When is it too late to equitably reform a deed in Texas? In part, that depends on whether the deed is ambiguous.
There is generally a rebuttable presumption that a grantor has immediate knowledge of
defects in a deed that result from mutual mistake.8 The court of appeals plurality correctly notes
that “[a]pplication of the presumption means that the limitations period on a claim to reform an
incorrect deed begins to run as soon as the deed is executed because . . . the grantor has actual
knowledge that the deed is incorrect.”9 This Court has not strictly applied the presumption of
knowledge rule because, as we noted many years ago, “[n]umerous exceptions are as well
established as the rule itself.”10
The court of appeals plurality did not apply the rebuttable presumption but instead applied
the discovery rule, which defers accrual of a claim until the injured party learned of, or in the
exercise of reasonable diligence should have learned of, the wrongful act causing the injury.
11
Courts apply the discovery rule in limited circumstances where “the nature of the injury incurred
is inherently undiscoverable and the evidence of injury is objectively verifiable.”12 Discovery rule
cases focus on categorical “types of injury, not causes of action.”13
A plainly evident omission on an unambiguous deed’s face is not a type of injury for which
the discovery rule is available. A generation ago, we held in Sullivan v. Barnett that certain
circumstances may trigger a rebuttable presumption that a grantor has immediate knowledge of
defects in a deed that result from mutual mistake.14 Once the presumption is rebutted, the
reformation claim does not accrue until the grantor actually knew, or in the exercise of reasonable
diligence should have known, of the mistake.15 But we have never decided a case involving a plain
omission in an unambiguous deed.16 Sullivan reserved the possibility of recognizing a rebuttable
presumption in plain-omission cases, but we never explicitly endorsed it, and we decline to do so
now. At execution, the grantor is charged with immediate knowledge of an unambiguous deed’s
material terms.
We have noted that circumstances may exist where a party is charged with knowledge of a
mistake in a deed as a matter of law. For example, in Brown v. Havard, we implicitly recognized
the possibility that parties can be charged with knowledge of an obvious mistake: “Nor can it be
said that the mistake is so plainly evident as to charge [grantee] with the legal effect of the words
used.”17 Decades earlier, in McClung v. Lawrence, we distinguished mistakes about the legal effect
of a deed’s terms from instances where “mineral rights had been entirely omitted from the deeds,
a fact plainly evident.”18 In McClung, we cited approvingly two court of appeals cases favoring
the bright line we adopt today:
Kahanek v. Kahanek—“It is well settled . . . in suits to correct a mistake in a
deed . . . if such actor be the grantor, then he is charged, as a matter of law, with
knowledge of the contents of his deed from the date of its execution, and
limitation begins to run against his action to correct it from that date.”19
Kennedy v. Brown—Agreeing that at the time the deed is executed a party is
charged as a matter of law with knowledge of whether the deed reserves mineral
rights provided in the contract, at which time limitations begins to run.20
In plain-omission cases, McClung suggests, and we squarely adopt today, the rule stated
by the courts of appeals in Kahanek and Kennedy: Parties are charged as a matter of law with
knowledge of an unambiguous deed’s material omissions from the date of its execution, and the
statute of limitations runs from that date.21 The Cades had actual knowledge of the deed’s omission
upon execution. They were charged, as a matter of law, with actual knowledge of what the deed
included, and excluded, and limitations began to run from the date of execution. An injury
involving a complete omission of mineral interests in an unambiguous deed is inherently
discoverable—“a fact plainly evident,” as McClung put it.22 When a reservation of rights is
completely omitted from a deed, the presumption of knowledge becomes irrebuttable because the
alleged error is obvious. It is impossible to mistake whether the deed reserves rights when it in fact
removes rights. In cases like these which involve an unambiguous deed, the conspicuousness of
the mistake shatters any argument to the contrary.
While the Court has recognized that public records can impose an irrebuttable presumption
of notice on a grantee to prevent application of the discovery rule,23 we have yet to recognize
circumstances where section 13.002 imposes constructive notice on a grantor as well. We do so
today to the extent that public records filed under section 13.002 establish as a matter of law a lack
of diligence in the discovery of a mistaken omission in an unambiguous deed. We do not impose
an affirmative duty to search the public record; we only say that obvious omissions are not
inherently undiscoverable