NO. 04-14-00711-CV

IN THE COURT OF APPEALS

FOURTH DISTRICT OF TEXAS

SAN ANTONIO DIVISION

___________________________________________________

PETER J. DRAGON, 

Appellant, 

V. 

CHARLES E. HARRELL AND HOLLIS R. HARRELL, 

Appellees. 

__________________________________________________

Cause No. 13-1100232-CVK 

On Appeal from the 218th Judicial District Court, Karnes County, Texas 

Honorable Donna S. Rayes, Judge Presiding 

___________________________________________________ 

BRIEF OF APPELLEES

____________________________________________________ 

Jesse R. Castillo

State Bar No. 03986600

jcastillo@casnlaw.com

CASTILLO SNYDER, P.C.

Bank of America Plaza, Suite 1020

300 Convent Street

San Antonio, Texas 78205

Telephone: (210) 630-4200

Facsimile: (210) 630-4210

Attorneys for Appellees Charles E. 

Harrell and Hollis R. Harrell

ORAL ARGUMENT REQUESTED 

ACCEPTED

04-14-00711-CV

FOURTH COURT OF APPEALS

SAN ANTONIO, TEXAS

6/18/2015 5:16:29 PM

KEITH HOTTLE

CLERK

 FILED IN 4th COURT OF APPEALS SAN ANTONIO, TEXAS 06/18/2015 5:16:29 PM KEITH E. HOTTLE Clerk
ii

IDENTITY OF PARTIES AND COUNSEL

Plaintiffs/Appellees: Charles E. Harrell

Hollis R. Harrell

Trial and Appellate Counsel: Jesse R. Castillo

jcastillo@casnlaw.com

Edward C. Snyder

esnyder@casnlaw.com

Melanie A. Castillo

mcastillo@casnlaw.com

CASTILLO SNYDER, P.C.

300 Convent Street, Suite 1020

San Antonio, Texas 78205

(210) 630-4200

(210) 630-4210 (Facsimile)

Defendant/Appellant: Peter J. Dragon

Trial and Appellate Counsel: Clinton M. Butler

cbutler@langleybanack.com

Elizabeth R. Kopecki

ekopecki@langleybanack.com

LANGLEY, BANACK & BUTLER

114 N. Panna Maria Avenue

Karnes City, Texas 78118

(830) 780-2700

(830) 780-2701 (Facsimile)
iii

TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ......................................................................... ii

TABLE OF AUTHORITIES ........................................................................................... iv

REFERENCE CITATION GUIDE................................................................................... vii

STATEMENT OF THE CASE ....................................................................................... viii

STATEMENT REGARDING ORAL ARGUMENT ........................................................... viii

STATEMENT OF FACTS.................................................................................................1

SUMMARY OF ARGUMENT...........................................................................................3

ARGUMENT .................................................................................................................5

I. After considering the competing motions for summary judgment and 

responses thereto, the trial court properly granted the Harrells’ traditional 

motion for summary judgment. .......................................................................5

A. Standard of Review ...............................................................................5

B. The trial court properly adopted the Harrell’s construction of the 

Reservation in the Harrell Deed............................................................7

II. After considering the competing motions for summary judgment and 

responses thereto, the trial court properly denied Dragon’s traditional motion 

for summary judgment...................................................................................13

