Duhig Revisited – Perryman v. Spartan Tex. Six Capital Partners, Ltd.

Duhig Texas State supreme court

By: Kiefaber & Oliva, LLP – Title examination is typically characterized by a series of deeds and conveyances, which—unsurprisingly—do not convey property and/or interests in a neat, uniform fashion.  To eliminate some of this confusion in the context of over-conveyances, the Texas Supreme Court established the Duhig doctrine.  Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (Tex. 1940).  The Duhig doctrine holds that where full effect cannot be given to the granted interest and the reserved interest, the grantor will be stopped, and the courts will give priority to the granted interest until the granted interest has been fully satisfied.  If the granted interest cannot be fully satisfied, then the grantee has a cause of action for breach of warranty.  Id. at 879-80.

Duhig Texas Supreme Court

In Perryman v. Spartan Tex. Six Capital Partners, Ltd., 546 S.W.3d 110 (Tex. 2018), the Texas Supreme Court revisited the Duhig doctrine and ultimately rejected its applicability to the conveyances at issue.  Perrymaninvolved a chain of eight separate real-property deeds, the first of which was executed in 1977, when Ben Perryman conveyed property to his son and daughter-in-law, Gary and Nancy Perryman.  546 S.W.3d 110 at 113.  The deed conveyed to Gary and Nancy a parcel of land referred to as the “First Tract,”

LESS, SAVE AND EXCEPT an undivided one-half (1/2) of all royalties from the production of oil, gas and/or other minerals that may be produced from the above-described premises which are now owned by Grantor.”  Id. at 113-14 (emphasis added).

As a result of the deed and in light of the fact that Ben owned all of the royalties, minerals, and premises at the time of the conveyance, Ben retained 1/2 of the royalty interests in the First Tract, and Gary and Nancy owned all of the surface and mineral interests and the other 1/2 of the royalty interest in the First Tract.  Id. at 114.  In a series of seven more deeds all containing warranties, the First Tract was conveyed to different entities, with several deeds failing to disclose the existing royalty interest ownership.

The dispute focused on the ownership of the royalty interests after the seven subsequent deeds were executed, with respect to the “less, save and except” clauses present in the first four deeds.  The trial court construed the language as reserving for the grantor 1/2 of all the royalties which were then owned by the grantor, thus eliminating any Duhig concern.  Id. at 113.  On the other hand, the court of appeals held that the deeds in this case “purported to grant title to the land subject to a 1/2 royalty interest in the described property.”  Id. at 118.  The court of appeals concluded that, because the deeds made “no mention” of the “previously excepted” royalty interests, and yet provided general warranties covering all the title purportedly conveyed, the grantors breached their warranties and thus were “estopped from claiming a royalty interest in the subject property under the Duhigdoctrine.”  Id.

The Texas Supreme Court, however, did not apply the Duhig doctrine.  Id. at 119.  The Texas Supreme Court explained that “the ‘less, save and except’ clause created an exception from the grant, not a reservation for the grantor.”  Id.  The “deeds conveyed the entire property interest ‘less, save and except’ a 1/2 royalty interest, and [] contained no language purporting to ‘reserve’ that excepted interest for or unto the grantors.”  Id.  Thus, the deeds did not purport to both convey and reserve unto the grantors more than the grantors owned.  As a result, the seven subsequent deeds were not over-conveyances requiring application of the Duhig doctrine.  Id. at 119-120.

Perryman is significant because it limits the application of the Duhig doctrine.  When the deed language creates an exception of an interest from the overall grant, rather than a reservation of an interest for the grantor, the deed will not create a Duhig problem.  When interpreting a deed, it is important to pay close attention to the granted interest, ensure whether any additional interests have been either excepted from that grant or reserved for the grantor.

Story Credit: Kiefaber & Oliva LLP is a Houston-based law firm that provides legal services to oil and gas companies across the country.  Our clients range from Fortune 500 companies to private equity startups.  Our attorneys are licensed in twelve states – Texas, Oklahoma, Louisiana, New Mexico, North Dakota, Ohio, Pennsylvania, Colorado, California, Arkansas, Wyoming and Kansas.

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