Non-Executive Mineral Interest

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 A non-executive mineral interest is “an interest in oil and gas that lacks the right to join in the execution of oil and gas leases and (probably) the right to develop.” H. Williams & C. Meyers, Oil And Gas Terms 616 (7th ed 1987).  The Alabama Supreme Court essentially recognized a non-executive  mineral  interest in the case of McCall v. Nettles, 37 So.2d 635 (Ala. 1948), but did not label the interest as such. In deed in the McCall case contained the following language:

 

The grantors further except from this conveyance and reserve unto themselves, their heirs and assigns forever, fifty percentum (50%) of all rentals that may be derived from coal, oil, gas or other mineral leases in and to said other lands herein above described, and fifty percentum (50%) of all royalties, whether in kind or money, that may be derived therefrom.

 

McCall v. Nettles, 37 So.2d at 637.

 

 The court applied rules of construction normally used in construing wills, that is: an unrestricted devise of rents, income, and profits from land for a fixed period or without limitation as to time carries an estate in the property for the period of the devise. Thus the court found “the deeds reserve an interest in the minerals themselves as they are imbedded in the ground before there is an effort to extract them.” Id.

 

 The court further commented on the ensuing relationship between the grantor and the grantee as follows:

 

The deeds imply a power granted to the appellees to make leases of the mineral rights, whereby rentals or royalties will be obtained in kind or money, in which the grantors will have one-half interest. The grantees in making such leases will be in a sort of trust relation to the grantors, and in exercising the power would act with the same good faith, care and diligence, which controls a trustee in performing the duties of the trust.

 

Id.

Copyright 2011 by Edward G, Hawkins. All rights reserved.