A. Impairment Of Future Leasing Not A Factor......................................18

B. Appellant Did Not Plead Ambiguity...................................................20

PRAYER FOR RELIEF..................................................................................................22

CERTIFICATE OF COMPLIANCE ..................................................................................23

CERTIFICATE OF SERVICE..........................................................................................24
iv

TABLE OF AUTHORITIES

Cases

Altman v. Blake,

712 S.W.2d 117 (Tex. 1986) .......................................................................5, 9

Arnold v. Ashbel Smith Land Co., 

307 S.W. 2d 818 (Tex. Civ. App.—Houston 1957, writ ref’d n.r.e.) .......4, 18

Ayert v. Grande, Inc., 

717 S.W.2d 891 (Tex. 1986) .........................................................................21

Benge v. Scharbauer, 

152 Tex. 447, 259 S.W.2d 166 (1953) ..........................................................22

BP America Production Co. v. Zaffirini,

419 S.W.3d 485 (Tex. App.—San Antonio 2013, pet. denied) ......................6

Brown v. Howard,

593 S.W.2d 939 (Tex. 1980) .............................................................. 4, 10, 12

Brown v. Smith, 

141 Tex. 425, 174 S.W.2d 43 (1943) ........................................................4, 10

City of Galveston v. Tex. Gen. Land Office, 

196 S.W.3d 218 (Tex. App.—Houston [1st Dist.] 2006, pet. denied)............6

City of Keller v. Wilson, 

168 S.W.3d 802 (Tex. 2005) ...........................................................................6

Clifton v. Koontz,

325 S.W.2d 684 (Tex. 1959) .................................................................. 19, 20

Cockrell v. Gulf Sulphur Co., 

157 Tex. 10, 15, 299 S.W.2d 672 (1957) ......................................................21

Coghill vs. Griffith,

358 S.W.3d 834 (Tex. App. —Tyler 2012, pet. denied)............ 11, 12, 13, 15

Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 

940 S.W.2d 587 (Tex. 1996) .........................................................................20

Dawkins v. Hysaw, 

450 S.W.3d 147 (Tex. App.—San Antonio 2014, pet. filed)........... 13, 17, 18

FM Props. Operating Co. v. City of Austin,

22 S.W.3d 868 (Tex. 2000) .............................................................................6
v

Frost Nat'l Bank v. L & F Distribs., Ltd.,

165 S.W.3d 310 (Tex.2005) ............................................................................8

Gavenda v. Strata Energy, Inc., 

705 S.W.2d 690 (Tex. 1986) .....................................................................4, 18

Harris v. Ritter, 

279 S.W.2d 845 (Tex. 1955) .................................................................. 11, 12

HECI Exploration Co. v. Neel,

982 S.W.2d 881 (Tex. 1998) ...........................................................................8

Helms v. Guthrie,

573 S.W.2d 855 (Tex. App. —Fort Worth 1978, writ ref'd n.r.e.)................11

Hicks v. Castille,

313 S.W.3d 874 (Tex. App. 2010) ..................................................................6

J.M. Davidson, Inc. v. Webster,

128 S.W.3d 223 (Tex.2003) ............................................................................8

Luckel v. White, 

819 S.W.2d 459 (Tex. 1991) .......................................................................5, 9

Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 

289 S.W.3d 844 (Tex. 2009) ...........................................................................6

Markert v. Williams,

874 S.W.2d 353 (Tex.App.-Houston [1st Dist.] 1994, writ denied)...............9

Matagorda Hosp. Dist. v. Burwell,

189 S.W.3d 738 (Tex. 2006) ...........................................................................8

Moore v. Noble Energy, Inc.,

374 S.W.3d 644 (Tex. App.—Amarillo 2012, no pet.).................................19

Range Resources Corporation v. Bradshaw, 

266 S.W.3d 490 (Tex. App.—Fort Worth 2008, pet. denied)...................3, 13

Reeves v. Towery, 

621 S.W.2 209 (Tex. App.—Corpus Christi 1981, writ ref’d n.r.e. (citations 

omitted)..........................................................................................................21

Schlitter v. Smith,

128 Tex. 628, 101 S.W.2d 543............................................................... 11, 13

Stag Sales Co. v. Flores, 

697 S.W.2d 493 (Tex. App.—San Antonio 1985, writ ref’d n.r.e.)....... 14, 16
vi

State Nat. Bank of Corpus Christi v. Morgan, 

143 S.W.2d 757 (Tex. 1940) .................................................................. 14, 17

Tenneco, Inc. v. Enterprise Products Co.,

925 S.W.2d 640 (Tex. 1996) ...........................................................................8

Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex.,

253 S.W.3d 184 (Tex.2007) ............................................................................7

Tyler v. Bauguss, 

148 S.W.2d 912 (Tex. Civ. App.—Dallas 1941, writ dism’d judgm’t cor.)14, 

16

Valence Operating Co. v. Dorsett, 

164 S.W.3d 656 (Tex. 2005) ...........................................................................8

White v. White, 

830 S.W.2d 767 (Tex. App.—Houston [1st Dist.] 1992, writ denied) .....4, 10

Wynne/Jackson Development, L.P. vs. PAC Capital Holdings, Ltd. 

No. 13-12-00449-CV, (Tex.App. —Corpus Christi 2013, pet. denied)........11

Rules

TEX. R. CIV. P. 166a(c)...............................................................................................6

Other Authorities

2 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and Gas Law, § 

327.2 (LexisNexis Matthew Bender 2009) .....................................................4
vii

REFERENCE CITATION GUIDE

The Parties

This Brief may refer to the parties as follows:

Appellant Peter J. Dragon “Appellant” or “Dragon”

Appellees Charles E. Harrell “Appellees” or “Harrells”

The Record on Appeal

This Brief will refer to the record as follows:

Appellant’s Brief “A’ants Br. At __”

Clerk’s Record “CR __”

Reporter’s Record “RR __”
viii

STATEMENT OF THE CASE

Nature of the 

case

This is a declaratory judgment action on the construction and 

interpretation of a reservation clause in a Warranty Deed with 

Vendor’s Lien (the “Harrell Deed”) dated February 8, 1991, 

executed by Hollis R. Harrell and wife, Mary Harrell, conveying 

a 9.954 acre tract in Karnes County, Texas, to Peter J. Dragon 

and Sharon Dragon. 1 CR 8. 

Course of 

proceedings

Appellees Charles E. Harrell and Hollis R. Harrell (the 

“Harrells”) and Appellant Peter J. Dragon (“Dragon”) filed

competing motions for summary judgment. After considering 

the motions and responses thereto, the Court granted Appellees’ 

Motion for Summary Judgment and denied Appellant’s Motion 

for Summary Judgment. 1 CR 141-43.

Trial court’s 

disposition

The trial court found that the reservation clause in the Warranty 

Deed granted Appellees a fractional royalty interest. The trial 

court entered final judgment whereby it ordered and decreed that 

the Harrells own a one half (1/2) royalty interest in the 9.954 

acre tract of land situated within the Ramon Musquiz Four 

League Grant, A-7 Karnes County, Texas, and being that certain 

Tract No. One (4.85 acres) and Tract No. Two (3.51 acres) (by 

re-survey found to contain 9.954 acres) as described in the 

Warranty Deed. 1 CR 141-42. The trial court awarded 

attorneys’ fees and post judgment interest to the Harrells 

pursuant to Chapter 37 of the Texas Civil Practice and Remedies 

Code. 1 CR 142. Appellant is not appealing the attorney’s fees 

award.

