssue i n t hi s i nt er l ocutor y appeal by agr eed or der i s w he t he rt he tr i a l c ou rtc or r e c t l y de c i de d t ha tt he r e s e r va t i on i n t w o 1960 dee ds w as a “f r ac t i on ofr oya l t y” i nt er es tr at hert han a “f r ac t i ona l r o y a l t y” i nt er es t . W e c onc l ude t hatt he t r i al co urtw as co r r ec tan d t hat t he r es er vat i on
w a s a “ fra c ti o n o f ro y a l ty .” II . F a c tu a la n d P ro c e d u ra lH i s to ry Bradshaw i s t he hol der of a non- par t i ci pat i ng r oyal t y i nt er est( “N PR I ”) i n 1 appr oxi m at el y 1, 80 0 acr es i n H ood C oun t y t hat she i nher i t ed f r om herpar ent s,2 ... I n o n e d e e d , th e D ri sk il ls c o n v e y e d ap p rox i m a tel y6 0 0 ac res to

M i t c h e l l & So n, a part ner shi p. I n t he ot herdeed, t he D r i ski l l s conveyed a p p ro x i m a te l y1 ,1 7 3 a c re s to T h e W h e a tl a n d R e tre a t, I n c .

3 ... S t e a d f a s ta l s o a s s i g n e d por t i ons o fi t s r o y a l t yi n t e r e s tt o P e t e rG. B e n n i s a n d R o g e r S i k e s . 3 J .A . a n d Lo ta F a yD ri s k il l . T h e D ri sk i l l s re se rve d the roy a l ty i n tere st i n tw o d e e d s th a t th e ye x e c u te d i n 1 9 6 0 (th e “ 1 9 6 0 D e e d s ” ). 2 B y2 0 0 6 , A p p e lla n t S t e a d f a s t o w n e d t h e s u r f a c e a n d m in e r a l e s t a t e s in appr oxi m at el y 1, 99 4 acr es i n H ood C oun t y, ofw hi ch t he D r i ski l l s’ r eser ved roy a l ty i n tere sts c o v e red 1 ,8 0 0 a c res . S tea d fas t c o n v e y e d th e su rf a c e es tate t o A p p e lla n tR a n g e R e s o u r c e s C o r p o r a t io n b u tre s e r v e d t o it s e lfa ll o ft h e o il, gas, and ot her hydrocar bon s i n t he 1, 99 4 acr es. A tt he sam e t i m e, Steadf ast ent er ed i nt o a n oi l an d gas l ea se cov er i ng t he 1, 994 ac r es w i t h Appel l antRange Pr odu ct i on I , L.P .; t he l ease pr ovi ded f ora 1/ 8 r oyal t y. St eadf astassi gned port i ons ofi t s r oya l t y i nt er es t t o t he f ol l ow i ng a ddi t i ona l A ppe l l ant s: R. J. an d Kat hy Si ke s, R. Cr i st V i al , t he Lou vi er s, an d Dacot a I nve st m entH ol di ngs , LL P. 3 I n J a n u a ry 2 0 0 7 , B rad sh a w fi l e d su i t, all e g i n g tha t S tea d fas t bre a c h e d i ts f i duc i ar y du t y t o her by ent er i ng i nt o t he one - ei ght h r oya l t y l ea se w i t h Rang e P rod u c ti o n I , L .P., w h e n S tea d fas t o w e d h e r a d u ty to se c u re a o n e -f o u rt h roy a l tyi n t he l e a s e . Br a ds ha w a r gu e d t ha ts he w a s e nt i t l e d t o a o ne -ei g h th
ro y a l ty (1 /2 o f 1 /4 l e a s e ro y a l ty ), ra th e r th a n a o n e -s i x te e n th ro y a l ty(1 /2 o f 1 /84

l ea se r oya l t y) be ca us e, att he t i m e St ea df as tex ec ut ed t he l ea se t o Rang e, t he “goi ng r oyal t y r at e i n H ood C oun t y, Texas, w as one- f our t h. ” Th e part i es f i l ed com pet i ng m ot i ons f orsum m ar y j udg m ent on w het her t he 196 0 D ee ds r es er ved a “frac ti o n o fr oya l t y” ora “f r ac t i ona l r oya l t y” i n tere st. R a n g e arg u e d tha t B rad sh a w ’s N P R I w a s a fi x e d o n e -s ix tee n th “f r ac t i ona l r oya l t y” ( 1/ 2 x 1/ 8) an d, t her ef or e, no f i duc i ar y du t y w as ow ed or br ea che d. Br ads haw con t end ed t hatt he 196 0 D ee ds pr ovi ded f ora “f r ac t i on
o f r o y a l ty,” s u c h tha t he r sh a re o f roy a l ty c o u l d n e v e r dro p b e l o w o n e -si x tee n th b u t c o u l d b e g re a te r th a n o n e -s i x te e n th . T h u s , i f a fu tu re l e a s e p ro v i d e d fo r a
one - ei ght h r oya l t y, s h e w o u l d g eta one - si xt ee nt h ( 1/ 2 x 1/ 8) s har e o f pr odu ct i on; i fi tpr ovi ded f ora one- si xt h r oyal t y, she w oul d be ent i t l ed t o a onetw e l fth (1 /2 x1 /6 ) sh a re o f p ro d u c ti o n . Th e t r i al cour tagr eed w i t h B r adshaw , h o ld ing t hatt he r oyal t y i nt er est
r e s e r v e d in t h e 1 9 6 0 D e e d s w a s a “ f r a c t io n o fro y a lt y ” in t e r e s t . T h is i n te rl o c u to ry a p p e a l b y a g re e d o rd e r fo l l o w e d . S ee T EX . C IV . P RA C . & R EM . C ODE A NN . § 51. 014 ( d) ( V er non 2008) . The t r i al co urts t aye d t he pr oce edi ngs be l ow p e n d i n g o u r re v i e w . I I I . Standar d ofRev i ew N e i th e r B ra d s h a w n o r R a n g e c o n te n d s th a t th e 1 9 6 0 D e e d s a re
am bi guo us. The i nt er pr et at i on of an unam bi guo us deed i s a quest i on of l aw .5

