Background

The grantors executed a note secured by a deed of trust over property in Borden County. The preprinted form deed of trust contained broad language conveying the property "together with all rights (including the rights to mining products, gravel, oil, gas, coal[,] or other minerals), interests, easements, fixtures" and other appurtenances. However, the attached Exhibit A providing the legal description stated "surface rights only" and specified the description was subject to "exceptions and/or reservations," including all outstanding oil, gas, and other minerals and any outstanding mineral leases.

The Dispute

After the grantors defaulted on the loan, the property was sold at foreclosure. The successors in interest to the lender filed a declaratory judgment action asserting that the deed of trust covered both the mineral estate and surface estate. The grantors' heirs counterclaimed for declaratory relief, arguing the deed of trust covered only the surface estate. Both parties moved for summary judgment in the 132nd District Court, Borden County, requiring the trial court to reconcile the preprinted boilerplate language with the specific property description in Exhibit A. The trial court granted the heirs' motion and denied the successors' motion.

The Court's Analysis

The Court of Appeals conducted de novo review and applied established principles governing deed interpretation. The court emphasized that "[a] deed of trust is governed by the same rules applied to other written instruments, such as contracts or deeds." Applying the rule that specific provisions control over general ones, the court held the deed of trust "unambiguously limited the conveyance to the surface estate" based on the express language in Exhibit A.

Exhibit not only stated "surface rights only," but also stated legal description was subject to "exceptions and/or reservations," including all outstanding oil, gas, and other minerals that may be produced from the premises or any outstanding oil, gas, and mineral leases on the property.

The court found that no provision of a deed of trust instrument should be disregarded unless an irreconcilable conflict exists that causes one part of the instrument to destroy another part. However, where such a conflict exists between general and specific provisions, the specific provisions control. The court also noted that when part of a deed's property description is incorrect, the court will disregard that part as surplusage and enforce the deed if the remainder of the description identifies the land with sufficient certainty.

The court further held that the substitute trustee's deed clearly and unambiguously excepted mineral rights from sale at public auction, affirming the trial court's grant of summary judgment in favor of the grantors' heirs.