Crum v. Mooney: Calculating Conveyances of NPRIs in Ohio

Recently, in Crum v. Mooney, 2023-Ohio-4451, Ohio’s Seventh Appellate District considered whether an 1898 assignment conveyed a fixed or floating royalty. The assignment in question conveyed “the one-half (1/2) part of his royalty Being 1/16 part of all the oil and gas in and under the following described premises.” The Court, employing ordinary rules of contract interpretation, held that the assignment conveyed a fixed royalty. Specifically, it reasoned that:

• The assignment used “closed” rather than “open-end” terms to describe the conveyed interest; that is, the grantor conveyed “the one-half (1/2) of his royalty” rather than “any” or “the” royalty.
  
  
• The assignment did not reference any current oil and gas lease or future oil and gas leases on the property.
  
  
• The phrase “Being 1/16 part of all the oil and gas in and under the following described premises” was deemed “a separate sentence in the granting clause to be given equal weight with the previous sentence.”
  
  
• The two fractions referenced in the assignment (i.e., 1/2 and 1/16) could be harmonized without stripping the 1/2 fraction of any meaning.

Consequently, the royalty owner was entitled to receive a 1/16 part of all the oil and gas produced from the land. Had the Court concluded that the assignment conveyed a floating royalty, the royalty owner would have been entitled to receive a royalty equal to 1/2 of the lease royalty.