A ltm a n v. Bl

a k e, 7 1 2 S .W .2 d 1 1 7 , 1 1 8 (T e x . 1 9 8 6 ). A ccor di ngl y, w e r evi ew d e n o v o th e tri a l c o u rt’s c o n s tru c ti o n . EO G Res ., In c . v. Ha n s o n Pro d. Co ., 94 S. W . 3d 697, 701 ( Tex. A pp. — San A nt oni o 200 2, no pet . ) . W hen co nduc t i ng a d e n ovo r evi ew , t he r evi ew i n g co urtex er ci se s i t s ow n j udgm entan d
r ede t er m i nes eac h i ss ue, ac cor di ng no de f er enc e t o t he t r i al co urt ’ s dec i si on. Q ui ckv. Cityo f A us ti

n, 7 S .W .3 d 1 0 9 , 1 1 6 (T e x . 1 9 9 8 ). I V . “Fr act i on of R oyal ty” ver sus “Fr act i onalRo yal ty” The s ol e i ss ue i n t hi s app ea l i s one ofde ed i nt er pr et at i on: w het h ert he
ro y a l tyre s e rv a t i o n s i n th e 1 9 6 0 D e e d s c o n s ti tu te a “ fra c ti o n a l ro y a l ty ” o r a “f r act i on of r oyal t y. ” A “f r act i onal r oyal t y” i nt er est ent i t l es t he ow ner t o t he speci f i ed f r act i onal
am ounts t at ed i n t he dee d of oi l , ga s, orot herm i ner al s pr oduc ed f r om t he l and and r em ai ns co ns t antr ega r dl es s oft h e am ountofr oya l t y c ont ai ned i n a
s u b s e q u e n tl y -n e g o ti a te d o i l a n d g a s l e a s e . S ee Ti l ler v. Ti l ler, 685 S. W . 2d 456, 4 5 8 (T e x . A p p .— A u s ti n 1 9 8 5 , n o w ri t); P h i l l i p E . N o rv e l l , Pitf al l s i n Devel opi ng La ndsBurden ed by Non-Parti ci pati ng Royalt y: Calcul

ati ng the Royalt y Share a nd Coexi sti ng with the D ut y owed to the Non-Parti ci pati ng Royalt y O wner

by the Executive I

nterest, 48 A RK . L. R EV . 9 3 3 , 9 3 5 (1 9 9 5 ). A “ f r a c t io n o fro y a lt y ” c o n v e y s a f r a c t io n a l s h a r e o ft h e ro y a lt yt h a tis
c o n t a in e d in a n o il a n d g a s l e a s e — itis n o tf ix e d , b u tra t h e r“ f lo a t s ” in6

ac cor dan ce w i t h t he si z e o ft he l and ow ner ’ s r oya l t y con t ai ned i n t he l ea se an d, i n a d d i ti o n to th e l a n d o w n e r’ s roy a l ty, the fr a c ti o n o f no n -pa rt i c i p a ti n g roy a l ty
a ls o s h a r e s p r o p o rt io n a lly i n a n yo v e r r id in g ro y a lt yin t e r e s tre s e r v e d in t h e o il
a nd g a s l e a s e , a nd t he h ol de ro ft he e xe c ut i ve r i gh to w e s a d u ty to t he NPRI
o w n e rin e s t a b lis h in g t h e la n d o w n e r ’s ro y a lt yin a n o il a n d g a s le a s e . N o r v e ll, 48 A RK . L. R EV . a t 9 3 5

– 3 6 . T h e a m o u n tt o b e p a id t o t h e o w n e ris det er m i nab l e u pon t he exe cut i on ofs om e f ut ur e l ea se an d i s ca l cul at ed by
m ul t i pl yi ng t he f r ac t i on i n t he r oya l t y r es er vat i on byt he roya l t y pr ovi ded i n a l e a s e . S ee W

i nslowv. A cker, 7 8 1 S .W .2 d 3 2 2 , 3 2 7 (T e x . A p p .— S a n A n t o n io 1 9 8 9 , w ri t d e n i e d ); Ti l ler, 685 S. W . 2d a t458. A . Rul es ofD ee d I nt er pr et at i on I n c ons t r ui ng a de e d , o u r p ri m ar y du t y i s t o a sc ert ai n t he i nt entoft he par t i es by a f und am ent al r ul e ofconst r uct i on kno w n as t he “f ourcor ner s” r ul e. Luckel, 819 S. W . 2d a t461; Benne t t v. Tar rant County W

