Landman
ACQUIRED TITLE
After Acquired Title
Revisited
by Donald G. Sinex and Susan A. Stanton
Scope of Article
his article will revisit the well-established doctrine of after
T acquired title, exploring its nature, parameters and certain
exceptions to the doctrine, which Texas courts have developed
over time as they have applied the doctrine.
History and Nature of the Doctrine
passes "eo instante" to the grantee and the grantee's heirs and
successors upon the grantor's acquisition of such interest.
Caswell v. Llano Oil Co., 120 Tex. 139, 36 S.W. 2d 208, 211
(Com. App. 1931), citing Baldwin v. Root, 90 Tex. 553, 40
S.W. 36 (1897).
Current Rule
Common Law Source
The doctrine of after acquired title in Texas is a doctrine
established in common law and evolved into its present form
as a result of numerous cases that have expanded, limited and
The Texas Supreme Court clearly articulated the current rule
in the well known Duhig v. Peavy-Moore Lumber Co. case: "It
is the general rule, supported by many authorities, that a deed
purporting to convey a fee simple or a less definite estate in
clarified the general rule. The doctrine touches many areas of
land and containing covenants of general warranty will estop
law including conveyances, recording acts, mortgages, real
property liens and adverse possession, among others. The after
acquired title doctrine deals with a grantor who owns a lesser
the grantor from asserting an after-acquired title or interest in
land, or the estate which the deed purports to convey, as
against the grantee and those claiming under him." Duhig, 135
interest in the property than the grantor purports to convey by
Tex. 503, 144 S.W.2d 878, 880 (1940). As a simple example,
virtue of a warranty in a deed or other conveyance document
and who thereafter acquires all or part of the interest he
intended to convey. The general rule estops the grantor from
claiming ownership of the after acquired interest as against his
grantee. Under the rule, title to the after acquired interest
Grantor A represents in his deed to Grantee B that he is conveying all of Tract A; however, he only owns an undivided 75
percent interest in the tract. Grantee B conveys the property
to Grantee C. Grantor A subsequently acquires the other 25
percent interest. As against Grantee B and Grantee C,
About the Authors
ever since. He is board certified in oil, gas and
practicing law for more than 14 years. Her
practice covers oil and gas producing proper-
Donald G. Sinex is a
mineral law by the Texas Board of Legal
Specialization and is a member of the State
member of Thompson
Bar Association of Texas and the Houston
transactions and commercial real estate
& Knight LLP, in
Bar Association. Sinex is also a past chair-
acquisition, divesture, financing, development
Houston,
man of the Houston Bar Association Oil, Gas
and leasing transactions.
Texas.
Sinex graduated
from Oklahoma
University in 1964
with a degree in
& Mineral Law Section.
Before practicing law, Stanton spent more
Effective May 15, 2005, Sinex is joining
than 20 years in the offshore petroleum
the law firm of Zukowski, Bresenham
industry as a market research specialist,
Sinex, LLP, based in Houston.
consultant and journalist.
petroleum land
management.
Following gradua-
ty title, acquisition, divestiture and financing
Susan Stanton is a
She holds a bachelor of arts and a master's
degree from the University of Oklahoma and a
doctor of jurisprudence from the University of
tion, he was employed by major oil companies
partner in the real
as a landman for eight years, during which he
estate and banking
attended law school. Sinex graduated in
section of the
Energy Network, the Houston Producers
1971 from South Texas College of Law, after
which he entered private practice and has
Houston office of
Forum and the Oil and Gas and Real Estate
Thompson i Knight
Sections of the Houston and Texas Bar
been practicing in the area of oil and gas law
LLP. She has been
Associations.
March /Avril 2005
Houston Law Center.
Stanton is a member of the Women's
1
3
Landinan
Acauip..-:v
Grantor A will be estopped from
I l L
claiming title to the 25 percent interest, because of representations in his
deed that he was conveying all of
the tract.
The 25 percent interest will vest in
Grantee C immediately upon Grantor
As acquisition of such interest.
The effect of the rule is binding not
only on the original grantor and his
heirs and successors, but, after recording, it also binds subsequent purchasers
from the original grantor who acquired
the interest with actual or constructive
notice of the prior conveyance.
Caswell, 36 S.W.2d at 211, citing
Leonard v. Benfford Lumber Co., 110
Tex. 83, 216 S.W. 382 (1919); Robinson
v. Douthit, 64 Tex. 101 (1883); Davis v.
Field, 222 S.W.2d 697, 699 (Tex. Civ.
App. Fort Worth, 1949 writ ref'd.
n.r.e.). A subsequent purchaser under
the original grantor, who may not have
actual notice of what the grantor represented that he was conveying, is
nonetheless put on constructive notice
by the recordation of the original conveyance instrument in the records of
the county where the property is located. Such a purchaser cannot claim to
be an innocent purchaser entitled to
recover the additional interest. Caswell,
36 S.W.2d at 211.
Nature of the Doctrine
The doctrine of after acquired title is
a remedy at common law, equitable in
nature and based on the estoppel of
the grantor to deny that which he has
represented in his conveyance instrument. Lindsay v. Freeman, 83 Tex.
