reservations. Romain v. Earl Schwartz Co. , 779 P.2d 54, 56 (Mont. 1989). The words “subject to” are a limitation upon the warranty of title and are not an exception to the grant. Id .
another party but reserved a 1/2 interest in the minerals for himself. The Texas Supreme Court determined that the grantee reasonably believed that the deed granted all the surface estate and all but 1/2 of the minerals. The court applied the rule preferring the grant over the reservation—based on the doctrine of estoppel by deed—to prevent the grantor from keeping the 1/2 of the minerals he attempted to reserve. Duhig, 144 S.W.2d at 880.
The Montana Supreme Court has explained:
The words “subject to” used in their ordinary sense, mean subordinate to, subservient to or limited by. There is nothing in the use of the words “subject to”, in their ordinary use, which would even hint at the creation of affirmative rights or connote a reservation or retention of property rights. “Subject to”
Dellit , 518 P.3d at 838 (emphasis added).
wording is commonly used in a deed to refer to existing easements, liens, and real covenants that the grantor wishes to exclude from warranties of title. Mary Ellen Duke Trust v. Lee Lou, LLC , 2023 MT 177, P18, 535 P.3d 1133. Montana law requires a reservation to be interpreted in favor of the grantor. Section 70-1-516, MCA Therefore, would it not be “favorable” to the grantor for the court to interpret a reservation in a manner that does not require the grantor to breach his warranty? It is submitted, therefore, that the scope of the reserved 2/3 mineral interest should be made up of (1) the prior out-standing 1/3 mineral interest—which Leonard did not own and clearly did not wish to warrant as per the “Subject to” clause and (2) an additional 1/3 mineral interest that Leonard did own. Finally, title to the remaining 1/3 mineral interest that Leonard owned should then pass to the grantee under warranty. However, the court in Dellit, never considered the relationship between the “Subject to” clause and the warranty clause in its analysis for determining the nature and make-up of the intended reserved 2/3 mineral interest. [3] In fact, the grantee in Dellit specifically asked the court to extend the “doctrine of estoppel by deed by adopting the Texas Supreme Court’s rule in Duhig v. Peavy-Moore Lumber Co ., 135 Tex. 503, 144 S.W.2d 878, 880 (Tex. 1940), which favors the grant when a grant and a reservation conflict.” Dellit , 518 P.3d at 836. For context, the Dellit court described the Duhig doctrine as follows:
The Dellit Court, however, declined to apply the Duhig rule to the Warranty Deed (under an equitable estoppel analysis) because Leonard and grantees were co-owners. Dellit , 518 P.3d at 838. Unlike in Duhig —where “the grantee was unaware that the grantor did not own the entire mineral estate and could not both convey 1/2 of the minerals and reserve that same amount.” Id . Consequently, the Dellit court ignored the Montana “after-acquired title” statute that prohibits the assertion of title in contradiction of breach of the warranty. If enforcement of title covenants is a fair and “equitable” remedy in the case of after-acquired title, it should also be equally appropriate here—where Leonard holds the very 1/3 mineral interest required to remedy the breach. See, Duhig v. Peavy-Moore Lumber Co. , 135 Tex. 503, 144 S.W.2d 878, 880 (Tex. 1940) (adopting this argument). Therefore, it is submitted that Duhig and after acquired title are not two different legal theories; but rather, the Duhig doctrine is a logical extension of after-acquired title—where the reservation acts as an “after-acquired” title. In the Deed, the grant itself conveys all the Property and that by reservation, Leonard clawed-back 2/3 of the minerals, thereby re-acquiring title to the warranted minerals— even if the conveyance and reservation occurred almost instantaneously.
The Author:
The Duhig rule states that when full effect cannot be given to both the reserved interest and the granted interest, the court will fulfill the granted interest first. Duhig , 144 S.W.2d at 880. In other words, if the grantor over- conveys through a warranty deed, the over- conveyance will be taken from the grantor’s reserved interest. In Duhig , a grantor acquired a parcel of land, except for a reservation of 1/2 of the mineral interests by the previous owner. Duhig , 144 S.W.2d at 878. The grantor subsequently conveyed the property to
Lance Walker
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