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NUMBER 13-15-00012-CV

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Memorandum Opinion by Chief Justice Valdez

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Summary of Memorandum Opinion — Benedict G. and Elizabeth Wenske v. Steve and Deborah Ealy

Factual and Procedural Background

In 1988, appellants Benedict G. and Elizabeth Wenske purchased approximately fifty-five acres via a deed in which Marian Vyvjala and Margie Novak reserved, collectively, an undivided one-fourth (1/4) non-participating royalty interest (NPRI) in the royalty estate (the "1988 Deed"). In 2003, the Wenskes conveyed the property to Steve and Deborah Ealy but reserved an undivided 3/8ths of the mineral estate to themselves; the Ealys received a 5/8ths mineral estate. The 2003 conveyance was made "subject to" the reservations and exceptions in the 1988 Deed, which included the NPRI. In 2011, the parties executed oil and gas leases covering their respective mineral interests. In 2013, the Wenskes sued for declaratory judgment seeking a declaration that their reserved 3/8ths interest in the minerals (and royalties) was free of the burden of the 1/4 NPRI (i.e., that the NPRI burden should be borne entirely by the Ealys' 5/8ths). The Ealys counterclaimed, seeking a declaration that the reserved and conveyed mineral interests each bear the Vyvjala reserved interest proportionately. Both parties moved for summary judgment. The trial court granted traditional summary judgment in favor of the Ealys, concluding the 3/8ths and 5/8ths mineral interests would proportionately bear the 1/4 NPRI (resulting in a 3/32nds carveout from the Wenskes' mineral interest and a 5/32nds carveout from the Ealys' mineral interest). The Wenskes appealed. This memorandum opinion affirms the trial court's judgment.

Legal Issues Presented

Whether, as a matter of law, the Wenskes' reserved undivided 3/8ths interest in the mineral estate (and royalties) is free of the 1/4 non-participating royalty interest reserved in the 1988 deed, or whether the outstanding 1/4 NPRI is to be borne proportionately by the Wenskes' 3/8ths and the Ealys' 5/8ths mineral interests.

Arguments of the Parties

Appellants' (Wenskes') Arguments

Their reserved 3/8ths mineral interest and corresponding royalty should be unburdened by the 1/4 NPRI reserved in the 1988 Deed; the NPRI burden should be deducted solely from the Ealys' conveyed 5/8ths interest.
They rely on the 2003 Deed language, including the phrase "subject to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty," and cite Bass v. Harper for the proposition that "subject to" can operate as an absolute limitation on the scope of the conveyance, making the Ealys wholly responsible for the NPRI.