259, 18 S.W. 727, 730 (1892). See
also, Richard W. Hemingway, After
Acquired Title in Texas, 20 S.W. L.J.
(No. 1), 117 (1966). The principle
underlying the estoppel is that one who
has contracted with another should not
be permitted to deny what he has
asserted or implied is true in his document(s). Lindsay, 18 S.W. at 730; Davis,
222 S.W.2d at 699-701.
A reading of Texas cases reflecting
how Texas courts apply after acquired
title doctrine and the general rule that
a conveyance instrument must contain
a covenant of some kind to cause an
after acquired title to pass to a grantor's
grantee gives one the impression that
application of the doctrine arises from
and depends on the existence of a
breach of the warranty. Learned commentators find otherwise. Hemingway,
in his extensive analysis of the after
acquired title doctrine, concedes that
the Texas courts have not been clear or
consistent in the rationale they use as
the basis for their decisions when
applying the doctrine. Hemingway,
supra at 99-101. Court articulated
rationales have included: (1) based on
a covenant of warranty in a deed, A is
given title to prevent a "circuitry of
action on the covenant"(warranty
cases); (2) based on estoppel, A is
given title to estop the grantor from
denying title he purported to convey to
A (estoppel cases); and (3) based on
estoppel, A is given title because of the
presence of a warranty contained in
the deed (estoppel/warranty cases). In
numerous cases, the basis of a court's
decision is simply not determinable.
See Hemingway, supra at 99-101 for an
extensive recitation of Texas caselaw.
However, as Hemingway explains,
despite the various rationale put forth
by Texas courts, Texas courts have consistently permitted the application of
the after acquired title rule to pass title
to real property by estoppel and they
have not limited damages to a breach
of warranty action. Hemingway, supra
at 117. Consequently, in Texas today,
the application of the after acquired
title doctrine does not depend solely
on the breach of an obligation created
by a title warranty. The presence of a
warranty goes to the nature of the
grantor's manifested intent, indicating
whether or not he purported to convey
the land described and describing the
estate of land he actually intended to
convey. Lindsay, 18 S.W. at 729-730;
Blanton v. Bruce, 688 S.W.2d 908, 911
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Vice President
Exceptions
The evolution of the current acquired
title rule through numerous court decisions has produced the above stated
EXTEX
303-463-8808 - Fax
Lindsey, 18 S.W. at 730.
Clarifications, Limitations and
Major Oil Company Experience
303-463-8799 - Phone
(Tex. Civ. App. - Eastland 1985, writ
ref'd n.r.e.); Hemingway, supra at 118.
Instead of covenants of warranty, the
courts look to the equitable principles
of "good faith, right conscience, fair
dealing and sound justice" in deciding
to apply the after acquired title rule.
www.extexllc.com
Chris Pennels
Vice President
tions, limitations and exceptions.
Covenants of Warranty and
Claims of Ownership
As noted previously, the application
of the after acquired title doctrine in
Texas does not depend on the breach
of a covenant to warrant title, but may
be asserted in equity to find "sound jusMarch /April 2005
Landman
tice." Lindsey, 18 S.W. at 729. The
ACOUIRED TITLE
effect of this viewpoint is that courts
When a deed of trust (or mortgage)
do not require a conveyance instru-
encumbers a conveyed interest and the
lien holder subsequently forecloses on
his lien, the question arises whether
ment to contain an express covenant
`warranty of title to support a claim
,f after acquired title. Id. Covenants
the foreclosure affects the application
f warranty may be implied from the
ace of the document or they may not
of the after acquired title doctrine.
Texas courts have held that the after
acquired title doctrine still applies
despite the foreclosure. Burns v.
be required at all. Words in an instrument that imply a claim of ownership
of title or that show the grantor's clear
Goodrich, 392 S.W.2d 689, 693 (Tex.
intent to claim such ownership,
together with the assumption that the
grantor has the right to make the con-
1965); Cherry v. Farmers Royalty
Holding Co., 135 Tex. 576, 160 S.W.2d
908, 911 (1942). For example, in the
veyance, are sufficient to apply the
doctrine. Id. Texas courts have held
that language in a deed stating the
grantors are conveying a fee simple
estate in land constitutes a recital that
implies an assertion by the grantors
that they are the owners of the land.
Having asserted that fact, equity will
estopped them from denying such fact.
Id.; Land Title Bank & Trust Co. v.
Witherspoon, 126 S.W.2d 71, 73 (Tex.
Civ. App. - Amarillo, 1939, no writ).
Texas courts also appear to agree with
other jurisdictions that the after
acquired title rule could apply even if
the deed contained "no warranty what---'never," if the deed clearly showed the
antor meant to convey a specific
-estate. Lindsay, 18 at 730, citing
Tannon v. Christopher, 34 N.J. Eq. 459,
465 (1881). Similarly, Texas courts will
not permit a grantor who assumes to
convey an estate to later assert
against his grantee anything in contra-
diction of the conveyance instrument.
The courts have applied the after
acquired title rule to estop a grantor
from defeating his grantee's after
acquired title by claiming that he had
no title to convey at the time of his
conveyance to the grantee, or that no
Burns case, a father conveyed property
to his daughter in 1942 by general warranty deed. At the time of the father
conveyed the property to his daughter,
a judgment lien encumbered one-half
the present conveyance and that the
estate is free from incumbrances at the
time the estate is conveyed. Tex. Prop.
