Gavenda v. Strata Energy, Inc.
Supreme Court of Texas
705 S.W.2d 690 (Tex. 1986)
The Gavendas (plaintiffs) reserved a one-half royalty interest when conveying land, but Strata Energy (defendant) mistakenly determined through a title search that they had reserved only a 1/16 royalty; Strata prepared division orders reflecting that error, which the Gavendas signed and were paid accordingly, while Strata retained the remainder of the proceeds it should have paid the Gavendas (and paid some to other royalty owners). After discovering the error, the Gavendas revoked the division orders and sued for the shortfall; the trial court granted Strata summary judgment, holding the division orders bound the Gavendas until revoked, and the court of appeals affirmed.
Whether division orders prepared by an operator that contain an error, where the operator retains the benefit of that error for itself, are binding on the underpaid royalty owner until formally revoked.