## Facts

- Five grantors acquired a 100-acre tract in Mobile County, Alabama, along with one-half of the mineral rights; the tract was then subject to an oil and gas lease reserving a 1/8 lessor’s royalty.
- The grantors also owned an adjacent 20.5-acre tract with all mineral rights.
- The grantors leased the 20.5-acre tract to Harris Anderson and, as part of the consideration, executed a royalty deed to Anderson covering the grantors’ mineral interest in the 100-acre tract.
- The royalty deed described a “1/10 royalty interest” and stated that the interest was subject to the existing lease and also subject to any future leases executed at the grantors’ option.
- The grantors later entered a new lease on the 100-acre tract with AMAX Petroleum Corporation that superseded the prior lease and increased the lessor’s royalty from 1/8 to 1/4.
- A payment dispute arose over whether the grantee’s interest was 1/10 of the 1/8 royalty (tied to the original lease) or 1/10 of the 1/4 royalty (tied to the new lease).
- The grantors sued for declaratory relief construing the deed as conveying only a limited interest (described as “five royalty acres”) or, alternatively, reformation based on fraud and/or mistake.
- The trial court construed the deed as conveying a 1/10 interest in the lessors’ reserved royalty under the existing and future leases and denied reformation for lack of sufficient proof.

## Issues

1. Whether the royalty deed conveyed only a fixed, limited royalty interest measured by the original lease terms, or instead conveyed a 1/10 interest in the lessors’ royalty under the existing lease and any future leases.
2. Whether the grantors proved grounds for reformation of the deed based on fraud, mutual mistake, or unilateral mistake known to the grantees.

## Decision

- The Supreme Court of Alabama affirmed the trial court’s judgment.
- The Court held the deed granted a floating 1/10 royalty interest in the lessors’ reserved royalty under both the existing lease and future leases, including the later lease reserving a 1/4 royalty.
- The Court held the grantors failed to prove entitlement to reformation because the evidence did not clearly and convincingly establish fraud, mutual mistake, or a qualifying unilateral mistake known to the grantees.

## Legal Principles

- When a royalty deed grants a fractional “royalty interest” and provides that it is subject to the current lease and any future leases, the conveyed interest generally follows the lessor’s reserved royalty under later leases rather than remaining fixed to the prior lease’s royalty fraction.
- Deed construction is controlled by the instrument’s language; a court will not rewrite a clear conveyance to match a claimed intent inconsistent with the text.
- Reformation of a written instrument requires clear and convincing evidence of fraud, mutual mistake, or unilateral mistake coupled with the other party’s knowledge or inequitable conduct.
- A party’s after-the-fact dissatisfaction with the economic effect of an otherwise valid deed is insufficient to justify equitable reformation.

## Conclusion

The court enforced the royalty deed as written, concluding it conveyed a floating 1/10 share of the lessors’ royalty that increased under a later lease, and it refused to reform the deed because the grantors did not meet the clear-and-convincing evidentiary burden for fraud or mistake.


Dudley v. Fridge, 443 So. 2d 1207 (Ala. 1983)