Code Ann., § 5.023 (Vernon 2000 &
Supp. 2004).
Mortgages/Deed of Trust
Texas courts have clarified that the
after acquired title doctrine applies to
deeds of trust (and mortgages), as well
as deeds and other conveyance instru-
ments, Shield v. Donald, 253 S.W.2d
710, 712 (Tex. Civ. App. - Fort Worth,
1952, writ ref'd. n.r.e.); Galloway v.
Moeser, 82 S.W. 1607, 1069 (Tex. Civ.
App. - Eastland 1935, no writ); Logue
v. Atkeson, 80 S.W.137, 140 (Tex. Civ.
App. 1904, writ denied). The rationale
behind the courts' decisions is that
mortgages and deeds of trust generally
contain covenants that warrant title to
at 880; C. D. Shamburger Lumber Co.
the encumbered property. The courts
have, found that the mortgagor, having
made such covenants, will not be
v. Bredthauer, 62 S.W.2d 603, 605
(Tex. Civ. App. - Fort Worth 1933,
property that was the subject of his
title passed with his deed, or that his
deed had no effect. Duhig, 144 S.W.2d
writ dism'd); 29 Lange and Leopold,
Texas Practice, Land Titles and
Examination §732 (1992) (Supp. 2004).
In addition to common law, the Texas
Property Code assists those using
implied covenants to support a claim of
-after acquired title. The statute prodes that one can imply from the use
�r the words "grant" or "convey" in any
,onveyance that, unless expressly stat1 otherwise, the grantor did not convey the same estate to another prior to
March / April 2005
Foreclosure
allowed to assert title to after acquired
covenant. Shield, 253 S.W.2d at 712.
The doctrine has also been applied to
other types of liens, such as a mechan-
ic's and materialman's lien. Land Title
Bank, 126 S.W.2d at 73. A Texas
appellate court has found the holder of
materialman's lien could foreclose on
after acquired property because the
owner recited in the lien document
that he and his wife were the owners of
the property on which the lien was
granted. Id.
of the property. The lien holder foreclosed the lien and a third party purchased the encumbered one-half interest at a foreclosure sale in May 1945.
In August 1945, the father purchased
the foreclosed property from the third
party purchaser. The court held that
neither the foreclosure nor the third
party's subsequent purchase of the
property at the foreclosure sale divested
the daughter of her right to the after
acquired property or prevented the
application of the after acquired title
rule. Title passed to the daughter the
moment the father acquired the property from the third party. Burns,
S.W.2d at 693. The doctrine applies
whether the interest in question is a
fee interest granted on a deed or a fee
simple determinable granted under an
oil and gas lease. Caswell, 36 S.W.2d
at 211-212. In Caswell, the land
owner, executed an oil and gas lease
covering property that was subject to
a deed of trust lien. The lien holder
foreclosed the deed of trust lien and
conveyed title to a third party, where-
upon the lease was "cancelled and terminated." Id. The third party conveyed the property to the original
landowner who executed an oil and
gas lease to the second lessee. In the
suit between the two lessees, the court
held that by virtue of the general warranty clause in the first lease, the after
acquired title doctrine applied and,
upon the original landowner's acquisition of the property, the first lessee
acquired its leasehold interest and it
was again valid. Id.
15
Landman
Title Limited to Estate
Conveyed
i
Texas courts have limited their application of the after acquired title rule in
certain circumstances, including an
estate not granted. Talley v. Howsley,
142 Tex. 81, 176 S.W.2d 158, 160
(1943); McKinnon v. Lane, 285 S.W.2d
269, 273-274 (Tex. Civ. App. - Fort
Worth, writ ref'd n.r.e.). The courts
will apply the rule to estop a grantor
from claiming title to the estate he has
purported or intended to convey by his
grant; however, they have restricted the
estoppel to that estate only.
McKinnon, 285 S.W.2d at 273-274.
They will not apply the doctrine to a
reserved estate or to an excepted interest or to an interest not conveyed. Id.
The rational behind the limitation is
that the grantee is entitled to receive
the estate or interest intended to be
conveyed, but he is not entitled to
receive a greater estate than the deed
or conveyance document would have
conveyed had his grantor owned the
estate described in the document.
Thus in the McKinnon case, the after
acquired title rule did not apply where
the grantor in a mineral lease warranted title to a tract in which he owned a
6/7 mineral interest at the time and
L
Green, 156 Tex. 223, 293 S.W.2d 848,
Sanders, 207 S.W.2d 155, 158 (Tex.
Civ. App. - Texarkana 1947, writ ref'd
n.r.e.); Newton v. Easterwood, 154 S.W.
