Natural Gas Pipeline Co. of America v. Law, 65 S.W.3d 121 (Tex. App.—Amarillo 2001, pet. denied).
Parties with an interest in a lease of mineral property and royalties
by intestate succession, will, or assignment, executed an agreement
relating to the correct ownership of the interest. The agreement also
appointed one of the owners as the agent to collect and distribute
royalties and to pay taxes and expenses incident to the lease. The
appellate court held that this agreement acted to revive the lease as a
matter of law. Although the lease may have terminated because of
cessation of production during the secondary term of the lease, the
agreement recognized and revived the lease.
The court treated this instrument as a family settlement agreement which
served as “an alternative to formal administration of a decedent’s
estate and is a favorite of the law. * * * A family settlement agreement
cannot be avoided by a unilateral mistake of law by one party and will
not be set aside for ordinary mistake of law or fact where all parties
have the same knowledge or means of obtaining knowledge, in the absence
of fraud or otherwise inequitable conduct.” Natural Gas at 126. The
agreement is binding on the parties as to their respective interests in
the minerals and royalties as well as the fact that their interests are
subject to the lease.
Moral: Family settlement agreements continue to be an effective method
of resolving disputes regarding the ownership of a decedent’s property.