Bogle Farms, Inc. v. Baca

• Citation: 122 N.M. 422,1996 NMSC 51,925 P.2d 1184
• Decision Date: 09 September 1996
• Docket Number: No. 21,259,21,259
• Parties: BOGLE FARMS, INC., et al., Plaintiffs-Appellees, v. Jim BACA, Commissioner of Public Lands for the State of New Mexico, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 1184

925 P.2d 1184

122 N.M. 422

BOGLE FARMS, INC., et al., Plaintiffs-Appellees, v. Jim BACA, Commissioner of Public Lands for the State of New

Mexico, Defendant-Appellant.

No. 21,259.

Supreme Court of New Mexico.

Sept. 9, 1996.

[122 N.M. 423] Tom Udall, Attorney General, Bridget A. Jacober, Louhannah M. Walker, Christopher G. Schatzman, Special Assistant Attorneys General, Santa Fe, for Appellant.

Jones, Snead, Wertheim, Wentworth & Jaramillo, P.A., Jerry Wertheim, James G. Whitley, Carol A. Clifford, Santa Fe, for Appellees.

Jennings Law Firm, A.D. Jones, Roswell, for Amicus Curiae N.M. Public Lands Council, Inc.

Hinkle, Cox, Eaton, Coffield & Hensley, P.L.L.C., Gregory J. Nibert, Roswell, for Amicus Curiae signatory N.M. title attorneys.

OPINION

RANSOM, Justice.

1. The Commissioner of Public Lands appeals from a partial summary judgment in favor of twenty-six plaintiffs who seek a declaratory judgment that their installment contracts for the purchase of state trust lands do not reserve sand and gravel to the state. The trial court ruled that the Commissioner is collaterally estopped from arguing that the general mineral reservations included within the contracts effectively reserved sand and gravel rights to the state. The court certified this as a proper case for interlocutory appeal under NMSA 1978, Section 39-3-4(A) (Repl.Pamp.1991). We accepted jurisdiction over the appeal pursuant to SCRA 1986, 12-203 (Repl.Pamp.1992). The collateral estoppel issue arises from Roe v. State ex rel. State Highway Department, 103 N.M. 517, 521, 710 P.2d 84, 88 (1985), cert. denied, 476 U.S. 1141, 106 S.Ct. 2247, 90 L.Ed.2d 693 (1986), in which this Court ruled that because a purchase contract and a patent did not specifically reserve sand and gravel to the state, title to these items passed to the purchaser along with the surface estate.

2. In a prior opinion filed in this case on August 15, 1995, a majority of this Court concluded that Roe does not collaterally estop the Commissioner from litigating whether sand and gravel are minerals within the meaning of the general mineral reservations in question. On motion for rehearing, Plaintiffs urged us to conclude that Roe established a rule of property and to affirm the trial court under principles of stare decisis, notwithstanding the inapplicability of the collateral-estoppel doctrine. We withdrew our prior opinion and directed the Commissioner to respond to Plaintiffs' rule-of-property argument. Hinkle, Cox, Eaton, Coffield and Hensley, P.L.L.C., filed an amicus curiae brief on behalf of New Mexico title attorneys. The case was reargued before the full Court. We reverse and remand with instructions.

3. Facts and proceedings. Plaintiffs are original purchasers of or successors in interest to land sold by the Commissioner of Public Lands pursuant to installment contracts executed in the early 1960s. Each original purchaser, prior to entering into an installment contract, signed under oath an application for purchase which recited that "this application is not made for the purpose of obtaining title to mineral, including but not limited to ... sand and gravel ... but with the sole object of obtaining title to the surface of the land."

4. Several of the plaintiffs have fulfilled their contractual payment obligations and received patents from the Commissioner transferring legal title. In these patents the Commissioner included a specific reservation of sand and gravel rights. One of the plaintiffs, Joe Helm, complained that the purchase contract had not included a specific reservation of sand and gravel and requested that the Commissioner delete from his patent all specific reservations that had not been expressly stated in the purchase contract. The Commissioner refused.

5. Plaintiffs brought this action against the Commissioner, claiming that sand and gravel were not within the general mineral reservation of their purchase contracts and seeking a declaratory judgment that their patents should not include a specific reservation of sand and gravel. Those plaintiffs who had fulfilled their payment obligations and received patents containing the specific reservation asked the trial court to order the Commissioner to issue new patents that do not contain this reservation. Those plaintiffs who were still making payments asked the court to order the Commissioner, upon receipt of full payment, to issue patents not containing the specific reservation.

