The Starting Point: Pich v. Lankford
When interpreting mineral conveyances, Texas courts focus on one main question: What did the parties intend to convey or reserve based on the language of the instrument?
Older Texas cases sometimes relied on default rules when a deed did not clearly explain how a mineral or royalty interest should be allocated. One frequently cited case is Pich v. Lankford, 302 S.W.2d 645 (Tex. 1957). In addition to its primary holding, Pich included a discussion suggesting that an outstanding royalty burden would ordinarily be allocated proportionately between divided mineral interests.
Although Pich has never been overruled, more recent Texas Supreme Court cases caution against automatically applying default rules when the parties’ intent can be determined from the instrument. In particular, Wenske v. Ealy, 521 S.W.3d 791 (Tex. 2017), and Piranha Partners v. Neuhoff, 596 S.W.3d 740 (Tex. 2020), emphasize looking first to the language of the deed itself.
In practical terms: start with the deed, not the default rule.
What Did Pich Actually Hold?
In Pich, the Texas Supreme Court considered a dispute over mineral and royalty ownership in a 160-acre tract. The chain of title included deeds excepting three-fourths of the minerals, with some stating that the excepted minerals had been “heretofore reserved” or otherwise did not belong to the grantors.
The parties disagreed over the effect of this language. One side argued that the mineral interest was excepted from the conveyance and therefore never passed to the grantee. The other argued that the language was included only to protect the grantors under their warranties.
The Texas Supreme Court held that the language operated as an exception from the grant. Put simply, an interest excepted from a conveyance does not pass to the grantee. An incorrect explanation for the exception did not change its legal effect.
The Court also made an observation that later became important in title work. When discussing an outstanding nonparticipating royalty interest affecting divided mineral ownership, the Court stated that the royalty would “ordinarily” be carved proportionately from the respective mineral interests. That language was later cited as support for proportionately allocating an outstanding royalty burden when the instrument did not otherwise address allocation.
Importantly, however, the Court did not ultimately apply proportional allocation in Pich in the manner that statement might suggest.
How Pich Shaped Proportional Allocation
After Pich, its proportional-allocation language became a useful tool in mineral title analysis. When an outstanding royalty burden affected divided mineral interests, Pich could support allocating that burden according to the parties’ respective ownership.
More recent Texas Supreme Court decisions, however, make clear that this should not be the first step. Before assuming that an outstanding royalty should be shared proportionately, the examiner should read the entire instrument to determine whether the deed itself shows who was intended to bear the burden.
That distinction is at the heart of Wenske.
Wenske v. Ealy: Look to the Deed First
Wenske involved a familiar title question: Who bears an outstanding NPRI after a portion of the mineral estate is conveyed?
The dispute was whether the NPRI proportionately burdened both the grantor’s reserved mineral interest and the grantee’s conveyed mineral interest. The lower courts determined that the parties should share the burden proportionately. The Texas Supreme Court affirmed that result but disagreed with the court of appeals’ reliance on a default allocation rule.
The Supreme Court explained that the court of appeals moved too quickly to a default rule. Instead, the court should first read the deed as a whole and determine the parties’ intent from the language they used.
The distinction matters. The Court did not hold that proportional allocation is always improper. The parties in Wenske ultimately shared the burden proportionately. The difference was why. The proportional result came from the Court’s interpretation of the deed itself, not simply from applying a default rule to divided mineral interests.
Wenske also addressed Pich. The parties disputed whether Pich’s proportional-allocation language should control and whether that portion of the decision was dicta. Because the Court could resolve the issue from the deed itself, it expressly declined to decide the continuing vitality of that portion of Pich.
For title purposes, the lesson is straightforward: do not assume a burden proportionately reduces every interest simply because Pich can be cited for that result. Read the deed first.
Piranha Partners: Moving Further from Mechanical Rules
The Texas Supreme Court reinforced this approach in Piranha Partners. Unlike Wenske, the case involved an assignment of an overriding royalty interest and a dispute over whether the assignment covered one identified well, certain lands, or all production under the lease.
The Court concluded that the assignment unambiguously conveyed the ORRI in all production under the lease. In reaching that conclusion, it again emphasized reading the entire instrument rather than relying on rigid rules tied to isolated words or phrases.
Although Piranha Partners was not a proportional-allocation case, it reinforces the broader lesson from Wenske: the text-first approach applies more broadly to mineral and royalty conveyances, including ORRI assignments.
Practical Implications for Title Examination
Taken together, Pich, Wenske, and Piranha Partners do not mean that proportional allocation is dead. Rather, proportional allocation should not be automatic.
When determining whether an outstanding royalty or similar burden affects multiple ownership interests proportionately, start with the governing instrument. Read the conveyance as a whole and look for language showing how the parties intended the burden to be allocated.
If the instrument resolves the allocation question, its language controls and there is no need to resort to a default rule. If the instrument does not resolve the issue, the proportional-allocation principle discussed in Pich may still be relevant. Even then, Wenske cautions against treating proportional allocation as an automatic answer without first examining the parties’ actual language.
These cases also highlight a practical drafting issue that frequently creates problems in title examination. Deeds sometimes use “less and except” or “save and except” both to reference previously outstanding interests and to create new reservations in favor of the grantor. This imprecision can make it difficult to determine whether an interest was intended to remain with the grantor or was simply excluded because it was already outstanding.
Clearer drafting can help avoid that uncertainty. When creating a new mineral or royalty reservation in favor of the grantor, expressly state that the grantor “reserves” the identified interest. When referencing an existing mineral or royalty interest held by another party, “subject to” language can more clearly identify the outstanding interest without suggesting a new reservation.
The practical takeaway is simple: begin with the deed, not the default rule. Pich may remain relevant, but Wenske and Piranha Partners make clear that the primary task is determining the parties’ intent from the instrument itself.
Kuiper Law Firm, PLLC advises clients on oil and gas title, mineral ownership, and conveyancing issues. If you have questions regarding the principles discussed in this article or how they may apply to your interests or operations, please contact our office.