ater Control

& I mp. D i st. No. O ne , 8 9 4 S .W .2 d 4 4 1 , 4 4 6

– 4 7 (T e x . A p p .— F o rtW o rt h 1 9 9 5 , w r it den i ed) . W e d o notl ookf ort he su bj ec t i ve i nt entoft he part i es , w hi ch m ay be
con f l i ct i ng; i ns t ea d, i ti s t he obj ec t i ve i nt ent , t he i nt entex pr es se d orap par ent i n th e w ri ti n g , th a t i s s o u g h t. Cherokee W ater Co. v. Forder

hause , 641 S . W . 2d 5 2 2 , 5 2 5 (T e x . 1 9 8 2 ). I n s e e k i n g to a s c e rta i n th e i n te n ti o n o f th e p a rti e s , w e
m u s t a tte m p t to h a rm o n i z e a l l p a rts o f th e d e e d . A ltm an v. Bl ake , 712 S. W . 2d7

1 1 7 , 1 1 8 (T e x . 1 9 8 6 ). E v e n i f d i ffe re n t p a rts o f th e d e e d a p p e a r c o n tra d i c to ry
ori ncon si st ent , t he cour tm ustst r i ve t o const r ue t he i nst r um entt o gi ve ef f ect to a l l o f i ts p ro v i s i o n s . Luckel, 819 S. W . 2d a t462. B. 1960 D ee ds ’ Royal t y Res er vat i ons The r es er vat i on ati ss ue i s con t ai ned w i t hi n t hr ee unnu m ber ed par agr aph s i n each deed, w i t h t he contr over si al por t i ons i n i t al i cs: [ 1] The Gr ant or s her ei n r es er ve unt o th e m se l ves , t hei rhe i r s and a s s ig n s , a n d e x c e p tf r o m t h is c o n v e y a n c e a n u n d iv i d e d o n e -h a lf ( 1/ 2) Royal t y ( Bei

ng equal

to not less than an und i vi ded on esi xt ee nt [ h] ( 1/ 16) [ ) ] ofal l t he oi l , ga s and / orot herm i ner al s i n, t o, and unde rort hatm ay be pr oduc ed f r om s a i d . . . l and af or es ai d, t o be pai d ordel i ver ed t o sai d G r ant or s, as t hei r ow n pr oper t y, f r ee o fc o s tF o r e v e r ; t o g e t h e rw it h t h e r ig h t o f in g r e s s a n d e g r e s s a ta ll t i m es f ort he pur pos e o fs t or i ng, t r ea t i ng, m ar ke t i ng a nd r em ovi ng t h e s a me t h e r e f r o m. [ 2] Sai d i nt er es t her eby r es er ved i s a N on- Part i ci pat i ng Royal t y a nd shal l notpart i ci pat e i n t he B onu ses pai d f orany oi l , gas orot her m i ner al [ s] l ea se co ver i ng s ai d l and , nors hal l i tpa rt i ci pat e i n t he m oney r ent al s w hi ch m ay be pai d t o ext end t he t i m e w i t hi n w hi ch a w e ll m a yb e b e g u n u n d e rt h e t e r m s o fa n y le a s e c o v e r in g s a id l and . I ts hal l notbe ne ce ss ar y f ort he G r ant or s, t hei rhe i r s, an d a ss i g n s, to j o i n i n th e ex e c u ti o n o f an yl e a se co v e ri n g sa i d R o y a l ty i nt er es t h e re i n r es er ved , an d t he G r ant ee he r ei n, hi s hei r s and assi gns, shal l have t he r i ght t o l ease sai d l and f or oi l , gas and ot her m i ner al s pr o vi ded , how eve r , t hatal l s uch l ea se s sh al l pr ovi de f or R o y a l ty o f notless than o n e -e i g h th (1 /8 ): ( a) on o i l , ga s and ot herm i ner al s, l i qui d ors ol i d; (b ) O ft h e n e tp r o c e e d s f r o m t h e s a le o fliq u id hydr oca r bons s uch as ga so l i ne, but ane , pr ot ane or f r om t he sal e ofany ot her m anufact ur ed orpr ocessed8 by- pr odu ct s ext r ac te d orr ecover ed f r om sai d nat ur al gas orcasi ngh ead gas; (c ) O ft h e n e tp r o c e e d s d e r iv e d f r o m t h e s a le o fa ll r esi due gas ori t s by- pr odu ct s. [3 ] I n t he ev en t oi l , ga s or othe r m i ne r al s are prod uc ed f r o m s a id l and, t hen sai d G r ant or s, t hei r hei r s and assi gns, shal l r ecei ve not lesstha n on e -si