646, 650 (Tex. Civ. App. - Texarkana
1913, writ ref'd). The rationale is that
the doctrine of after acquired title cannot not be used to benefit a grantee
whose grantor is holding the interest
grantor's "right, title and interest" in
and to a described property, because the
courts view such language as constituting a quitclaim. Unless the document
or other evidence reflects an intent to
convey the land itself, or contains
recitals specifying a quantum of interest, the grantor only conveys whatever
interest he actually had at the time of
the conveyance. Clark, 161 S.W.2d at
273. The result is that any subsequently acquired interest does not contradict
a quitclaim deed and the after acquired
title doctrine will not apply. Id. This
limitation controls even if the deed
contains a warranty based on the rationale that the warranty will not enlarge
the intended grant. Wilson v. Wilson,
118 SW. 2d 403, 405 (Tex. Civ. App. Beaumont, 1938, no writ).
A problem arises when the conveyance instrument contains a description of land and it is not clear if the
language is merely describing the
source of the title conveyed or is
later acquired an outstanding 1/7 of
royalty, but not the 1/7 outstanding
mineral interest. Id. It is because of this
concept that deeds of trust in Texas
usually include an express after
description by referencing a prior deed
and the prior deed limits the interest
conveyed. The question is whether the
reference to the prior deed is for the
acquired property clause stating the
purpose of giving the source of title or
deed of trust lien attaches to all after
acquired property of the grantor so
for limiting the interest conveyed.
The courts have interpreted clauses
indicating the source of title as not
restricting the granting clause and
applying the after acquired title rule so
that the deed estops the grantor from
claiming after acquired title. Duhig,
Without a provision expressly conveying any after acquired title to the mortgagee until the debt is paid off, the
mortgagee's lien will attach only to the
property specifically described in the
deed of trust.
Quitclaims and Forms of Deeds
or Conveyances
Texas courts have also limited their
application of the after acquired title
rule to conveyance instruments that
convey a specific interest in the land
itself and not just the grantor's title to
the land, whatever it may be at the
time of the conveyance. Clark v.
Gauntt, 138 Tex. 558, 161 S.W.2d 270,
273 (1942). As a result, the courts will
not apply the doctrine where a quitclaim deed is involved. Halbert v.
16
title to estates acquired and held in
trust for another party. MacDonald v.
851 (1956). In Texas, this limitation
will apply to a conveyance of all of a
describing the actual interest being
conveyed. This may happen when a
draftsman attempts to clarify a property
long as the lien is still in effect.
L
ACQUIRED TITLE
144 S.W. at 879-880; Rettig v. Houston
West End Realty Co., 254 S.W. 765,
768 (Tex. Comm. App. 1943). On the
other hand, if the court interprets a
in trust for a third party, because the
grantee is not entitled to claim greater
rights than his grantor under such subsequent title. MacDonald, 207 S.W.2d
at 158. While the grantor holding in
trust may have legal title to the property, he has no beneficial rights in such
land. Consequently, he has nothing to
convey to his grantee. Id. The same is
true where legal title is held by virtue
of a fraud and a constructive trust is
imposed in equity. Newton, 154 S.W. at
650. In the Newton case, a sheriff's sale
was the result of fraudulent litigation
begun and prosecuted for the purpose
of unjustly depriving an infant ward to
the title to his land. The court found
the purchasers at the foreclosure sale,
who had been involved in the fraud,
did not acquire legal or equitable title
by their purchase at the sale, or, if they
did acquire legal title, they held the
title in trust only for the benefit of the
victim of their fraud. Id. The court
made no distinction between a trust
held actively or constructively when it
stated that estoppel will not operate to
transfer title to a party who is holding
property in his own name for the beneift of another. Id.
Does Not Apply to Conveyances
of Public Lands
Texas courts have declined to apply
the after acquired title doctrine to
attempted conveyances of public land
by private individuals. The courts con-
sider such conveyances to be in deroga-
clause to describe the interest actually
tion of public rights, void as against
public policy, and title to any after
conveyed, as indicated in this article,
acquired interest in the land will be
the clause will limit the grant to the
described interest and the estoppel of
the after acquired title rule will not be
void. Lamb v. James, 87 Tex. 485, 29
applicable. Wilson, 118 S.W.2d at 405.
See Hemingway, supra 119-123 for a
thorough discussion of drafting issues.
Title Acquired in Trust
Texas courts have declined altogether
to apply the doctrine of after acquired
S.W. 647, 649 (1895). The courts have
applied the limitation to a sovereign in
the circumstance where the sovereign
conveyed to a private individual public
land that later became the subject of a
boundary dispute between sovereign
states. Jones v. P.A.W.N. Enter., 988
S.W.2d 812, 821-823 (Tex. App. Amarillo, 1999, pet. denied). In the
Jones case, Oklahoma, under its authorMarch /April 2005
Landman
ity and laws, patented certain land to a
private person, who conveyed one-half
of the minerals to a predecessor in
interest to P.A.W.N Enterprises. In the
•,ettlement of a boundary dispute
oetween Oklahoma and Texas title to
the land became vested Texas. Texas
,hen patented the land, under its
authority and laws, to the heirs of the
original Oklahoma grantee, who conveyed the property to Jones. P.A.W.N.
claimed the one-half mineral interest
under the Oklahoma conveyance based
on the after acquired title doctrine,
stating that when the heirs of the original Oklahoma grantee acquired a patent
from the State of Texas, title to the onehalf mineral
interest went imme-
ACou/RED
TITLE
Exceptions
Christmann, 157 Tex. 403, 303 S.W.2d
341 (1957). The McMahon court
explained that in many instances an
oil and gas lease purports to cover the
that in instances of
undivided interest in the land, in order
to make certain that no fractional mineral interest is left outstanding in the
lessor. The court reasoned that if the
lease contains the standard provisions,
the lessee is protected against overpay-
and statutes have created assistance,
ment of royalties by the inclusion of a
proportionate reduction clause in the
Because the state of
Oklahoma never
had title to the land,
its patenting of the
land to the private
persons and all subsequent conveyances
notice aspects of the doctrine. These
aspects are best illustrated by utilizing
an actual fact situation, which in part
inspired the authors' desire to prepare
this article. The actual chain of title
FIGURE 1
X Heirs
GWD S
1963
Res. Min.
conveyed
160 ac. 70_Xand
recorded
1972
_ _ Y
------------------ GWD-1972-------
No Ref.
