Saturday, January 4, 2014

Understanding How Texas Courts Interpret Deeds, and the Language Contained in Them

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

 As a real estate lawyer in San Antonio, Texas, I am often presented with situations where parties are embroiled in a dispute over the meaning and effect of language contained in a deed conveying title to real property. In those circumstances, the parties to a given dispute usually have competing interpretations/constructions of the words used in a deed, how those specific words fit into the context of the document, or the perceived intent of the party who granted the deed (often, that Grantor is long-gone).

Texas Courts, too, are frequently asked to interpret deeds and issue determinations on the respective rights of the parties arising from such deeds. These issues are usually presented to Courts in connection with lawsuits filed seeking declaratory judgment, or claims under the "trespass to try title" scheme.   With the tremendous surge in value of property rights in South Texas -- especially in the Eagle Ford counties (**see list below) -- these determinations can have huge financial impacts on the parties. For this reason, it is important to understand the legal criteria courts in Texas use to construe deeds.

In short, how Texas courts interpret deeds depends on whether -- in the Court's opinion -- the plain language contained in a deed is AMBIGUOUS or NON-AMBIGUOUS. That determination makes all the difference...

DETERMINING WHETHER AMBIGUITY EXISTS

Deciding whether an instrument is ambiguous is a question of law for the court. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003) (citing Coker, 650 S.W.2d at 394). A court may conclude that a writing is ambiguous even in the absence of such a pleading by either party. Id. at 231. In determining ambiguity, Texas courts look to the document as a whole, in light of the circumstances present when it was executed. Univ. Health Servs., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d 742, 746 (Tex. 2003); see also Lenape Res. Corp., 925 S.W.2d at 574. An agreement is ambiguous when it is susceptible to more than one reasonable meaning after the application of established rules of construction. Univ. Health Services, 121 S.W.3d at 746. If the  language can be given a certain or definite meaning, then the instrument is not ambiguous and the court should interpret it as a matter of law. Id. 

Notably, an ambiguity does not arise simply because the parties advance conflicting interpretations. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). For an ambiguity to exist, both interpretations must be reasonable. Id.

HOW TEXAS COURTS INTERPRET UNAMBIGUOUS DEEDS

Under Texas law, 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, 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 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)). 

Courts 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, Texas courts 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). 

Courts 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.”). 

INTERPRETING AMBIGUOUS DEEDS

When an instrument, including a deed, is ambiguous, courts in Texas consider other facts and circumstances. See Stephens County Museum, 517 S.W.2d at 262; Bantuelle, 667 S.W.2d at 816.  Relevant considerations are related to the intent of the parties at the time that the instrument was executed, including the parties' relationship, the exchange of money or other consideration, and the totality of the circumstances existing between the grantor and grantee. Evidence of these facts and circumstances can be adduced through witness testimony or documentary evidence.

The following Texas counties are generally associated with the Eagle Ford shale oil play:
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