xte enth ( 1/ 16)p orti

on( bei ng e qua l to on e -ha lf

( 1/ 2) of the custom ary one- ei ghth ( 1/

8) R o ya lt y) of

the enti

re gross produc ti

on a nd/ or s uchne tproce edsas h erei nab oveprovi

ded as t hei row n pr ope rt y t o be pa i d orde l i ver ed t o s ai d Gr ant or s f r ee of a l l co st fr o m roy a l ty o i l , g a s a n d /o r o t h e rm i n e ral s, b y -pro d u c ts m a n u fa c tu re d o r p ro c e s s e d th e re fro m . [E m p h a s i s a d d e d .] C . A n a ly s is The Tex as Supr em e Courti nt er pr et ed a si m i l ar cl aus e i n Bro wn v. Ha va rd . 59 3 S . W . 2d 93 9 ( Tex . 19 80 ) . I n t hatcase, a cl ause i n a 19 63 w ar r ant y deed
r es er ved “ i n p er pet ui t y a n und i vi ded one - hal fnon- part i ci pat i ng r oya l t y ( Bei ng equal t o, notl ess t han an u n d iv id ed 1 / 16 t h) ofal l t he oi l , gas and ot her
m i ner al s. ” Id . at940. Af t era l ea se w i t h a 3/ 8 r oya l ty w a s ex ec ut ed, t he B ro w n s c l a i m e d a 3 /1 6 ro y a l tyi n te re s t. Id . at 94 1. Th e cour t concl uded t hat t he cl aus e w as am bi guousan d uph el d t he j ur y’ s f i ndi ng t hat t he part i es ’ i nt ent
w a s to re s e rv e a ro y a l tye q u a l to 1 /1 6 b a s e d o n e x tri n s i c e v i d e n c e . S e ei d. at 9 4 2 ; Ha va rd

v. Bro wn , 57 7 S . W . 2d 75 7, 75 9– 60 ( Tex . C i v. A pp. — S an A n to n i o 1 9 7 9 ), a ff’d, 5 9 3 S .W .2 d 9 3 9 (T e x . 1 9 8 0 ).9

T h e c o u rtre a s o n e d t h a t , “ [w ]it h o u tt h e p a r e n t h e s is , t h e re s e r v a t io n is ei t her a 1/ 2 r oya l t y or 1/ 2 ofr oya l t i es , ” t hati s, a f r ac t i ona l r oya l t y ora f r ac t i on ofr oyal t y, al t hou gh i tdi d concl ude t hat t he l angu age w i t hou tt he par ent het i cal

w oul d r eser ve 1/ 2 o fal l oi l , gas, and ot herm i ner al s pr odu ced, i . e. , a f r act i onal i n te re s t, a n d n o t 1 /2 o f a n y o u ts ta n d i n g o r fu tu re ro y a l ty . Bro wn , 593 S. W . 2d at 94 2. Th e par ent het i cal pr esent ed f ur t her am bi gui t y: ei t her ( 1) th e p art i es i nt ended t o r eser ve 1 / 2 o ft he conv ent i onal 1/ 8 r oyal t y, “bei ng equ al t o” a 1/ 1 6 , w i t h t he “n otl es s t han ” i ns ur i ng t hatt he r es er vat i on w as 1/ 2 oft he
c o n v e n t io n a l 1 /8 a n d t h a t , ift h e r o y a lt yw e r e re d u c e d , t h e B r o w n s w o u ld s t ill
r ecei ve t hei r1/ 16 ; or( 2 ) th e part i es i nt ended t o r eser ve 1/ 2 o ft he r oyal t i es contai ned i n f ut ur e l eases, pr ovi di ng f urt hert hatsuch shar e m ustnotbe l ess th a n 1 /1 6 . Id . T h e m a jo r i t y d i s c o u n t e d t h e s e c o n d in t e r p r e t a t io n b e c a u s e it “m us ti gnor e t he pr es enc e of t he ‘ com m a’ be t w ee n t he phr as e ‘ Bei ng e qua l t o’ and t he phr ase ‘ not l ess t han an un di vi ded 1 / 16 t h. ’ ” Id . Jus t i ce M cGee, di ss ent i ng, s t at ed t hatt he pr ovi si on w as notam bi guous and i nt er pr et ed t he par ent het i cal as an i ndic a tio n t hatt he B r ow ns had
c o n tem p l a ted futu re l e a se s a n d h a d a ttem p ted to m a k e su re th a t t h e i r r o y a l ty i nt er estw oul d neverbe l ess t han t he 1 / 16 i nt er est und er t he cur r entl ease, an
u n a m b i g u o u s m i n i m u m . Id . a t 9 4 6 (M c G e e , J . , d i s s e n ti n g ); se e a l so Shar on C a l l a w a yD i ttfu rth , Co m m o n Prob lem s i n Co n ve yi

ngO i l an d Ga s Interes ts , 1310

S T . M ARY ’ S L. J. 82 5, 83 0 ( 19 82 ) ( descr i bi ng t he di f f i cul t y f or t he dr af t er p o st- Ha va rd) . Ju st i ce M cGee hi nge d t hi s ana l ys i s on t he w or ds “ hei r s and assi gns i n per pet ui t y” t o i ndi cat e t hatt h e p a rt i es i nt ended t o r eser ve a per pet ual r oya l t y a nd no tone co i nci den t onl y w i t h t he dur at i on oft he exi st i ng l ease on t he pr oper t y and “not l ess t han an un di vi ded 1 / 16 t h” t o i ndi cat e t hat t he Br ow ns con t em pl at ed f ut ur e l ea se s on t he pr ope rt y a f t ert he exp i r at i on of t h e c u rre n t l e a s e . Bro wn , 593 S . W . 2d at946 ( M cGee, J. , di ss ent i n g ). F u rt h e rm o re, Ju sti c e M c G e e o b se rve d the ab se n c e o f an y l a n g u a g e to i n d i c a te t hatt he r oya l t y w as t o be l i m i t ed t o a m axi m um of , or not m or e t han , 1/ 16, but al so t he pr esence ofspeci f i c l angu age t hat t he r oyal t y w as t o be not l ess t han 1 /1 6 . Id . ( M cG ee, J. , di ssent i ng) . H e not ed, “D escr i bi ng a var i abl e am oun tas bei ng equ al t o not l ess t han 1/ 16 has t he sam e r esul tas descr i bi ng i tas equal t o orgr ea t ert han 1/ 16, ” and t he abs enc e o f a com m a bet w ee n “ equ al t o” an d

