Court Opinion

ID: 4561576
Source: CourtListenerOpinion
Date Created: 2020-08-31 18:00:19.178116+00
Date Added: 2024-06-11T09:27:44.430529
License: Public Domain

Case: 19-50860      Document: 00515545983        Page: 1    Date Filed: 08/31/2020

         United States Court of Appeals
              for the Fifth Circuit                                   United States Court of Appeals
                                                                               Fifth Circuit

                                                                              FILED
                                                                       August 31, 2020
                                 No. 19-50860
                                                                        Lyle W. Cayce
                                                                             Clerk

 Five Star Royalty Partners, Limited,

                                                           Plaintiff—Appellee,

                                     versus

 Jack Mauldin, Jr., Individually and in his capacity
 as Trustee of the Charles W. Welch Irrevocable Trust;
 Timothy L. Welch, Individually and as
 Trustee of the Timothy L. Welch and Vicky L. Welch Revocable Living Trust;
 CK Bird Minerals, L.P.;
 Kathryn B. Bird, as Trustee of the Kathryn B. Bird Revocable Trust,

                                                      Defendants—Appellants.

                 Appeals from the United States District Court
                      for the Western District of Texas
                           USDC No. 6:16-CV-465

 Before Smith, Willett, and Duncan, Circuit Judges.
 Jerry E. Smith, Circuit Judge:
        Defendants appeal a summary judgment favoring Five Star Royalty
 Partners, Limited (“Five Star”), which had sought to quiet title over certain
 oil-and-gas interests. The district court declared that Five Star “own[s] an
 undivided three-eighths (3�8) mineral interest pursuant to [a] May 5, 1927
 deed.” We affirm, though we clarify that said mineral interest consists solely
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                                    No. 19-50860

 of the right to receive a proportionate share of royalties and does not include
 any executive right or right to develop the land.
                                          I.
        This case concerns the interpretation of a May 5, 1927, deed (the
 “Deed”) purporting to convey a “royalty interest” and an “equivalent re-
 versionary interest in and to all oil, gas, casinghead gas, and other minerals,
 in and under” certain sections of land. That Deed reads in relevant part as
 follows:
           [Grantor conveys to grantee] a royalty interest of three-eighths
        ( ) of all . . . minerals, hereafter produced and saved from,
         3�
           8
        together with an equivalent reversionary interest in and to all . . .
        minerals, in and under the [relevant lands] . . . .
           [That] land being now under an oil and gas lease . . . . It is
        understood and agreed that this sale is made subject to the
        terms and conditions of said lease and the royalty interest hereby
        conveyed is a three-eighths (3�8) part of the royalty provided by said
        lease to be paid, but the royalty interest hereby conveyed shall
        be a covenant running with said land in perpetuity and shall be
        provided for in any future lease or sale of the . . . minerals in, on
        and under the [relevant] land.
           It is understood that the three-eighths of one-eighth interest
        herein conveyed is a royalty interest only, and the grantee by
        reason of the possible reversionary interest in the . . . minerals
        in and under said land shall have no interest in any rentals,
        bonuses or other revenues or moneys other than royalties re-
        ceived or derived from the lease or sale of said land, and neither
        the grantee nor its successors or assigns shall have any control
        over the lease or sale of said lands for minerals or other pur-
        poses, and for the purpose of leasing, selling or making other
        contracts for the development and production of the minerals
        in said lands, the original grantors are expressly made the
        agents of the grantee, and it shall not be necessary to consult
        the grantee in any way with respect thereto; but in case . . .