STATEMENT REGARDING ORAL ARGUMENT

Appellees Charles E. Harrell and Hollis R. Harrell request oral argument in 

this proceeding. While the issue presented may be summarily dismissed based on 

this court’s review of the record below, oral argument will assist the court in 

analyzing the legal issues herein presented.
1

STATEMENT OF FACTS

On or about March 17, 1978, General Portland, Inc., as Grantor, executed a 

Special Warranty Deed conveying three parcels of land in Karnes County, Texas to 

Hollis R. Harrell and his wife, Mary Harrell, as Grantees (the “Special Warranty 

Deed”). CR 5. On or about February 8, 1991, by Warranty Deed with Vendor’s 

Lien, Hollis R. Harrell and wife, Mary Harrell, conveyed 9.954 acres of land to 

Peter J. Dragon and wife, Sharon M. Dragon (the “Warranty Deed”). CR 6. The 

Warranty Deed conveyed a 9.954 acre tract of land situated within the Ramon 

Musquiz Four League Grant, A-7 Karnes County, Texas, and being that certain 

Tract No. One (4.85 acres) and Tract No. Two (3.51 acres) (by this survey found to 

contain 9.954 acres) as described in the Special Warranty Deed (“Subject Land”). 

Id. The Warranty Deed contained the following non-participating royalty interest 

reservation:

“SAVE AND EXCEPT HOWEVER, and there is hereby reserved 

unto the Grantors, their heirs and assigns, a free non-participating 

interest in and to the royalty on oil, gas and other mineral in and under 

the hereinabove described property, consisting of ONE-HALF (1/2) of 

the interest now owned by Grantors together with ONE-HALF (1/2) 

of the reversionary rights in and to the presently outstanding royalty in 

on and under said property, perpetually from date hereof”

(the “Reservation”). Id. 

On or about February 17, 1993, as a result of the divorce between Sharon M. 

Dragon and Peter J. Dragon, Sharon M. Dragon executed a Special Warranty Deed 
2

conveying 6.44 acres (called 4.85 acres) of land, more or less out of the Roman 

Musquiz Four League Grant, to Peter J. Dragon, a/k/a Peter Joseph Dragon, as 

Grantee, LESS AND EXCEPT, 3.51 acres of land, more or less, being described as 

Tract Two in that certain Special Warranty Deed effective March 17, 1978, from 

General Portland, Inc., as Grantor, to Hollis R. Harrell and wife, Mary Harrell, as 

Grantees, recorded in Volume 474, Page 514 of the Deed Records of Karnes 

County, Texas. CR 6-7. As a result of the Sharon M. Dragon Special Warranty 

Deed, Defendant Peter J. Dragon owns the mineral interest conveyed in the 

Warranty Deed subject to the Reservation. CR 7. 

As of March 17, 1978, the Hollis R. Harrell and Mary Harrell ownership 

interest was subject to a 1/32 nonparticipating royalty interest in Dorice Winerich 

for her life. Id. Dorice Winerich died on October 6, 1994, and her 1/32 nonparticipating royalty interest terminated. Id. 

By Special Warranty Deed dated July 10, 2006, Charles E. Harrell and 

Hollis R. Harrell, Jr., Trustees of the Mary Swain Harrell Living Trust, conveyed a 

fifty percent (50%) interest in the undivided mineral interest in the Subject Land to 

Charles E. Harrell and a fifty percent (50%) interest in the undivided mineral 

interest in the Subject Land to Hollis R. Harrell. Id.

The Harrells filed their Original Petition for Declaratory Judgment asking 

the court to interpret the Reservation as reserving a one half (1/2) royalty interest 
3

in the Subject Land, entitling the Harrells to a stated fraction of total production of 

the oil and gas produced from the land. CR 4-15. Dragon filed his Original 

Answer and Original Counterclaim asking the court to interpret the Reservation as 

reserving a one-half fraction of royalty interest, conveying a fractional share of the 

royalty. CR 17-31.

SUMMARY OF ARGUMENT

This case hinges on the construction and interpretation of the reservation 

clause in the Warranty Deed. The critical question is whether the Reservation 

constitutes a “fractional royalty interest” or a “fraction of royalty.” The law makes 

a major distinction between a “fractional royalty interest” and a “fraction of 

royalty.” A “fraction of royalty” conveys a fractional share of the royalty that is 

contained in an oil and gas lease and is not fixed, but rather “floats” in accordance 

with the size of the landowner’s royalty in the lease. Range Resources 

Corporation v. Bradshaw, 266 S.W.3d 490, 493 (Tex. App.—Fort Worth 2008, 

pet. denied). The amount to be paid to the owner is determinable upon the 

execution of some future lease and is calculated by multiplying the fraction in the 

royalty reservation by the royalty provided by the lease. 

There is no language in the Reservation that is typical of—or indicates that 

the parties intended to—create a “fraction of royalty” interest. Instead, the Harrell 

Deed, when read as a whole, shows an unambiguous intent by the Grantors to 
4

reserve a one-half (1/2) fractional royalty interest. The owner of a fractional 

royalty is entitled to the stated fraction of gross production, unaffected by the 

royalty reserved in the lease. See Brown v. Smith, 141 Tex. 425, 174 S.W.2d 43 

(1943). “Thus the owner of a 1/16 royalty takes 1/16 of gross production whether 

the lease provides for a lessor’s royalty of 1/16, 1/8 or 1⁄4.” 2 Patrick H. Martin & 

Bruce M. Kramer, Williams & Meyers Oil and Gas Law, § 327.2 (LexisNexis 

Matthew Bender 2009). Texas case law is clear that a reservation of an undivided 

fractional royalty interest is just that—an undivided interest in production, not an 

interest reduced by a base royalty. See Brown v. Howard, 593 S.W.2d 939 (Tex. 

1980); White v. White, 830 S.W.2d 767 (Tex. App.—Houston [1st Dist.] 1992, writ 

denied). 