“ n o t l e s s th a n ” d i d n o t c h a n g e th a t m e a n i n g . Id . (M c G e e , J ., d i s s e n ti n g ). Ther e a r e s om e d i f f er enc es be t w ee n t he f ac t s i n Bro wna n d t h e f a c t s in t hi s c a s e : (1 ) t he pr ope rt y i n Brown w as unde rl ea se att he t i m e t hatt he
r e s e r v a t i o n wa s ma d e , ( 2 ) t h e r e wa s a c o mm a i n t he Bro wnr es er vat i on bet w ee n “ Bei ng e qua l t o” an d “ notl es s t han , ” and ( 3) t he gr anti ncl ude d t he

w or ds “i n per pet ui t y. ” S e ei d. at 94 0, 94 2. H er e, t he pr oper t y had not been l ea se d a tt he t i m e Br ads haw ’ s par ent s m a d e t he r es er vat i on, t her e i s no4 ... H ow ever , t he Bro wnm a jo r it yd id r e c o g n iz e t h a t t h is la n g u a g e c o u ld

c r e a t e e i t he ra f r a c t i on a l r oy a l t y or a f r a c t i on - of

- r oy a l t y. 593 S . W . 2d a t942. 11 separ at i ng com m a bet w een t he “bei ng equal t o” and “notl ess t han” cl auses,
a n d , i n ste a d o f j u st th e w o rds “i n p e rpe tu i ty, ” t h e 1 9 6 0 D e e d s c o n tai n tw o addi t i onal par agr aphs t hatexpl ai n w hatw a s gr ant ed and i ndi cat e w hatw as i nt end ed. P a r a g r a p h O n e s e t s o u t t h a t t h e g r a n t o r s re s e r v e d a n “ u n d iv id e d o n e -h a lf ( 1 /2 ) Royal t y . . . ofal l t he oi l , ga s and / orot herm i ner al s i n, t o, an d und eror t hatm ay be pr odu ced” f r om t he l and. W i t hou t t he addi t i on oft he par ent het i cal th i s fi rst se n ten c e p rob a b l y res e rve d o n l ya frac ti o n a l roy a l ty i n tere st. See i d. 4
a t9 4 2 . P a r a g r a p h T w o c la r if ie s t h a tt h e in t e r e s tre s e r v e d in P a r a g r a p h O n e is
a n o n p a rti c i p a ti n g ro y a l tyi n te re s t. A l t hough no l e a se ex i st ed att he t i m e t he r es er vat i on w as cr ea t ed, t he
r es er vat i on c l ea r l y i ndi ca t es t hatl ea si ng w as ant i ci pat ed: i n Par agr aph Tw o, t he
res e rva ti on s t a t e s t ha t i t i s un ne c e s s a r y f or t he gr a nt or s , he i r s , or a s s i gn s to jo in in t h e e x e c u t io n o fa n yle a s e s a n d e x c lu d e s t h e m f r o m p a rt ic ip a t in g in b o n u s e s o rre n t a ls “ w h ic h m a y b e p a id t o e x t e n d t h e t im e w it h in w h ic h a w e ll
m ay be beg un un dert he t er m s ofan y l ea se co ver i ng s ai d l and . ” Par agr aph T h r e e a ls o in d ic a t e s t h a tle a s in g w a s c o n t e m p la t e d , s t a t in g , “ [i] n t h e e v e n to il,12

g a s o r o th e r m i n e ra l s a re p ro d u c e d . . . th e n s a i d G ra n to rs . . . sh a l l re c e i v e . . . .” I ft he abs enc e o ft he com m a r end er s onl y on e p os si bl e i nt er pr et at i on of th e p a re n th e ti c a l u n d e r Bro wn , i. e ., t o re s e r v e 1 /2 o ft h e ro y a lt ie s c o n t a in e d in f ut ur e l ea se s, pr ovi di ng f urt hert hats uch s har e m us t not be l es s t han 1/ 16, t he f l oorbei ng setby t he par ent het i cal i n Par agr aph O ne, t hen t he r eser vat i on i s a fra c ti o n o f ro y a l ty . Bro wn , 59 3 S . W . 2d at94 2. Thi s concl usi on i s suppor t ed by t he di ss ent ’ s r ea so ni ng i n Bro wnasw el l , i . e. , t he l ang uag e i ndi ca t i ng t he ant i ci pat i on of l easi ng i n Par agr aph Tw o and t he i ncl usi on of t he par ent het i cal i ts e l f i n P a ra g ra p h O n e a s c o n te m p l a ti n g fu tu re l e a s e s . Id . a t 9 4 6 (M c G e e , J ., d i s s ent i ng) . Par agr aph Tw o al so se t s out t hat al l l ea se s sh al l pr ovi de fo r a roy a l ty o f no t l e ss tha n 1 /8

