roger-l-graham-john-b-graham-john-regmund-glenn-regmund-wilma ( 2013 )


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  •                                Fourth Court of Appeals
    San Antonio, Texas
    OPINION
    No. 04-12-00755-CV
    Roger L. GRAHAM, John B. Graham, John Regmund, Glenn Regmund, Wilma Regmund,
    Raellen Regmund Mattingly, Rayanne Regmund Chesser, Albert O. Menn, and Irene C. Menn,
    Appellants
    v.
    George L
    George J. PROCHASKA, Jr., Patricia Prochaska Holland, Jeanette Prochaska Mazza, Dawn
    Prochaska Snyder, Frederick James Prochaska, II, and Rebecca Prochaska Willis,
    Appellees
    From the 81st Judicial District Court, Karnes County, Texas
    Trial Court No. 12-02-00023-CVK
    Honorable Donna S. Rayes, Judge Presiding
    Opinion by: Luz Elena D. Chapa, Justice
    Dissenting Opinion by: Marialyn Barnard, Justice (to follow)
    Sitting:          Sandee Bryan Marion, Justice
    Marialyn Barnard, Justice
    Luz Elena D. Chapa, Justice
    Delivered and Filed: December 31, 2013
    AFFIRMED
    In this appeal, we must construe a 1950 warranty deed to determine the nature and size of
    the royalty interest retained by the grantors. The trial court rendered summary judgment in favor
    of the Prochaskas, who are the appellees and heirs of the grantors, and ruled they own a “floating”
    one-half royalty interest. The Regmunds, who are the appellants and heirs of the grantees, contend
    the trial court misconstrued the warranty deed and ask us to reverse and render judgment that the
    Prochaskas are entitled to a “fixed” one-sixteenth royalty interest. We affirm.
    04-12-00755-CV
    BACKGROUND
    The Warranty Deed
    In 1950, George and Elsie Ann Prochaska conveyed a tract of land in Karnes County,
    Texas, to John and Frances Regmund. The granting clause conveyed “all that certain tract or parcel
    of land.” But the Prochaskas reserved 1 a royalty interest that is the center of this dispute:
    SAVE AND EXCEPT, however, there is reserved unto George
    Prochaska, his heirs and assigns, one-half (1/2) of the one-eighth
    (1/8) royalty to be provided in any and all leases for oil, gas and
    other minerals now upon or hereafter given on said land, or any part
    thereof, same being equal to one-sixteenth (1/16th) of all oil, gas and
    other minerals of any nature, free and clear of all costs of production,
    except taxes;
    *** 2
    AND PROVIDED this reservation is burdened with paying the two
    outstanding mineral royalty reservations, each of One-Fourth (1/4)
    of one-eighth (1/8) royalty, one of which reservations is described
    in the deed from John Hancock Mutual Life Insurance Company to
    E.S. Joslin, now of record in Vol. 141, page 161, Deed Records of
    Karnes County, Texas, and the other reservation is described in the
    deed from E.S. Joslin, et ux to A.W. Powell, Jr., et al now of record
    in Vol. 165, page 80 of the Deed Records of Karnes County, Texas;
    And this reservation shall only be effective to the extent that one or
    both of said outstanding reservations become terminated.
    It being the intent of the parties hereto that John W. Regmund and
    wife, Frances E. Regmund, as of the effective date hereof, shall be
    vested with and entitled to one-half (1/2) of the usual one-eighth
    (1/8) royalty in and to all oil, gas and other minerals in on and/or
    under the property herein conveyed, and the reservation herein
    above recited in favor of the grantor herein, shall relate to and cover
    only the one-half (1/2) of one-eighth (1/8) royalty interest
    previously reserved in favor of John Hancock Mutual Life Insurance
    Company and Ennis Joslin, if, as and when said interest in favor of
    said parties terminate.
    1
    For ease of reference, we will refer to the Prochaskas’ royalty interest as a “reservation,” although the parties differ
    on whether the interest was “reserved” or “excepted.” Our discussion will explain why the difference is immaterial to
    the resolution of this case.
    2
    The omitted clause limits the nature of reservation to a nonparticipating royalty interest and does not aid our
    determination of the nature or size of the royalty reserved.
    -2-
    04-12-00755-CV
    The “save and except” clause excludes a royalty interest from passing under the deed. The
    “provided” clause identifies previously reserved “mineral royalty” interests, with which the
    Prochaskas’ royalty interest is “burdened.” The deeds creating those interests were offered as
    summary judgment evidence. The “intent” clause clarifies the relationship between the
    Prochaskas’ reserved interest, the Regmunds’ received interest, and the previously reserved
    interests identified in the “provided” clause.
    The Present Controversy
    The original mineral leases providing a one-eighth landowner’s royalty in effect at the time
    of the 1950 conveyance have expired. The Regmunds have executed new leases that provide a
    one-fifth landowner’s royalty, and they filed the underlying lawsuit seeking a declaratory judgment
    that the Prochaskas reserved a “fixed” one-sixteenth royalty interest from the 1950 deed.
    According to the Regmunds, the Prochaskas’ allegedly fixed royalty interest limits them to
    receiving one-sixteenth of production, regardless of the landowner’s royalty set by the newly
    executed mineral leases. The fixed one-sixteenth royalty would be deducted from the Regmunds’
    one-fifth landowner’s royalty. Under the Regmunds’ interpretation, the Prochaskas would receive
    one-sixteenth of production and the Regmunds would keep the remaining eleven-eightieths of
    production from the landowner’s royalty (1/5 – 1/16 = 11/80).
    The Prochaskas counterclaimed for declaratory relief, contending they were entitled to a
    “floating” one-half royalty interest. Under their interpretation, they should receive one-half of
    whatever royalty the Regmunds have secured on the conveyed lands, now and in the future.
    Accordingly, the Prochaskas contend they should currently receive one-tenth of production, which
    is one-half of the landowner’s royalty, and the Regmunds would take the remaining one-tenth of
    production (1/5 × 1/2 = 1/10).
    -3-
    04-12-00755-CV
    The trial court held a hearing on the parties’ competing motions for summary judgment.