Appellees' (Ealys') Arguments

The NPRI reserved in the 1988 Deed is a separate royalty estate that is carved out of the total mineral production and must be applied to the entire mineral estate; therefore the NPRI should be allocated proportionately between the Wenskes' and the Ealys' mineral interests.
Because the 2003 Deed provides no guidance on apportioning the NPRI between the reserved and conveyed mineral interests, the default rule—proportionate carving of the royalty interest—applies.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985)	Summary judgment movant's burden to show no genuine issue of material fact and entitlement to judgment as a matter of law.	Cited to state the standard governing traditional motions for summary judgment.
Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995)	If movant establishes entitlement, burden shifts to non-movant to raise a material fact issue.	Cited to explain the burden-shifting framework in summary judgment review.
Altman v. Blake, 712 S.W.2d 117, 118 (Tex. 1986)	Construction of a deed is a question of law; court's duty is to ascertain parties' intent within the four corners of the deed.	Used to justify de novo review of deed construction performed by the appellate court.
Hausser v. Cuellar, 345 S.W.3d 462, 467 (Tex. App.—San Antonio 2011, pet. denied)	Affirms that deed construction is reviewed de novo.	Reinforced the appellate standard of review for deed construction in this case.
Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied)	Review the granting of a traditional motion for summary judgment de novo to determine whether a party's right to prevail is established as a matter of law.	Cited to confirm de novo appellate review of the summary judgment ruling.
KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 75 (Tex. 2015)	Definition: an NPRI is an interest in the gross production carved out of the mineral fee estate as a free royalty; explains nature of NPRI.	Used to define the NPRI and to explain that a NPRI entitles its owner to a share of production proceeds separate from the mineral estate.
Plainsman Trading Co. v. Crews, 898 S.W.2d 786, 789 (Tex. 1995)	Explains NPRI is non-possessory and entitles owner only to a share of production proceeds, free of exploration/production expenses.	Cited to show the non-possessory nature of the NPRI and its effect (share of proceeds).
Extraction Res., Inc. v. Freeman, 555 S.W.2d 156, 158-59 (Tex. Civ. App.—El Paso 1977, writ ref'd n.r.e.)	The mineral estate and the royalty estate are two separate and distinct estates.	Used to support the court's statement that royalty and mineral estates are separate and can be separately conveyed or reserved.
Range Res. Corp. v. Bradshaw, 266 S.W.3d 490, 493 (Tex. App.—Fort Worth 2008, pet. denied)	An NPRI reserved as a fractional share of royalty "floats" in accordance with the size of the landowner's royalty contained in the lease.	Cited to explain that the 1988 reservation operates as a floating fractional royalty that depends on future leases.
Amundson v. Gordon, 328 P.2d 630, 634 (1958)	After severance, owners of separate mineral interests are tenants in common; each tenant may separately lease such mineral interest.	Applied to describe legal relationship of appellants and Ealys after the 2003 conveyance.
Medina Interests, Ltd. v. Trial, 469 S.W.3d 619, 623 (Tex. App.—San Antonio 2015, pet. filed)	When a fraction of royalty is reserved, its amount depends on the royalty reserved in future mineral leases.	Used to explain how the amount Vyvjala and Novak receive depends on royalty provisions in future leases covering total production.
Pich v. Lankford, 302 S.W.2d 645, 650 (1957)	Default rule: ordinarily a royalty interest would be carved proportionately from the mineral ownerships.	Relied upon by the court as the default rule for allocating the NPRI between the Wenskes' and the Ealys' mineral interests where the deed is silent.
Bass v. Harper, 441 S.W.2d 825 (Tex. 1969)	Interprets phrase "subject to" in certain conveyances as an absolute limitation on the scope of the conveyance (as argued by appellants).	Cited by appellants; the court explained Bass dealt solely with fractional ownership of the minerals and does not control apportionment of a separate royalty estate corresponding with the minerals, so Bass was inapplicable to the NPRI allocation here.
Watkins v. Slaughter, 144 Tex. 179, 182, 189 S.W.2d 699, 700 (1945)	Illustrates distinction between granting/conveying a mineral fee interest and granting a fraction of royalty; language matters (use of term "royalty").	Used to show that the 2003 Deed did not use the term "royalty" and therefore did not operate to alter the NPRI ownership reserved by the 1988 Deed.
Leal v. Cuanto Antes Mejor LLC, No. 04-14-00694-CV, 2015 WL 3999034, at *3 (Tex. App.—San Antonio July 1, 2015, no pet.)	Provides examples distinguishing grants of fraction royalties from grants of fractions of minerals (and importance of term "royalty").	Used to support the court's point that deeds that intend to reserve or convey royalties expressly use the term "royalty."
Day & Co. v. Texland Petroleum, Inc., 786 S.W.2d 667, 668 (Tex. 1990)	A deed will convey every interest held by the grantor except that which is clearly reserved or excepted.	Applied to explain that the grantor's deed conveys all interests except those clearly reserved; here appellants reserved only a 3/8ths mineral interest and excepted a 1/4 interest to Vyvjala and Novak.
Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10, 15, 299 S.W.2d 672, 675 (1957)	Supporting precedent cited in Day & Co. about conveyance/reservation principles.	Cited as supporting authority for the principle that deeds convey all interests except those clearly reserved.
Duhig v. Peavy-Moore Lumber Co., 135 Tex. 503, 506, 144 S.W.2d 878, 879 (1940)	The deed cannot convey what the grantor does not own.	Cited to explain that the 2003 Deed could not convey the NPRI to appellants because the 1988 Deed had already reserved that royalty interest to Vyvjala and Novak.

