North Dakota Deed Reservations – Mineral Interests, Life Estates
North Dakota Deed Reservations – Mineral Interests, Life Estates
Rolla v. Tank, 2013 ND 175
McKenzie County, North Dakota
In a decision issued in 2013,the North Dakota Supreme Court affirmed the District Court’s finding that certain quitclaim deeds were effective in reserving in the deed grantor – now deceased:
- all mineral rights,
and also
- a life estate in the surface rights.
Rolla v. Tank, 2013 ND 175
North Dakota Deed Reservations – Mineral Interests, Life Estates – Quiet Title Action
Son #1 – the party losing in the District Court – appealed from a judgment quieting title to certain mineral rights in McKenzie County, North Dakota, in the Estate of his father.
Interested Parties
The decedent was a widower, and the father of six surviving children, including Son #1, and Daughter #1 – who would later become the personal representative of her father’s estate.
McKenzie County, North Dakota
At his death, the decedent was the owner of certain real property located in McKenzie County, North Dakota – the “Property” – which he had used for farming and other commercial activities, together with Son #1.
Quitclaim Deed – 2007
In December of 2007, the Father – then a widower – conveyed certain of his interests in the Property to Son #1 pursuant to a quitclaim deed, which contained an error in the Property’s legal description (the “2007 Deed“).
Corrective Quitclaim Deed – 2008
In March of 2008, the Father – still a widower – conveyed certain of his interests in the Property to Son #1 pursuant to a quitclaim deed, which corrected the Property’s legal description which had been used in the 2007 Deed (the “2008 Deed“).
Deed Captions
Both the 2007 Deed and the 2008 Deed contained the following caption:
“(Life Estate Reserved),”
North Dakota Deed Reservations – Mineral Interests, Life Estates
Both the 2007 Deed and the 2008 Deed made the following “reservations“:
Clause #1:
(heading not a part of the deed)
EXCEPTING and RESERVING to the Grantor, his successors and assigns, all oil, gas and other minerals now owned by Grantor, including coal, in and under the above-described land, or any part thereof, together with the right of ingress and egress and the use of so much of the surface of the land as is reasonably necessary for the purposes of exploring for, mining, drilling, excavating, operating, developing, storing, handling, transporting and marketing such minerals.
Clause #2:
(heading not a part of the deed)
Sand, gravel and clay shall be considered part of the surface.
Clause #3:
(heading not a part of the deed)
FURTHER EXCEPTING and RESERVING to the Grantor, the full use, control, income and possession of the described property, including without limitation, the right to lease and receive the bonuses, rentals and royalties therefrom, without liability for depletion or waste, for and during Grantor’s natural life.
Death of the Father
The Father died in June of 2008.
Oil Company’s Title Opinion
At some point after the death of the Father, ConocoPhillips – the oil company operating a well on the Property – discontinued making royalty payments to the Father’s Estate with respect to the Property’s mineral rights, because it had determined that Son #1 was the owner of the mineral rights.
North Dakota Deed Reservations – Mineral Interests, Life Estates – Quiet Title Action
In response, Daughter #1, as personal representative of her Father’s Estate, petitioned the district court in a “quiet title action“ to determine which party, or parties, legally owned the mineral rights in the Property.
Daughter #1 – District Court Arguments
On behalf of her Father’s Estate, Daughter #1 argued at the District Court trial that the combined effect of the 2007 Deed and the 2008 Deed was that they:
- transferred only a remainder interest in the Property’s surface rights to Son #1,
- reserved a life estate in the Property’s surface rights in her Father,
and
- reserved in her Father all of the mineral rights in the Property, rather than just a life estate in the mineral rights.
Son #1 – District Court Arguments
Son #1 disputed the Estate’s claims, arguing at the District Court trial that the combined effect of the 2007 Deed and the 2008 Deed was to:
- convey to Son #1 complete fee title ownership of both the surface rights and the mineral rights in the Property,
- subject to the reservation by the Father of a life estate in both the surface rights and the mineral rights in the Property.