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        minerals shall at any time hereafter be produced from said
        lands, then and in that event the grantee shall receive a three-
        eighths of one-eighth of the same so produced and saved, as royalty,
        which shall be delivered to the grantee, its successors, and
        assigns. [Emphases added.]
        Five Star, asserting itself as the grantee’s successor-in-interest,
 sought a declaration that it owns a “floating” royalty entitling it to a 3�8 share
 of any leased royalty. The defendants each counterclaimed that Five Star
 owns a fixed royalty interest consisting of a 3�8 of 1�8 (i.e., 3�64) share of gross
 production. The district court granted Five Star’s motion for summary judg-
 ment and denied defendants’ equivalent motions.
        Seeking to establish chain of title to the interest conveyed in the Deed,
 Five Star had submitted various property records. The latest conveyance in
 that chain described the interest obtained by Five Star as “ROYALTY
 ONLY.” After summary judgment, Five Star moved to supplement the
 record with “newly-available evidence,” including a recent quitclaim exe-
 cuted by the successor to the entity that had transferred the “ROYALTY
 ONLY” interest to Five Star. The district court granted that motion while
 simultaneously denying defendants’ motion to modify the judgment. Defen-
 dants appeal.
                                         II.
        “This court reviews summary judgment de novo, applying the same
 legal standards as the district court. Summary judgment is appropriate if the
 movant shows that there is no genuine dispute as to any material fact and the
 movant is entitled to judgment as a matter of law.” Ryder v. Union Pac. R.R.
 Co., 945 F.3d 194, 199 (5th Cir. 2019) (cleaned up). “We can affirm the . . .
 summary judgment on any ground supported by the record.” Smith v. Reg’l
 Transit Auth., 827 F.3d 412, 417 (5th Cir. 2016).

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        “When, as in this case, subject matter jurisdiction is based on diver-
 sity, federal courts apply the substantive law of the forum state. For guid-
 ance, we turn first to [Texas’s] highest court and otherwise look to its inter-
 mediate courts to determine how the highest court should likely rule.”
 Ryder, 945 F.3d at 199 (cleaned up).

                                        A.
        A suit to quiet title “enable[s] the holder of the feeblest equity to
 remove from his way to legal title any unlawful hindrance having the appear-
 ance of [a] better right.” Bell v. Ott, 606 S.W.2d 942, 952 (Tex. App.—Waco
 1980, writ ref’d n.r.e.) (quoting Thomson v. Locke, 1 S.W. 112, 115 (Tex.
 1886)). “[T]he plaintiff must prove, as a matter of law, right, title, or own-
 ership in himself with sufficient certainty to enable the court to see that he
 has a right of ownership and that the alleged adverse claim is a cloud on the
 title that equity will remove.” Hahn v. Love, 321 S.W.3d 517, 531 (Tex.
 App.—Houston [1st Dist.] 2009, pet. denied).
        Five Star submitted a chain of title purporting to demonstrate an own-
 ership interest in the land. The legitimacy or continuity of that chain is un-
 disputed, as is the existence of defendants’ competing claim. We agree with
 the district court’s finding such uncontested proof enough, “as a matter of
 law, . . . [to establish] ownership in [Five Star] with sufficient certainty to
 enable the court to see that [Five Star] has a right of ownership” before
 determining whether defendants’ “claim is a cloud on the title that equity
 will remove.” Id.
        The defendants’ contrary suggestion—that Five Star has not estab-
 lished ownership because one conveyance in its chain of title purports to
 transfer a “ROYALTY ONLY”—is unpersuasive. Even accepting that Five
 Star holds solely a “royalty,” that would affect the nature of Five Star’s own-
 ership interest and not its existence. Five Star’s interest, shown throughout

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 the chain of title, undisputedly includes some kind of “royalty” as first
 conveyed in 1927. Defining that “royalty” is the core question and is sepa-
 rate from the issue of ownership. 1

                                             B.
         “The construction of an unambiguous 2 deed is a question of law for
 the court. The primary duty of a court when construing such a deed is to
 ascertain the intent of the parties from all of the language in the deed by a
 fundamental rule of construction known as the ‘four corners’ rule.” Luckel
 v. White, 819 S.W.2d 459, 461 (Tex. 1991) (citation omitted). That rule
 “favor[s] a holistic and harmonizing approach and reject[s] mechanical rules
 of construction, such as giving priority to certain types of clauses over others
 or requiring the use of magic words.” Hysaw v. Dawkins, 483 S.W.3d 1, 8
 (Tex. 2016). Indeed, “[n]o single provision taken alone will be given control-
 ling effect; rather, all the provisions must be considered with reference to the
 whole instrument.”           Seagull Energy E&P, Inc. v. Eland Energy, Inc.,
 207 S.W.3d 342, 345 (Tex. 2006).
         “In this case, questions of [contractual] intent arise due, in part, to the
 use of double fractions,” to “the prevalence of 1�8 as the standard royalty at
 the time” of the Deed’s execution, and to the subtle, though important, dis-
 tinction between a “royalty interest” as a constituent element of a mineral
 interest and a “royalty interest” consisting of a fixed factor of gross produc-
 tion. Hysaw, 483 S.W.3d at 8. We consider, first, the kind of royalty the Deed
 conveyed, before turning to the amount thereof.

