Black Stone Minerals Co. v. Brokaw

893 N.W.2d 498

BLACK STONE MINERALS COMPANY, L.P. and the Hamill Foundation, PlaintiffsandMissouri River Royalty Corporation and Bauer Family LLP, Plaintiffs and Appellants

v.Kate Sarah BROKAW, Gordon Brokaw as Personal Representative of the Estate of Evelyn Brokaw, Gordon Brokaw as Trustee of the Testamentary Trust U/W of Evelyn G. Brokaw FBO Jacob Gordon Brokaw, Gordon Brokaw as Trustee of the Testamentary Trust U/W of Evelyn G. Brokaw FBO Emily Sue Brokaw, Kristen Jones, Steven Irgens, James Scott Brokaw, Ryan Kyle Brokaw, Brett Christopher Brokaw, Gordon D. Brokaw, Linda B. Irgens, Martha Brokaw, Lyman G. Brokaw, and all other persons unknown claiming any estate of, interest in or lien or encumbrance upon, the real estate described in the complaint, Defendants and Appellees

No. 20160286

Supreme Court of North Dakota.

Filed April 25, 2017

Jannelle R.S. Combs, 436 Brunswick Drive, Bismarck, N.D. 58503, for plaintiffs and appellants.

Aaron J. Weber (argued), Ariston E. Johnson (appeared), and Dennis E. Johnson (on brief), 109 Fifth Street SW, P.O. Box 1260, Watford City, N.D. 58854–1260, for defendants and appellees.

Tufte, Justice.

[¶ 1] Missouri River Royalty Corporation and Bauer Family LLP appeal a district court's order granting summary judgment to the defendants, most of whom are members of the Brokaw family (collectively "Brokaw"). On cross motions for summary judgment, the district court quieted title to certain minerals in favor of Brokaw. We affirm in part, reverse in part, and remand to correct the judgment.

I

[¶ 2] In 1945, Lyman Brokaw acquired a full, undivided interest in 160 acres through a Williams County tax deed. Later that year, Lyman and his wife, Martha Brokaw, initiated a quiet title action. The district court entered judgment by default quieting title in Lyman and Martha Brokaw. The judgment decreed: "the Plaintiffs, Lyman G. Brokaw, also known as L. G. Brokaw, and Martha Brokaw, his wife, are the owners in fee simple absolute of [the property]." Other than the judgment recorded in Williams County, the parties agree no other records of the quiet title action exist today.

[¶ 3] In 1958, Lyman conveyed "an undivided full interest" in the minerals in and under the property to North American Royalties Inc. ("North American"). Later that year, North American conveyed an undivided one-half interest in the minerals to Claud B. Hamill. Over the next fifty years, North American transferred other fractional interests to various persons and entities. By the time of this action, the Plaintiffs alleged the ownership proportions of the 160 mineral acres were as follows: The Hamill Foundation—50%; Black Stone Minerals Co.—25%; Missouri River Royalty Corp.—18.75%; and Bauer Family LLP—6.25%. Appellants Missouri River Royalty Corp. and Bauer Family LLP will be referred to below as "North American Successors."

[¶ 4] North American Successors claim ownership through North American and initiated this action against Brokaw to quiet title in the minerals. Brokaw moved for summary judgment, arguing the 1945 judgment vested a one-half interest in Martha and thus Lyman's conveyance to North American of a "full interest" had transferred only the one-half interest he owned and not the one-half interest vested in Martha by the 1945 judgment. North American Successors also moved for summary judgment, arguing first that the 1945 judgment did not vest one-half interest in Martha, and in the alternative that the Marketable Record Title Act or the doctrines of adverse possession and bona fide purchaser supported their claims to title.

[¶ 5] The district court granted Brokaw's motion for summary judgment. Its order and judgment decrees that a one-half interest in the minerals is owned by "North American Royalties Inc. and Successors in interest (Plaintiffs)." The district court did not make specific findings on the mineral interests of Hamill, Black Stone, Missouri River, and Bauer. The four Plaintiffs below moved the court to correct the judgment, arguing that it vested title in a non-party, North American Royalties, Inc. The district court denied the motion. North American Successors appeal, arguing the district court erred in its determinations regarding (1) the 1945 judgment vesting a one-half mineral interest in Martha; (2) adverse possession; (3) the Marketable Record Title Act; (4) bona fide purchaser; and (5) their motion to correct judgment.

II

[¶ 6] North American Successors argue the district court erred by concluding as a matter of law that the 1945 judgment vested in Martha Brokaw one-half interest in the minerals. Under N.D.R.Civ.P. 70(b), a North Dakota court judgment can vest title to property in any party "and such judgment has the effect of a conveyance." McKenzie County v. Hodel , 467 N.W.2d 701, 704–05 (N.D. 1991). The question before us is whether the district court properly interpreted the 1945 judgment as divesting a one-half interest from Lyman Brokaw and vesting it in Martha.

