Oil and Gas Lawyer Blog
On April 24, the Supreme Court issued an opinion in two consolidated appeals, Boren Descendants v. Fasken Oil and Ranch, Ltd., and Mabee Ranch Royalty Partnership LP v. Fasken Oil and Ranch, Ltd. I wrote about the Eastland Court of Appeals, decision in these cases in December 2024. The issue is construction of a 1933 deed of 60,000 acres in which the grantor reserved “an undivided one-fourth (1/4th) of the usual one eighth (1/8th) royalty.” Fasken owns the reserved royalty and the Boren and Mabee descendants on the fee mineral interest. Relying on the Supreme Court’s guidance on how to construe such deeds in Van Dyke v. Navigator Group, the Eastland Court held that the deed reserved a “floating” 1/4th of the royalty.
The more interesting part of the case is the applicability of the presumed grant doctrine, also addressed in Van Dyke. The appeal of the Fasken cases was a permissive interlocutory appeal; the Eastland Court refused to consider the the Boren and Mabee parties’ contention that the presumed grant doctrine applied, concluding that it was not one of the issues referred by the trial court for the interlocutory appeal.
The Supreme Court has elected to return the case to the Eastland Court for further proceedings. First, it told the Eastland Court that it should consider the Supreme Court’s more recent opinion in Clifton v. Johnson, which addressed a another fraction-of-royalty issue. Second, it said the Eastland Court should have considered the Boren and Mabee parties’ claim that the presumed grant doctrine applied.
The theory behind the presumed grant doctrine arises first in instances where there is a gap in the chain of title to a property. If the present owner can show that he has possessed the property for a long time and no one has challenged his ownership, and the gap in title is distant in time, courts will presume that the missing deed in the chain of title was lost. The missing grant is “presumed” to have existed.
The doctrine has been expanded by Van Dyke to apply to instances where there is no missing grant. Where owners treat a royalty interest as fixed for many years, the advocates for a fixed royalty construction can use the doctrine to override the express language in the deed.
The Van Dyke opinion said that the presumed grant doctrine has three elements:
(1) A long-asserted and open claim, adverse to that of the apparent owner; (2) nonclaim by the apparent owner; and (3) acquiescence by the apparent owner in the adverse claim. … The presumed grant doctrine, also referred to as title by circumstantial evidence, has been described as a common-law form of adverse possession.
The Court in the Fasken decision summarizes the evidence presented by the Boren and Mabee parties in support of its presumed-grant argument:
For about 85 years, the parties to the deed and their successors treated the instrument as reserving a fixed 1/32 royalty interest. Fasken’s representative agreed that “for 855 years, the Faskens treated the royalty on the Mabee Ranch as a 1/3nd,” that the royalty did not float” for 85 years, and that the royalty never changed from 1/32 for 85 years. Fasken also admitted that it “has paid taxes on a .03125 [1/32] royalty interest” and that it has never paid taxes on a greater royalty interest. Fasken further admitted that it was ‘not aware of any of Fasken’s Predecessors-in-Interest ever describing the [nonparticipating royalty interest] as anything other than a 1/32nd (or 3.125% or other mathematical equivalent0 Royalty interest.”
Similar evidence supporting presumed grant was admitted in Van Dyke, and it concluded that the evidence conclusively showed that the presumed grant doctrine should apply.