To Min.
Res.
cise by the state of
7klahoma of its
governmental powers in patenting such
public lands without
vested authority was
merely de facto.
limitations and exceptions to the sub-
sequent purchaser and constructive
Minerals and Surface
ceded or conquered
ing title, the state of
Oklahoma in this
case, was not in
__-rightful possession of
ie land. The exer-
actual or constructive notice of the
prior conveyance affecting the subsequent purchaser's title. Texas courts
1963___
boundary disputes,
unlike instances of
territory, the sovereign originally creat-
As mentioned earlier in the article,
the general rule of after acquired title is
binding on subsequent purchasers with
entire mineral estate, even though the
parties know the lessor only owns an
diately to P.A.W.N.
The court noted
MoreLimitations and
conveyed
and
recorded
----
I
I
Z
1
I
1976
conveyed
All Min and
recorded-
---1976------------------
Min
1976
A
1997
Min. Deed
_1997
__ _
------------"031 i7
�'s Well 1999
OilCo. I
----
Res. 1/16
NPRI
2000
---2000------------------------------------------------Oil Co. No. 11
of interests in the
land, including the
one-half mineral interest, wereinvalid
and the doctrine of after acquired title
lease, thus application of the Duhig
not applicable. Id.
doctrine is unnecessary. The clause
Limited Application to Oil and
Gas Leases
the estate that the lessor purports to
In contrast to foreclosure of a lessor's
title discussed in the Caswell case,
-Texas courts have declined to apply the
)uhig" rule, which is based on the
-after acquired title doctrine, to oil, gas
id mineral leases where the lessor
acquired an additional interest after
execution of the lease. McMahon v.
March /April 2005
does not, however, operate to reduce
convey, which application of the Duhig
could do. The application of the Duhig
doctrine could prevent the landowner
from asserting his royalty, allow the
lessee who drafted the lease to take the
lessor's entire mineral estate without
having to pay royalties to the lessor,
and permit the lessee to recover damages from the lessor for breach of warranty. Id.
was more involved than the chain outlined on the attached Figure 1; however, the simplification of the facts does
not change the results when applying
the after acquired title doctrine to the
example fact situation.
Example Fact Situation
The example fact situation begins
with a common grantor, X, who owned
both the surface and mineral estates in
certain land. In 1963, X conveyed the
surface estate only to Y, reserving the
1
7
Landman
entire mineral estate. Y conveyed the
UI E
TITLE
surface estate to Z by a general warran-
L
ty deed in 1972. In 1976, the heirs of X
conveyed all mineral interests in the
property to Y. Oil Co. No. 1 acquired
an oil and gas lease in 1997 from the
record title holders of the minerals,
including Y. Oil Co. No. 1 successfully
drilled a well in 1999 at a surface location on the lands conveyed to Z in
1972, being the same lands under
which the minerals were conveyed to
Y in 1976. In 2000, the title buster, Oil
Co. No. 2, checked the records and
decided that Z had an interest in the
minerals based on the after acquired
title doctrine. The basis for application
of the doctrine was the general warran-
recorded deed, rather than one who
is simply subsequent in time after the
deed is recorded. White v. McGregor, 92
Tex. 558, 50 S.W. 564, 565-566 (1899);
Houston Oil Co. v. Kimball, Tex., 103
Tex. 94, 122 S.W. 533, 540 (1909).
a non-participating royalty on the
Texas courts have stated the object of
the recording statutes is to give notice
to a grantee who would have reason to
search for conveyances prior to his
own, but not to give notice of conveyances out of his grantor after the
grantee's purchase. Such subsequent
conveyances would be outside of the
chain of title under which the first
grantee purchased. Everyone who derives
title from the first grantee can insist on
the same principles with respect to him-
lands covered by the drill site lease.
self. White, 50 S.W. at 566.
Interestingly, Z never claimed the min-
The recording statutes, which are
located in the Texas Property Code,
protect a subsequent purchaser who
acquires property for valuable consideration and without notice of a prior document or circumstance affecting his
title. Tex. Prop. Code, §§ 12 and 13, et
seq. For purposes of this article, the
ty deed from Z to Y that purported to
convey both the surface and the minerals, neither excepting nor referencing
the prior mineral reservation in 1963
from X to Y. Oil Co. No. 2 convinced
Z to convey the minerals and reserve
erals until convinced by Oil Co. No. 2
that he might have a claim to the min-
erals estate based on after acquired
title. Presumably Z had actual knowledge that Y did not own the minerals
'I
afforded a subsequent purchaser and
what duty a party has to search the
records. A subsequent purchaser means
a purchaser who is subsequent in the
chain of title of the grantee of the
and, therefore, never claimed the minerals, even though his general warranty
deed on its face seemed to convey all
title to the surface and minerals.