    The court rendered judgment for the Prochaskas, construing the deed to reserve a floating one-half
    royalty interest in the current, and any future, mineral leases.
    STANDARD OF REVIEW
    We review a trial court’s ruling on motions for summary judgment de novo. Valence
    Operating Co. v. Dorsett, 
    164 S.W.3d 656
    , 661 (Tex. 2005). If competing motions for summary
    judgment were filed, with one being granted and the other denied, we review all the issues
    presented and render the judgment the trial court should have rendered. 
    Id. To determine
    whether
    the prevailing party below was entitled to summary judgment, we view the evidence in the light
    most favorable to the party against whom summary judgment was rendered. 
    Id. DEED CONSTRUCTION
    Rules of Construction
    The parties contend the deed is unambiguous, although they offer competing constructions
    of the reserved royalty interest. The construction of an unambiguous deed is a question of law for
    the court to decide de novo. Luckel v. White, 
    819 S.W.2d 459
    , 461 (Tex. 1991). When construing
    an unambiguous deed, the court ascertains the intent of the parties from the “four corners” of the
    deed. 
    Id. Under circumstances
    such as those presented by this case, the court may consider other
    instruments that are incorporated by reference into the deed. See Cockrell v. Tex. Gulf Sulphur Co.,
    
    299 S.W.2d 672
    , 676 (Tex. 1956) (holding the “subject to” clause in a deed incorporated mineral
    leases to define the estate conveyed, and the nature, extent and character of such estate); Petty v.
    Winn Exploration Co., Inc., 
    816 S.W.2d 432
    , 434 (Tex. App.—San Antonio 1991, writ denied);
    see also Johnson v. Fox, 
    683 S.W.2d 214
    , 216 (Tex. App.—Fort Worth 1985, no writ) (“[C]ourts
    can construe an instrument containing a reservation or exception together with other instruments
    -4-
    04-12-00755-CV
    to which it refers.”) (citing Williams v. J. & C. Royalty Co., 
    254 S.W.2d 178
    (Tex. Civ. App.—
    San Antonio 1952, writ ref’d)).
    We harmonize all parts of the deed, understanding that the parties to an instrument intend
    every clause to have some effect and in some measure to evidence their agreement. 
    Luckel, 819 S.W.2d at 462
    . If different parts of the deed appear contradictory or inconsistent, we strive to
    harmonize all of the parts and construe the instrument to give effect to all of its provisions. 
    Id. The deed’s
    terms are given their plain, ordinary, and generally accepted meanings unless the deed itself
    shows them to be used in a technical or different sense. Heritage Res., Inc. v. NationsBank, 
    939 S.W.2d 118
    , 121 (Tex. 1996). We determine the parties’ intent from the whole document, “not by
    the presence or absence of a certain provision.” Concord Oil Co. v. Pennzoil Exploration & Prod.
    Co., 
    966 S.W.2d 451
    , 457 (Tex. 1998). Arbitrary rules of construction should not be applied absent
    some ambiguity or irreconcilable conflict that cannot be resolved through harmonization. See
    
    Luckel, 819 S.W.2d at 462
    ; Hancock v. Butler, 
    21 Tex. 804
    , 816 (1858); Stewman Ranch, Inc. v.
    Double M. Ranch, Ltd., 
    192 S.W.3d 808
    , 811 (Tex. App.—Eastland 2006, pet. denied); see also
    Bruce M. Kramer, The Sisyphean Task of Interpreting Mineral Deeds & Leases: An Encyclopedia
    of Canons of Construction, 24 TEX. TECH. L. REV. 1, 72 (1993) (“[A]s a general matter, courts take
    the position that they should initially attempt to harmonize the deed language within the four
    corners of the instrument. Only upon their inability to harmonize within the four corners, should
    the courts resort to anti-harmonizing canons.”).
    Reservations and Exceptions
    “[A] warranty deed will pass all of the estate owned by the grantor at the time of the
    conveyance unless there are reservations or exceptions which reduce the estate conveyed.”
    
    Cockrell, 299 S.W.2d at 675
    . Property “excepted” or “reserved” under a deed is “never included
    in the grant” and is “something to be deducted from the thing granted, narrowing and limiting what
    -5-
    04-12-00755-CV
    would otherwise pass by the general words of the grant.” King v. First Nat’l Bank of Wichita Falls,
    
    192 S.W.2d 260
    , 262 (Tex. 1946). Reservations must be made by “clear language,” and courts do
    not favor reservations by implication. Monroe v. Scott, 
    707 S.W.2d 132
    , 133 (Tex. App.—Corpus
    Christi 1986, writ ref’d n.r.e.). Exceptions “must identify, with reasonable certainty, the property
    to be excepted from the larger conveyance.” Angell v. Bailey, 
    225 S.W.3d 834
    , 840 (Tex. App.—
    El Paso 2007, no pet.).
    MINERAL ESTATES & ROYALTY INTERESTS
    Mineral Estates & Leases Generally
    Landowners generally own the right to exploit the minerals under their land, or “the mineral
    estate.” See Coastal Oil & Gas Corp. v. Garza Energy Trust, 
    268 S.W.3d 1
    , 15 (Tex. 2008); French
    v. Chevron U.S.A., Inc., 
    896 S.W.2d 795
    , 797 (Tex. 1995). The mineral estate encompasses five
    rights and attributes, including the right to receive royalties. 3 
    French, 896 S.W.2d at 797
    .
    Landowners “lease” their minerals to an operator for development, but the typical mineral lease
    actually conveys the mineral estate as a determinable fee estate. 
    Luckel, 819 S.W.2d at 464
    . As the
    holder of a determinable fee interest, the “lessee-operator” has the present possessory interest in
    the mineral estate. Accordingly, the “lessor-landowner” is left with a future interest, the possibility
    of reverter, in the mineral estate. 
    Id. The owner
    of a present or future interest in the mineral estate may convey or reserve his
    mineral interest. 
    Id. The grantor
    does not need to part with all the attributes of the mineral estate;
    “individual [attributes] can be held back, or reserved in the grantor.” 
    French, 896 S.W.2d at 797
    .