The size of the fractional interest reserved, or the possibility that the 

reservation would impair the future ability to lease, are not factors to be considered 

in the construction of fractional royalty interest reservations. See Arnold v. Ashbel 

Smith Land Co., 307 S.W. 2d 818 (Tex. Civ. App.—Houston 1957, writ ref’d 

n.r.e.); Gavenda v. Strata Energy, Inc., 705 S.W.2d 690 (Tex. 1986). The court 

does not determine the parties’ intent based on the quantum of production to which 

the holder of a particular interest may be entitled. The primary duty of a court in 

determining the construction of an unambiguous deed is to ascertain the intent of 

the parties by a fundamental rule of construction known as the “four corners” rule. 
5

Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991). The interpretation of the 

contract is controlled by the parties’ intentions as expressed within the four corners 

of the instrument. Altman v. Blake, 712 S.W.2d 117, 118 (Tex. 1986). In seeking 

to ascertain the intention of the parties, the court must attempt to harmonize all 

parts of the deed. Id. Qualifiers and parentheticals are critical in the final 

construction and interpretation. Brown, 593 S.W.2d at 942. No case has found 

that “in and to” means “of” without additional qualifiers in the instrument. 

In considering the competing motions for summary judgment and responses 

thereto and the arguments of counsel, the trial court properly rendered final 

judgment in favor of appellees. The trial court properly determined that the 

Harrells are entitled to judgment as a matter of law construing the Reservation as 

reserving a one-half (1/2) royalty interest in the Subject Land. 

ARGUMENT

I. After considering the competing motions for summary judgment and 

responses thereto, the trial court properly granted the Harrells’ 

traditional motion for summary judgment.

A. Standard of Review

To prevail on a traditional motion for summary judgment, the movant must 

show “there is no genuine issue as to any material fact and the movant is entitled to 

judgment as a matter of law.” BP America Production Co. v. Zaffirini, 419 S.W.3d 
6

485, 495 (Tex. App.—San Antonio 2013, pet. denied); TEX. R. CIV. P. 166a(c). In 

reviewing the trial court’s judgment, the appellate court typically examines “the 

evidence presented in the motion and response in the light most favorable to the 

party against whom the party the summary judgment was rendered, crediting 

evidence favorable to that party if reasonable jurors could, and disregarding 

contrary evidence unless reasonable jurors could not. Mann Frankfort Stein & 

Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); see City of 

Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). However, “[w]hen both sides 

move for summary judgment and the trial court grants one motion and denies the 

other, the reviewing court should review both sides’ summary judgment evidence 

[,]...determine all questions presented[,]...[and] render the judgment that the trial 

court should have rendered.” BP America Production Co, 419 S.W.3d. at 495

(citing FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000)

(citations omitted)). 

When a trial court resolves a declaratory judgment action on competing 

motions for summary judgment, the appellate court reviews the propriety of the 

declaratory judgment under the same standards applied in reviewing a summary 

judgment. Hicks v. Castille, 313 S.W.3d 874, 879-80 (Tex. App. 2010) (citing 

City of Galveston v. Tex. Gen. Land Office, 196 S.W.3d 218, 221 (Tex. App.—

Houston [1st Dist.] 2006, pet. denied)). The appellate court reviews a trial court's 
7

decision to grant or to deny a motion for summary judgment de novo. See Tex. 

Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d 184, 192 

(Tex.2007). Although the denial of summary judgment is ordinarily not appealable, 

an appellate court may review such a denial when both parties moved for summary 

judgment and the trial court granted one and denied the other. Id.

Here, both parties moved for summary judgment on their respective claims 

involving the interpretation of the Reservation clause. The trial court, after 

reviewing the motions and responses thereto and hearing arguments of counsel, 

found that as a matter of law the Harrells’ interpretation of the Reservation clause 

entitled them to a fractional royalty interest and properly granted summary 

judgment in their favor. This court should affirm the trial court’s decision.

B. The trial court properly adopted the Harrell’s construction of the 

Reservation in the Harrell Deed

The trial court's judgment adopted the Harrells construction of the 

unambiguous warranty deed Reservation. The Harrells read the Warranty Deed 

Reservation as reserving a one-half (1/2) royalty interest in the Subject Land. CR 

7. In other words, the Reservation reserved a fixed fractional royalty interest 

entitling the Harrells to the one-half (1/2) of total production of the oil and gas 

produced from the Subject Land. Dragon, on the other hand, reads the Reservation 

as unambiguously reserving a one-half fraction of royalty interest that was owned 

by the Harrells at the time the Harrell Deed was executed. CR 19.
8

1. Legal Standard for Deed Construction

In construing a written contract, the court’s primary concerns are to ascertain 

and to give effect to the parties' intentions as expressed in the document. Frost 

Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 311–12 (Tex.2005). 

Ordinarily, the writing alone is sufficient to express the parties' intentions for it is 

the objective, not subjective, intent that controls. Matagorda Hosp. Dist. v. 

Burwell, 189 S.W.3d 738, 740 (Tex. 2006) (per curiam). To give effect to the 

parties’ intentions, the court should consider the entire writing and attempt to 

harmonize and give effect to all of the provisions of the agreement by analyzing 

the provisions with reference to the whole agreement. Id. at 312. The court should 

not give any single provision controlling effect. J.M. Davidson, Inc. v. Webster,

128 S.W.3d 223, 229 (Tex.2003). 

Contract terms are given their plain, ordinary, and generally accepted 

meanings unless the contract itself shows them to be used in a technical or 

different sense. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 

2005). Courts are not authorized to rewrite agreements to insert provisions parties 

could have included or to imply terms for which they have not bargained. 