Court's Reasoning and Analysis

The court began with the applicable standards: the movant on a traditional summary judgment must show no genuine issue of material fact and entitlement to judgment as a matter of law, and deed construction is a question of law reviewed de novo. The court then analyzed the nature of the interests created by the deeds at issue.

First, the court observed that the 1988 Deed expressly reserved an undivided one-fourth (1/4) interest "in and to all of the oil royalty, gas royalty, and royalty ... in other minerals ... that may be produced" from the tract. From this language the court concluded that Vyvjala and Novak owned a portion of the separate royalty estate (a NPRI) that entitles them to a share of production proceeds. The court relied on authority explaining that an NPRI is carved out of the mineral fee as a free royalty and is non-possessory, and that a fractional royalty reservation "floats" and is determined by the royalty provided in future leases.

Second, the court addressed the effect of the 2003 Deed conveying 5/8ths of the mineral estate to the Ealys while reserving 3/8ths to the Wenskes and making the conveyance "subject to" prior reservations and exceptions (including the 1988 NPRI). After the 2003 conveyance, the Wenskes and the Ealys owned the mineral rights as tenants in common and could separately lease their mineral interests.

The court rejected the Wenskes' position that the NPRI burden should be borne entirely by the Ealys. The court explained that Bass v. Harper, relied on by the Wenskes, involved allocation of fractional ownership of minerals and did not address apportionment of a separate royalty estate. Because the 2003 Deed provided no express instruction allocating the NPRI between the reserved 3/8ths and conveyed 5/8ths mineral interests, the court applied the default rule: ordinarily the royalty interest would be carved proportionately from the two mineral ownerships. The court further noted that the 2003 Deed did not even mention "royalty" and thus did not clearly shift the NPRI burden entirely to the Ealys. The court relied on the general principle that deeds convey every interest held by the grantor except that which is clearly reserved or excepted, and that a deed cannot convey what the grantor does not own, to conclude that the NPRI remained a separate royalty interest and its burden should be apportioned proportionately between the Wenskes' and the Ealys' mineral estates.

Finally, applying these principles, the court concluded the Ealys had established entitlement to summary judgment as a matter of law and that the NPRI should be borne proportionately by the 3/8ths and 5/8ths mineral interests.

Holding and Implications

Holding: The court affirmed the trial court's judgment in favor of appellees. The court held that the 2003 Deed conveyed a 5/8ths mineral interest to the Ealys and that the reserved 3/8ths mineral interest (appellants') and the conveyed 5/8ths mineral interest (appellees') will proportionately bear the outstanding 1/4 NPRI.

Implications:

Direct effect on the parties: the NPRI is allocated proportionately between the mineral owners; specifically, as the trial court concluded and the opinion explains, 3/8ths of the NPRI (a 3/32nds interest) is carved out of the Wenskes' mineral estate and 5/8ths of the NPRI (a 5/32nds interest) is carved out of the Ealys' mineral estate.
The opinion applied established deed-construction rules and default allocation principles for royalties where a deed is silent; the court did not announce a new rule of law beyond applying those established principles and did not discuss broader precedential effects.

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BENEDICT G. WENSKE AND ELIZABETH WENSKE, Appellants, v. STEVE EALY AND DEBORAH EALY, Appellees.

Memorandum Opinion by Chief Justice Valdez

On appeal from the 25th District Court of Lavaca County, Texas.

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Rodriguez and Perkes
Memorandum Opinion by Chief Justice Valdez

Appellants, Benedict G. and Elizabeth Wenske, challenge the trial court's grant of traditional summary judgment in their cause of action for declaratory judgment in favor of appellees, Steve and Deborah Ealy. By one issue, appellants contend that as a matter of law they own 3/8ths of the minerals and 3/8ths of the royalties, unburdened by an outstanding 1/4th non-participating royalty interest (NPRI) belonging to former owners of the property. We affirm.

