Angela Staples
In September of this year, the Texas Supreme Court denied a request to rehear arguments in a case it issued an opinion on in April 2021. The case, styled Concho Resources, Inc. et al. v. Ellison d/b/a Ellison Lease Operating, was a trespass-to-try-title suit between the lessees of adjacent tracts. The dispute arose when Ellison claimed that Concho drilled wells on the plaintiff’s leasehold or closer to the lease line than the field rules permitted. However, the boundary line confusion started well before the dispute.
In 1927, a portion of a section of land in Irion County was conveyed with the following description: “All of Survey 1, Block 6, H & T.C. Ry. Co. lands located North and West of the public road which now runs across the corner of said Survey, containing 147 acres, more or less[,]” (the “Northwest Tract”). Later, the remainder of tract (the “Southeast Tract”) was conveyed and described as “Abstract 312, Survey 1, Original Grantee H. & T.C. Ry. Co., Block 6, 493 acres.” Unfortunately, the “lands located North and West of the public road” was actually 301 acres. And the Southeast tract was 339 acres.
After many conveyances and leases of the lands that either cited to the 1927 deed or restated the legal description in the 1927 deed, Jamie Ellison d/b/a Ellison Lease Operating’s (“Ellison”) predecessor in title leased the Northwest Tract from the mineral owner and filed an application for a permit to drill a well, certifying that its leases covered 320 acres. Meanwhile, Samson Resources Company was lessee of the Southeast Tract.
A title opinion alerted Samson to the boundary issues. However, Samson received a preliminary survey “that credited 493 acres to the southeast tract, including 154 acres of land north of the public road.” Despite the survey crediting acreage north of the public road to Samson, Samson notified Ellison that it wanted to drill a well 100 feet south of the public road and asked for a waiver of the Rule 37 distance from lease line requirement. Ellison agreed to the waiver.
In the meantime, Samson reached out to the current mineral owners of the Northwest and Southeast tracts. Samson asked that the owners stipulate “that the boundary of the mineral estate [was] in accordance with the boundary line contained in the Samson survey. In other words, the parties stipulated that the disputed 154-acre tract was part of the southeast tract.” Samson sent the stipulation to Ellison and asked that he “’signify [his] acceptance of the description of the […] 147 acre tract as set out in the Stipulation (your leasehold), by signing […] in the space provided below and return one copy […] in the enclosed self-addressed envelope.” Ellison signed and returned the letter.
Five years after the stipulation and Ellison’s agreement with same, Jamie Ellison dies and his wife, Marsha Ellison (hereafter “Ellison”) sued Samson as well as Concho Resources LLC and Three Rivers Operating Co. (Samson’s successors in title and collectively the “Defendants”) claiming trespass to try title, trespass to real property, conversion, unlawful drainage, gross negligence, and nonpayment of oil and gas proceeds. She alleged that the 2008 stipulation and agreement by Jamie Ellison “had no impact on Ellison’s legal title under those leases.”
The Defendants argued that by agreeing to the stipulation in 2008, “Ellison relinquished any claim of ownership of the disputed 154-acre tract, ratified the boundary line established by the 2008 stipulation, and waived any right to a leasehold interest” in the disputed tract. The trial court agreed with the Defendants, but the court of appeals reversed, “holding that the boundary stipulation is void and thus may not be ratified.” The Defendants appealed to the Texas Supreme Court.
The Court discussed the court of appeal’s holding “that the stipulation is not itself a conveyance of the disputed acreage but is ‘close in nature to a ‘correction deed’ in which a party seeks to retroactively correct . . . some ‘ambiguity or error’ in the original deed.” Because the deed “unambiguously conveyed ‘all’ of the tract northwest of the public road (which includes the disputed tract), notwithstanding the inconsistent general acreage description[,]” there was no error to be corrected. The court of appeals went on to say that “the evidence in the record suggests that the defendants were aware that the public road was the true boundary” and that no “bona fide uncertainty or doubt [existed] as to the location of the boundary.” Thus, the court of appeals identified the “’true’ location of the boundary line” as the public road and held that “the mineral owners’ agreement to establish the line elsewhere in accordance with the Samson survey [was] thus null and void.”
The Supreme Court noted that while “[r]atification is the adoption or confirmation by a person with knowledge of all material facts of a prior act which did not then legally bind him and which he had the right to repudiate[,] a ‘void’ act is “‘not susceptible of ratification.’” The Defendants argued that “imposing this ‘objective uncertainty’ requirement ‘would scuttle boundary agreements as a mechanism to avoid litigation’ because parties will never know whether their informal settlement of a boundary dispute is effective until it is declared so by a court.” The Supreme Court agreed with the Defendants, pointing out that the mineral owners:
could have gone to court to obtain a determination of the location of the boundary between their mineral estates. Had they done so, perhaps the court would have concluded, as Ellison contends and the court of appeals held, that the 1927 deed is unambiguous, the inconsistent acreage calls are immaterial, and the public road is the boundary line. But they chose to resolve the ‘question’ that had arisen’ about the boundary location informally by executing the stipulation. We see no reason to second-guess the owners’ decision to bind themselves in that manner without resorting to litigation.
Therefore, the Court held that—because of the stipulation and acceptance of same by Ellison—Ellison “as a matter of law ratified the boundary line contained in the stipulation as the boundary of Ellison’s leasehold.”