Boley v. Greenough

• Decision Date: 11 May 2001
• Docket Number: No. 99-299.,99-299.
• Citation: 2001 WY 47,22 P.3d 854
• Parties: Gabrielle Manigault BOLEY; Edwin L. "Tooter" Rogers and Elizabeth Josephine Rogers, husband and wife; and Fred L. Oedekoven and Mary Ann Oedekoven, Trustees of the Fred and Mary Oedekoven Family Trust dated September 12, 1995, Appellants (Defendants), v. Douglas C. GREENOUGH; Gary F. Greenough; Jess S. Greenough; Michael W. Greenough; Patrick B. Greenough; Myrtle A. Wallis; and Kathryn M. York, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

22 P.3d 854

2001 WY 47

Gabrielle Manigault BOLEY; Edwin L. "Tooter" Rogers and Elizabeth Josephine Rogers, husband and wife; and Fred L. Oedekoven and Mary Ann Oedekoven, Trustees of the Fred and Mary Oedekoven Family Trust dated September 12, 1995, Appellants (Defendants), v. Douglas C. GREENOUGH; Gary F. Greenough; Jess S. Greenough; Michael W. Greenough; Patrick B. Greenough; Myrtle A. Wallis; and Kathryn M. York, Appellees (Plaintiffs).

No. 99-299.

Supreme Court of Wyoming.

May 11, 2001.¹

Representing Appellants: John M. Daly and Patrick G. Davidson of Daly Law Associates, P.C., Gillette, WY.

Representing Appellees: Haultain E. Corbett and Dan B. Riggs of Lonabaugh and Riggs, Sheridan, WY.

Before LEHMAN, C.J., and GOLDEN, HILL, and KITE, JJ.

KITE, Justice.

[¶ 1] When oil was discovered on ranch property owned by Frank and Doris Greenough (the Greenoughs), they sought to share that benefit by conveying royalty interests to their children. The resulting seventy-seven separate assignments each used the terms "royalty interest" and "over-riding royalty," inter alia, in reference to the nature of the interest transferred. Thirty years later, subsequent purchasers of various tracts in the ranch property disputed the Greenough children's royalty interests. They claimed the interests assigned were not perpetual nonparticipating royalty interests. The appellants relied exclusively on the use of the term "over-riding royalty" in the assignment documents and the contemporary definition of that technical term to contend the assignments transferred only an overriding royalty on leases in existence at the time of the conveyance. They argued the assignments were void, ab initio, because the Greenoughs held no leaseholds or overriding interests at the time of conveyance and, therefore, had nothing to convey. The district court entered summary judgment in favor of the Greenough children. We affirm because the assignments, on their face, permit no other interpretation than that which passes perpetual nonparticipating royalty interests.

ISSUES

[¶ 2] The appellants articulate three issues:

1. Did the District Court err in determining that the Greenoughs' Assignments of Royalty conveyed a perpetual royalty interest to the Appellees?

2. Did the District Court err in determining that the Greenoughs' Assignments of Royalty were doubtful and uncertain, so as to allow the extrinsic evidence as to the intent of the Greenoughs in making their assignments?

3. Did the District Court err in granting the Plaintiffs' (Appellees') Motion for Summary Judgment?

The appellees state essentially the same issues:

A. Did the trial court correctly rule that the Assignments of Royalty conveyed perpetual royalty interests that were applicable to existing and subsequent leases of the underlying mineral estate?

B. Was the trial court correct in considering extrinsic evidence as to the facts and circumstances surrounding the execution of the Assignments of Royalty?

C. Did the trial court correctly rule that there were no genuine issues as to material fact and that the interpretation of the Assignments of Royalty was a question of law for the court to decide?

FACTS

[¶ 3] In the 1960s, the Greenoughs owned a fee interest in surface and mineral rights to approximately one hundred sections of land in northern Campbell County near Recluse. In 1967, a commercial quantity of oil was discovered on the Greenough ranch. Between November 28, 1967, and January 15, 1969, the Greenoughs executed and delivered to their children, the appellees, seventy-seven different documents, each entitled "Assignment of Royalty."

[¶ 4] Each assignment recites that the consideration therefor is the "[l]ove and affection" of the receiving child, and each assignment specifies that it "is intended as a gift" for that named child. Each assignment further recites that the Greenoughs

do hereby SELL, ASSIGN, SET OVER, TRANSFER and CONVEY ... all right title and interest in, of and to Percent ( %) of all the oil, gas and other hydrocarbon substances produced and saved from the following described lands....