Tenneco, Inc. v. Enterprise Products Co., 925 S.W.2d 640, 646 (Tex. 1996). In 

other words, courts cannot make contracts for the parties. HECI Exploration Co. v.

Neel, 982 S.W.2d 881, 888 (Tex. 1998). 
9

A contract is not ambiguous simply because the parties disagree over its 

interpretation. Markert v. Williams, 874 S.W.2d 353, 355 (Tex.App.-Houston [1st 

Dist.] 1994, writ denied). Nor does uncertainty or a lack of clarity in the language 

chosen by the parties suffice to render a contract ambiguous. Id. If, after applying 

the relevant rules of construction, the court can give the agreement a definite or 

certain legal meaning, the agreement is unambiguous, and is construed as a matter 

of law Altman v. Blake, 712 S.W.2d 117, 118 (Tex. 1986). 

In interpreting a deed, the primary duty of a court is to ascertain the intent of 

the parties by a fundamental rule of construction known as the "four corners" rule.

Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991). The interpretation of the 

contract is controlled by the parties' intentions as expressed within the four corners 

of the instrument. Altman, 712 S.W.2d at 118. In seeking to ascertain the intention 

of the parties, the court must attempt to harmonize all parts of a deed. Id. Even if 

different parts of the deed appear contradictory or inconsistent, the court must 

strive to construe the instrument to give effect to all of its provisions. Luckel, 819 

S.W.2d at 462.

2. The Language of the Reservation Reserved a Fractional Royalty

The dispute hinges on the construction and interpretation of the reservation 

clause in the Warranty Deed. The Harrells’ interpretation of the Reservation is that 

the Grantors reserved a one-half (1⁄2) royalty interest in the Subject Land as a result 
10

of the Reservation. Appellant’s interpretation of the Reservation is that Grantors 

reserved a one-half (1⁄2) of royalty in the Subject Land as a result of the 

Reservation. The Harrells met their burden to establish they are entitled to 

judgment as matter of law, that the Reservation reserved a one-half (1⁄2) royalty 

interest, in the Subject Land.

The language in question is a reservation of “a free non-participating interest 

in and to the royalty on oil gas and other mineral in and under the above described 

property consisting of one-half (1/2) of the interest now owned by Grantors 

together with one-half (1/2) of the reversionary rights in and to the presently 

outstanding royalty in, on and under said property, perpetually from date hereof” 

(the “Reservation”). 

Where a conveyance or reservation is phrased as a fractional royalty interest, 

the owner is entitled to the stated fraction of total production of the oil and gas 

produced from the land. Brown v. Smith, 141 Tex. 425, 174 S.W.2d 43 (1943). 

This interest in production is fixed and does not vary with the fractional royalty 

that may be payable under a particular lease. Texas case law is clear that a 

reservation of an undivided fractional royalty interest is just that--- an undivided 

interest in production, not an interest reduced by a base royalty. See Brown v. 

Howard, 593 S.W.2d 939 (Tex. 1980) and White v. White, 830 S.W.2d 767 

(Tex.App.-Houston [1st Dist.] 1992, writ denied). 
11

The Warranty Deed, when read as a whole, shows an unambiguous intent by 

the Grantors to reserve a one-half (1/2) fractional royalty interest. The first part of 

the Reservation, “a free non-participating interest in and to the royalty on oil gas 

and other mineral in and under the above described property,” does not quantify 

the interest reserved, and necessarily relies on the language following to define and 

clarify the interest reserved. In fact, without the additional language, the phrase 

would necessarily reserve a one hundred percent (100%) royalty interest then 

owned by the Harrells. There is no reference in the phrase to existing leases or 

existing or future production. All cases that have held similar language to be either 

a “fractional royalty interest” or a “fraction of royalty” have looked at the 

instrument as a whole, particularly with respect to qualifiers, parentheticals, or

other clarifications included in the instrument. Eg. Schlitter v. Smith, 128 Tex. 628, 

101 S.W.2d 543, 544 (Tex. Comm’n App. 1937); Coghill vs. Griffith, 358 S.W.3d 

834, 838 (Tex. App. —Tyler 2012, pet. denied); Harris v. Ritter, 279 S.W.2d 845 

(Tex. 1955); Helms v. Guthrie, 573 S.W.2d 855, 857 (Tex. App. —Fort Worth 

1978, writ ref'd n.r.e.); Wynne/Jackson Development, L.P. vs. PAC Capital 

Holdings, Ltd. No. 13-12-00449-CV, (Tex.App. —Corpus Christi 2013, pet. 

denied). 

As an example, Coghill involved a reservation of “an undivided one-eighth 

(1/8th) interest in and to all of the oil and gas royalty”. Although the Court found 
12

this to be a “fraction of royalty”, the Court relied on “qualifiers” in making its 

ruling. The deed in Coghill included additional language that it was subject to an 

existing lease and reserved a 1/8th royalty under that lease and the usual 1/8th of 

1/8th royalties in any future leases. So Coghill is distinguishable based on the 

additional qualifying language. 

In Harris v. Ritter, the Texas Supreme Court held that the phrase “grantors 

herein reserve to themselves from this conveyance one-half (1/2) of one eighth 

(1/8) of the oil, gas and other minerals royalty [emphasis added] that may be 

produced from said land ...” reserved a fractional royalty interest, despite the use 

of the word “of” in the phrase based on the context of the deed. Harris v. Ritter, 

279 S.W.2d at 847-8.

Qualifiers, and parentheticals and other clarifications are critical in the final 

construction and interpretation. Brown v. Howard, 593 S.W.2d at 942. No case has 

found that “in and to” means “of” without additional qualifiers, parantheticals and 

other clarifications in the instrument. 