         1
           To be sure, the “ROYALTY ONLY” language might have been relevant if we
 agreed with the district court’s finding that the 1927 Deed conveyed to its grantee not only
 royalty rights but also executive and development rights. See infra section II.B.2.
         2
             No party contends that the Deed is ambiguous.

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                                             1.
         “The word ‘royalty’ has a well understood meaning in the oil and gas
 industry.” Watkins v. Slaughter, 189 S.W.2d 699, 700 (Tex. 1945). Never-
 theless, this case requires distinguishing between two kinds of “royalty”
 interests: (1) a “mineral interest” that includes a right to receive a propor-
 tionate share of reserved royalties and (2) a free “royalty interest” granting
 a right to a fixed fraction of gross production.
         “A mineral estate consists of five interests: 1) the right to develop,
 2) the right to lease, 3) the right to receive bonus payments, 4) the right to
 receive delay rentals, and 5) the right to receive royalty payments.” French
 v. Chevron U.S.A. Inc., 896 S.W.2d 795, 797 (Tex. 1995). It is possible to
 convey (by express intention) solely the royalty interest while reserving or
 excepting the others; the grantee would nevertheless hold a “mineral
 interest”—“a mineral interest stripped of appurtenant rights other than the
 right to receive royalties.” Id. at 798. Such an interest is “subject to being
 leased,” entitling the interest-holder to his portion “of the royalty reserved
 in the instrument leasing the mineral interests.” Delta Drilling Co. v. Sim-
 mons, 338 S.W.2d 143, 146 (Tex. 1960). 3 “In other words, when a deed con-
 veys a royalty interest by the mechanism of granting a fractional mineral
 estate followed by reservations, what is conveyed is a fraction of royalty, not
 a fixed fraction of total production royalty.” French, 896 S.W.2d at 798.
         A “royalty interest” can also indicate a non-mineral estate interest,
 sometimes referred to as a “non-participatory royalty interest” or an “over-
 riding royalty,” 4 which in any case consists of “an expense-free obligation

         3
           Absent an operating lease, the “royalty interest” due to the interest-holder would
 be his share of the mineral estate, minus production costs. See Cox v. Davison, 397 S.W.2d
200, 201 (Tex. 1965).
         4
             See Piranha Partners v. Neuhoff, 596 S.W.3d 740, 742 n.2 (Tex. 2020). Precise

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 (except as to taxes), payable as a specified share of the gross production.”
 Delta, 338 S.W.2d at 147. 5 Such an interest, the defendants contend, was
 conveyed in the Deed. That contention, if true, would support an inference
 that Five Star, as the grantee’s successor-in-interest, would be owed not a
 portion of royalties reserved to the mineral estate owner but a fixed royalty
 of gross production.
         The district court, however, correctly recognized that the Deed con-
 veyed an interest in the mineral estate. First, the Deed’s “royalty interest”
 (as distinguished from its “equivalent reversionary interest”) itself is a por-
 tion of royalties and not a fixed factor of gross production. The granting
 clause conveys a “royalty interest of three-eighths (3�8) of all . . . minerals”;
 in isolation, that might suggest a 3�8 fixed royalty. See Watkins, 189 S.W.2d
 at 700–01. The Deed’s second paragraph, however, refers to the same inter-
 est as “a three-eighths (3�8) part of the royalty provided by [the then-operative]
 lease,” and in the third paragraph we encounter the “royalty interest” again
 phrased as a “three-eighths of one-eighth interest.” Moreover, the Deed
 neglects to absolve the grantee of production costs. 6 Such language suggests
 that the “royalty interest” is not a fixed royalty but instead is a right to
 receive royalties proportionate to a held mineral interest. 7