    A grantor may also convey a fractional interest in the mineral estate. The owner of a fractional
    mineral interest is generally entitled to a proportional amount of the bonuses, rental, and royalties
    3
    The other four are the right to develop the mineral estate; the right to lease the mineral estate; the right to receive
    bonus payments; and the right to receive delay rentals. 
    French, 896 S.W.2d at 797
    .
    -6-
    04-12-00755-CV
    to be received under a lease. Gibson v. Turner, 
    294 S.W.2d 781
    , 786 (Tex. 1956). Parties to a deed
    may, however, agree to limit or expand the royalty interest to be greater or less than the fractional
    mineral interest conveyed or reserved. Patrick v. Barrett, 
    734 S.W.2d 646
    , 648 (Tex. 1987); but
    see Sundance Minerals, L.P. v. Moore, 
    354 S.W.3d 507
    , 511–12 (Tex. App.—Fort Worth 2011,
    pet. denied) (holding a deed reserving a one-half mineral interest, but describing the reserved
    royalty as “one half of the usual one-eighth,” did not limit the grantor’s proportional, floating
    royalty interest).
    Royalty Interests
    A royalty interest is defined under well-established oil and gas law as the right to receive
    a share of gross production of the minerals produced under a mineral lease, free of the costs of
    production. Delta Drilling Co. v. Simmons, 
    338 S.W.2d 143
    , 147 (Tex. 1960). The basic royalty
    interest, or “landowner’s royalty,” is the fraction of production, free of the costs of production,
    which a landowner-lessor is entitled to receive from the operator-lessee under the terms of his
    lease. See Heritage 
    Res., 939 S.W.2d at 121
    –22. The right to receive royalty payments, as one of
    the rights and attributes comprising the mineral estate, is an intangible and separately alienable
    property interest. 
    Luckel, 819 S.W.2d at 464
    .
    A mineral-interest owner may create, by conveyance, reservation, or exception, a royalty
    interest out of either the total production achieved under a lease or from the landowner’s royalty.
    See 
    id. at 463–64.
    Generally, such a diminished royalty interest is termed a “nonparticipating”
    royalty interest because the holder only has the right to a share of production. Hamilton v. Morris
    Res., Ltd., 
    225 S.W.3d 336
    , 344 (Tex. App.—San Antonio 2007, pet. denied). These royalty
    interests may, like interests in the mineral estate, be conveyed or reserved as determinable fee
    interests and, therefore, be separated into present and future interests. See Luckel, 819 S.W.2d at
    -7-
    04-12-00755-CV
    464; see, e.g., Bagby v. Bredthauer, 
    627 S.W.2d 190
    , 193–95 (Tex. App.—Austin 1981, no writ)
    (grantors reserved the possibility of reverter in a determinable royalty interest).
    In the 1920s and 1930s, the landowner’s royalty became standardized at one-eighth of
    production. Concord 
    Oil, 966 S.W.2d at 459
    ; 
    Luckel, 819 S.W.2d at 462
    ; 1 ERNEST E. SMITH &
    JACQUELINE LANG WEAVER, TEXAS LAW OF OIL & GAS § 2.4[B][1], at 2-64 (LexisNexis Matthew
    Bender, 2nd ed. 2013). Leases containing royalties larger than one-eighth became increasingly
    common in the mid-1970s. 1 SMITH & WEAVER, TEXAS LAW OF OIL & GAS § 2.4[B][1], at 2-64.
    The ubiquity of leases providing for a one-eighth landowner’s royalty led the Texas Supreme Court
    to take judicial notice that “the usual royalty provided in mineral leases is one-eighth.” Garrett v.
    Dils Co., 
    299 S.W.2d 904
    , 907 (Tex. 1957); see also State Nat. Bank of Corpus Christi v. Morgan,
    
    143 S.W.2d 757
    , 761 (Tex. 1940) (“The fact stated in the foregoing quotation, that the usual royalty
    in oil and gas leases is 1/8, is in our opinion one so generally known that judicial knowledge may
    be taken of it.”). The historical standardization of the landowner’s royalty at one-eighth of
    production has sometimes created confusion in the construction of deeds from that period, where
    the use of conflicting fractions suggests the parties mistakenly assumed the landowner’s royalty
    would always be one-eighth. See 
    Garrett, 299 S.W.2d at 907
    ; 
    Luckel, 819 S.W.2d at 462
    ; see
    generally 1 SMITH & WEAVER, TEXAS LAW OF OIL & GAS § 3.7[A] (describing the problems in
    deed construction likely caused by such a mistaken assumption). The theory that parties from that
    period mistakenly assumed and conceptualized the landowner’s royalty as set at one-eighth of
    production is the “estate-misconception” theory. See Concord 
    Oil, 966 S.W.2d at 460
    (acknowledging the estate-misconception theory and stating an understanding of the theory is
    helpful and instructive, although not dispositive, in the construction of deeds).
    -8-
    04-12-00755-CV
    How Is the Nature and Size of a Royalty Interest Determined?
    There are two kinds of nonparticipating royalty interests. See 
    Luckel, 819 S.W.2d at 464
    .
    A “fixed” or “fractional” royalty interest entitles the owner to an absolute fraction of production—
    it is not affected by the amount of the landowner’s royalty. Id.; Sundance 
    Minerals, 354 S.W.3d at 511
    –12; see, e.g., Watkins v. Slaughter, 
    189 S.W.2d 699
    , 699–700 (Tex. 1945) (holding a
    reservation of “a 1/16 interest in and to all of the oil, gas and other minerals” describes a fixed
    royalty interest). In contrast, a “fraction-of” or “floating” royalty interest entitles its owner to a
    share of the landowner’s royalty obtained under a lease. See 
    Luckel, 819 S.W.2d at 464
    ; Sundance
    
    Minerals, 354 S.W.3d at 512
    ; see, e.g., Schlitter v. Smith, 
    101 S.W.2d 543
    , 544–45 (Tex. 1937)
    (holding a reservation of “an undivided one-half interest in and to the royalty rights on all of oil
    and gas and other minerals” described a floating royalty interest). Thus, the value of the royalty
    interest “floats” in accordance with the size of the landowner’s royalty. 4 Sundance 
    Minerals, 354 S.W.3d at 512
    . The fundamental distinction between the two kinds of nonparticipating royalty
    interests is the source of the royalty payments: fixed royalty interests are an unchanging fraction
    of total production obtained under a mineral lease, but floating royalty interests come out of the
    landowner’s royalty and vary in accordance with that fraction of production. See 
    Luckel, 819 S.W.2d at 464
    ; Sundance 
    Minerals, 354 S.W.3d at 512
    ; 1 SMITH & WEAVER, TEXAS LAW OF OIL
    & GAS § 2.4[B][2], at 2-64; 2 HOWARD R. WILLIAMS & CHARLES J. MEYERS, OIL & GAS LAW
    § 327.2, at 87–88 (LexisNexis 2012).