The critical qualifier or clarification for the interest in the Reservation is 

“consisting of one-half of the royalty interest now owned by” the Harrells at the 

time of the Warranty Deed. At the time of the Warranty Deed, the Harrells owned 

one hundred percent (100%) of the minerals, and thus, a one hundred percent 

(100%) royalty interest. There were no outstanding leases covering the property at 
13

the time the Warranty Deed was executed. The reservation was expressly for

“royalty on oil, gas and other minerals in and under” the property, without any

reference to future production. One-half (1/2) of a one hundred percent (100%)

royalty interest is logically and unambiguously a fifty percent (50%) fractional 

royalty interest.

II. After considering the competing motions for summary judgment and 

responses thereto, the trial court properly denied Dragon’s traditional 

motion for summary judgment.

A “fraction of royalty” conveys a fractional share of the royalty that is 

contained in an oil and gas lease is not fixed, but rather “floats” in accordance with 

the size of the landowner’s royalty contained in the lease. Range Resources 

Corporation v. Bradshaw, 266 S.W.3d 490, 493 (Tex. App. —Fort Worth 2008, 

pet. denied). The amount to be paid to the owner is determinable upon the 

execution of some future lease and is calculated by multiplying the fraction in the 

royalty reservation by the royalty provided in a lease.

Appellant argues that the language in the Reservation is consistent with what 

Texas cases have found to be a fraction of royalty. Appellant cites six cases to 

support his contention that the Reservation is a fraction of royalty reservation and 

not a fractional royalty: Dawkins v. Hysaw, 450 S.W.3d 147 (Tex. App.—San 

Antonio 2014, pet. filed); Coghill v. Griffitti, 358 S.W.3d 834 (Tex. App. – Tyler 

2012, pet. denied); Schlitter v. Smith, 101 S.W.2d 543 (Tex. 1937); Stag Sales Co. 
14

v. Flores, 697 S.W.2d 493 (Tex. App.—San Antonio 1985, writ ref’d n.r.e.); Tyler 

v. Bauguss, 148 S.W.2d 912 (Tex. Civ. App.—Dallas 1941, writ dism’d judgm’t 

cor.); State Nat. Bank of Corpus Christi v. Morgan, 143 S.W.2d 757 (Tex. 1940). 

The language in the deeds in each of the six cases cited by Appellant is not the 

language in the Reservation. The language in the Warranty Deed shows that under 

the context of the Reservation, the grantors reserved a one-half royalty in the 

Subject Lands. 

The Court should compare the language in the Reservation with the 

language in Coghill and the other cases cited by Defendant. The Reservation reads 

as follows:

RESERVATION: SAVE AND EXCEPT HOWEVER, and 

there is hereby reserved unto the Grantors, their heirs and 

assigns, a free non-participating interest in and to the royalty on 

oil, gas and other mineral in and under the hereinabove 

described property consisting of ONE-HALF (1⁄2) of the 

interest now owned by Grantors together with ONE-HALF (1⁄2) 

of the reversionary rights in and to the presently outstanding 

royalty in on and under said property, perpetually from date 

hereof. 

CR 11.

The reservation in the Coghill deed provided as follows:

[T]his Grantor excepts from this conveyance and reserves unto 

himself, his heirs and assigns an undivided one-eighth (1/8) 

interest in and to all of the oil royalty [and] gas royalty.... It 

is understood and agreed that this sale is made subject to the 

terms of said lease, but the Grantor reserves and excepts unto 

himself, his heirs and assigns an undivided one-eighth (1/8) of 
15

all royalties payable under the terms of said lease, as well as an 

undivided one-eighth (1/8) of the usual one-eighth (1/8) 

royalties provided for in any future oil, gas and/or mineral lease 

covering said lands or any part thereof.... Nevertheless, neither 

the Grantee herein, nor his heirs, executors, administrators, and 

assigns of the Grantee shall make or enter into any lease or 

contract for the development of said land or any other portion 

of the same for oil, gas or other minerals, unless each and every 

such lease, contract, leases or contracts, shall provide for at 

least a royalty on oil of the usual one-eighth (1/8) to be 

delivered free of cost.... [A]nd in the event Grantee, nor [sic] 

the heirs, executors, administrators and assigns of the Grantee, 

or as in the status of the fee owners of the land and minerals, or 

as a fee owner of any portion of the same, shall operate or 

develop the minerals therein, Grantor shall own and be entitled 

to receive as a free royalty hereunder, (1) an undivided onesixty fourth (1/64) .... (emphasis added). 

Coghill, 358 S.W.3d at 835-36.

The reservation in Schlitter provides as follows:

Grantor H. F. Smith hereby reserves unto himself, his heirs and 

assigns for a period of ten years and as much longer thereafter 

as oil and gas or other minerals are being produced an 

undivided one-half interest in and to the royalty rights on all of 

oil and gas and other minerals in, on and under or that may be 

produced from the land herein conveyed and described above. 

In the event oil or gas or other minerals are not being produced 

in paying quantities from said land at the expiration of said ten 

year period then this reservation shall become null and void and 

of no further force and effect.

Schlitter, 101 S.W.2d at 544.

The reservation in Stag Sales Company provides:

[Grantors convey to grantee] an undivided one-half (1/2) 

interest in and to all of the oil royalty, gas royalty, royalty in 

casinghead gas and gasoline, and royalty in all other minerals in 
16

and under, and that may be produced and mined from [the 

2291.2 acre tract].