 distinctions, if any, among various subgroups of non-mineral estate royalty interests—e.g.,
 “free” or “pure” or “overriding” royalty interests—are not relevant to this case, particu-
 larly given that we find the Deed not to have conveyed any such interest.
         5
           See also KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 75 (Tex. 2015); 8 WILLIAMS
 & MEYERS OIL & GAS LAW 921 (2019 ed.) (noting that “royalty” can be “(1) [t]he
 landowner’s share of production, free of expenses of production [or] (2) [a] share of pro-
 duction, free of expenses of production[.]”).
         6
            Cf. id. at 186 (holding “that a [fixed] royalty interest was reserved” in key part
 because the deed explicitly stated that “the interest retained [would be] free of the costs of
 drilling and production”).
         7
             See Temple-Inland Forest Prods. Corp. v. Henderson Family P’ship, Ltd., 958 S.W.
7
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         The Deed’s third paragraph only strengthens that conclusion. Its
 “Reservations Clause” 8 states that “the possible [equivalent] reversionary
 interest” would not transfer any right to lease or develop 9 the land, or to
 receive rentals or bonus payments “other than royalties received or derived
 from the lease or sale of [the] land.” Those “reservation[s] would be redun-
 dant and would serve no purpose whatsoever if the interests in minerals being
 conveyed [were] a [fixed, pure] royalty interest, that is, [a set fraction] of all
 production.” French, 896 S.W.2d at 798.
         The defendants would have the foregoing analysis not apply because,
 in their view, the so-called “Reservations Clause” is a list of exceptions and
 not reservations. 10 But even if we refer to the relevant section as the “Excep-
 tions Clause,” we cannot conceive of a single reason—and defendants have
 not attempted to provide any—why the Texas Supreme Court’s analysis of
 “when a deed conveys a royalty interest by the mechanism of granting a frac-
 tional mineral estate followed by reservations” might apply any differently
 should said “mechanism . . . [be] followed by” exceptions. French, 896 S.W.2d
 at 798 (emphasis added). 11 It is of no immediate concern who is to be enjoying

 2d 183, 185 (Tex. 1997) (“The owner of 50 royalty acres out of a 32,808.5 acre tract is
 entitled to receive 50�32,808.5 of royalty, not a 50�32,808.5 fixed royalty.”).
         8
           For continuity’s sake, we, like the district court, refer to the two broad sections
 within the Deed’s third paragraph as the “Reservations Clause” (ending at “but in case”)
 and the “Future Production Clause.”
         9
              See infra note 14.
         10
            See Pich v. Lankford, 302 S.W.2d 645, 650 (Tex. 1957) (“The primary distinction
 between a reservation and exception is that a reservation must always be in favor of and for
 the benefit of the grantor, whereas, an exception is a mere exclusion from the grant, in favor
 of the grantor only to the extent that such interest as is excepted may then be vested in the
 grantor and not outstanding in another.”) (emphasis omitted).
         11
          See also Pich, 302 S.W.2d at 650 (citation omitted) (stating that, although “[t]he
 words ‘exception’ and ‘reservation’ are not strictly synonymous, [ ] they are often used
 interchangeably”).

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 the interests excluded; whether by “reservations” or by “exceptions,” it is
 enough that the Deed expressly states that the specified interests shall not be
 the grantee’s.
        The Deed conveyed two interests that were “equivalent[ly]” the
 same right to receive a share of royalties commensurate with a mineral inter-
 est. As the lands were under an operating lease at the time of the conveyance,
 the grantee would gain a fraction of the grantor’s right to receive royalties
 reserved in that lease. That interest would carry a “possibility of reverter,”
 under which “[t]he royalty rights [ ] may revert [to the grantor], as part of
 the total mineral estate that may revert” upon termination of the lease.
 Luckel, 819 S.W.2d at 464. But the Deed foreclosed that possibility by speci-
 fying that the interest would “be a covenant running with [the] land in per-
 petuity and [would] be provided for in any future lease or sale”; for his “pos-
 sible reversionary interest,” the grantee’s right to receive a fractional royalty
 would revert to the grantee himself. Given that the relevant operating lease
 did terminate, the “royalty interest” reverted to the grantee, who now owns
 a single “interest in the nature of a royalty—a mineral interest stripped of
 appurtenant rights other than the right to receive royalties.”           French,
896 S.W.2d at 798.