    Each of the two types of nonparticipating royalty interests may be created by a variety of
    language. Compare 2 WILLIAMS AND MEYERS, OIL & GAS LAW § 327.1, at 81–82 (six examples
    4
    We use the more recent terms “fixed” (in place of “fractional”) and “floating” (in place of “fraction of”) when
    discussing the two kinds of royalty interests because they vividly describe the differing natures of the two types of
    royalty interests.
    -9-
    04-12-00755-CV
    of language creating fixed royalty interests), with 
    id. § 327.2,
    at 83–84 (six examples of language
    creating floating royalty interests). Problems of construction arise when deeds create royalty
    interests described as “a fraction of one-eighth royalty” or “a fraction of the usual one-eighth
    royalty.” Depending on the context of the description, Texas courts have construed the same
    language in different deeds in different ways. Compare Pickens v. Hope, 
    764 S.W.2d 256
    , 258–
    59, 267 (Tex. App.—San Antonio 1988, writ denied) (holding “an undivided 1/4 of the usual 1/8
    royalty” reserved a fixed one thirty-second royalty), with Sundance 
    Minerals, 354 S.W.3d at 512
    (holding a deed reserving a one-half mineral interest, but describing the reserved royalty as “one
    half of the usual one-eighth,” did not limit the grantor’s proportional, floating royalty interest).
    When a deed contains a reservation of “a fraction of one-eighth,” “a fraction of one-eighth
    royalty,” “a fraction of the one-eighth royalty,” or “a fraction of the usual one-eighth royalty,” a
    party may argue that “one-eighth” should be understood as a stand-in for the landowner’s royalty
    and therefore convey or reserve unto them a floating royalty interest. E.g., Hudspeth v. Berry, No.
    02-09-225-CV, 
    2010 WL 2813408
    , at *3 (Tex. App.—Fort Worth July 15, 2010, no pet.) (mem.
    op.). Arguments for construing such language as conveying or reserving fixed royalties are based
    on the estate-misconception theory. See generally 1 SMITH & WEAVER, TEXAS LAW OF OIL & GAS
    § 3.7[A]. But courts generally construe simple grants or reservations of “a fraction of one-eighth”
    or its variations as creating a fixed royalty interest, the size of which is determined by multiplying
    the two fractions together. See 
    Pickens, 764 S.W.2d at 258
    –59, 267; Hawkins v. Tex. Oil & Gas
    Corp., 
    724 S.W.2d 878
    , 889 (Tex. App.—Waco 1987, writ ref’d n.r.e) (holding grant of “1/4 of
    the 1/8 royalty interest” conveyed a fixed one thirty-second royalty interest); Helms v. Guthrie,
    
    573 S.W.2d 855
    , 857 (Tex. Civ. App.—Fort Worth 1978, writ ref’d n.r.e.) (holding reservation of
    “1/2 of the 1/8Th royalty (same being a 1/16Th of the total production)” described a fixed royalty).
    This accords with the literal, mathematical meaning of a “fraction of a fraction.” See Heritage
    - 10 -
    04-12-00755-CV
    
    Res., 939 S.W.2d at 121
    (“plain language” rule). Sometimes, however, the context of the entire
    deed leads courts to harmonize variations of a “fraction of one-eighth” in favor of finding a floating
    royalty. See Coghill v. Griffith, 
    358 S.W.3d 834
    , 837–40 (Tex. App.—Tyler 2012, pet. denied)
    (holding reservation of “an undivided one-eighth (1/8) of the usual one-eighth (1/8) royalties
    provided for in any future oil, gas and/or mineral leases” described a floating one-eighth royalty);
    Sundance 
    Minerals, 354 S.W.3d at 512
    (holding a deed reserving a one-half mineral interest, but
    describing the reserved royalty as “one half of the usual one-eighth,” did not limit the grantor’s
    proportional, floating royalty interest).
    DISCUSSION
    The “save and except” clause
    The “save and except” clause of the 1950 deed describes the Prochaskas’ reserved royalty
    interest in two different ways. The first phrase reserves “one-half (1/2) of the one-eighth (1/8)
    royalty to be provided in any and all leases for oil, gas and other minerals now upon or hereafter
    given on said land, or any part thereof.” The second phrase continues “same being equal to one-
    sixteenth (1/16th) of all oil, gas and other minerals of any nature, free and clear of all costs of
    production, except taxes.” We must, if possible, harmonize these phrases considering the
    reservation as a whole. 5 Concord 
    Oil, 966 S.W.2d at 457
    ; 
    Luckel, 819 S.W.2d at 462
    .
    The parties’ major dispute is over what kind of royalty interest is described by the first
    phrase of the “save and except” clause. The Regmunds argue that the language “one-half (1/2) of
    5
    The Regmunds argue that according to Hudspeth no harmonization is required because there are no conflicting
    fractions, and they urge us to resolve any apparent contradictions or inconsistencies in the deed by applying two
    secondary canons of construction: the canon construing the conveyance of the greatest estate possible and the canon
    construing ambiguities against the grantor. First, to the extent that Hudspeth may suggest harmonization is only
    required where there are conflicting fractions, we disagree and decline to follow that reasoning. Second, we question
    whether the cited canons can fruitfully be applied to deciding whether a royalty interest is fixed or floating. The former
    is absolute, but the latter is contingent on the amount of the landowner’s royalty. Regardless, we must first attempt to
    harmonize the four corners of the deed, and we can do so without these canons. See 
    Luckel, 819 S.W.2d at 461
    –62;
    Stewman 
    Ranch, 192 S.W.3d at 811
    .
