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Case Study: Dragon v. Trial: Revisiting the Duhig Rule
Background: The case involves 237 acres in the Eagle Ford play in Karnes County, Texas, which was conveyed in equal shares to eight siblings in 1932, one of whom died. One of the remaining seven siblings was Leo Trial. In 1983, Leo conveyed one-half of his 1/7th share to his wife Anna Ruth. Jerome and Patricia Dragon purchased the property from Leo Trial and his siblings in 1992. They financed a part of the purchase with a 15-year note to the Trials. The Trials reserved the mineral estate in the 237 acres for a term of 15 years, after which title to the minerals would go to the Dragons. (Anna Ruth Trial did not sign the deed, an oversight that was not discovered until years later.) Leo Trial died in 1996, and devised his estate to a trust with his wife Anna Ruth as life beneficiary, and on her death to his two sons. After Leo’s death, Anna Ruth continued to accept Leo’s share of payments on the Dragons’ note, and when the debt was paid, she signed a release of lien, along with Leo’s other six siblings. Facts: The minerals in the land were leased and produced. In 2008, the Dragons informed the operator that the 15- year mineral reservation had expired so all royalties should be paid to them. The operator’s title opinion concluded that, because of the 1983 deed to Anna Ruth, the Dragons did not acquire her interest in the property (as she had not signed the conveyance). Since Anna Ruth had died, the operator credited Anna Ruth’s 1/2 of 1/7 interest in the property to her two sons. The Dragons sued the two sons over title to the 1/2 of 1/7 interest.
Trial Court: In Dragon v. Trial, the 81st Judicial District Court, Karnes County, Texas, denied the Dragon’s motion for summary judgment and found for the two Trial sons. Dragon appealed. Issue on Appeal: Does the Duhig rule apply in this case? The Duhig Rule was established in Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (1940). In Duhig, Gilmer sold land to Duhig, reserving a one-half mineral interest. Duhig then conveyed the land to Miller-Link Lumber Company, also reserving a one-half mineral interest. But Duhig’s deed to Miller-Link failed to mention the prior mineral reservation by Gilmer. The Supreme Court held that, because Duhig had warranted title in his deed, his deed reserved no mineral interest, and the minerals were held 1/2 by Gilmer and 1/2 by Miller-Link. The San Antonio Court of Appeals held that the Duhig Rule applied to the deed to Dragon. It held that, because Leo Trial’s sons derived their title claim from their father Leo, and because Leo had conveyed his interest in the 237 acres to Dragon by a general warranty deed, Leo’s sons were estopped from claiming ownership of an interest in the land through their mother. From the opinion: The Trials are remainder beneficiaries of Leo’s estate and trust, and, therefore, they are his privies in blood, privies in estate, and privies in law. They are bound by the recitals in the 1992 deed. The Trials are Court of Appeals: Reversed, concluding that Duhig applies to the facts in Dragon v. Trial.
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