                                        2.
        Despite observing the dichotomy between the Reservations Clause
 (and its withholding of rights) and the Future Production Clause (and its
 granting of rights), the district court neglected to consider such when dispen-
 sing with the executive right. The court found that “the Deed, by appointing
 the original grantor as the agent of the grantee for purposes of exercising the
 executive right, acknowledges that that right is not reserved to the grantor
 but remains instead as a constituent attribute of the grantee’s mineral inter-
 est.” Thus, the court accepted Five Star’s proffered argument that “the

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  [D]eed does not deprive the Grantee of the executive right and right to de-
  velop associated with the reversionary mineral interest it conveyed. It simply
  provides that the Grantor will exercise those rights through an agent specified
  in the [D]eed.”
          We disagree. First, the Deed’s naming the grantor as “the agent[] of
  the grantee” when “leasing, selling, or making other contracts for [ ] devel-
  opment and production” is squarely within the Reservations Clause, which,
  as the district court acknowledged, concerns rights not conveyed. That alone
  suggests the “agent” language would not transfer the executive right but,
  instead, would qualify how the grantor may exercise the right otherwise with-
  held to himself.
          Bolstering that conclusion is the internal inconsistency that would
  arise from the district court’s reading. A principal-agent relationship, today
  as in 1927, requires the former to enjoy at least some control over the latter.12
  Although the Deed does refer to the grantor as the grantee’s “agent[]” in
  exercising the executive right, in the same breath—bookending the “agent”
  language—it declares that the grantee would lack “any control over the lease
  or sale of [the] lands” and that it would “not be necessary [for the grantor]
  to consult the grantee in any way with respect thereto.” Not only is it unlikely
  that a conveyance of a mineral interest would be found within the Reser-

          12
             See Gen. Bldg. Contractors Ass’n, Inc. v. Pennsylvania, 458 U.S. 375, 392 (1982)
  (“Agency is the fiduciary relation which results from the manifestation of consent by one
  person to another that the other shall act on his behalf and subject to his control, and consent
  by the other so to act.”) (emphasis added) (quoting Restatement (Second) of
  Agency § 1 (Am. Law Inst. 1958)); Hunter v. Adoue & Lobit, 86 S.W. 622, 624 (Tex.
  1905) (“The agent’s right is, of course, subordinate to and liable to the control of the prin-
  cipal to the extent of his interest.”); see also Warren A. Seavey, The Rationale of Agency,
  29 YALE L.J. 859, 863 (1920) (“The agent’s duty of obedience flows directly from the
  control which the cases recognize to be at all times in the principal.”).

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  vations Clause; under its own terms, the grantor, by definition, could not truly
  be the grantee’s “agent.”
          That the prospective royalty owner should insist on some sort of fidu-
  ciary standard governing the executive is explained by the state of the law at
  the time. As late as 1948—a full twenty years after the Deed’s execution—
  Texas law had “not yet developed to the point where a clear concept of the
  exact nature of the relation and duties [between the royalty owner and the
  exclusive-lessor could] be ascertained,” so that a “royalty owner [would] not
  be fully protected if he must rely entirely upon the ordinary principles of con-
  tract law.” Lee Jones, Jr., Non-Participating Royalty, 26 TEX. L. REV. 569,
  573–74 (1948). Indeed, “[a] royalty owner has no power to lease or use the
  surface, or to interfere with the land owner in any way. It might be, or it might
  not be true that the courts [as of 1946] would raise an implied obligation in
  his favor, requiring the land owner to lease the land under certain circum-
  stances . . . .” Moore v. City of Beaumont, 195 S.W.2d 968, 980 (Tex. Civ.
  App.—Beaumont 1946), aff’d, 202 S.W.2d 448 (Tex. 1947). For the Deed’s
  grantee, however, there would be no potential need to determine the exis-
  tence of any such “implied obligation” because that obligation was made
  express by the “agent” proviso. 13
          That proviso is thus a limitation on the Deed’s reserving the executive
  right with the grantor: The grantor would retain the executive right (and the
  right to develop 14), but “a fiduciary standard of conduct will be required on

