Prior Grants And Reservations

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 Another drafting problem occurs when a deed refers to a prior reservation or grant that, in fact, does not exist. For example, assume a grantor owns the entire mineral estate in, on, and under his land. Also assume that, even though neither the grantee nor any of his predecessors had previously severed any portion of the mineral estate by conveyance or reservation, the grantor executes and delivers a warranty deed containing the following recital:


There are excepted... an undivided one-half (½) interest in and to the oil, gas and minerals lying in, under, or upon... save having been reserved to G.C. Coggin Company, Inc., in the certain deed...


Union Oil Co. of Cal. v. Colglazier, 360 So.2d 965, 967 (Ala. 1968).  Under the facts of Colglazier, the recitation about a prior reservation to G.C. Coggin Company, Inc., was a mistake and was false. There had never been a prior reservation to C. G. Coggin Company, Inc., but the fact that the language about the prior reservation was false did not void the exception. The court found:


We find that the deed in question, taken as a whole, is not ambiguous and clearly expresses an intention to except from the grant an undivided one-half interest in the oil, gas and minerals. The clause referring to the prior reservation is merely an erroneous recitation of fact, and does not operate to void the exception or pass the entire fee interest.


Union Oil Co. of Cal. v. Colglazier, 360 So.2d at 968.


 The Colglazier case involved a statutory warranty deed, and the court expressly limited its decision to the language used in the particular deed involved in the case by declining to decide whether the language set out above was present in the deed solely to protect the grantor’s warranties. Specifically, the court wrote:


[W]e express no opinion as to what effect, if any, the presence or absence of warranties, expressed or implied, would have on the inter­pretation of other deeds. Our conclusion here is based on the consideration of the language used in the deed, not on the fact that it is a statutory warranty deed.


Id.   Other courts had employed the warranty protection approach to permit the grantee to acquire the mineral interest mentioned in the exception language if that language was intended only to protect the grantor against a breach of warranty. See Whitman v. Harrison, 327 P.2d 680 (Okla. 1958); United States v. McKenzie County, 187 F.Supp. 470 (D.N.D. 1960), aff’d subnom., Murray v. United States, 291 F.2d 161 (8th Cir. 1961).


 In the case of Turner v. Lassiter, 484 So.2d 378 (Ala.1985) the Alabama Supreme Court again faced a deed exception that included by an erroneous recitation. The Turner deed language was as follows:


LESS AND EXCEPT all oil, gas and minerals, one-half of which have been reserved by prior owners and one-half of which the undersigned expressly reserves unto himself, his heirs and assigns.


Id. at 379.  The recitation about reservations by prior owners was false. In that respect, the court held:


Does the phrase which follows this unambiguous exception make the exception ambiguous when half of such oil, gas, and minerals has not in fact been reserved by prior owners . . . ?


         It does not. . .


We conclude that the deed in the case at issue was not ambiguous and clearly excepted all oil, gas, and minerals. The phrase `one-half of which have been reserved by prior owners’ is merely a recitation of fact, which may or may not have been erroneous, and it does not make the deed ambiguous. The deed from Lassiter to the Turners clearly excepted all oil, gas and minerals.


Id. at 380, 381.


 In the case of Howell Petroleum Corp. v. Holliman, 504 So. 2d 277 (Ala. 1987),  the Alabama Supreme Court held that the following language excepted minerals from a grant: “It is understood that the mineral rights are ex­cepted.” The reported opinion focused upon the operative effect of a 1924 deed from J. M. Holliman to the Citizens Bank of Fayette. The property covered by the deed had been foreclosed in 1923 by the bank, and Holliman was the foreclosure sale purchaser. Apparently the foreclosure vested the bank with title to the surface estate in the property and all the mineral estate, except the coal, which had been reserved by the United States in the original patent in 1917.


 Finding that the deed was not ambiguous, the Court refused to look beyond the deed to the contemporaneous and subsequent actions of the parties to aid construc­tion. Therefore, the opinion does not reveal why Holliman was conveying the land back to the bank only one year from the foreclosure sale, and whether or not Holliman was a strawman for the bank following the foreclosure.


 The court also did not discuss whether the language of exception may have been present to protect warranties on the part of Holliman. The opinion does not reveal whether or not the 1924 deed from Holliman to the bank was a warranty deed, a statutory warranty deed, or a quit claim deed. The warranty deed distinction may have formerly been important in Alabama.


 In Colglazier, Turner, and Howell, prior and subsequent events in the chain of title could have easily influenced the outcome of the decision if the court had looked beyond the language of the particular instrument. Howell continued the court’s practice of expanding the Colglazier approach by not repeating the limitation that the court stated in Colglazier, by not stating the nature of the deed from Holliman to the bank, and by refusing to look beyond the wording in the deed. The cumulative effect of Howell, Turner, and Colglazier is that title examiners should only cautiously assume that exception language protects the grantor’s warranties rather than carving an interest from the grant, notwithstanding what appears elsewhere in the chain of title.


 Sometimes, the qualifying language following the reservation can render the reservation ambiguous, as shown in the case of Stanford v. Sharp, 402 So.2d 882 (Ala. 1981).  The reservation language before the court in that case was “oil and gass [sic] right reserved according to contract, given in 1910.” Id.  The court wrote:


[W]ithout the qualifying phrase ‘according to contract given in 1910,’ the initial language ‘oil and gas reserved’ would be clear. There would be no question that what was intended was a reservation of all the oil and gas rights. The qualifying language’s reference to an uncertain contract, however, makes the former phrase less certain. In fact, the qualifying phrase makes the reservation vague, uncertain and, therefore, inoperative. Because the language of the reservation of oil and gas rights clause is ambiguous, it must be construed in favor of the grantee and against the grantor.


Stanford v. Sharp, 402 So.2d at 883.


 Perhaps the distinction between the Stanford and the Colglazier lines of cases is that the word “all” was missing in the first part of the reservation in Stanford?

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