— a fl o o r t h a t w o u l d g u a ran tee tha t t h e roy a l ty pr ovi d e d (a f r ac t i on ofr oya l t y) w oul d notbe l es s t han 1/ 16. Fi nal l y, t he l ang uag e i n Pa r agr aph Thr ee ag ai n i ncl ude s a p are n thet i ca l t o e xpl ai n t he
ca l cul at i on of th e n o t- l es s- t han

- 1/ 16 port i on oft he r oya l t y r ec ei ved by t he gr a nt or s , “ ( be i ng e qu a l t o o n e -ha l f( 1/ 2) o ft he c us t om a r y on e - e i gh t h ( 1/ 8) Royal t y) of t he ent i r e gr os s pr oduc t i on and / or su ch net

proce edsasherei

nab ove provi ded . . . . ” [ Em phasi s added . ] Th i s l angu age est abl i shes t hat w h a t w as
r es er ved w as a f l oat i ng f r ac t i on ofr oya l t y a nd no ta f i xed f r ac t i ona l r oya l t y. C onst r ui ng t he deeds as a w hol e, and har m oni zi ng al l part s t o gi ve ef f ect t o t he part i es ’ i nt ent , w e d et er m i ne t hat a “f r ac t i on ofr oya l t y” w as co nve yed .13

S ee Luckel, 8 1 9 S .W .2 d a t4 6 2 . P a r a g r a p h O n e re s e r v e s a n u n d iv id e d o n e -h a lf
o fro y a lt yf o rB r a d s h a w , b a s e d o n t h e la n g u a g e re s e r v in g “ a n u n d iv id e d o n e -h a lf
r oyal t y, ” i nt er pr et ed w i t h t he par ent het i cal t hat i m m edi at el y f ol l ow s i t , w hi ch set s outt hat th e u n di vi ded on e- hal fr oyal t y i s “equal t o not l ess t han an
u n d i v i d e d o n e -si x tee n t[ h ] (1 /1 6 ) o f al l the o i l , g a s a n d /or o th e r m i n e ral s i n , to and unde r or t hat m ay be pr oduc ed, ” and t he cl ar i f yi ng l ang uag e i n Pa r agr aph T h ree , w h i c h sta tes tha t th e g ran to r sh a l l rec e i v e n o t l e ss tha n o n e -si x tee n th po rt i on “ ( be i ng e qu a l t o on e - ha l f( 1/ 2) o ft h e c u st om a r y on e - e i gh t h ( 1/ 8) Royal t y of t he ent i r e gr os s pr oduc t i on a nd/ ors uch ne tpr oce eds ashe r ei nab ove p rov i d e d . . . . ” W e rea d this l a n g u a g e , e n tot o , a s e x p r e s s i n g the i n ten t t o est abl i sh an i nt er estofa m i ni m um one- si xt eent h ro yal t y, r at hert han a f i xed
one- si xt eent h “f r act i onal r oyal t y. ” I n i t s m ot i on f or r ehear i ng, Ran ge ci t es t he f ol l ow i ng T exas st at ut es t hat
u se “e q u a l to n o t l e ss th a n ” to su p p o rti ts a rgu m e n t t h a t t h e p h ras e ca n d e n o te a f i xed am ount : s e c ti o n 51. 302 ( a) ( 4) oft he gove r nm entco de and s ec t i on 6 1 . 0 5 9 1 ( a ) o ft h e e d u c a t i o n c o d e . R a n g e a l s o r e f e r s t h e c o u rtt o 4 2 U. S . C. A. § 608 ( a) ( 2) ( A ) ( W es t2003 ) , an d Ne el v. O l iver’ s E sta te , 44 A . 2d 56 1, 56 3 ( Pa. 194 5) , t o s u p p o rt i ts ar gum entt hatt he 196 0 D ee ds ’ us e o f“ notl es s t han ” i n d i c a te s a fi x e d a m o u n t.5 ... T h a t i s, the G ran to rs r e s e r v e d “a n u n d i v i d e d o n e -ha l f ( 1 /2 ) roy a l ty

( Bei ng e qua l t o notl es s t han an undi vi ded one - si xt ee nt [h] ” of pr odu ct i on— Par agr aph O ne; al l l eases s hal l pr ovi de f or r oyal t y ofnotl ess t han one- ei ghth— Par agr aph T w o; and t he G r ant or s shal l r ecei ve not l ess t han on esixte e n th p o rt i o n “(b e i n g e q u a l t o o n e -ha l f ( 1 /2 ) o f t h e cu sto m a ry o n e -ei g h th ( 1/ 8) Ro yal t y) oft he ent i r e gr os s pr odu ct i on and / orsuch netpr oceeds as 14 H ow eve r , ea ch oft hes e pr ovi si ons es t abl i sh es a bas el i ne and a m et hod ofca l cul at i on ba se d on di f f er entva r i abl es , not a sp ec i f i c f i xed am ount . Sec t i on 5 1 .3 0 2 (a )(4 ) o f th e g o v e rn m e n t c o d e , w h i c h i n v o l v e s th e b o n d a d i s tri c t c l e rk i s r equi r ed t o pr ovi de bef or e begi nni ng t he duti es of of f i ce, m er el y st at es t hat t he bon d m ust b e i n a n am o u n t equal to not less than20 percentof the m axi