          13
            Cf. Hager v. Stakes, 294 S.W. 835, 837 (Tex. 1927) (noting a conveyance in which
  it was expressly agreed that “no obligation is imposed . . . to drill or operate for oil . . . but
  that [the royalty owner] shall have [his] part of such petroleum only if and when
  produced”).
          14
             On its face, “the deed was silent as to the conveyance of the right to develop,”
  but “the right to develop is a correlative right and passes with the executive rights [i.e., the
  right to enter leases for sale or development of the land].” French, 896 S.W.2d at 797 n.1.

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  the theory that [something akin to] the relation of principal and agent or
  trustee and cestui que trust exists.” 15 The grantee, though receiving solely the
  right to receive proportionate royalties, may be assured that the estate would
  be developed, leased, and utilized in good faith toward his interest. 16 That
  interest, however, remains solely a right to receive royalties as a partial min-
  eral interest-holder.

                                              C.
          Having determined the nature of Five Star’s interest, we consider its
  quantum. The source of contention is that the Deed’s paragraphs appear to
  contradict one another. Its first paragraph purports to convey “a royalty
  interest of three-eighths (3�8) . . . together with an equivalent reversionary
  interest.” Its second paragraph, however, states that “the royalty interest
  hereby conveyed is a three-eighths (3�8) part of the royalty provided by the
  [operative] lease” and that the same “interest . . . shall be provided for in any
  future lease or sale.” Further compounding the discrepancy, the third para-
  graph refers to that interest as a “three-eighths of one-eighth interest,” and it
  declares that “in case . . . minerals shall at any time hereafter be produced

  Therefore, the Deed’s expressly disclaiming to convey “any control over the lease or sale
  of [the] lands for minerals or other purposes,” effectively reserved “the right to develop
  . . . in the grantor.” Id.
          15
             Jones, supra, at 573. In more recent years, Texas courts have found that “a fidu-
  ciary relationship [does] exist[] between an owner of the executive rights and [a] non-
  participating royalty owner[].” KCM, 457 S.W.3d at 80. That duty is distinct from “a
  more paradigmatic fiduciary relationship, like principal and agent,” as the executive need
  not “grant priority to the non-executive’s interest,” though he must nevertheless “acquire
  every benefit for the non-executive that [he] would acquire for himself.” Id. at 81 (quo-
  tation marks omitted).
          16
             Given that the 1927 Deed granted solely a “right to receive royalties,” French,
896 S.W.2d at 798, it is of no consequence that a subsequent conveyance in Five Star’s
  chain of title purported to transfer a “ROYALTY ONLY.” We thus decline to consider
  defendants’ argument relating to Five Star’s submission of the post-judgment quitclaim.

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  from [the relevant] lands, then . . . the grantee shall receive a three-eighths of
  one-eighth of the same so produced and saved, as royalty.”
         The defendants suggest that the double fraction be read literally to
  convey, effectively, a 3�64 interest in gross production. Five Star submits that
  the fraction “one-eighth” in context is but a proxy for whatever be provided
  in a lease so that “three-eighths of one-eighth” is synonymous with a right to
  receive royalty proportionate to a 3�8 mineral interest.
         Texas is no stranger to such controversies. In one case, the deed—
  executed in 1921—began by granting “an undivided one sixty-fourth interest
  in and to all . . . minerals in and under, and that may be produced from the
  . . . land.” Garrett v. Dils Co., 299 S.W.2d 904, 905 (Tex. 1957) (emphasis
  added). And it ended by noting, again, that the grantee would “own[] one-
  eighth of one-eighth of all . . . minerals in and under said lands.” Id. (emphasis
  added). In an intervening paragraph, however, the deed stated that the sale
  would “cover[] and include[] one-eighth of all . . . royalty due and to be paid
  under the terms of [the existing] lease,” which itself “provided for a one-
  eighth royalty.” Id. (emphasis added).
         The Texas Supreme Court held that the deed, notwithstanding its lan-
  guage of “one sixty-fourth” and “one-eighth of one-eighth,” granted a right
  to receive 1�8 of royalties reserved under future leases:
         As pointed out above, there was granted one sixty-fourth of the
         minerals which the parties construed to mean one-eighth of the
         one-eighth royalty under the then existing lease. The provision
         for ownership of the minerals under future leases is that the
         grantee shall own ‘one-eighth of one-eighth’ of the minerals.
         Had that fraction been expressed as one sixty-fourth, it should
         be given the same meaning as in the granting clause which the
         parties understood and agreed to be a one sixty-fourth royalty
         or one-eighth of the one-eighth royalty. Instead of employing
         the fraction one sixty-fourth in defining the ownership under a

