The “Duhig” Rule Generally
The Duhig rule is a rule of deed construction that developed in response to issues of over conveyance. It applies whenever a grantor excepts or reserves an interest in minerals in a conveyance on mineral interests and has either unintentionally or deliberately misrepresented their ownership of the fractional mineral rights below their land. It ultimately places the risk of title failure on the grantor.
The rule developed from the Texas Supreme Court case, Duhig v. Peavey Moore Lumber Co., Inc., 135 Tex. 503, 144 S.W. 2d 878 (1940). The general rule is that when full effect cannot be given to both the granted interest and to a reserved interest, the courts will give priority to the granted interest, rather than to the reserved interest, until the granted interest if fully satisfied. Id. Essentially, if a grantor appears to over convey their mineral interest, for example by failing to reference a prior reservation by a previous owner, then the current grantor will be estopped from claiming the total fractional share of the minerals reserved in the deed. The same general rule is applied where the fractional interest reserved by the grantor is different from that reserved in a prior deed or deeds in the chain of title. See Howell v. Liles, 246 S.W.2d 260 (Tex. Civ. App.—Amarillo 1951, no writ).
For example, in Duhig, the grantor only owned one-half of the minerals in a tract of land, the other having been reserved prior. Duhig, 135 Tex. 503 at 505. The grantor later conveyed the land to the grantee while reserving one-half of the mineral interest. Id. The grantor’s heirs then took the position that only the surface estate was conveyed and that they still held title to the one-half minerals reserved, but the grantee claimed the reservation in the warranty deed only exempted the one-half mineral interest originally reserved. Id. In finding this to be a breach of warranty “at the very time of the execution and delivery of the deed” to the grantee, the court held that equity demanded the interest of the grantee and original reservation be satisfied prior to the grantor. Id. at 507.
Application and Limitations on the “Duhig” Rule
The Texas Supreme Court narrowed the application of the Duhig rule in subsequent cases such as Benge v. Scharbauer, 152 Tex. 447, 452, 259 S.W.2d 166, 168 (1953). In Benge, the grantor reserved a 3/8th mineral interest in a conveyance to the grantee, but there was an outstanding 1/4th mineral interest in a third party. In applying the Duhig rule, the court granted the grantee a 5/8th interest, the third party its original 1/4th interest, and permitted the grantor to reserve only the remaining 1/8th interest. Id. at 453. However, the court declined to extend its application of Duhig to the other provisions covering the lease benefits which provided for a 3/8th of all bonuses, rentals, and royalties because the parties made this by “express agreement” and was a valid provision at the time of the deed’s execution and therefore remained binding. Id. at 454.
Texas courts further clarified its limited application to conveyances by general and special warranty deeds, rather than quitclaim deeds, because these deeds “promise” or purport to convey definite interests and further highlighted the importance of estoppel to this rule. Blanton v. Bruce, 688 S.W.2d 908, 912 (Tex. App.—Eastland 1985, writ ref’d n.r.e.). In comparison, Texas courts have declined to extend the Duhig rule to cover oil and gas leases. See McMahon v. Christmann, 157 Tex. 403, 405, 303 S.W.2d 341, 343 (1957). The court’s decision in this case turned on the distinction that deeds are generally prepared by the grantor and leases by the lessee, and therefore, attributed the risk to the grantor. Id. at 410.
Lastly, the Texas Supreme Court has found that a reference to another deed “for all legal purposes” was sufficient to prevent Duhig’s application because the explicit reference made the intent of the parties clear. See, Harris v. Windsor, 156 Tex. 324, 294 S.W.2d 798 (1956)
“Duhig” in Tracts
Handling Duhig is easy in Tracts. First, the landman will have to decide whether he or she is dealing with a situation in which Duhig applies based on the language in the conveyances and the other factors mentioned in this article. If the landman determines that Duhig applies, he or she will simply treat the second grantee making the ineffective reservation as conveying all their interest using the default “of int.” toggle under the Grantee tab. The landman should also make a note in the Digital Notecard that he or she has applied Duhig and has not given effect to the second reservation.
“Duhig” by State
This rule has been adopted in a number of states to varying extents. Here is a state-by-state breakdown of Duhig’s rule and application.
Texas – Duhig v. Peavey Moore Lumber Company, 135 Tex. 503, 144 S.W.2d 878 (1940) was a Texas case. As a result, producing states have Texas to thank for the Duhig Rule.
According to Duhig, if there is a reservation of a “specific interest” without mention of the prior reservation, and all parties can’t be made whole, then the grantee is made whole at the grantor’s expense. Like Oklahoma, Texas allows reformation by equity in cases involving mutual mistake. Texas does not apply Duhig to quictclaim deeds.
Arkansas – Adopted Duhig for warranty deeds, but not quitclaim deeds.
California – Has not expressly adopted Duhig. Courts in that state generally try to give effect to the intent of the parties.
Colorado – Has applied Duhig in several cases.
Kansas – Has not explicitly adopted Duhig.
Louisiana – Follows Duhig, same as in Texas.
Mississippi– Has adopted Duhig.
Montana – Has not specifically adopted Duhig but follows the doctrine of ‘estoppel by deed.’
New Mexico – Has adopted Duhig.
New York – Has not had much case law regarding the issue, but would likely follow, as they will not limit the estate of the grantee in the subsequent conveyance.
North Dakota – Adopted the Duhig Rule for warranty deeds, but a court declined to apply Duhig when the grantee had actual notice of prior reservations – very similar to Texas.
Oklahoma – Generally follows Duhig if a “Warranty Deed reserves a specific interest without acknowledging prior reservations, then the grantee is made whole at the grantor’s expense”. However, if there is mutual mistake, then equity allows reformation of the deed.
Pennsylvania – Likely would follow Duhig.
Utah – Has not formally adopted Duhig, and it is uncertain whether a Utah court would apply it.
Wyoming – Recognizes Duhig and follows Texas.