    - 11 -
    04-12-00755-CV
    the one-eighth (1/8) royalty” should be construed as reserving a fixed royalty interest. The
    Prochaskas counter that a floating interest was created because they reserved one-half of “the one-
    eighth (1/8) royalty to be provided in any and all leases . . . now upon or hereafter given on said
    land.”
    We agree with the Prochaskas that “one-eighth royalty” must be read with the surrounding
    descriptive language. “One-eighth royalty” is modified by “the . . . to be provided in any and all
    leases for oil, gas and other minerals now upon or hereafter given on said land, or any part thereof.”
    The use of the word “the” denotes that “the one-eighth royalty” is a distinct or particular royalty.
    See 2 SHORTER OXFORD ENGLISH DICTIONARY 3228, at 2 (6th ed. 2007) (defining “the” as
    “[d]esignating one or more persons or things particularized by . . . a phr[ase] introduced by a
    preposition or inf[initive] . . .”); MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 1221, at 2 b (1)
    (10th ed. 1999) (“The” is “used as a function word before a noun to limit its application to that
    specified by a succeeding element in the sentence.”). The succeeding phrase, “to be provided in
    any and all leases for oil, gas and other minerals now upon or hereafter given on said land, or any
    part thereof,” further distinguishes and particularizes “the one-eighth royalty.” See 2 SHORTER
    OXFORD ENGLISH DICTIONARY 3228, at 2; MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 1221,
    at 2 b (1).
    Setting aside “one-eighth” for a moment, we note that the reservation of “one-half of the
    royalty to be provided in any and all leases” reserves a floating royalty. The objective intent of that
    language would be to reserve a portion of the landowner’s royalty—i.e., the royalty provided in
    leases, not an absolute fraction of production. See 
    Luckel, 819 S.W.2d at 463
    (holding “[t]he
    language ‘one-fourth of any and all royalties reserved under’ future leases is clear and
    unambiguous” to describe a floating royalty); cf. 
    Schlittler, 101 S.W.2d at 545
    (holding a
    reservation of “an undivided one-half interest in and to the royalty rights on all of oil and gas and
    - 12 -
    04-12-00755-CV
    other minerals” described a floating royalty interest). Furthermore, the language “in any and all
    leases . . . now upon or hereafter given” objectively shows the floating interest would apply to
    both existing and future leases (emphasis added). See 
    Coghill, 358 S.W.3d at 839
    (holding
    reservation of “royalties payable under the terms of said lease, as well as . . . royalties provided for
    in any future oil, gas and/or mineral lease covering said lands or any part thereof” applied to then-
    current and future leases).
    Of course, we may not simply disregard the modifier “one-eighth.” We decline, however,
    to construe “one-eighth” in the description of the landowner’s royalty as a limitation of the
    Prochaskas’ interest to a fixed royalty. See 
    id. (holding reservation
    of “an undivided one-eighth
    (1/8) of the usual one-eighth (1/8) royalties provided for in any future oil, gas and/or mineral
    leases” described a floating one-eighth royalty); Sundance 
    Minerals, 354 S.W.3d at 512
    (holding
    a deed reserving a one-half mineral interest, but describing the reserved royalty as “one half of the
    usual one-eighth,” did not limit the grantor’s proportional, floating royalty interest). Instead, its
    presence reflects the common misconception of that period that the landowner’s royalty would
    always be one-eighth of production obtained under a lease. Concord 
    Oil, 966 S.W.2d at 460
    ;
    
    Garrett, 299 S.W.2d at 907
    ; 1 SMITH & WEAVER, TEXAS LAW OF OIL & GAS § 3.7[A], at 3-47; see
    Heritage 
    Res., 939 S.W.2d at 121
    (“We give terms their plain, ordinary, and generally accepted
    meaning unless the instrument shows that the parties used them in a technical or different sense.”)
    (emphasis added). We note that the deed before us was executed in 1950—seven years before the
    Texas Supreme Court took judicial notice that “the usual royalty provided in mineral leases is one-
    eighth.” 
    Garrett, 299 S.W.2d at 907
    . In addition, the mineral lease that was then in effect provided
    a one-eighth landowner’s royalty. Accordingly, we construe “one-eighth” within context of the
    surrounding language “the . . . royalty to be provided in any and all leases for oil, gas and other
    minerals now upon or hereafter given on said land, or any part thereof” as an expression of the
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    04-12-00755-CV
    parties’ assumption that the landowner’s royalty would always be one-eighth of production. See
    id.; Heritage 
    Res., 939 S.W.2d at 121
    .
    The Regmunds urge this court to isolate the language “one-half (1/2) of the one-eighth
    (1/8) royalty” from the rest of the phrase and thereby to construe the Prochaskas’ reservation as a
    fixed 1/16 royalty interest, directing us to cases construing variations of a “fraction of one-eighth
    royalty” as fixed interests. See Hudspeth, 
    2010 WL 2813408
    , at *4; 
    Helms, 573 S.W.2d at 857
    ;
    Tiller v. Tiller, 
    685 S.W.2d 456
    , 457–58 (Tex. App.—Austin 1985, no writ). We acknowledge that
    the truncated phrase “one-half of the one-eighth royalty” falls within the line of cases construing
    variations of a “fraction of one-eighth royalty” as fixed royalty interests. We agree the language
    in those cases did not sufficiently show the parties intended any technical meaning to be applied
    to “one-eighth royalty,” nor did it justify using the surrounding circumstances to deviate from the
    plain, mathematical meaning. And if that were the complete and unadorned language of the
    reservation before us, we would likely construe that as an objective expression of a fixed royalty
    interest. See 
    Hawkins, 724 S.W.2d at 889
    .
