Hysaw v. Dawkins
No. 14-0984
04-13-00539-CV, 450 S.W.3d 147, 07-30-14
Case Summary written by Jana L. Simons, Staff Member.
JUSTICE GUZMAN delivered the opinion of the Court.
In 1947 Ethel Hysaw executed her will, dividing her land into three fee simple estates in her land and bequeathing one to each of her three children, Dorothy, Howard, and Inez. In her will, she disposed of the underlying mineral rights separately by stating “[t]hat each of my children shall have and hold an undivided one-third (1/3) of an undivided one-eighth (1/8) of all oil, gas or other minerals in or under or that may be produced from any of said lands, the same being a non-participating royalty interest . . . .” The resulting 1/24 presents what is known as the double fraction problem. Over half a century ago, when Ethel’s will was drafted, mineral contracts rarely departed from the standard one-eighth royalty agreement, but presently such provisions are more regularly adjusted. Therefore, a common issue becomes whether the royalty disbursement should be fixed or floating when subsequently interpreting the document.
In 2008, Inez’s descendants negotiated a one-fifth, rather than one-eighth, mineral lease on the 600 acres they owned in fee simple. As a result, a double fraction problem ensued regarding whether or not descendants of all three children should divide all royalties equally, even those greater than one-eighth, or whether Inez’s descendants should exclusively profit from the negotiated excess royalty. The families of Ethel’s children sued to settle the dispute over these lucrative mineral interests.
The family that owned the surface rights to the oil producing land argued that the other two families should receive one-third of one-eighth, known as a fixed or “fractional” royalty interest, as the plain language of the will reads, while the other two families argued that the distribution should float, or be a “fraction of” the royalty interests. For example, as in the present case, if a mineral contract is negotiated at one-fifth, then the families of the devisees should each receive one-third of one-fifth equally.
The trial court held that the minerals should be divided equally amongst the families, as a fraction of royalty interests, including the additional, agreed-upon royalty amounts negotiated by the surface owner. The appellate court reversed the lower court and held for Inez by stating that descendants of Dorothy and Howard were merely entitled to the fraction of mineral interests of one-third of one-eighth as stated in Ethel’s will. The excess amount negotiated would be designated for the owner of the surface rights.
Issue: Whether Ethel Hysaw’s will intended for the bequeathed mineral estate to be divided equally (floating royalty) or if the additional royalties should go solely to the owner of the surface rights (fixed royalty).
While this area of oil and gas law is often litigated, the Court decided the case based heavily on the intent of the testatrix. The Court therefore ultimately refused to establish bright-line rules on the interpretation of fixed and floating royalties. The Court held that, despite the fact that the double fraction problem, in plain language, left 1/24 to each child, the descendants of each of the three children should benefit equally because the intent was to treat each of the children equally with respect to mineral rights.
The Court considered additional testamentary language such as: “unless there has been an inter vivos sale or conveyance of royalty on land willed to that child, in which case the children ‘shall each receive one-third of the remainder of the unsold royalty.”’ The Court concluded that when holistically considering the intent expressed within the will’s four corners, the testatrix intended to divide the mineral estate equally. The court thus “favored a holistic and harmonizing approach and rejected mechanical rules of construction, such as giving priority to certain types of clauses over others or requiring the use of magic words.” Therefore, the Court reversed the appellate court and determined the intent of the will was to divide the mineral interests equally, in a floating manner if necessary, to all of her children.