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          subsequent lease, the provision is for one-eighth of one-eighth.
          Clearly, that does not denote a less interest than a one sixty-
          fourth, but on the contrary it emphasizes the fact that the in-
          tention was to convey one-eighth of the royalty under future
          leases the same as under the original lease. The court takes
          judicial knowledge of the fact that the usual royalty provided in
          mineral leases is one-eighth. The parties doubtless assumed
          that the royalty under future leases would be one-eighth, as it
          was under the lease in existence when the deed was executed.
Id. at 906–07; see also Hysaw, 483 S.W.3d at 10 n.11.
          The correct resolution of this case becomes apparent. The Deed pur-
  ports to grant a “royalty interest of three-eighths” in the minerals, combined
  with “an equivalent reversionary interest.” The grantee would thus be enti-
  tled to “three-eighths (3�8) part of the royalty provided by [the then-opera-
  tive] lease”—3�8 of      1�
                             8. But should that lease terminate (which it did), the
  grantee’s interest by reverter would “be provided for in any future lease or
  sale,” i.e., he would be owed “a three-eighths (3�8) part of the royalty . . .
  provided for in any future lease or sale.” That interest, though an interest in
  the mineral estate, would be of the estate’s “royalty interest only”; all other
  interests 17 would remain with the grantor, who may exercise them as he
  wishes, provided he does not violate his fiduciary duty (akin to, though not
  precisely that of an “agent[]”) toward the grantee’s interest. “Instead of
  employing the fraction [three] sixty-fourth[s] in defining the ownership
  under a subsequent lease, the provision [in the third paragraph] is for [three]-
  eighth[s] of one-eighth. Clearly, that does not denote a less interest than
  [three] sixty-fourth[s], but on the contrary it emphasizes the fact that the

          17
          That is, “1) the right to develop, 2) the right to lease, 3) the right to receive bonus
  payments, [and] 4) the right to receive delay rentals.” French, 896 S.W.2d at 797.

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Case: 19-50860      Document: 00515545983          Page: 15      Date Filed: 08/31/2020

                                    No. 19-50860

  intention was to convey [three]-eighth[s] of the royalty under future leases
  the same as under the original lease.” Garrett, 299 S.W.2d at 907.
         It is true that, taken alone, “the double-fraction royalty . . . [might be
  read] as a mathematical expression describing a [single] fractional royalty;
  under such a reading, any excess royalty would default to the fee owner.”
  Hysaw, 483 S.W.3d at 15. But “our objective is to effectuate the parties’
  intent as expressed within the four corners of the conveying instrument,”
  and that is accomplished through “careful and detailed examination of the
  document in its entirety, rather than by application of mechanical rules of
  construction that offer certainty at the expense of effectuating intent.” Id.
  at 16. Such an inquiry reveals that the parties intended to convey a 3�8 interest
  in the mineral estate, reduced to the right solely to receive royalties propor-
  tionate to any applicable lease as represented by the metonym of
  “one-eighth.”
         The judgment is AFFIRMED, but subject to the clarification that
  Five Star’s 3�8 mineral interest includes solely a right to receive proportionate
  royalties.

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