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Ohio Appellate Court Finds The Duhig Rule Persuasive

By Jay Carr

In Talbot v. Ward (2017-Ohio-9213), Ohio's Seventh District Court of Appeals found the Duhig rule “persuasive” in interpreting a deed containing an exception for royalties, bonuses, and rentals. The Duhig rule, first enacted in Texas in 1940, bars a grantor and his successors and assigns from claiming title in a reserved fractional mineral interest when doing so would, in effect, breach the grantor’s warranty of title. Talbot is the first reported appellate decision in Ohio to ever discuss the Duhig rule.

In Talbot, E.M. Ward conveyed certain land to Dow Mellot excepting “½ of the oil and gas royalty and ½ of all rentals and bonuses.” Thereafter, Dow Mellot conveyed the same land to John and Minnie Tomolonis repeating the earlier reservation by E.M. Ward.  One of the issues on appeal was whether Dow Mellot reserved an interest in the oil and gas estate by the Mellot-Tomolonis Deed.

The appellate court held that the Mellot-Tomolonis Deed did not reserve such an interest. The deed clearly indicated that one-half of the oil and gas royalty, bonus, and rental were excepted from the grant. The deed did not, however, account for the other one-half of the oil and gas royalty, bonus, and rental. As such, by the deed’s plain language, the surface and one-half of the oil and gas royalty, bonus, and rental were conveyed to the Tomolonises.

Although the court of appeals’ holding was grounded in ordinary rules of deed construction, the appellants argued, and the appellate court agreed, that the case was similar to Duhig v. Peavy-Moore Lumber Co., 135 Tex., 503, 144 S.W.2d 878 (1940). Duhig states that if both the grant and reservation in a deed cannot be given effect, then the reservation must fail. In Talbot, the appellate court noted that the facts before it compelled the same result as Duhig requires. That is, even if Dow Mellot did reserve a one-half interest in the oil and gas royalty, bonus and royalty under the Mellot-Tomolonis Deed, that reservation failed because Dow Mellot breached his warranty of title due to earlier reservation by his predecessor, E.M. Ward.

Click here to read the decision.

Tags: 'Utica Shale', Duhig rule, Ohio, Oil and Gas, Energy, Royalty

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