    But context matters. The language of those deeds is not the language of the deed before us,
    and the Regmunds’ construction asks us to ignore the full context of the reservation described as
    “one half (1/2) of the one-eighth (1/8) royalty to be provided in any and all leases for oil, gas and
    other minerals now upon or hereafter given” (emphasis added). As we have explained, that
    language objectively expresses the parties’ intent to reserve one-half of the royalty to be provided
    in current and future leases, and also reflects the parties’ assumption that the landowner’s royalty
    would always be one-eighth, consistent with the mineral lease that was presently covering the
    property. Unlike cases where courts have declined to delve into the subjective meaning behind the
    use of “one-eighth,” see 
    Hawkins, 724 S.W.2d at 889
    (holding grant of “1/4 of the 1/8 royalty
    interest” conveyed a fixed one thirty-second royalty interest), the deed before us contains
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    04-12-00755-CV
    additional language that provides the context necessary to objectively determine that the parties
    assumed the landowner’s royalty would always be one-eighth of production. The Regmunds, in
    arguing that the phrase describes a fixed royalty, have not offered any construction that accounts
    for the entire phrase. But we must construe all the language of the deed. Concord 
    Oil, 966 S.W.2d at 457
    . Accordingly, we distinguish the Regmunds’ cited authorities because they do not contain
    the same language as the 1950 deed.
    Having determined that the first phrase of the “save and except” clause describes a floating
    royalty interest, we must attempt to harmonize it with the second, describing the reserved interest
    as “same being equal to one-sixteenth (1/16th) of all oil, gas and other minerals of any nature, free
    and clear of all costs of production, except taxes.” This language, standing alone, would reserve a
    fixed royalty interest. See 
    Watkins, 189 S.W.2d at 700
    . However, as previously explained, the prior
    phrase objectively shows that the parties assumed the landowner’s royalty, of which the
    Prochaskas would take half, would always be a one-eighth royalty. In light of the first phrase, we
    conclude the parties naturally assumed that the value of the Prochaskas’ reserved royalty interest
    would always be “one-sixteenth of production.” Accordingly, we harmonize the second phrase as
    a statement of the value that the parties (mistakenly) expected the Prochaskas’ floating one-half
    royalty reservation would always have, i.e. one-sixteenth of production. 6 The parties’ assumption
    6
    We note the Court in Luckel criticized the court of appeals for relying on the estate-misconception theory to arbitrarily
    choose which provisions of the deed before it should be given 
    effect. 819 S.W.2d at 462
    . The court of appeals
    purportedly “harmonized” the granting clause, conveying “an undivided one thirty-second (1/32nd) royalty interest,”
    with the future lease clause, providing the grantees would receive “one-fourth of any and all royalties reserved under
    [future] leases” by reasoning that “the clear and unambiguous language ‘one-fourth of any and all royalties reserved
    under said leases’ really meant a fixed 1/32nd.” 
    Id. at 461–62.
    The Court explained such reasoning could be equally
    well employed to show the parties intended a floating one-fourth royalty interest; and the court of appeals erred by
    “ignor[ing] the express language used . . . produc[ing] different assumptions about what the parties’ actual intent was.”
    
    Id. at 462.
    The Court ultimately held the deed conveyed two royalty interests: a fixed one thirty-second royalty interest
    under the then-current leases and a floating one-fourth royalty interest under future leases. 
    Id. at 464.
    Our reasoning
    avoids the error criticized in Luckel because the presence of “one-eighth” in the description of the landowner’s royalty
    objectively shows the parties assumed that the landowner’s royalty, of which the Prochaskas reserved half, would
    always be one-eighth of production, and we have read the second phrase in light of their assumption.
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    04-12-00755-CV
    that one-half of the landowner’s royalty under future leases would always equal one-sixteenth of
    production does not alter our conclusion that the “save and except” clause unambiguously shows
    the intent to reserve one-half of the landowner’s royalty “in any and all leases for oil, gas and other
    minerals now upon or hereafter given on said land.”
    The “intent” clause
    The final clause, or the “intent” clause, confirms that the parties were proceeding under the
    assumption that the landowner’s royalty in future leases would always be one-eighth of production
    and underscores the importance of context in deed construction. The deed states that the parties
    intended the Regmunds “as of the effective date hereof, shall be vested with and entitled to one-
    half (1/2) of the usual one-eighth (1/8) royalty in and to all oil, gas and other minerals in on and/or
    under the property herein conveyed.” In another case, we might construe this description of the
    Regmunds’ royalty interest as limiting the Regmunds’ interest to a fixed one-sixteenth royalty
    because the parties to a deed may modify the default royalty interest conveyed with a mineral
    interest. See 
    Gibson, 294 S.W.2d at 786
    ; 
    Patrick, 734 S.W.2d at 648
    ; 
    Pickens, 764 S.W.2d at 267
    (holding “an undivided 1/4 of the usual 1/8 royalty” reserved a fixed one thirty-second royalty).
    However, the surrounding context of the “intent” clause does not show that the parties intended to
    limit the royalty interest conveyed with the mineral estate. See Sundance 
    Minerals, 354 S.W.3d at 512
    (holding that the grantors reservation of a one-half mineral estate were entitled to a floating
    one-half royalty in spite of qualifying language suggesting they limited the royalty to a fixed one-
    sixteenth).
    Instead, the context of the “intent” clause and the preceding “provided” clause shows that
    the Regmunds were immediately entitled to their royalty interest, as opposed to the Prochaskas’
    interest, which would not be effective until prior “outstanding mineral royalty” interests
    terminated. The “provided” clause describes “this reservation”—the Prochaskas’ royalty
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    04-12-00755-CV
    interest—as “burdened with paying the two outstanding mineral royalty reservations.” The phrase
    “mineral royalty reservation” is not a legal term of art, although the reservations are described as
    being “each of One-fourth of one-eighth (1/8) royalty.” The clause goes on to say “this
    reservation”—the Prochaskas’ royalty interest—is only “effective to the extent that one or both of
    said outstanding reservations become terminated.” In a similar vein, the “intent” clause states that
    “the reservation herein above recited in favor of the grantor herein”—the Prochaskas’ royalty
    interest—“shall relate to and cover only the one-half (1/2) of one-eighth (1/8) royalty interest
    previously reserved in favor of John Hancock Mutual Life Insurance Company and Ennis Joslin,
    if, as and when said interest in favor of said parties terminate.” Given that the Prochaskas’
    reservation is ineffective until the prior reservations terminate, we conclude the parties intended
    the Prochaskas’ royalty interest to be a future interest, not a present or immediately effective one.