m um am ount of f ees col lec ted i n any yeardur i n g th e te rm ofof f i ce im m e d ia t e lyp r e c e d in g t h e t e r m o fo f f ic e f o rw h i c h t h e b o n d is g i v e n , e x c e p t t h a t the bon d m ay not be i n an am oun tless than $5, 000 n or

m oretha n $100, 000 . T EX . G OV ’ T C ODE A NN . § 51. 302 ( a) ( 4) ( V er non 2005) ( em pha si s add ed) . The st at ut e i t se l fex pr es sl y s et s outt he bond ’s fl o or( $5, 000 ) an d t he ce i l i ng ( $ 1 0 0 , 0 0 0 ) , a n d p r o v i d e s f ort he c alcul ati onofa f i xed am ountba se d on t he
a m o u n tc o lle c t e d b ya p a rt ic u la rd is t r ic t

— t h is a m o u n t , n e e d le s s t o s a y , w o u ld
vary by cou nt y. Si m i l ar l y, Par agr aph s O ne, Tw o, an d Thr ee oft he 196 0 D ee ds
es t abl i sh a f l oorf ort he r oya l t y ( one - si xt ee nt h) an d pr ovi de f ort he ca l cul at i on oft he r oyal t y based on a po t ent i al l y var yi ng am oun tofpr odu ct i on orl easer oyal t y si ze. The ot hers t at ut or y pro v i si ons w hi ch Range ci t es ope r at e i n a 5her ei nabo ve pr ovi ded”— Par agr aph T hr ee. 6 ... Secti on 6 1. 05 91 ( a) oft he e d u c a tio n code i s partoft he chapter add r es si ng t he pow er s and dut i es oft he Texa s H i ghe rEduc at i on Coor di nat i ng Boar d a nd st at es t hat “[ t ] he l egi sl at ur e sh al l app r opr i at e t o t he boa r d an am ount equal to not less than 1 0 p ercentof the total

app ropr

i ati ons f orba se f undi ng of gen er al ac ade m i c t ea chi ng i ns t i t ut i ons f or t he pur pos e o fpr ovi di ng i nce nt i ve and speci al i ni t i at i ve f und i ng un d e r th i s sect i on. ” T EX . E DUC . C ODE A NN . § 6 1 . 0 5 9 1 ( a ) ( Ve r n o n 2 0 0 6 ) ( e mp h a s i s a d d e d ) . 42 U . S . C. A. § 6 0 8 ( a ) ( 2 ) ( A) s t a tes , w i th reg a rd to red u c ti o n o r el i m i n a ti o n o f T e m p o raryA ss i sta n c e to N e e d yF a m ilie s f o rn o n c o o p e r a t io n in e s t a b lis h in g p a t e r n it yo ro b t a i n i n g c h ild su p po rt , i f t he St a t e m a k e s t he a pp r op r i a t e f i nd i ng s w i t h r e ga r d to non coop er at i on and t he i ndi vi dual does notqual i f y fo r g ood cause orot her except i ons, t hen t he S t at e ( A ) sh a l

l de du c t f r om t he as si st anc e t hatw oul d ot her w i se be pr ovi ded t o t he f am i l y oft he i ndiv id u al undert he S t at e pr ogr am fu n d e d u n d e r t h i s p a rt an am ount equal to not less than25 percent of the am oun tof

such assi

stance ; an d ( B) m ay deny the f am i l y any assi st ance und ert he S t at e pr ogr am . 4 2 U .S .C .A . § 6 0 8 (a )(2 )(A ) & (B ) (e m p h a s i s a d d e d ). C o n tra ry to R a n g e ’s ar gum entt hatt hese pr ovi si ons setoutf i xed am oun t s, t hey t oo m er el y est abl i sh a f l oor and pr ovi de a m et hod of ca l cul at i ng a f i xed am ountt hati s dep end enton th e v a ri a b l e s s e t o u t i n th e s ta tu te s .

7 ... I n Neel, t he Penn sy l van i a c ourtha d t o c ons t r ue an i n s ur anc e c ode pr ovi si on t hat contem pl at ed an asses sm ent l i abi l i t y ofan i nsur ance subscr i ber as “ equal

