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DUHIG RULE DEMYSTIFIED

Duhig comes into play when a mineral owner owns less than 100% of the property conveyed by a Warranty Deed, and reserves a fractional interest.  It boils down to interpreting a fraction of a fraction. The rule was borne from the Texas case Duhig v. Peavey-Moore, 135 Tex. 503, 144 S.W.2d 878 (Tex. 1940).  Several other states have adopted the Duhig rule, either in whole, or with modifications, including Arkansas, Oklahoma, North Dakota, and Wyoming.

 

DEFINITION:

When a grantor who owns less than the full mineral estate conveys property by Warranty Deed reserving a fraction of the minerals, the deed on its face purports to convey the full mineral interest less only the reserved fraction, so the grant must be fully satisfied (if possible), leaving the grantor with only the difference (if any) between the granted interest and the fractional interest owned by the grantor immediately prior to the conveyance.

 

HERE’S THE PROBLEM:

Mr. Jones conveys Blackacre to Smith and reserves ½ minerals.  Smith gives a warranty deed to Brown, but reserves ½ minerals.  It would seem that Jones owns ½ and Smith owns ½ of the minerals.  No.

 

DUHIG RULE:

Because of the Warranty given by Smith to Brown, and because on it’s face, Brown could reasonably expect to receive ½ minerals, he is not made whole by Smith.  Therefore, Smith has to bear the burden of the poor drafting of documents, and he owns no minerals.  Jones keeps ½ and Brown obtains ½.

 

PRIORITY:

Where full effect cannot be given both to the granted interest and to a reserved interest because of a previous outstanding interest, priority will be given to the granted interest until full effect is given the grantee interest.

 

In other words, if both the grantor and the grantee cannot be made whole, the grantor loses if he gave a Warranty Deed (or Special Warranty Deed).

 

Duhig does not apply to oil and gas leases.  See proportionate reduction clause.

 

REMEDY:

In drafting the documents of conveyance, do one of the following:

  1. Refer to all prior conveyances in the conveyance; or
  2. Include a statement of the intent of the grantor in the conveyance, or
  3. Use a Quitclaim Deed.
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