Subsequent Purchasers and
Constructive Notice
Subsequent Purchasers and the
Recording Statute
Before discussing the exceptions and
limitations affecting subsequent purchaser status and constructive notice,
one must first understand who is a subsequent purchaser, the protections
authors have assumed that the subsequent purchaser has paid valuable consideration and will deal only with the
notice portion of the statute as it
relates to after acquired title. The relevant portion of the current statutes is
Section 13.01, which provides that a
conveyance of real property "is void as
to a subsequent purchaser for a valuable
consideration without notice unless the
instrument has been acknowledged,
sworn to or proved and filed for record
as required by law." Thus, a prior purchaser can protect himself from a sub-
TERREBONNE ABSTRACT COMPANY
an Association of Mary B.
Blum and Petroleum Land Resources, Inc.
P.O. Box 9011
Phone: (985) 917-0559
Fax: (985) 872-2528
One Oak Square, Ste. 5
Houma, Louisiana
70361
mblum @ terrebonneabstract.com
Title Abstracts Covering
Terrebonne Parish, Louisiana
sequent purchaser who is without
notice of the prior purchaser's rights
only by recording his prior conveyance
before the subsequent purchaser purchases the property. A recording of the
prior deed after the subsequent purchaser has completed his purchase will
not affect the subsequent purchaser's
protection under the recording statutes,
even if the recording of the prior deed
is prior to the recording of the subsequent purchaser's deed. The subsequent
purchaser's protection exists even if he
never records his own deed. White, 50
S.W. at 565-566; Houston Oil, 122 S.W.
at 540. Although the code sections referenced in the cases cited above are an
earlier version of the current statute,
the code sections on which the cases
rely have not been amended over the
years in a way that would change this
discussion.
Constructive Notice and Duty
to Search
Although the first part of the recording statute protects a subsequent purchaser without notice, the last part of
the statute places a limitation on such
notice by not requiring the notice to be
actual notice. Constructive notice is
sufficient. The presence of properly
recorded documents in the record pro-
vides constructive notice to a subsequent purchaser of all documents in his
chain of title that have been "acknowledged, sworn to or proved and filed for
record as required by law." Tex. Prop.
Code § 13.01. The question arises
regarding the duty a subsequent purchaser has to search the records and
the time period he is required to
search. Early Texas courts established
that to qualify as a subsequent purchaser, the purchaser has a duty to search
the records and the period of the
required search is from the date of the
conveyance instrument into a grantor
and not from the date of the recording
of the conveyance. White, 50 S.W. at
565-566; Houston Oil, 122 S.W. at 540.
As a result, the duty of a subsequent
purchaser originally was to look back to
the date of each conveyance in his
chain of title and run the name of each
grantor backward and forward. The
duty required an exhaustive search
because each name had to be run back
to the patent and forward to the present. The recordation date of the conveyance instrument did not matter for
purposes of running the title into a pur-
18
March / April 2005
Landman
chaser's grantor, as long as the recordation date was prior to the date of a
grantor's conveyance to his grantee.
White, 50 S.W. at 565-566.
Subsequent Purchaser in
Junior/Senior Chains
These early cases also established who
is the subsequent purchase where both
senior and junior chains of title for a
property exist. This junior/senior chain
situation occurs when a common
grantor creates two chains of title. The
second or junior chain holder is, by
necessity, the subsequent purchaser,
because the senior chain holder, based
on the date of his conveyance docu-
ment is the first in the title chain.
White, 50 S.W. at 565-566; Houston
Oil, 122 S.W. at 540. As the subsequent purchaser, the junior chain holder will be the party protected by the
recording statutes, but he will also have
constructive notice of all recorded documents in his chain of title, which, as
the junior chain, includes documents
in the senior chain. The same is not
true of the senior chain holder. The
early cases established that the senior
claim holder is not required to take
constructive notice of the recorded
ACQUIRED TITLE
title of each grantor in their title
chains. When Oil Co. No. 1 and Oil
purchaser because he already owns the
land. The courts do not require the first
purchaser to continuously search the
Co. No. 2 ran the records as subse-
ing statute, they found different docu-
second chain of title or something has
happened that affects his interests.
Neither do the courts require those
ments in their title chains. They were
not required to run title forward from
the same period of time, because the
who hold under the first purchaser to
look for subsequent deeds for the rea-
time period for the search forward was
from the date of each conveyance vest-
son that such deeds are out of the
chain of title under which they pur-
ing title in the grantor to the present
and that varied as between the two
chased. White, 50 S.W. at 565-566;
chains of title.
Houston Oil, 122 S.W. at 540. For our
purposes of analyzing after acquired
Constructive Notice Applied to
title, we will use this limited explanation. However, for complete analysis
and reference to supporting citations
we would refer you to Lange and
Leopold, supra at §884.
Breen Exception
The Breen case created an exception
or limitation to the subsequent purchaser and constructive notice rules.
