Court Opinion

ID: 9516906
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:55:44.251849+00
Date Added: 2024-06-11T09:39:59.838124
License: Public Domain

RICK STRANGE, Justice,
dissenting.
I respectfully dissent. The majority’s ultimate conclusion: that when both parties to a purchase agreement believe that it conveyed only the surface, then their deed should transfer title only to the surface is logically sound. Furthermore, I find the conflict between Clarence O. Bright’s testimony that he knew the John-sons were keeping the minerals and his prayer to this court asking for clear title to those same minerals problematic. Consequently, if we were resolving this issue strictly on equitable principles, I would have no trouble reforming the deed. But, because we are not, because the Johnsons do not challenge the enforceability of the purchase agreement, and because our opinion -will create uncertainty in other title and contractual matters, I respectfully dissent.
My concerns are twofold. First, I believe that we are improperly relying upon extrinsic evidence. The Johnsons do not ask this court to reform the underlying purchase agreement. We have previously held that in such an instance extraneous evidence is inadmissible to explain the contract’s language. See Wright v. E.P. Operating Ltd. P’ship, 978 S.W.2d 684, 687 (Tex.App.-Eastland 1998, pet. denied). We reached this conclusion based upon our responsibility to “carry into effect the intent of the parties as expressed [in the agreement]. It is not the intent that the parties may have had but failed to express in the instrument, but it is the intent that is expressed by the instrument.” Id. (citing Pierson v. Sanger, 93 Tex. 160, 53 S.W. 1012 (1899)).
Even though no challenge is made to the underlying agreement, our opinion discusses Floy Johnson’s and Clarence Bright’s testimony describing their subjective intent concerning the reservation of the minerals and their statements at closing, and *494we clearly rely upon this testimony to reach our conclusion. Not only does this run counter to the parol evidence rule, but also it is inconsistent with the merger clause that the parties included in their agreement1 — a clause whose operation is not challenged on appeal. A merger clause presumes that all prior negotiations and agreements relating to the transaction have been merged into the contract; consequently, the contract will be enforced as written and cannot be added to, varied, or contradicted by parol evidence. See ISG State Operations, Inc. v. Nat’l Heritage Ins. Co., 234 S.W.3d 711, 719 (Tex.App.-Eastland 2007, pet. denied). Our consideration of Floy Johnson’s and Clarence Bright’s testimony is at odds with the terms of this unchallenged contractual provision.
The majority correctly notes that we may consider the facts and circumstances surrounding the execution of a contract. The limits of this rule are not clearly defined. However, commentators have indicated that it is limited to pre-conveyancing issues such as vocabulary peculiar to the conveyor, utilization of a drafting agent or use of a form instrument, the skill of the scrivener in the use of language or terms of art, the prevailing manners of expression at the time, and other evidence that affected the formulation of the terms of the instrument. See Bruce M. Kramer, The Sisyphean Task of Interpreting Mineral Deeds and Leases: An Encyclopedia of Canons of Construction, 24 Tex. Tech L. Rev. 1, 14 (1993). But regardless of how the rule is defined, it is clear that it does not permit proof of the parties’ subjective intent. See Mark K. Glasser & Keith A. Rowley, On Parol: The Construction and Interpretation of Written Agreements and the Role of Extrinsic Evidence in Contract Litigation, 49 Baylor L. Rev. 657, 669 (1997).
My apprehension is the effect our analysis will have on future contracts. By broadening the scope of surrounding circumstances, we make it more difficult to determine a contract’s meaning because of the uncertainty over what now is or is not a permissible evidentiary consideration. By disregarding the merger clause, we make it more difficult for contracting parties to limit the risk of subsequent litigation. We are also potentially increasing transactional costs. Assume Clarence Bright had conveyed his interest to an innocent third party before the dispute arose. What burden do we place upon this third party when we undercut the ability to rely upon the documents in a chain of title? And how will that increased cost and risk be absorbed? I realize that an innocent purchaser has defenses to a title challenge,2 but even successful litigation imposes transactional costs.
My second concern is that our opinion assigns a meaning to the phrase “all of record” that no practitioner would have expected, and, therefore, a definition that will cause uncertainty in any chain of title with a document containing that phrase. We hold that the Johnsons retained all of their minerals because the contract contained the following phrase: “To be additionally retained by Seller: ALL OF RECORD.” We reach this conclusion by defining the term “all of record” to mean all of the minerals that the Johnsons owned of record. I respectfully disagree.
*495The phrase “all of record” is commonly understood to refer to documents on file. For example, in E.P. Operating Ltd. P’ship, 978 S.W.2d at 688, we wrote:
The language stating that the conveyances were made subject to any and all reservations presently of record inelud-ing without limitation that property reserved by the Wrights does not reserve any mineral interest in Oregon’s predecessors in title, but rather recognizes that reservations have been made in the past and are in the chain of title.
I note that, if the parties had used “all of record” to describe the interest outstanding in third parties, we would have applied its normal meaning.3 I appreciate that there is a difference between an exclusion for interests in third parties and a reservation of interests to the seller, but this distinction does not justify defining “all of record” differently.4
Moreover, by holding that the meaning of “all of record” depends upon its placement in the contract and the other circumstances of the transaction, we create uncertainty in chains of title. The parties should have simply said “all” when describing the mineral interests to be retained by the Johnsons. But they did not. They instead referred to “all of record.” The scrivener properly read this to refer to title documents on file. Regrettably, this effectively precluded any reservation because it is difficult to envision a previously filed document describing the Johnson’s retained mineral interest, but we should not create uncertainty for others by saying “all of record” does not carry its normally accepted meaning simply because the language chosen by the parties may not have accurately said what they intended to say. See Canter v. Lindsey, 575 S.W.2d 331, 334 (Tex.Civ.App.-El Paso 1978, writ ref d n.r.e.) (the question is not what the parties meant to say, but the meaning of what they did say); see also Dahlberg v. Holden, 150 Tex. 179, 238 S.W.2d 699, 701 (1951) (courts must construe contracts as written and may not alter the parties’ language by interpolation or substitution).
For these reasons, I respectfully dissent.

. That clause provided: "AGREEMENT OF PARTIES: This contract contains the entire agreement of the parties and cannot be changed except by their written agreement."

. See Madison v. Gordon, 39 S.W.3d 604, 606 (Tex.2001) (A bona fide purchaser is one who acquires property in good faith, for value, and without notice, actual or constructive, of any third-party claim or interest. This status is an affirmative defense to a title dispute.).

. I note also that the parties used the term “as of record" to describe the easements to which the grant was subject. The scrivener treated this as a reference to the easements on file. This is consistent with common practice, and no one complains.

. The practical distinction between a reservation and exception is questionable today. See, e.g., Pick v. Lankford, 157 Tex. 335, 302 S.W.2d 645, 650 (1957) (the words "exception” and "reservation" are not strictly synonymous but are often used interchangeably); Reynolds v. McMan Oil & Gas Co., 11 S.W.2d 778, 781 (Tex. Comm'n App.1928, holding approved) (for the purpose of determining the extent of the grant, the distinction between an exception and a reservation is of no practical importance, for the property excepted or the estate reserved is never included in the grant); see also 8 Howard R. Williams & Charles J. Meyers, Oil and Gas Law 336 (2008) (the distinction between exceptions and reservations has lost most of its importance in contemporary law).