Each assignment is for either one-half of one percent or one percent of the oil, gas, and other hydrocarbons produced from one of eleven tracts of land within the Greenough ranch. The net effect of those seventy-seven separate documents was to convey to each of the Greenough children a shared seven percent interest in the oil produced from some of those eleven tracts and a three and a half percent interest in the remaining tracts. Each habendum clause is identical:

TO HAVE AND TO HOLD said royalty interest unto said assignee, [his] heirs, successors and assigns as above set forth; the said oil, gas and other hydrocarbon substances so produced and saved from said land to be delivered free of cost to assignee, his successors or assigns, in the pipe line or pipe lines serving said premises or into tanks erected for the purpose of storing said products, together with the rights, privileges and benefits derived therefrom. Assignors covenant and agree that they have lawful right to sell and convey said royalty, and that they will warrant and defend the title to the same.

Each assignment also contains the following language: "This is an OVER-RIDING royalty conveyed by assignors and accepted by assignee subject to the terms of the lease, leases, operating agreement and operating agreements now held by assignors covering said lands."

[¶ 5] Notwithstanding the foregoing language, the parties agree that the Greenoughs did not own leasehold interests in any of the lands described in the assignments and did not possess overriding royalty interests in any of the lands. Nor did they possess any overriding royalty interests as a lessee.

[¶ 6] In 1974, the Greenoughs sold their ranch to the TR Ranch Limited Liability Company (TR Ranch), reserving certain mineral interests but conveying the remainder to the purchaser. It is not contested that the Greenough children's interests were recorded or that those children received royalty payments from all the lands covered by the assignments from 1967 to 1998 because of the assignments. Nothing in the record suggests that either the parents or the children questioned the nature or scope of the royalty interest granted during the thirty-one years after the assignments were made. In 1995, TR Ranch conveyed portions of the ranch to Edwin and Elizabeth Rogers. In 1996, TR Ranch conveyed the balance of the ranch to Gabrielle Manigault Boley who, in turn, conveyed a portion of the land to the Oedekoven Trust. Each of the foregoing transactions conveyed lands burdened by the assignments.

[¶ 7] In early 1998, the Boley No. 31-36 Well was drilled and completed. A portion of the spacing unit for this well was subject to the Greenough children's assignments. The well operator obtained a Drilling Title Opinion and a Division Order Title Opinion, both of which concluded the author could not determine whether the assignments to the Greenough children were intended to be perpetual royalty interests or were limited to any oil and gas leases in effect at the time of the assignments. The operator was thus advised to hold royalties in suspense pending resolution of the meaning of the assignments.

[¶ 8] Faced with the first interruption of royalty payments in thirty years, the Greenough children sought a declaratory judgment as to their interests in production from the lands subject to the assignments. They bolstered their position with their own affidavits in addition to affidavits from their mother (their father had died in the interim) and the attorney who drafted the assignments, which provided some factual background for the assignments and the subjective intent of the assignors to pass perpetual nonparticipating royalties to the children. The appellants, however, took the position that, because the assignments used the term "overriding royalty" and the Greenoughs held neither leaseholds nor overriding royalty interests in any of the subject lands, the assignments were, as a matter of law, either limited to any leases that were outstanding at the time or void, ab initio.

[¶ 9] The district court found the assignments were intended to transfer perpetual royalty interests in the described lands which were not limited to the duration of any particular lease but instead were applicable to existing and subsequent leases of the underlying mineral interests. This appeal timely followed.

STANDARD OF REVIEW

[¶ 10] This court has concisely stated the standard of review for summary judgment in contract litigation as follows:

A summary judgment is appropriate in litigation when there are no genuine issues of material fact and the prevailing party is entitled to judgment as a matter of law. In contract litigation, when the terms of the agreement are unambiguous, the interpretation is a question of law, and a summary judgment is appropriate because there is no genuine issue of material fact. Whether a contract is ambiguous is a question of law for the reviewing court. We review questions of law de novo without affording deference to the decision of the district court.

According to our established standards for interpretation of contracts, the words used in the contract are afforded the plain meaning that a reasonable person would give to them. When the provisions in the contract are clear and unambiguous, the court looks only to the "four corners" of the document in arriving at the intent of the parties. In the absence of any ambiguity, the contract will be enforced according to its terms because no construction is appropriate.

Amoco Production Company v. EM Nominee Partnership Company, 2 P.3d 534, 539-40 (Wyo.2000) (citations omitted); see also Burbank v. Wyodak Resources Development Corp., 11 P.3d 943, 946-47 (Wyo.2000).

[¶ 11] Assignments are contracts and are construed according to the rules of contract interpretation. Wolter v. Equitable Resources Energy...