Specifically, appellants argue that the trial court erred in concluding that both their 3/8th interest and the Ealy's 5/8ths interest in minerals shared the burden of the outstanding NPRI in proportion to their ownership of the minerals.

I. BACKGROUND

In 1988, appellants purchased approximately fifty-five acres from, among others, Marian Vyvjala and Margie Novak (the "1988 Deed"). Out of this conveyance, Vyvjala reserved a 1/8th NPRI and Novak reserved another 1/8th NPRI—resulting in a total reservation of 1/4th of the royalty estate. The NPRI from the 1988 Deed states, in relevant part, the following:

Anything in the foregoing conveyance to the contrary notwithstanding, it is expressly agreed and stipulated that out of the sale hereby made there is expressly excepted and reserved to the grantors herein, [Vyvjala] and [Novak], their heirs and assigns . . . an undivided one-fourth (1/4) interest in and to all of the oil royalty, gas royalty, and royalty in casinghead gas, gasoline and royalty in other minerals in and under and that may be produced from the above described tract or parcel of land for a period of twenty-five years. . . . [(Emphasis added).]
. . . .
In the event any existing or future oil, gas and/or minerals lease provides for a royalty in excess of one-eighth (1/8) then grantors herein [Vyvjala] and [Novak], shall share in said royalty provided for in such lease or leases to the extent of an undivided one-fourth (1/4) thereof.
. . . .
In the event that [appellants], their heirs, executors, administrators or assigns, in the status of fee owner or fee owners of any portion [of the land], or any interest therein, shall develop and/or operate said tract or parcel of land, or any portion thereof, in the production of oil, gas, or other minerals therefrom, then [Vyvjala and Novak], shall own and be entitled to receive as a free royalty, free and clear of all costs and expenses, one-fourth (1/4th) of the oil, gas and/or other minerals produced and saved under any such operation.

In 2003, appellants sold the property to the Ealys, reserving an undivided 3/8ths of all oil, gas, and other minerals, in and under, and that may be produced from the property (the "2003 Deed"). The conveyance to the Ealys was made specifically subject "to several Reservations and Exceptions to Conveyance and Warranty 'for all purposes,'" which included the NPRI. Thus, appellants reserved 3/8ths of the mineral estate, and the Ealys received 5/8ths of the mineral estate. The Reservation in the 2003 Deed states the following:

For [appellants and appellants'] heirs, successors, and assigns forever, a reservation of an undivided 3/8ths of all oil, gas, and other minerals in and under and that may be produced from the Property. If the mineral estate is subject to existing production or an existing lease, the production, the lease, and the benefits from it are allocated in proportion to ownership in the mineral estate.

(Emphasis added). The Exception from the 2003 Deed states the following:

Undivided one-fourth (1/4) interest in all of the oil, gas, and other minerals in and under the herein described property, reserved by [Vyvjala], et al for a term of twenty-five (25) years in an instrument recorded in Volume 400, Page 590 of the Deed Records of Lavaca County, Texas, together with all rights, express or implied, in and to the property described herein arising out of or connected with said reserved interest and reservation reference to which instrument is here and now made for all purposes.

In 2011, appellants executed an oil and gas lease providing for a royalty payment on oil and gas production from the property. Contemporaneously, the Ealys also leased their share of the mineral estate.

In 2013, appellants filed a petition for declaratory judgment requesting a declaration that appellants were "the owners of an undivided 3/8ths interest in the oil, gas, and other minerals lying in, on and under the subject property which interest does not bear any portion of the royalty reserved under the 1988 deed." In plain terms, appellants argued that they had taken their 3/8ths interest free and clear of the 1/4th NPRI that had been reserved to Vyvjala and Novak, which they contended should be deducted solely from the Ealys' 5/8ths interest.

The Ealys filed an answer and counter claim requesting a declaration

that when properly construed, the [2003] Deed reserved unto [appellants] therein, 3/8ths of all oil, gas and other minerals in and under the Land and conveyed unto [the Ealys] 5/8ths of all oil, gas and other minerals in and under the Land and that the interest reserved and conveyed each bear the Vyjala Reserved Interest proportionately.