    See 
    Bagby, 627 S.W.2d at 193
    –95. Thus, the “provided” clause and the “intent” clause work
    together to establish that the Regmunds’ are immediately entitled to the other half of the
    landowner’s royalty not reserved by the Prochaskas.
    The “provided” clause
    The language in the “provided” clause describing the outstanding mineral royalty
    reservations is potentially inconsistent with the construction that the Prochaskas reserved a floating
    royalty interest. The “provided” clause describes the “outstanding mineral royalty reservations” as
    “each of One-fourth of one-eighth (1/8) royalty” and the “intent clause” describes them as “the
    one-half (1/2) of one-eighth (1/8) royalty interest previously reserved.” If by “outstanding mineral
    royalty reservations” the parties meant “royalty interests,” these would be fixed royalty interests,
    and it would be difficult to conclude the Prochaskas’ reservation of those interests could transform
    them into floating interests.
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    04-12-00755-CV
    However, the Prochaska–Regmund deed specifically refers to and identifies the deeds
    creating the interests with which the Prochaskas’ reservation is “burdened” and to which it “covers
    and relates.” Thus, the deeds were incorporated into the Prochaska–Regmund deed. See 
    Cockrell, 299 S.W.2d at 675
    (holding the “subject to” clause in a deed incorporated mineral leases to define
    the estate conveyed, and the nature, extent and character of such estate); 
    Petty, 816 S.W.2d at 439
    ;
    see also Scheller v. Groesbeck, 
    231 S.W. 1092
    , 1093 (Tex. Comm’n App. 1921, judgm’t adopted)
    (stating “that all instruments in a chain of title when referred to in a deed will be read into it . . .
    [is] so familiar that citation of authorities is unnecessary”); CenterPoint Energy Houston Elec.,
    L.L.P. v. Old TCJ Co., 
    177 S.W.3d 425
    , 430 (Tex. App.—Houston [1st Dist.] 2005, pet. denied)
    (same). In addition, we may “construe an instrument containing a reservation or exception together
    with other instruments to which it refers.” 
    Johnson, 683 S.W.2d at 216
    (construing unambiguous
    reservation before it with a prior reservation referenced by the reservation before it) (citing
    
    Williams, 254 S.W.2d at 178
    (analyzing whether a deed reserved a mineral or royalty interest, in
    part, by considering the language of a mineral lease referred to in the deed)). Therefore, we
    conclude the Prochaska–Regmund deed, by specifically referencing and identifying the prior
    deeds, incorporates their description of those interests into itself, like the “subject to” clause in
    Cockrell and the reservation in Johnson. 7 See 
    Cockrell, 299 S.W.2d at 675
    ; 
    Johnson, 683 S.W.2d at 216
    .
    7
    We do not consider this court’s decision in Hausser v. Cuellar to foreclose our consideration of the incorporated
    deeds. 
    345 S.W.3d 462
    (Tex. App.—San Antonio 2011, pet. denied) (en banc). In Hausser, this en banc court
    disapproved an earlier panel opinion because “[r]ather than construing the four corners of the deed to harmonize and
    give effect to all its provisions . . . [the panel] relied on a prior deed to provide the 
    interpretation.” 345 S.W.3d at 470
    (disapproving the analysis in Neel v. Killam Oil Co., Ltd., 
    88 S.W.3d 334
    (Tex. App.—San Antonio 2002, pet.
    denied)). The Hausser court pointed out that the earlier opinion’s “analysis began with a discussion of the conveyance
    that preceded the [deed being construed].” 
    Id. The court
    looked to the prior deed to determine the amount of the royalty
    interest received by the grantor of the deed before it, and construed the deed before it from the assumption that the
    grantor only intended to convey that which he had received. 
    Id. The Hausser
    court’s disapproval was directed at the
    previous court’s reliance on an earlier deed to provide the construction of the nature and size of the interest conveyed
    in the deed before it. See 
    id. - 18
    -
    04-12-00755-CV
    The prior deeds clarify that each “outstanding mineral royalty reservation” contains a
    determinable one-quarter floating royalty interest. The earlier deeds state that the grantors reserved
    “an undivided one-fourth (1/4) interest in and to all minerals of every character and kind.” The
    deeds then stripped those mineral interests of the rights to receive bonuses and delay rentals, and
    the grantors were not required to join in or ratify mineral leases made by the grantees. Thus, the
    prior grantors reserved only the right to receive an amount of royalties consistent with a fractional
    mineral interest, i.e., one-quarter of the landowner’s royalty. See 
    French, 896 S.W.2d at 798
    (“[W]hen a deed conveys 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.”); 
    Patrick, 734 S.W.2d at 648
    (owner of fractional mineral interest is
    generally entitled to a proportionate share of the landowner’s royalty). Accordingly, if a new lease
    had been executed while those “outstanding mineral royalty” interests were still in existence, the
    prior grantors would have received one-fourth of whatever new landowner’s royalty was agreed
    upon because they owned floating royalty interests. See 
    French, 896 S.W.2d at 798
    . Therefore, the
    “prior outstanding mineral royalty” interests were of the same size and nature as the Prochaskas’
    reserved interest. There is no conflict in concluding that the Prochaskas’ reserved the possibilities
    of reverter in those “outstanding mineral royalty reservations.”
    We distinguish our analysis from the one Hausser disapproved. The prior deed relied on by the Neel court does not
    appear to have been referenced in the deed actually being construed, whereas the reservation before us does refer to
    and identify the deeds creating the prior interests. See 
    Cockrell, 299 S.W.2d at 675
    ; 
    Johnson, 683 S.W.2d at 216
    . Thus,
    the Graham–Prochaska deed incorporated the terms of the prior reservations. Additionally, we note the Neel court
    assumed the grantor of the deed before it only intended to convey that which he had received and construed the deed
    before it in accordance with the prior deed through which he had received his interest. Unlike the Neel opinion, our
    analysis of the language describing the Prochaskas’ interest rests on its own, and we have reviewed the incorporated
    deeds solely for the purpose of clarifying the nature of the “prior mineral royalty reservations.” For these reasons, we
    do not view our considering the earlier deeds as inconsistent with Hausser.