The Breen court limited the period of
time required to be searched by a subsequent purchaser to the,period coming
forward from the date title vests in
each grantor in his chain of title to the
present. Breen v. Morehead, 104 Tex.
Consequently, anyone claiming under
254, 136 S.W. 1047, 1048-1049;
Williams v. Cook, 282 S.W. 574, 575
under him are not subsequent purchasers, the recording statutes will not
protect them. The rationale for the
junior/senior chain relationship and
who is the subsequent purchaser is that
after the second deed from the common grantor is recorded, the second
deed does not give notice to the first
(Tex. Com. App. 1926); Hemingway,
supra at 131-133. As a result, the subsequent purchaser does not have to look
for conveyances out of his grantor that
were made before the date of the deed
that vested in the grantor title to the
First, turning to Figure 1 and assuming Oil Co. No. 2. was a subsequent
purchaser, Oil Co. No. 2 would be
placed on constructive notice of the
1976 mineral deed into Y and would
know the 1972 deed could not have
conveyed the minerals to Z. However,
Oil Co. No. 2 cannot be a subsequent
purchaser in the example fact situation.
Y is shown as common source of title
into Oil Co. No. 1 and Oil Co. No. 2.
Since Y's conveyance to Z in 1972 was
prior to the mineral deed in 1976 and
the lease with Oil Co. No. 1 in 1997,
Oil Co. No. 2 would be the senior
chain holder, not a subsequent purchaser, and not on constructive notice of the
1976 deed from Y which is in the junior
title chain. The same result
occurs if X is considered the common
source of title and Oil Co. No. 2 would
still be the senior chain holder. Thus,
regardless of whether X or Y is consid-
interest being conveyed to the grantee.
ered the common source of title, Oil
Co. No. 2 would be senior and take no
constructive notice of the 1976 deed.
Be that as it may, under our facts Oil
Co. No. 2 appears to have had notice
of the 1976 deed; otherwise why did it
tell Z that Z had an after acquired title
claim? Apparently, Oil Co. No. 2 had
actual notice of the 1976 mineral
deeds, which it acquired by running the
records as if it were a subsequent pur-
in the example fact situation to run the
166 Jomela Drive, Suite A
Lafayette, Louisiana 70503
Fax: 337-236-9161
Innovative Land Solutions
Morris S. Hoffpauir, Jr., CPL
Oil Co. No. 2 Chain
Once the subsequent purchaser locates
his grantor's vesting deed, he does not
need to inquire further back. Breen, 136
S.W. at 1048. The attached Figure 2
exemplifies how the Breen rule affects
the duty of the subsequent purchasers
Hoffpauir Land & Title Company, LLC
P. O. Box 52446
Lafayette, Louisiana 70505
Phone: 337-236-9117
obtaining the protection of the record-
records to see if his grantor created a
documents in the junior chain.
the senior chain holder will have the
same position as the senior chain holder, will be considered prior to anyone
in the junior chain and, in relation to
the junior chain holder, cannot be the
subsequent purchaser. Because the
senior chain holder and those claiming
quent purchasers for the purpose of
mshoffpauir@landinnovations.com
chaser. By actually running the records,
Oil Co. No. 2 would have acquired
actual knowledge of the 1963 deed in
which X reserved the minerals and
actual knowledge that the deed from Y
to Z in 1972 could not have conveyed
the minerals. Finally, even if Oil Co.
No. 2 did not run the records and did
not acquire actual notice, and even if it
did not have constructive notice of the
1976 deed in the junior chain, because
March / April 2005
10
Landman
it was the senior chain holder Oil Co.
No. 2 takes notice of all documents in
the senior chain. Consequently, Oil
Co. No. 2 would have had constructive
notice of the mineral reservation in the
1963 deed to Y. Regardless of the rationale used, Oil Co. No. 2 has notice
Constructive Notice Applied to
grantee had constructive knowledge
the prior mineral reservation that left
the grantor with only owned 1/2 of the
minerals. The court found that because
Oil Co. No. 1 Chain
Figure 2 shows the time line for Oil
Co. No. 1 in relation to Oil Co. No. 2.
In 1997 Oil Co. 1 acquired an oil and
the grantor assumed to convey the
gas lease from A who owned 1/2 of the
minerals and from Y who owned the
to Z in 1972 despite the language in Y's
entire mineral estate, he could not now
say that constructive notice of the min-
general warranty deed.
remaining 1/2 of the minerals. The
result of running title to acquire the oil
eral reservation would preclude the
and gas lease is a good example of the
But what about Z, Oil Co. No. 2's
grantor? Z would
have a claim for the
after acquired minerals, except for the
grantee from claiming the after
Breen exception to the after acquired
title rule. The rule
says that the subsequent purchaser, Oil
Co. No. 1, must
check the records
back to the date
that each grantor in
that Y did not have minerals to convey
FIGURE 2
Constructive Notice and "Breen Rule"
Breen case. Z does
not have constructive notice of the
1963
1976 mineral deed
his chain acquires
from X to Y conveying the minerals,
because Y's deed
vesting title to Z was
the
1972
have no reason or
Oil Co. No. 1 in
1976
duty to inquire about
subsequent con-
1997 looks back to
veyances into or out
of Y. In any event, as
a senior chain holder,
he need not take
notice of the 1976
Y's date of acquisition in 1976 and
runs title forward
to present. Oil Co.
