Van Dyke v. Navigator
Van Dyke v. Navigator[1] is a Texas Supreme Court case involving the unusual term "1/2 of 1/8" (found in many real estate deeds) in the context of Texas oil and gas law.
Background
In 1924, George H. and Frances E. Mulkey conveyed their west Texas ranch and mineral interests to the partnership of "White and Tom", with the deed containing the following reservation: "It is understood and agreed that one-half of one-eighth of all minerals and mineral rights in said land are reserved in grantors, Geo. H. Mulkey and Frances E. Mulkey, and are not conveyed herein."
Notwithstanding the language of the reservation, for nearly the next 90 years both sides[2] acted as though each party maintained a full 1/2 interest in the mineral rights. Not until 2013, when drilling operations commenced on the property (and $44 million of royalties was involved), did the White Parties argue for the first time that only a 1/16 interest was reserved by the Mulkey Parties in the 1924 deed.
Both the trial court and the appellate court agreed that the term "1/2 of 1/8" meant (by rules of simple multiplication) that only a 1/16 interest was reserved. The case was ultimately appealed to the Texas Supreme Court (the highest court for civil cases in Texas) which granted certiorari to hear the case.
Decision of the Texas Supreme Court
The Court reversed and remanded to the trial court for further proceedings. It did so based on two distinct paths: the construction of the original deed, and the presumed-grant doctrine.
Under the first path, the Court ruled that the text of the deed maintains the same original meaning as it had when drafted, even though language changes over time. It pointed out that under early cases, a contract for 1,000 rabbits could mean 1,200, the term "day" could refer to a 10-hour period, and (referencing a Federal court case) the term "contracts of employment" meant at that time an agreement to perform work (not as the term means today, referring to a formal employment relationship vs. an independent contractor). It then referenced a prior Court case from 2016 involving the construction of a 1947 will (Hysaw v. Dawkins, which itself quoted a legal text co-written by SCOTUS Justice Antonin Scalia) and the "Double-Fraction Dilemma", where that Court ruled that the term "1/8" had become shorthand for the standard royalty, based on a misconception that, when entering into an oil and gas lease, a lessor only retained a 1/8 interest in minerals with 7/8 going to the lessee (when, in actuality, the lessor retained the entire mineral estate). Thus, the Mulkey Parties conveyed a 1/2 interest in the entire mineral estate to the White Parties and retained a 1/2 interest for themselves.
Under the second path, the Court noted that both parties had operated under the view that each owned a 1/2 interest in the mineral estate, specifically noting documents over the nearly 90-year period by both parties, all asserting a 1/2 interest owned by each, and another document by the Mulkeys (on a different property) which conveyed a 1/16 interest (and actually used the fraction "1/16" as opposed to "1/2 of 1/8"). Thus, it was presumed that each did, in fact, own 1/2 interest in the mineral estate.
References
- ↑ The official style for the case is Susan Davis Van Dyke, et al. v. The Navigator Group, et al.
- ↑ All successors to the Mulkeys were referred to in the opinion as the "Mulkey Parties", and included petitioner Van Dyke; all successors to the White and Tom partnership were referred to in the opinion as the "White Parties", and included respondent Navigator.