to not less than o n e a d d i ti o n a l a n n u a l p re m i u m o r d e p o s i t c h a rg e d .” 44 A . 2d at 563 –64 ( em pha si s add ed) . The cou rtco ncl ude d t hatt he pr ovi si on p re s c ri b e d th e c e i l i n g o f a s u b s c ri b e r’s l i a b i l i tyfo r a s s e s s m e n t, a n d n o t a fl o o r, b a s e d o n it s “ v e r ye v i d e n t p u r p o s e ” o fm a k in g c e rt a in t h a ts u b s c r ib e r s c o u ld notl i m i t t he ext entoft hei rr es pec t i ve l i abi l i t i es t o a nyt hi ng l es s t han one a d d i ti o n a l a n n u a l p re m i u m o r d e p o s i t c h a rg e d . Id . a t5 6 3 . H o w e v e r , t h is rea so n i n g d o e s n o t ap p l yh e re b e c a u se the i ss u e i s n o t th e l i m i tati o n o f l i a b i l i ty ( i . e. , t he am ounta su b s c ri b e r w oul d ha ve t o pa y) , butr at hert he am ountof 15 si m i l arf as hi on. A nd t he case t o w hi ch R ange ci t es i s i napp osi t e. 6 S e eBro wn , 7pay m entt he gr ant or s i nt end ed t o r ec ei ve f r om t hei rr es er vat i on. 16 59 3 S . W . 2d at94 6 ( M cG ee, J. , di ssent i ng) ( “A pr uden tgr ant orw ho r eser ves a f r ac t i on of r oya l t i es m ay w i sh t o e ns ur e t hathi s i nt er es tw i l l notf al l be l ow a
ce rt ai n m i ni m um . Car ef ul dr af ti n g ofr oya l t y r es er vat i ons r equ i r es t hathe
r e c o g n i z e t h a t fu tu re l e a s e s m a yb e e x e c u te d b yh i s g ra n te e th a t c a l l fo r a d i ffe re n t ro y a l tyth a n a l e a s e e x i s ti n g a t th e ti m e o f th e d e e d .” ). Bas ed on t he f or ego i ng, w e hol d t hatt he r es er vat i onsi n t he 196 0 D ee ds pr ovi ded f ora “f r act i on of r oyal t y” r at hert han a “f r act i onal r oyal t y. ” Ther ef or e,
w e a gr ee w i t h Br ads haw ’ s i nt er pr et at i on t hat t he l ang uag e o ft he 196 0 D ee ds p e rm i ts h e r to s h a r e i n o n e -h a l f o f w h a te v e r ro y a l ti e s m a yb e c o n tra c te d fo r, and t hathe rr es ul t i ng sh ar e ofpr oduc t i on m us tnotbe l es s t han one - si xt ee nt h. Thi s i nt er pr et at i on i s con si st entw i t h t he pl ai n l ang uag e o ft he 196 0 D ee ds an d gi vesef f ec tt o a l l oft he ope r at i ve l ang uag e i n t he 196 0 D ee ds s o t hatal l oft he te rm s a re i n h a rm o n y . S e eBro wn , 5 9 3 S .W .2 d a t 9 4 2 ; see al so Luckel, 819 S .W .2 d a t 4 6 2 ; A ltm an , 7 1 2 S .W .2 d a t 1 1 8 .17 V . Concl us i on H avi ng de t er m i ned t hatt he t r i al cou rt pr ope r l y f ound t hat t he 196 0 D ee ds p ro v i d e d fo r a “ fra c ti o n o f ro y a l ty ,” w e o v e rru l e R a n g e ’s th re e i s s u e s a n d a ffir m th e tri a l c o u rt’s p a rti a l s u m m a ryj u d g m e n t i n fa v o r o f B ra d s h a w .

B OB M CC OY J U S T I C E PA N EL: CA YC E, C. J. ; LI V I N G STO N an d M C C O Y, JJ. C A YC E, C. J. f i l ed a d i ss ent i ng op i ni on. DEL I VERE D: Aug us t14, 2008

## COURT OF APPEALS SECOND DISTRICTOFTEXAS FORT WORTH
NO. 2 - 07 - 26 3- CV
RAN GE RE SOU RCES CORPO RATI O N APPE L L AN TS AND R ANG E P R ODU CT I ON, I , L . P . AN D ST E ADF ASTF I NANCI AL , L L C, R. J . SI KES, KATH Y SI KES, CH RI STY ROM E, GREG LOUV I ER, PAM L O UV I ER, AN D D AC O TA I N V ES TM EN T H O LD I N G S , LLP AND R . CR I S T VI AL V . BETTY LOU BRA D SH A W A PPELL EE

----- ----- -- FR O M THE 3 55TH DI STRI CT CO URT O F HO O D CO UN TY

----- ----- -- 

### DI SS E NTI NG OP I NI ON

----- ----- -- I r es pec t f ul l y di ss ent . A s a m at t er of l aw , t he t w o 196 0 dee ds ati ss ue
r es er ved a f i xed f r ac t i ona l 1/ 16t h non

- part i ci pat i ng r oya l t y i nt er es t . The
a p p e l l e e ’s co nt ent i on t o t he con t r ar y r equ i r es us t o i gnor e n um er ous r ul es of2

con t r ac tco ns t r uct i on, t o gi ve no e f f ec tt o t he “b ei ng e qua l t o” l ang uag e i n t he dee ds , an d t o i m pl y f r om t he “n ot l es s t han ” phr as e i n t he dee ds a r es er vat i on ofi nt er es ti n f avo roft he gr ant ort hati s m or e th a n th e p l a i n l ang uag e o ft he d e e ds al l ow s. I w oul d, t her ef or e, gr antap pel l ant s’ m ot i ons f orr ehe ar i ng,
r ever se t he t r i al cour t ’ s part i al sum m ar y judgm ent , and r enderj udg m entt hat appel l ee t ake not hi ng on hercl ai m s agai nstappel l ant s.

J OHN CAYCE CHI E F J UST I CE DEL I VERE D: Aug us t14, 2008