Said land being now under an oil and gas lease...this sale is 

made subject to the terms of said lease, but covers and includes 

one-half of all the oil royalty, gas royalty, casinghead gas and 

gasoline royalty, and royalty from other minerals or products to 

be paid under the terms of said lease...

In the event a future lease or leases are executed...then the 

Grantee shall receive under such future lease or leases an 

undivided one-sixteen [sic] part of all the 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.

Stag Sales Company v. Flores, 697 S.W.2d at 494.

The reservation in Tyler provided as follows:

For and in consideration of the sum of Ten Dollars cash in hand 

paid by Tyler & Smith, hereinafter called Grantee, the receipt of 

which is hereby acknowledged, have granted, sold, conveyed, 

assigned and delivered, and by these presents do grant, sell 

convey, assign and deliver, unto the said Grantee, an 

undivided one-tenth interest in and to all of the oil royalty, 

gas royalty, and royalty in casing head gas, gasoline, and 

royalty in other minerals in and under, and that may be 

produced and mined from the following described lands 

situated in the County of Henderson and State of Texas.

Tyler, 148 S.W.2d at 916.

The deed in State Natl. Bank of Corpus Christi provided the following 

reservation language: 

It is expressly agreed and understood that there is reserved

to granter, its successors and assigns forever, and excepted

from this conveyance an undivided 1/2 interest in and to all 

of the royalty in oil, gas, casinghead gas, gasoline, and in
17

all other minerals in and under and that may be produced and

mined from the above described land; however, granter does

not by this reservation and exception retain any right of

participating in the making of future oil and gas lease nor of

participating in the bonus or bonuses which shall be

received from any future lease nor of participating in any

rental to be paid for the privilege of deferring the

commencement of a well under any lease, now or hereafter;

it being intended and agreed that in no event will any lease

or contract be made for the development of said land or any

portion of same for oil, gas, or other minerals, providing for

a royalty of less than one-eighth on oil and gas.

State Natl. Bank of Corpus Christi, 143 S.W.2d at 758.

The language in the deeds in each of the five cases above, cited by 

Appellant, is not the language in the Reservation. The language in the Warranty 

Deed shows that under the context of the Reservation, the grantors reserved a onehalf royalty in the Subject Lands. As noted by Appellant, this Court recently 

provided five examples of language used to create a fraction of royalty. A’ants Br. 

at 6. Appellant argues that the language in the Reservation is “almost identical” to 

the language cited in Dawkins as reserving a fraction of royalty: “(4) [a]n 

undivided one-half interest in and to all of the royalty.” 450 S.W.3d at 153. 

However, just because the Reservation has some of the same words does not make 

the language identical. It is the additional language in the Reservation that makes 

it clear that a fractional royalty was reserved, and that language cannot simply be 

ignored so as to fit into Appellant’s argument. 
18

What Appellant failed to mention, is this Court also provided six examples 

of language used to convey a fractional royalty: “(1) [a] one-fourth royalty in all 

oil, gas and other minerals in and under and hereafter produced; (2) [a] fee 

royalty of 1/32 of the oil and gas; (3) [a]n undivided one-sixteenth royalty interest 

of any oil, gas or minerals that may hereafter be produced; (4) [o]ne-half of the 

one-eighth royalty interest; (5) [a]n undivided 1/24 of all the oil and other minerals 

produced, saved, and made available for market; (6) 1% royalty of all the oil and 

gas produced and saved.” Dawkins, 450 S.W.3d at 153. The language cited by 

this Court as conveying a fractional royalty is consistent with the language found 

in the Reservation.

A. Impairment Of Future Leasing Not A Factor

The size of the fractional interest reserved, or the possibility that the 

reservation would impair the future ability to lease, are not factors to be 

considered in the construction of fractional royalty interest reservations. White v. 

White involved a 3/8ths fractional royalty interest. A 1/4th fractional royalty 

interest was reserved in Arnold v. Ashbel Smith Land Co., 307 S.W.2d 818 (Tex. 

Civ. App.—Houston 1957, writ ref'd n.r.e.). The reservation of an undivided 1⁄2 

nonparticipating royalty entitling the grantor to 1⁄2 of all production was not even 

questioned by the Texas Supreme Court in Gavenda v. Strata Energy, Inc., 705 

S.W.2d 690 (Tex. 1986).
19

Appellant suggests that “Texas courts are charged with interpreting deed 

reservations in a manner that will not frustrate the ability of the mineral owners to 

enter into a lease at some point in the future” and goes as far as asking this Court to 

take judicial notice “that Harrells’ interpretation of the Reservation would render 

the Property unleaseable and undevelopable ad infinitum.” A’ants Br. at 11-12. 

Appellant cites two cases in support of his argument that Harrells’ interpretation of 

the Reservation hinders future leasing1: Moore v. Noble Energy, Inc., 374 S.W.3d 

644 (Tex. App.—Amarillo 2012, no pet.) and Clifton v. Koontz, 325 S.W.2d 684, 

695-96 (Tex. 1959).

In Moore v. Noble Energy, the question before the court was whether a 

reservation in a 1955 warranty deed was ambiguous. 374 S.W.3d 644. The court 

considered each possible interpretation, and determined that the phrase “one-half 

non-participating royalty interest,” standing along, would reserve to the grantor a 

fifty percent interest in the production, free of production costs.” Id. at 650. The 

court did note that a construction of the 1955 deed to reserve a one-half royalty is 

“doubtful” but in no way charged courts with interpreting deed reservations in a 

manner that will not frustrate the ability of the mineral owners to enter into a lease 

at some point in the future. What the court was charged with was examining the 

deed as a whole, including the parenthetical phrase. Id. (citing Columbia Gas 

 

1 It is important to note that Appellant did not submit, and could not submit, any summary 

judgment evidence showing that any leasing of the minerals is impaired.
20

Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996)

([c]onstruction of the language to reserve a one-half royalty would also require that 

the parenthetical phrase be ignored, contrary to the rule of construction mandating 

that we examine the deed as a whole)). 

