Hobbs v. Hutson

In September 1956, Marshall Hobbs and others (collectively, Hobbs) (plaintiffs) sold a 53-acre parcel of land to O. L. Hale by a deed containing a reservation of royalty interests in oil, gas, and minerals that might be produced from the land. C. W. and Helen Hutson (defendants) later acquired the land subject to the reservation in the deed. The Hutsons later sold their surface rights but retained the coal rights, believing that the right to mine coal was not already reserved in the previous mineral reservation. In February 1956, the Hobbses leased the rights to mine clay, coal, lignite, and other minerals. The Hutsons ratified the lease in 1968. Lignite was being mined on the property, but all royalties were paid into an account with the court pending resolution of the dispute over who owned the royalties. The Hobbses argued that lignite rights were reserved in the 1956 deed. The Hutsons argued that lignite was part of the surface under Texas caselaw. In response, the Hobbses argued that if the deed was interpreted as conveying the lignite interest, the court should reform the deed to align with the Hobbses and Hale’s mutual intent, which, according to the Hobbses, was for the Hobbses to reserve the lignite interests. On cross-motions for summary judgment, the trial court ruled in favor of the Hutsons, holding that the lignite interest was not reserved in the 1956 deed and refusing to reform the deed otherwise. The Hobbses appealed, arguing that Texas’s default rule requiring explicit reservation of lignite interests should not apply in disputes between competing royalty claimants.