[¶ 7] Interpretation of the 1945 judgment is a question of law that we review de novo. Slorby v. Slorby , 2009 ND 11, ¶ 4, 760 N.W.2d 89. We start with the text of the judgment to determine whether its language is plain and unambiguous or ambiguous. Id. at ¶ 5. If the language is unambiguous, then the analysis ends and we must accept the "literal meaning of the language used." Sullivan v. Quist , 506 N.W.2d 394, 401 (N.D. 1993). Only if the language is ambiguous is there room for construction to reach a fair and reasonable interpretation. Id.

[¶ 8] The 1945 judgment decrees that Lyman and Martha were "the owners in fee simple absolute" of the property. North American Successors asserts this language is ambiguous because it does not describe the relative ownership between Lyman and Martha. They argue fee simple absolute in this context means the property belonged to them and nobody else, but it does not describe the fractional share of interest that might have been vested in Martha. Lyman and Martha may have been co-plaintiffs in the quiet title action simply because of her homestead interest, without intention to alter their relative ownership. E.g., Sexton v. Sutherland , 37 N.D. 500, 510–11, 164 N.W. 278, 282 (N.D. 1917) (acknowledging "she may maintain an action to determine adverse claims to her homestead, even though the legal title thereto is vested in her husband"). Although that contrary intent is possible, a mere possibility of a contrary intent does not alter what the district court unambiguously did here: vest title in both Lyman and Martha.

[¶ 9] Absent certain exceptions not applicable here, "[e]very interest created in favor of several persons in their own right is an interest in common." N.D.R.C. § 47–0208 (1943). The 1945 judgment vested ownership of the property in Lyman and Martha "in fee simple absolute" without further detail. Thus the judgment vested title in Lyman and Martha as tenants in common. Property interest owned by tenants in common is "presumed to be equal." 7 Richard R. Powell, Powell on Real Property § 50.02[5] (Michael Allen Wolf ed., 2017). Parties may rebut this presumption with competent evidence, City of Detroit v. Jacobs , 145 Mich. 395, 108 N.W. 671, 672 (1906), but at oral argument the parties confirmed there is no known evidence that might be produced to establish the intent of the district court or the parties in 1945. Accordingly, we conclude the 1945 judgment vested title to the property in Lyman and Martha in equal shares.

[¶ 10] Lyman Brokaw then conveyed "an undivided full interest" to North American. At the time of the conveyance in 1958, he owned only a one-half interest as discussed above. Because he could not convey what he did not own, we conclude Lyman Brokaw conveyed only his one-half interest to North American. Martha retained her one-half, which eventually passed to Lyman and Martha Brokaw's descendants, the defendants in this current action.

III

[¶ 11] We now consider whether North American Successors adversely possessed the one-half interest retained by Martha. Adverse possession, a doctrine born in common law, is codified within N.D.C.C. chs. 28–01 and 47–06. Under N.D.C.C. § 28–01–08, a party has legal title to land when that party establishes it possessed the land under claim of title and continuously occupied the land for twenty years. Our decisions have defined "possession" in this context as requiring possession that is "actual, visible, continuous, notorious, distinct, hostile, and of such character" that "unmistakably indicates" the occupant asserted exclusive ownership. Moody v. Sundley , 2015 ND 204, ¶ 15, 868 N.W.2d 491. "Possession" of oil and gas minerals for adverse possession purposes requires more than merely executing oil and gas leases. Sickler v. Pope , 326 N.W.2d 86, 93 (N.D. 1982).

[¶ 12] The undisputed facts show no one could have adversely possessed the minerals under our Sickler standard until 2013, when the first well was spudded. North American Successors attempt to overcome the Sickler actual possession standard by arguing the 2013 amendment to N.D.C.C. § 47–19.1–07 redefined "possession" for purposes of analyzing adverse possession.

[¶ 13] The 2013 amendment to § 47–19.1–07 added the following: "The holder of an interest in severed minerals is deemed in possession of the minerals if that person has used the minerals as defined in section 38–18.1–03 and the use is stated in the affidavit of possession provided for in this section." North American Successors argue the plain language of the Marketable Record Title Act establishes the legislature intended for this provision to extend to adverse possession. We disagree. Section 47–19.1–07 begins with "[f]or the purpose of this chapter," which is language of limitation rather than extension. Nowhere in the statute is there any reference to adverse possession. The language of § 47–19.1–07 unambiguously applies only to chapter 47–19.1. The district court did not err by rejecting North American...