SUMMARY: The Eastland Court of Appeals held that grantors who conveyed only a fractional mineral interest kept the additional executive rights they owned, disagreeing with the El Paso Court of Appeals, held that an executive right may be held as a naked interest, and held that a 1958 deed reserving “1/4th of the 1/8th royalty irrespective of the amount of royalty actually provided for in any lease” rebutted the Van Dyke presumption and reserved a fixed 1/32 royalty.
In this case, the Eastland Court of Appeals addressed two questions arising from Martin County mineral deeds executed in 1958 and 1962. First, the court held that grantors who conveyed only a fractional mineral interest kept the additional executive rights they owned, and that an executive right may exist as a stand-alone interest. Second, the court held that a 1958 deed reserving a double-fraction royalty “irrespective of the amount of royalty actually provided for in any lease” rebutted the presumption from Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023), and reserved a fixed 1/32 royalty.
In 1958, E.H. Chandler and William A. Childress conveyed to High Crest Realty Company an undivided 1/4 mineral interest in the C.C. Slaughter Ranch, a tract of over 25,000 acres, along with the executive right over the 1/4 mineral interest they kept. The deed provided that the grantors would receive one-fourth of any bonus and delay rentals and
one-fourth (1/4th) of the usual one-eighth (1/8th) royalty (and Grantors shall be entitled to 1/4th of the 1/8th royalty irrespective of the amount of royalty actually provided for in any lease executed by Grantee, its successors or assigns) . . . .
Through later conveyances, Chandler, Childress, and Excuderunt, Inc. each came to own an undivided 1/24 mineral interest and a 1/12 interest in the executive rights. In 1962, each executed a mineral deed to General Crude Oil Company conveying “an undivided one-twenty-fourth (1/24th) interest in and to all of the oil, gas and other minerals” in about 7,000 acres. The deeds said nothing about the grantors’ additional executive rights, which together amounted to a 1/8 interest.
Element Petroleum Properties LLC, later succeeded by High Noon Resources, LLC, held leases from the 1962 grantors’ successors. PetroLegacy Energy II, LLC, later succeeded by Ovintiv USA, Inc., held leases from General Crude’s successors. Element sued PetroLegacy, which counterclaimed for trespass to try title, and other interest owners were joined, including XTO Holdings, LLC and Jase Minerals, LP and Jase Family, Ltd. (collectively “Jase”). Jase moved for a declaration that the 1958 deed reserved only a fixed 1/32 royalty. The trial court ruled for Element on the 1962 deeds and for Jase on the 1958 deed, and rendered judgment against PetroLegacy for $471,837 in stipulated damages and $350,000 in attorney’s fees.
On the 1962 deeds, Ovintiv and XTO argued that executive rights pass with a mineral conveyance unless expressly reserved, even when the executive interest is larger than the mineral interest conveyed. They relied on Anadarko Petroleum Corp. v. BNW Property Co., 393 S.W.3d 846 (Tex. App.—El Paso 2012, pet. denied), which so held, and on the Texas Supreme Court’s decisions in Day & Co. v. Texland Petroleum, Inc., 786 S.W.2d 667 (Tex. 1990), and Lesley v. Veterans Land Board, 352 S.W.3d 479 (Tex. 2011). Element conceded at oral argument that Anadarko conflicted with the trial court’s ruling. The court of appeals affirmed anyway. It explained that the grantors in Day and Lesley lost their executive rights because their deeds showed no intent to convey less than everything they owned. Under Piranha Partners v. Neuhoff, 596 S.W.3d 740 (Tex. 2020), a grantor can keep part of its estate either by reserving it or by granting only the part it wants to convey. Because the 1962 deeds granted only a 1/24 interest, the grantors did not need to reserve the additional executive rights to keep them. To the extent Anadarko requires a reservation in that situation, the court expressly disagreed with it. The court also rejected the argument that the “to have and to hold” clause carried the executive rights as appurtenances, holding that a warranty clause does not convey title or define the estate conveyed.
Ovintiv and XTO further argued that the trial court’s reading left the grantors with an impermissible “naked” executive right. The court disagreed. Relying on Day’s statement that the executive right remains an interest in property even when severed, and noting that the Texas Supreme Court has left the question open, the court held that the executive right is severable from the other attributes of the mineral estate and may be held as a naked right. The court added that, given its reading of the 1958 deed, the executive right retained here was not naked in any event.
The court next held that the trial court did not abuse its discretion by refusing to compel joinder of everyone claiming under the 1958 deed across the full 25,000 acres. Ovintiv and XTO relied on Longoria v. Exxon Mobil Corp., 255 S.W.3d 174 (Tex. App.—San Antonio 2008, pet. denied), but the court noted that the trial court in Longoria had ordered joinder, and it found no evidence here that the absent owners actually claimed an interest, as Crawford v. XTO Energy, Inc., 509 S.W.3d 906 (Tex. 2017), requires. Merely having an interest is not enough. The court also rejected the argument that no party pleaded for a construction of the 1958 deed. Element pleaded that the 1958 grantors conveyed the “excess royalty” to High Crest, PetroLegacy and XTO argued the opposite, and the trial court was required to decide all questions presented by the competing motions.
On the meaning of the 1958 deed, Ovintiv and XTO argued that the double fraction triggered the Van Dyke presumption and that the “irrespective” language simply guaranteed a minimum of 1/8 under future leases. They also pointed out that, unlike the deed in Clifton v. Johnson, 733 S.W.3d 16 (Tex. 2026), the 1958 deed never used the multiplied fraction of 1/32. Jase and High Noon responded that the “irrespective” language untethered the reserved royalty from any lease royalty, and that applying the presumption would write those words out of the deed.
The court agreed with Jase and High Noon. It acknowledged that the presumption applied and, standing alone, would produce a floating 1/4 royalty, consistent with the grantors’ 1/4 shares of bonus, rentals, and shut-in royalty. But the parenthetical did two things. It showed that the parties knew future leases might carry a royalty other than 1/8, which undercuts a key basis for the presumption. And by making the grantors’ share payable “irrespective of” the lease royalty, it cut the reservation loose from any lease, which is the defining feature of a fixed royalty. Because a fixed 1/4 royalty would be unreasonable when the grantors owned only a 1/4 mineral interest, the court multiplied the fractions and held that the deed reserved a fixed 1/32 royalty.
This case creates a conflict with the El Paso Court of Appeals on whether excess executive rights pass when a grantor conveys only a fractional mineral interest, and it holds that a naked executive right is permissible, a question the Texas Supreme Court has left open. It also shows that the Van Dyke presumption can be rebutted even when the deed never states the multiplied fraction.