Holding because the wilson parents owned enough

 Holding:
 Because the Wilson parents owned enough mineral
interests in the 160-acre tract of land to fully satisfy
their conveyances to Leach, we conclude that the
interests of Leach successors-in-interests, Acoma and
Bassett, are not burdened by the 6.5% royalty.
 Takeaway:
 Notice seems to be only relevant if the deed in
question should give sufficient notice of a potential
problem to prompt futher investigation.
o Look to the 4 corners regardless of what the
grantee knows
 The effect of Duhig is that a grantor does not own a
large enough mineral interest to satisfy both the
146

grant and the reservation, the grant must be satisfied
first because the obligation incurred by the grant is
superior to the reservation.”
o Grant over reservation
o If grant cannot be satisfied  get equity and
relief
 Can be brought up in any conveyance though
different jurisdictions will not apply Duhig to o&g
lease.
 There has to be an outstanding interest not disclosed
and a general warranty. And there may or may not
be a reservation.
 Notes:
 1) Duhig does not seem to cover these cases, and the
burden should be applied proportionately. Duhig
only seems to apply when the grantor
claims/reserves title that was given to the grantee
and retains enough to title to make the grantee
whole. Unsure how this would be handled.
 Effect of Pooling on Property Interests :
o Wagner v. Brown, Ltd. V. Sheppard :
 Facts:
 Sheppard owns a 1/8 interest in 62.72 acre unit just
north of Tyler. Sheppard’s lease had a special
addendum providing that if royalties were not paid
within 120 days after first gas sales, her lease would
terminate the following month.
o Sheppard’s lease allowed pooling with
adjacent tracts.
147

 Sept. 1, 96, Sheppard’s tract was pooled with 8 other
units to form the W.M. Landers Gas Unit.
o In 2000, Wagner & Brown found out that
Sheppard had not been paid within the first
120 days after gas had been sold and thus the
lease terminated.
 They tried to renegotiate a lease, but
Sheppard refused and became an
unleased co-tenant, entitled to her share
of proceeds from minerals sold less her
share of the costs of production and
marketing.
 Issue:
 Did the lease terminate, thus making Sheppard an
unleased cotenant?
 Should Sheppard bear any costs occurred before her
lease terminated, or any costs incurred after the
lease terminated that relate to the unit but not her
lease?
 Discussion:
 Did the lease termination terminate the unit?
o A proper interpretation would hold that
Sheppard’s lease termination does not
terminate the pool.
 Both lease and unit pooled certain
premises and lands, not just their leased
interests
 “the continued validity of any such
pooling was not dependent upon a
148

subsisting leasehold estate in the
adjacent land.”
 Court finds that the unit was comprised
of Sheppard’s land not the lease;
Sheppard is entitled to 1/8
th
of proceeds
due to the mineral owners of her tract,
that does not entitle her to 1/8 th of the
proceeds that must be shared with
mineral owners of other tracts by the
terms of the unit agreement.