In re Estate of Slaughter, 305 S.W.3d 804 (Tex. App.—Texarkana 2010, no pet.).



“Unproduction Royalty”


Testator died in 1965 and his 1955 holographic will was duly admitted to probate. A dispute arose whether this will either (1) devised all his mineral rights to his three sons to be held as tenants in common, or (2) devised only the royalty rights to his three as tenants in common with the remainder of the mineral estate passing to the sons in equal, but divided, interests. The trial court determined that the will was patently ambiguous and determined that Testator mean to devise all mineral interests to his sons as tenants in common. The appellate court reversed.

The court began by examining Testator’s will which devised each son 158 acres of land and also provided that the three sons were to “share and share alike production royalty and unproduction royalty.” The court explained that Testator’s language was unambiguous in that it transferred 158 acres to each son and reserved the royalty interest from the entire tract to be held by the sons as tenants in common, each owning an undivided one-third of the royalty interest. The court recognized that the term “unproduction royalty” may be an “unusual expression,” but that it was nonetheless unambiguous in that it means “to cease production or not to produce oil and gas,” or, in other words, what is commonly known as shut-in royalties (royalties paid to keep the lease in force when a well capable of producing oil and gas is not utilized because there is no market for the oil and gas).

Moral: Wills dealing with mineral interests should be drafted clearly using industry standard language.