Both parties moved for summary judgment.

The trial court granted the Ealys' motion for traditional summary judgment concluding that the 2003 Deed conveyed to the Ealys "a 5/8ths mineral interest in fee as well as all of the surface in the Property" and "[t]hat the 3/8ths mineral interest reserved by [appellants] and the 5/8ths mineral interest conveyed to the [Ealys] in the Deed will proportionately bear in accordance with the reserved and conveyed mineral interests in the [2003] Deed." Thus, appellants' and the Ealys' mineral estates would share the burden of the 1/4th NPRI in proportion to the fractional interests; 3/8ths of the NPRI (a 3/32nds interest) would be carved out of appellants' mineral estate and 5/8ths of the NPRI (a 5/32nds interest) would be carved out of the Ealys' mineral estate. This appeal followed.

III. STANDARD OF REVIEW AND APPLICABLE LAW

In a traditional motion for summary judgment, the movant has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a; Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). If the movant's motion and summary judgment proof facially establish a right to judgment as a matter of law, the burden shifts to the non-movant to raise a material fact issue sufficient to defeat summary judgment. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). The construction of a deed is a question of law for the court, where the primary duty of the court is to ascertain the intent of the parties within the four corners of the deed. Altman v. Blake, 712 S.W.2d 117, 118 (Tex. 1986). Thus, our review of a deed is de novo. Hausser v. Cuellar, 345 S.W.3d 462, 467 (Tex. App.—San Antonio 2011, pet. denied).

We review the granting of a traditional motion for summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied).

"A [NPRI] is an interest in the gross production of oil, gas, and other minerals carved out of the mineral fee estate as a free royalty, which does not carry with it the right to participate in the execution of, the [b]onus payable for, or the delay rentals to accrue under oil, gas, and mineral leases executed by the owner of the mineral fee estate." KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 75 (Tex. 2015). A NPRI is non-possessory because it does not entitle its owner to produce the minerals himself and only entitles its owner to a share of the production proceeds, free of the expenses of exploration and production. Plainsman Trading Co. v. Crews, 898 S.W.2d 786, 789 (Tex. 1995). "A NPRI is an interest in the gross production of oil, gas, and other minerals carved out of the mineral fee estate as a free royalty. . . ." KCM Fin., 457 S.W.3d at 75.

III. DISCUSSION

Appellants argue that the 2003 Deed conveyed the burden of the NPRI solely to the Ealys. Thus, appellants claim that they could reserve an interest in the mineral estate without the burden of the NPRI. As support, appellants point to the following portion of the 2003 Deed:

Grantor, for the Consideration and subject to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty, grants, sells, and conveys to Grantee the Property, together with all and singular
the rights and appurtenances thereto in any way belonging to have and to hold it to Grantee and Grantee's heirs, successors, and assigns forever. [(Emphasis added)].

The Ealys respond that the NPRI comes out of the entire mineral estate. Both parties rely on construction of the 2003 Deed; however, to determine the rights of the NPRI owners, we must construe the 1988 Deed first.

The mineral estate and the royalty estate are two separate and distinct estates. Extraction Res., Inc. v. Freeman, 555 S.W.2d 156, 158-59 (Tex. Civ. App.—El Paso 1977, writ ref'd n.r.e.).

"The words 'Royalty,' 'Bonus,' and 'Rentals,' each and all have a separate, distinct and well established meaning in the oil and gas business." There are varying forms of these estates, which we do not need to discuss, but it is important to note that each can be separately conveyed or reserved, and when so conveyed or reserved, they become separate estates. In Texas, oil and gas in place are, by the established rules of property, a part of the realty or corpus of the land and as such are subject to ownership, severance, conveyance, lease, and taxation. This includes royalty.

Id. (internal citations omitted, emphasis added).