North Dakota Deed Reservations – Mineral Interests, Life Estates – The District Court
The District Court quieted title to the Property in the Father’s Estate, based upon the Father’s demonstrated intent when he executed the 2007 Deed and the 2008 Deed:
The Court finds that the testimony presented shows that . . . [the Father’s] intent was consistent with Plaintiff’s position, that being that . . . [the Father] intended to reserve a life estate in the surface and wanted to reserve the mineral rights on lands with no current well to the children other than [Son #1] Defendant, and intended that [Son #1] Defendant would receive
- the surface and mineral rights on lands with a current well,
and
- surface on lands with no well.
North Dakota Deed Reservations – Mineral Interests, Life Estates – The North Dakota Supreme Court
In Nichols v. Goughnour, 2012 ND 178, 12, 820 N.W.2d 740, the North Dakota Supreme Court had previously addressed the relative importance of both a deed grantor’s, and a deed grantee’s intent, by stating that:
The primary purpose in construing a deed is to ascertain and effectuate the grantor’s intent.
“However, deeds that convey mineral interests are subject to general rules governing contract interpretation, and we construe contracts to give effect to the parties’ mutual intentions.”
Gawryluk v. Poynter, 2002 ND 205, 8, 654 N.W.2d 400 (citations omitted).
“When the language of a deed is plain and unambiguous and the parties’ intentions can be ascertained from the writing alone, extrinsic evidence is inadmissible to alter, vary, explain, or change the deed.”
Gawryluk v. Poynter, 2002 ND 205, 8, 9
“If a contract is ambiguous, extrinsic evidence may be considered to clarify the parties’ intentions.”
“A contract is ambiguous when rational arguments can be made for different interpretations.”
“On appeal, we independently review a contract to determine if it is ambiguous.”
Gawryluk v. Poynter, 2002 ND 205, 8, 9
North Dakota Deed Reservations – Mineral Interests, Life Estates – Statutory Proof – Contract Ambiguities
The North Dakota Supreme Court had previously identified the standard of proof which is to be used in resolving contract ambiguities – a clearly erroneous standard – by stating that:
Resolution of an ambiguity in a contract by extrinsic evidence is a finding of fact subject to review under the clearly erroneous standard of N.D.R.Civ.P. 52(a).
In re Estate of Zimmerman, 1998 ND 116, 13, 579 N.W.2d 591.
A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, on the entire evidence, we are left with a definite and firm conviction a mistake has been made.
Brigham Oil and Gas, L.P. v. Lario Oil & Gas Co., 2011 ND 154, 32, 801 N.W.2d 677.
North Dakota Deed Reservations – Mineral Interests, Life Estates – Effect of Deed Captions
Son #1 appealed the District Court’s decision in Rolla v. Tank to the North Dakota Supreme Court, relying in part upon the captions placed on the 2007 Deed and the 2008 Deed, which read:
“(Life Estate Reserved),”
claiming that the effect of the 2007 Deed and the 2008 Deed was that they:
“unambiguously reserved the mineral interests for . . . [the Father’s] natural life and upon his death [the mineral rights] are owned by . . . [Son #1] as the remainderman.”
North Dakota Deed Reservations – Mineral Interests, Life Estates – North Dakota Supreme Court Holding
While the North Dakota Supreme Court agreed that the terms of both the 2007 Deed and the 2008 Deed were unambiguous, they held that the effect of the deeds was to reserve in the Father a life estate in the surface rights of the Property, but not in the “oil, gas and other minerals.”
The North Dakota Supreme Court declared that in construing deeds, the court must attempt to give effect to every clause, sentence and provision.
Rolla v. Tank, 2013 ND 175, citing Valley Honey Co., LLC v. Graves, 2003 ND 125, 12, 666 N.W.2d 453; N.D.C.C. § 9-07-06.
The North Dakota Supreme Court had previously identified common law which provided that:
. . . a caption on a deed “is of no effect where the conveyance is clear.”
Rolla v. Tank, 2013 ND 175, citing Clark v. CSX Transp., Inc., 737 N.E.2d 752, 763 (Ind. Ct. App. 2000), and cases cited therein.
This is simply an application of the principle that “‘[i]f a conflict exists between a specific provision and a general provision in a contract, the specific provision qualifies the general provision.'”