No. 1 never sees Y's
1976
1972 deed to Z. In
deed in the junior
structive, and possibly actual, knowledge
of X's 1963 mineral
reservation. In the
end, whether or not
Z has constructive or
actual knowledge
fact, when Oil Co.
No. 1 runs title
backward to 1963,
1997
all that it sees is X's
mineral reservation
in the conveyance
Oil Co.
No. 1
Subsequent
Purchaser/
Junior Chain
to Y in 1963. Oil
Co. No. 1 has no
2000T
duty to look behind
Oil Co.
No. 2
Senior Chain
that Y did not and
could not convey the
minerals to him does not matter,
because Z is the beneficiary of the after
acquired title claim. His claim arises
acquired minerals. Id. at 1007. The
court went on to state that having
actual or constructive notice had nothing to do with the grantee's right to
out of his grantor's conveyance in
recover for a breach of the general warranty. Id. at 1009. Based on Frets and
1972, which on its face appeared to
convey all of the surface and the minerals. Frets v. Schuette, 222 S.W.2d
and
to Oil Co. No. 1 is
described in Figure 2.
in 1972 and Z would
chain. However, as a
senior chain holder,
he does have con-
property
run title forward to
the present. The
way this rule applies
the 1976 conveyance from Y to
discover that Y had
attempted to convey minerals he did not own to Z in
1972. If X's heirs had conveyed the
minerals to Y before 1972, there would
be no after acquired title claim, because
Z would have acquired the minerals
before 1976. The recording statues
other previously cited cases, neither
actual nor constructive notice of X's
mineral reservation in 1963 precludes
would not protect him as a subsequent
Galveston 1949, writ ref'd). The Frets
fact situation was very similar to the
example fact situation. The grantor
owned only 1/2 of the minerals at the
Z's right to recover under a breach of
have had constructive notice of the
the general warranty in his deed. This
claim could be conveyed to title buster,
Oil Co. No. 2, who might prevail,
conveyance of minerals.
time of the conveyance, but he later
except for the Breen case. The Breen
case creates a different result because
1006, 1009 (Tex. Civ. App. -
inherited the other 1/2. The court held
the grantor was estopped to claim the
inherited minerals under the doctrine
of after acquired title, even though his
20
Oil Co. No. 1 did not have constructive notice of the after acquired title
claim as discussed following.
purchaser for value from after acquired
title of the minerals, because he would
References in Documents: The
Westland Rule
The extent to which the documents
that are referenced in recorded conveyances, which puts a subsequent pur-
March /April 2005
Landman
chaser on notice, has also been well
defined in the Westland case. Westland
Oil Development Corp. v. Gulf Oil
Corp., 637 S.W.2d 903, 908 (Tex.
1982). The Westland case states that a
subsequent purchaser is bound by
recitals referenced in any instrument in
the chain of title under which he
RIUQCA ED TITLE
erals to Y in 1976. Absent other factors,
the after acquired title of the minerals
would pass to Z and the conveyance of
1/2 of the minerals by Y to A would be
void. However, if Y had acted as agent
claims. The court held that a 1968
conveyance, which referred to a 1966
for A in acquiring 1/2 of the minerals,
then the trust exception could apply,
and 1/2 of the minerals would vest in A
letter agreement that provided for
when Y later acquired the mineral estate.
Westland to receive an overriding royalty and a working interest, was binding on the grantee in the conveyance.
The Westland rule appears to apply to
the example fact situation. The 1972
general warranty deed from Y to Z
described the land conveyed by a reference to X's 1963 deed. Applying the
Westland rule, even if the 1963 deed
was not in the chain of title to Z or Oil
Co. No. 2, the reference to that deed in
the 1972 deed was notice of the
mineral reservation and the fact that
Y had no minerals to convey to Z.
Impact of a Trustee
As noted earlier in the article, Texas
courts will not apply the after acquired
title doctrine to estates held in trust by
Y. Figure 1 contains a good example of
what could happen if title were acquired
in trust. The after acquired title issue
arises out of the deed in 1972 from Y to
Z, which purported to convey the fee
simple estate including the minerals. The
heirs of X thereafter conveyed the min-
Highest
Standards in
ducation
Continuing E
for
Land Profession
Application of the After
Acquired Title Doctrine
to the Fact Example
Oil Co. No. 1 did not have a duty to
look behind the 1976 deed and find
the 1972 deed that created the after
acquired title claim. The oil and gas
lease to Oil Co. No. 1 would be valid,
because Oil Co. No. 1 was the subse-
quent purchaser for value and was protected by the recording statutes as
interpreted by the Breen case. All that
Oil Co. No. 1 finds when it runs the
records backward from its grantee is
that Y was conveyed the minerals in
1976 and that X reserved the minerals
in 1963. It does not, under the Breen
case, have notice of the 1972 deed.
The after acquired title claim of Z and
Oil Co. No. 2 would be cut off as long
as Oil Co. No. l's lease is in effect.
When the lease expires, and title to the
minerals goes back to Y, Z's (and Oil
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Co. No. 2's) after acquired title claim
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21