6. Plaintiffs moved for partial summary judgment, asking the trial court to determine that the general mineral reservation in the purchase contract did not include sand and gravel. Plaintiffs based their request on the doctrine of equitable conversion, arguing that the purchase contracts gave them equitable title to all property interests not specifically reserved, and thus, upon full execution of the purchase contract, each was entitled to a patent conveying legal title to such property interests. Plaintiffs alternatively based their request on the doctrine of offensive collateral estoppel, contending that the Commissioner had a full and fair opportunity to argue the mineral reservation issue in Roe.

7. The trial court entered partial summary judgment, determining that the Commissioner was "collaterally estopped under [Roe ] from litigating whether sand and gravel are minerals, as that term is used in purchase contracts for state lands," but also determining that the Commissioner was free to pursue all issues regarding his counterclaims and affirmative defenses. ¹ In its order the court expressly stated that the collateral estoppel issue involved "a controlling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal from this decision or order may materially advance the ultimate termination of the litigation." This Court has addressed many times the question whether sand and gravel fall within a general mineral reservation in a state land purchase contract. Our opinions have been inconsistent, leaving room for debate on this issue. We consequently agreed with the trial court's assessment and granted the Commissioner's application for interlocutory appeal of the collateral estoppel issue.

8. Partial summary judgment as an effective case-management tool. The Commissioner argues that partial summary judgment was improper because the trial court did not consider his counterclaims and affirmative defenses; but, here, partial summary judgment was an effective case-management tool because it allowed the court to define the course of litigation. A primary issue in this case is whether this Court's holding in Roe is entitled to collateral estoppel effect. If Roe is entitled to collateral estoppel effect, the Commissioner cannot rely on evidence outside the purchase contract's general mineral reservation to resolve a purported ambiguity in favor of a reservation of sand and gravel. "For the State to reserve sand and gravel, a provision so specifying must be included in [the purchase contract]." Roe, 103 N.M. at 521, 710 P.2d at 88. Alternatively, if there is no collateral estoppel, the Commissioner may litigate the meaning of the term "mineral" in each individual contract, and, if he were to prevail, the trial court would not reach the Commissioner's counterclaims or affirmative defenses. Under either scenario, substantial litigation may be avoided through the entry of partial summary judgment.

9. History of sand and gravel litigation in New Mexico. When New Mexico attained statehood, the federal government transferred to the state government control over vast areas of land. This land was to be held in trust for schools and other public institutions. See Act of June 20, 1910, ch. 310, § 10, 36 Stat. 557, 563 (Enabling Act). The state has authority to dispose of this trust land "in whole or in part" as long as it uses the value received therefor in a manner consistent with the Enabling Act. Operating under this authority, the Commissioner entered into several installment purchase contracts, some of which are the subject of this dispute.

10. By the time the Commissioner entered into the disputed contracts, the New Mexico State Land Office had promulgated rules governing the sale of state trust lands. Under these rules the state is required to reserve rights to "[a]ll minerals of whatsoever kind, including oil, gas, commercial sand, gravel and caliche." General Information & Rules & Regulations: Rules Relating to State Land Sales, N.M. State Land Office, Rule 2 (Jan. 22, 1965) (emphasis added). The Commissioner contends that the definition of "mineral" in this rule reflects the law in effect at the time the disputed contracts were executed and that this law governs the meaning of the general mineral reservation, relying in part on Board of County Commissioners v. Good, 44 N.M. 495, 105 P.2d 470 (1940). In Good this Court considered the appropriate measure of damages in an inverse condemnation proceeding when the state has entered land and removed caliche. In determining that the trial court should have received and considered evidence of the value of the caliche taken based upon all uses to which it could be put, we stated that sand, gravel, ordinary clay, and caliche fall within the term "mineral." Id. at 498, 105 P.2d at 472.

11. The Commissioner also cites three Attorney General opinions in which the Attorney General's Office stated its position that sand and gravel were "minerals" within the common meaning of that term. See N.M.Att'y Gen.Op. 61-12 (1961) (stating that sand and gravel were minerals as that term was used in a general reservation clause contained in a "Grant of Material Site" issued to state highway department); N.M.Att'y Gen.Op. 5568 (1952) (stating that the State Inspector of Mines has jurisdiction over sand and gravel pits because sand and gravel are minerals and the inspector has jurisdiction over all mineral mining); N.M.Att'y Gen.Op....