The 1988 Deed's reservation states that an undivided 1/4th "interest in and to all of the oil royalty, gas royalty, and royalty in casinghead gas, gasoline and royalty in other minerals in and under and that may be produced from the above described tract" was reserved in favor of Vyvjala and Novak. (Emphasis added.) Thus, Vyvjala and Novak own a portion of the separate royalty estate, in the form of a NPRI, which "entitles its owner[s] to a share of the production proceeds . . . . " Plainsman Trading Co., 898 S.W.2d at 789 (emphasis added). The 1988 Deed entitled Vyvjala and Novak to a 1/4th share of the royalty proceeds that may be produced from the land described in the deed. See Range Res. Corp. v. Bradshaw, 266 S.W.3d 490, 493 (Tex. App.—Fort Worth 2008, pet. denied) ("The amount to be paid to the [NPRI] owner is determinable upon the execution of some future [mineral] lease and is calculated by multiplying the fraction in the royalty reservation by the royalty provided in the [mineral] lease."). Furthermore, the 1988 Deed clearly states that if any portion of the land, or any interest shall be developed and/or operated for the production of oil, gas, or other minerals, then Vyvjala and Novak "shall own and be entitled to receive as a free royalty, free and clear of all costs and expenses, one-fourth (1/4th) of the oil, gas and/or other minerals produced" from the land or any portion of the land. (Emphasis added).

In the 1988 Deed, Vyvjala and Novak reserved a fractional share of the royalty, which "'floats' in accordance with the size of the landowner's royalty contained in the [oil and gas] lease. . . ." Range Res. Corp. v. Bradshaw, 266 S.W.3d 490, 493 (Tex. App.—Fort Worth 2008, pet. denied).

When Vyvjala and Novak reserved a 1/4th interest in the royalty estate, the entire mineral estate had been conveyed to appellants. Thus, had appellants leased the mineral estate, Vyvjala and Novak would have received 1/4th of the royalties from production on the land, and appellants would have received a 3/4th share of the royalties. After the conveyance in 2003, appellants and the Ealys were the owners of separate mineral interests and became the owners of the mineral rights as tenants in common. See Amundson v. Gordon, 328 P.2d 630, 634 (1958). "Each tenant in common as the owner of a mineral interest may separately lease such mineral interest." Id. However, the 1988 Deed controls the nature of Vyvjala's and Novak's royalty estate, and the 1988 Deed did not grant appellants any interest in the NPRI. See Duhig v. Peavy-Moore Lumber Co., 135 Tex. 503, 506, 144 S.W.2d 878, 879 (1940) ("The deed, of course, does not actually convey what the grantor does not own.").

Because the 1988 Deed reserved for Vyvjala and Novak a royalty interest that is carved out of the total production achieved under a mineral lease, it is considered a fraction of royalty or floating royalty. See Medina Interests, Ltd. v. Trial, 469 S.W.3d 619, 623 (Tex. App.—San Antonio 2015, pet. filed). When a fraction of royalty is reserved or conveyed, "its amount (as a percentage of production) depends upon the royalty reserved in future [mineral] leases." Id. In this case, the amount of royalties that Vyvjala and Novak receive depends on the royalty reserved in any mineral leases for the total production of those minerals from the land. See id. Thus, Vyvjala and Novak are entitled to 1/4th of the royalties from any production of minerals from the entire mineral estate, which includes appellants' 3/4th interests in the mineral estate. See KCM Fin., 457 S.W.3d at 75 (explaining that the royalty estate is carved out of the mineral estate).

It appears that appellants claim that by making an exception in the 2003 Deed, although Vyvjala and Novak will still receive 1/4th of the royalties from production on the entire mineral estate, only the Ealys must pay the amount of the royalties, even if the royalties come from production on appellants' portion of the mineral estate. Appellants cite Bass v. Harper, arguing that the phrase "subject to," as used in the 2003 Deed, is an absolute limitation on the scope of the conveyance and operates to make the Ealys wholly responsible for the NPRI. 441 S.W.2d 825 (Tex. 1969). However, in Bass, the disputed conveyance dealt solely with fractional ownership of the minerals themselves, and Bass says nothing about how to apportion a separate royalty estate that corresponds with the minerals. See id. Rather, because the 2003 Deed provides no guidance on this apportionment, we agree with the Ealys that the default rule should apply: "Ordinarily the royalty interest . . . would be carved proportionately from the two mineral ownerships . . . ." Pich v. Lankford, 302 S.W.2d 645, 650 (1957)

To the extent that appellants argue that the NPRI is only attached to the Ealys' 5/8ths portion of the mineral estate, we disagree because that would decrease the amount of royalties Vyvjala and Novak would receive.