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    04-12-00755-CV
    Other arguments
    The Regmunds argue that the absence of certain provisions in the deed precludes us from
    construing it as reserving a floating royalty interest. They assert that the absence of a “share and
    share alike” phrase in the deed precludes construing it as reserving a floating royalty interest,
    claiming that such language was a “factor in [this] court’s judgment” in Hausser. We do not find
    any analysis or discussion of the phrase “share and share alike” in that opinion. The Regmunds
    also point to the absence of a minimum royalty provision. Notwithstanding our recognition that
    such a provision is probative of a floating royalty interest, see 
    Hausser, 345 S.W.3d at 470
    & n.1,
    no authority requires such a minimum-royalty provision in order to reserve a floating royalty
    interest. Cf. 
    Schlittler, 101 S.W.2d at 545
    (holding a floating royalty interest was granted under
    future leases without any minimum royalty provision in the deed). Moreover, “[w]e determine the
    parties’ intent from the whole document, not by the presence or absence of a certain provision.”
    Concord 
    Oil, 966 S.W.2d at 457
    .
    As a final matter, the Regmunds oppose any construction of the deed that would hold that
    the Prochaskas reserved or excepted the possibilities of reverter to the floating royalty interests
    contained within the outstanding reservations. 8 They argue, essentially, that because the parties
    never used the terms “future rights” or “possibility of reverter” to describe the Prochaskas’ interest,
    such a construction would violate the requirements that reservations be made by using “clear
    language” and that exceptions “identify, with reasonable certainty the property to be excepted from
    the larger conveyance.” This argument misapplies the requirement that reservations be created by
    8
    It is in this context that the parties dispute whether the deed created an “exception” or “reservation.” We are
    unconvinced this case “call[s] for a discussion of the refined and subtle distinctions between a reservation and an
    exception in a deed, which terms are frequently used interchangeably and indiscriminately.” 
    King, 192 S.W.2d at 262
    .
    It is sufficient to say both interests are “something to be deducted from the thing granted, narrowing and limiting what
    would otherwise pass by the general words of the grant.” 
    Id. - 20
    -
    04-12-00755-CV
    “clear language.” If a reservation is not created by clear language, it does not exist and cannot be
    implied by a court. 
    Monroe, 707 S.W.2d at 133
    . But the dispute over the 1950 deed is not focused
    on whether the deed actually reserved anything from passing to the Regmunds; the reservation’s
    four clauses manifestly exclude something. Instead, the parties’ dispute is over the nature and
    amount of the excluded property rights. A comparison with Monroe illuminates the difference.
    The appellants in Monroe held property as tenants-in-common with the appellees’
    predecessor-in-interest. 
    Id. During the
    period of the tenancy, the appellants conveyed a
    determinable royalty interest to their son, and prior to the expiration of that interest, the appellants
    and appellees partitioned their land. 
    Id. In the
    “subject to” clause listing existing mineral interests,
    the partition deed listed the son’s interest as a “1/64th non-participating for a term of 10 years from
    August 29, 1953, and as long thereafter as oil, gas or other minerals are produced therefrom with
    reversion to [appellants] equally upon the expiration of said term.” 
    Id. It did
    not otherwise mention
    the interest. 
    Id. The court
    refused to imply that the “subject to” clause created a reservation. 
    Id. It held
    that half of the outstanding possibility of reverter passed to the appellees under the partition
    deed because the mere mention of the outstanding future interest in the “subject to” clause did not
    indicate by clear language the intent to exclude any part of that interest from passing under the
    deed. 
    Id. at 133–34.
    The 1950 deed bears no resemblance to the partition deed in Monroe. The deed’s
    reservation begins “SAVE AND EXCEPT, however, there is reserved unto George Prochaska, his
    heirs and assigns . . . .” There is no question that the parties to the deed intended to exclude a one-
    half floating royalty interest from passing under the deed. Cf. 
    Bagby, 627 S.W.2d at 193
    –95
    (holding appellant-grantors validly reserved the possibility of reverter to a determinable royalty
    interest where the deed identified the outstanding interest in the “subject to” clause and then
    reserved that interest).
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    04-12-00755-CV
    The parties to the deed then provided a detailed description of the excluded interest, and
    we have construed that deed in accordance with Texas law to determine the nature of that interest.
    Our construction of the deed is sufficient to show there is no merit to the contention that the
    Prochaskas’ interest, if it was an exception, was not identified to a reasonable certainty. Compare
    
    Angell, 225 S.W.3d at 841
    (holding exception of “the following described tracts of land which
    have heretofore been sold and conveyed to . . . 10 acres conveyed to Jack Ellison . . . 2 acres sold
    to S.A. Bailey . . . all of said last mentioned . . . acres being out of the Southeast forty acres of said
    above mentioned [parcel]” sufficiently described the excepted interests), with State v. Dunn, 
    574 S.W.3d 821
    , 824 (Tex. Civ. App.—Amarillo 1978, writ ref’d n.r.e.) (holding exception of “that
    part of said tract to be acquired by the Texas State Highway Department for additional right-of-
    way purposes of Highway 87” failed to identify the excepted area with the requisite certainty).
    CONCLUSION
    We ascertain only one reasonable construction of the deed’s language and hold that the
    royalty interest reserved by the deed was a floating one-half royalty interest. In 1950, the
    Prochaskas conveyed the entirety of their present interest to the Regmunds, but they excluded the
    possibilities of reverter to two floating one-quarter royalty interests contained in outstanding
    reservations from passing under the deed, and reserved those interests to themselves. Upon the
    termination of those prior interests, the Prochaskas’ future interests became present possessory
    interests. Therefore, the Prochaskas are entitled to one-tenth of production under the current lease
    and to one-half of whatever landowner’s royalty may be negotiated under future leases. The
    judgment of the trial court is affirmed.
    Luz Elena D. Chapa, Justice
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