In Clifton v. Koontz, the issue before the court was whether a lessee violated 

an implied covenant to reasonably develop the lease at issue by drilling additional 

wells on a multi-strata property. 325 S.W.2d at 695. The court looked at both 

“reasonable diligence” and what a “reasonably prudent operator” might do and 

determined the lessee did not violate the implied covenant to reasonably develop 

the lease. Id. It is not disputed that a reasonably prudent operator should proceed 

with due regard to his own interests as well as those of a lessor, however the 

“reasonably prudent operator” standard does not factor into the construction of the 

reservation language in this deed. Furthermore, the “reasonably prudent operator” 

or “reasonable diligence” in no way makes the Property unleaseable and 

undevelopable ad infinitum, and such a conclusion is certainly misplaced.

B. Appellant Did Not Plead Ambiguity

Appellant argues that “it is well-established law that where an ambiguity 

exists in a contract, the contract language will be construed strictly against the 

party who drafted it since the drafter is responsible for the language used.” A’ants 

Br. at 14. Appellant also argues that the Harrells offered no summary judgment 
21

evidence to establish that Harrells did not draft the Warranty Deed. Id. The 

Harrells did not offer summary judgment evidence because ambiguity was never 

an issue. Appellant did not plead ambiguity nor did he argue ambiguity in his 

Motion for Summary Judgment. In the absence of the allegations of 

ambiguity...parole evidence is not admissible to show the intentions of either the 

grantor or grantee in the deed, but such intention is to be determined by the trial 

court as a matter of law from the language which appears in the deed itself, and the 

deed will be enforced as written. Reeves v. Towery, 621 S.W.2 209, 212 (Tex. 

App.—Corpus Christi 1981, writ ref’d n.r.e. (citations omitted); Ayert v. Grande, 

Inc., 717 S.W.2d 891, 893 (Tex. 1986) (“[n]either party contended the 1983 deed is 

ambiguous, so we construe the language of the deed to ascertain the intent of the 

parties without considering parole evidence, i.e. as a matter of law”). Appellant 

has never claimed, and cannot now claim, that the Warranty Deed is ambiguous. 

Appellant also argues that it is well-established in Texas that deeds are 

interpreted to convey the greatest estate possible to the grantee. See A’ants Br. at 

15. Appellant’s argument is generally true in deed construction, but does not take 

into account the reservation language. “A general warranty deed conveys all of the 

grantor’s interest unless there is language in the instrument that clearly shows an 

intention to convey a lesser interest.” Reeves, 621 S.W.2 at 212 (citing Cockrell v. 

Gulf Sulphur Co., 157 Tex. 10, 15, 299 S.W.2d 672, 675 (1957)). The property 
22

intended to be reserved is never included in the grant. Benge v. Scharbauer, 152 

Tex. 447, 259 S.W.2d 166 (1953). As shown in the arguments above, the 

Reservation in the Warranty Deed clearly shows the intention to reserve a 

fractional royalty interest.

PRAYER FOR RELIEF

Appellees Charles E. Harrell and Hollis R. Harrell pray that this Court 

affirm the traditional summary judgment granted by the trial court in favor of the 

Harrells and against Dragon, in its entirety. Appellees Charles E. Harrell and 

Hollis R. Harrell pray for whatever additional relief to which they may be entitled.

 Respectfully submitted,

/s/ Jesse R. Castillo

Jesse R. Castillo

 State Bar No. 03986600

jcastillo@casnlaw.com

CASTILLO SNYDER, P.C.

Bank of America Plaza, Suite 1020

300 Convent Street

San Antonio, Texas 78205

Telephone: (210) 630-4200

Facsimile: (210) 630-4210

Counsel for Appellees Charles E. 

Harrell and Hollis R. Harrell
23

CERTIFICATE OF COMPLIANCE

In Compliance with Texas Rule of Appellate Procedure 9.4(i)(3), Appellees 

Charles E. Harrell and Hollis R. Harrell certify that the number of words in 

Appellee’s Brief, including its headings, footnotes, and quotations, is 5,744.
24

CERTIFICATE OF SERVICE

I certify that, on this 18th day of June, 2015, a true and correct copy of the 

foregoing Brief of Appellee has been served as follows:

Clinton M. Butler

CLINTON M. BUTLER

State Bar No. 24045591

Email: cbutler@langleybanack.com

ELIZABETH R. KOPECKI

State Bar No. 24087859

Email:

ekopecki@langleybanack.com

LANGLEY, BANACK & BUTLER

114 N. Panna Maria Avenue

Karnes City, Texas 78118

Telephone: 830.780.2700

Telecopier: 830.780.2701

ROBINSON C. RAMSEY

State Bar No. 16523700

Email: rramsey@langleybanack.com

LANGLEY & BANACK, INC.

Trinity Plaza II, Suite

900 745 E. Mulberry

Avenue San Antonio,

Texas 78212

Telephone:

210.736.6600

Telecopier: 210.735.6889

ATTORNEYS FOR APPELLANT

PETER J. DRAGON

/s/ Jesse R. Castillo

Jesse R. Castillo