Moreover, the exception in the 2003 Deed states that Vyvjala and Novak own an undivided one-fourth (1/4) interest in all of the oil, gas, and other minerals in and under the land for a term of twenty-five (25) years. (Emphasis added). Vyvjala and Novak do not own a 1/4th interest in the mineral estate. See Watkins v. Slaughter, 144 Tex. 179, 182, 189 S.W.2d 699, 700 (1945) ("Ha[d] the foregoing [clause stating to grantee, 'Together with a 15/16 interest in and to all the oil, gas and other minerals in and under and that may be produced from said land and the grantor retains title to a 1/16 interest in and to all of the oil, gas and other minerals in and under and that may be produced from said land'] been the whole of what the deed contained as to the mineral interest conveyed and the mineral interest reserved, [the Grantor] would have reserved merely a 1/16 mineral fee interest."); see also Leal v. Cuanto Antes Mejor LLC, No. 04-14-00694-CV, 2015 WL 3999034, at *3 (Tex. App.—San Antonio July 1, 2015, no pet.) (setting out examples of grants of fraction royalties and fraction of royalties, which all include the term "royalty"). The 1988 Deed clearly states, as previously explained, that Vyvjala and Novak have a 1/4th interest in the royalties produced from the land. The 2003 Deed does not even mention royalties. Therefore, we disagree with appellants that they could be unburdened by the NPRI simply by stating in the 2003 Deed that they conveyed the property to the Ealys "subject to" the exception without even mentioning anything about royalties or that the portions of the royalty estate owned by Vyvjala and Novak would be paid entirely by the Ealys. We agree with the Ealys that a deed will convey every interest held by the grantor except that which is clearly reserved or excepted. See Day & Co. v. Texland Petroleum, Inc., 786 S.W.2d 667, 668 (Tex. 1990) (citing Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10, 15, 299 S.W.2d 672, 675 (1957)). Here, all that appellants reserved was a 3/8ths mineral interest, and they excepted from the conveyance a 1/4th interest to Vyvjala and Novak (presumably the NPRI). However, in certain circumstances, an exception will have the same legal effect as a reservation when the excepted interest remains with the grantor, and here, the excepted interest did not remain with appellants. See Pich v. Lankford, 302 S.W.2d 645, 650 (1957). Thus, for the foregoing reasons, we cannot conclude as appellants argue that the exception in the 2003 Deed conveyed the entire burden of the NPRI to the Ealys.

Appellants and the Ealys appear to agree that appellants could have somehow conveyed the entire burden of the NPRI to the Ealys. However, in this memorandum opinion, we have not made such a determination of this issue as it is not dispositive. See TEX. R. APP. P. 47.1.

Neither appellants nor the Ealys address the 2003 Deed's statement that Vyvjala and Novak owned a 1/4th interest in the mineral estate.

We further note that the Texas Supreme Court has held that appellants, who originally solely owned the executive rights, owed Vyvjala and Novak a fiduciary duty. See KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 82 (Tex. 2015) (providing that an "executive has a largely unfettered hand in negotiating and structuring a mineral lease, that discretion is circumscribed by the duty owed to a non-executive"). --------

Accordingly, based on our de novo review, we conclude that the Ealys established their entitlement to summary judgment as a matter of law. See Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied). We overrule appellants' sole issue.

IV. CONCLUSION

We affirm the trial court's judgment.

/s/ Rogelio Valdez

ROGELIO VALDEZ

Chief Justice Delivered and filed the 28th day of January, 2016.

Wenske v. Ealy