Rolla v. Tank, 2013 ND 175, citing Kortum v. Johnson, 2008 ND 154, 44, 755 N.W.2d 432 (quoting Oakes Farming Ass’n v. Martinson Bros., 318 N.W.2d 897, 908 (N.D. 1982)).
Clause #1:
The North Dakota Supreme Court considered the effect of Clause #1 which was used in both the 2007 Deed, and the 2008 Deed, and which provided that the Grantor-Father had reserved to himself:
“his successors and assigns, all oil, gas and other minerals now owned by Grantor, including coal, in and under the above-described land.”
Clause #3:
The North Dakota Supreme Court also considered the effect of Clause #3 which was used in both the 2007 Deed, and the 2008 Deed, and which began with the word “FURTHER.”
The North Dakota Supreme Court determined that since “further” is a “comparative” term – defined in Webster’s dictionary as “in addition” to, and “going or extending beyond what exists”, the purpose in using the word “FURTHER” to begin Clause #3 was to alert the reader of the document that a distinction was being drawn between the provisions which preceded such term, and the provisions which followed it.
In addition, the North Dakota Supreme Court found that since Clause #3 excluded the phrases “oil, gas and other minerals“, and “successors and assigns,” while reserving:
“to the Grantor, the full use, control, income and possession of the described property, . . . for and during Grantor’s natural life.”
the North Dakota Supreme Court determined that Clause #3 could only refer to a life estate in the Property’s surface rights – because the Father had reserved to himself in Clause #1 all of the “oil, gas and other minerals.”
Rolla v. Tank, 2013 ND 175
The North Dakota Supreme Court determined that the reference to “bonuses, rentals and royalties” in Clause #3 did not create an interpretation problem because:
- such payments are usually made in exchange for the right to mine for sand and gravel,
and because
- Clause #2 specifically provided that:
“[s]and, gravel and clay shall be considered part of the surface [rights].”
Rolla v. Tank, 2013 ND 175
The North Dakota Supreme Court also determined that the “(Life Estate Reserved)” caption was likewise not problematic because the Father had actually reserved a life estate in the Property’s surface rights.
While Son #1 had argued that the life estate created by the Father in Clause #3 also applied to the reservation of mineral interests created by Clause #1, the North Dakota Supreme Court did not find his argument to be persuasive.
Rolla v. Tank, 2013 ND 175
Conclusion;
North Dakota Deed Reservations – Mineral Interests, Life Estates
In Rolla v. Tank, the North Dakota Supreme Court concluded that a decedent father’s 2007 Deed and 2008 Deed unambiguously:
- reserved “oil, gas and other minerals” in real property in the Father and “his successors and assigns,”
and also
- reserved in the Father a life estate in the Property’s surface rights.
Recommendations – North Dakota Deed Reservations, Mineral Interests – Life Estates
Deed reservation clauses must be carefully drafted, and properly interpreted.
Observations – North Dakota Deed Reservations, Mineral Interests – Life Estates
Initial oil company title opinions issued with respect to North Dakota mineral rights are not always correct.
Whether you reside in North Dakota, California, Minnesota, or any other state, if you had a relative who died owning mineral rights in North Dakota which have not yet been properly settled, contact Minnesota and North Dakota probate attorney Gary C. Dahle, at 763-780-8390, or gary@dahlelaw.com.
Gary C. Dahle has represented clients from the countries of Canada, Norway, and Sweden, and the states of Alabama, Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington, and Wisconsin in the United States, with respect to North Dakota mineral rights and probate issues in various North Dakota Counties.
Attorneys not licensed in North Dakota are invited to refer the North Dakota portion of the probate estate they are associated with to Minnesota and North Dakota attorney Gary C. Dahle, at 763-780-8390, or gary@dahlelaw.com.
Minnesota and North Dakota probate attorney Gary C. Dahle does not represent oil companies – only owners of North Dakota mineral and royalty interests – and is currently accepting new clients.
Topics of Interest – North Dakota Ancillary Probate
Topics of Interest – North Dakota Transfer on Death Deeds
Topics of Interest – North Dakota Affidavits of Heirship
Topics of Interest – North Dakota Intestate Succession.
Topics of Interest – North Dakota Informal Probate
North Dakota Deed Reservations – Mineral Interests, Life Estates
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