Where a deed conveys more mineral interest than what was owned at the time of the transaction, and contains either a warranty clause, or in some instances, a special warranty clause, what recourse do the parties to this transaction have?
The Duhig Doctrine Traditionally:
In 1940, the Texas Supreme Court developed the Duhigdoctrine, a legal rule made in an effort to protect Grantees and make them whole in instances where a Grantor has over-conveyed an interest (Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (Tex. 1940)). When full effect cannot be given to a warrantied deed, the granted interest will be given priority until full effect can be given. In other words, the Grantee will be made whole first.
The DuhigDoctrine Updated:
In 2018, the Texas Supreme Court revisited the Duhigdoctrine in Perryman v. Spartan Tex. Six Capital Partners, Ltd., 546 S.W.3d 110 (Tex. 2018). In Perryman, the Court refused to apply the doctrine in certain instances where a warranty deed creates an exceptionof an interest from the grant as opposed to reservingan interest for the Grantor. The deed in Perrymancontained the following language in the grant:
“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.”
The Texas Supreme Court held that this particular deed did not purport to convey andreserve an interest in the grantor; rather, the deed language created an exception from the grant.
Duhigand Perrymanin Action:
Amy is the fee simple owner of all of Blackacre. Amy sells all of Blackacre to Ben and reserves 1/2 of the minerals for herself. At this time, Amy owns 1/2 of the minerals and Ben owns 1/2 of the minerals. Then, Ben decides to sell 1/2 of the minerals to Carl, and using a warranty deed, reserves for himself 1/2 of the minerals. But Ben forgot to mention in the deed Amy’s prior reserved interest. If Duhigis applied, Amy remains the owner of 1/2 of the minerals and Carl owns the other 1/2 of the minerals. Ben is out of luck. Carl cannot be on notice of Amy’s prior reservation - based on the face of deed, Carl believes he is purchasing 1/2 of the minerals. Ben cannot keep 1/2 of the minerals when he is purporting to convey 1/2 without any mention of Amy’s 1/2.
If we apply Perrymanand change the facts, we get the following scenario:
Ben sells 1/2 of the minerals to Carl, and again, uses a warranty deed. This time, he less and excepts1/2 of the minerals. Perrymantells us that Amy owns a 1/2 of the minerals, Ben owns a 1/4 of the minerals, and Carl owns a 1/4 of the minerals. The “less and except” language here creates an exception from the grant and does not “reserve” an interest for the grantor. Thus, Duhigis not applied.
Because Perryman created a limitation on the application of the Duhigdoctrine, title examiners, and others involved in real estate transactions, should carefully examine the granted interest and ensure that other interests were properly excepted or reserved.