Gavenda v. Strata Energy, Inc.
Supreme Court of Texas
705 S.W.2d 690 (Tex. 1986)
The Gavendas (plaintiffs) conveyed a parcel of land, subject to their reserving a one-half royalty interest in all oil and gas produced from the property. Subsequently, Strata Energy, Inc. (Strata) (defendant) conducted a title search on the property and determined, erroneously, that the Gavendas had reserved only a 1/16 royalty. Strata signed an oil and gas lease on the property under this mistaken belief. Strata then prepared erroneous division orders, which the Gavendas signed, and distributed a 1/16 royalty to the Gavendas. Strata also paid out other royalty owners, and kept the remainder of the proceeds. The Gavendas discovered the error and revoked the division orders. The Gavendas then brought suit to recover the 7/16 royalty interest that they were mistakenly not paid. The trial court granted Strata summary judgment on the ground that the division orders were binding on the Gavendas until the Gavendas revoked the orders. The court of appeals affirmed. The Gavendas appealed.
Rule of Law
Holding and Reasoning (Spears, J.)
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