Dixon v. Kaufman

• Decision Date: 07 May 1953
• Docket Number: No. 7353,7353
• Citation: 58 N.W.2d 797,79 N.D. 633
• Parties: DIXON et al. v. KAUFMAN et al.
• Court: North Dakota Supreme Court

Page 797

58 N.W.2d 797

79 N.D. 633

DIXON et al. v.KAUFMAN et al.

No. 7353.

Supreme Court of North Dakota.

May 7, 1953.

Rehearing Denied June 19, 1953.

Syllabus by the Court.

1.Where a defendant in an action to quiet title answers and sets up his interest in or claim to the property involved and seeks affirmative relief by asking that his right or interest so pleaded be adjudged superior to the interest of the plaintiffs, the answer constitutes a counterclaim.

2.Section 32-1709, NDRC 1943, provides that in an action to quiet title no reply shall be necessary on the part of the plaintiff, with four exceptions, none of which directly or by implication includes fraud.Fraud not being within the scope of any exception is provable by the plaintiff against a claim or title set up in a counterclaim without being pleaded in a reply.

3.A certificate of acknowledgment regular on its face is presumed to state the truth.

4.The rule that open and notorious possession and occupancy of real estate by another than the grantor is sufficient to charge a purchaser with knowledge of the rights of the occupant does not apply where the possession is entirely consistent with the record title.

5.It is a general rule that an estate in real property may be transferred by an instrument in writing subscribed by the grantor and the instrument need not be acknowledged or witnessed in order to be valid as between the grantor and grantee.To this rule the conveyance of a homestead is an exception.A conveyance of a homestead that is not executed and acknowledged by both husband and wife is void.

6.A deed that is absolutely void passes no title.It gives no constructive notice and a claim of bona fides may not be based upon a void instrument even when placed of record in the manner prescribed by statute.

7.Before a court of equity will declare a deed void as against the rights of an innocent purchaser on the ground of fraud, the fraud must go to the execution of the instrument rather than the inducement and proof of the fraud must be clear, unequivocal, and its force be undiminished by negligence on the part of the grantor if he be mentally competent.

8.If a loss results to parties ignorant of and innocent of participation in a fraud perpetrated by a third party, the loss must fall on one whose lack of care made the fraud possible rather than upon the one wholly unconnected with the fraudulent transaction.

9.Issues will not be adjudicated where they cannot be resolved without prejudice to the rights of the state, which is not a party to the action.

Paul Campbell, Minot, for plaintiffs and appellants.

Cox, Cox, Pearce & Engebretson, Bismarck, for W. C. Kaufman, Jr., United States Smelting, Refining & Mining Co., Andrew H. Gay, Cyrus B. Frost, Sabine Royalty Corp., California Co., a corporation, and Phillips Petroleum Co., a corporation, defendants and respondents.

Traynor & Traynor, Devils Lake, for Union Oil Co. of California and Los Nietos Co., defendants and respondents.

MORRIS, Chief Justice.

This is a statutory action to quiet title, Chapter 32-17 NDRC 1943, wherein Clarence Dixon alleges that he is the owner of and has an estate and interest in the real property involved in the action which, for convenience of discussion, will be separated into two tracts, the first being the Southeast Quarter (SE 1/4) of Section Thirty-six (36) in Township One Hundred Sixty (160) North of Range Eighty-three (83) West, which will be hereinafter known as the school land because it was acquired by Clarence L. Dixon from the State of North Dakota through the Board of University and School Lands by patent dated October 29, 1945.The second tract consists of the East Half (E 1/2); East Half of the Southwest Quarter (E 1/2 SW 1/4) Lots Three and Four (3-4) of Section Thirty-one (31), Township One Hundred Sixty (160) North of Range Eighty-two (82) West, except Soo Railway right-of-way and except 7.73 acres released for highway.This tract will be hereinafter identified as bank land because it was acquired through the Bank of North Dakota by state treasurer's deed on December 8, 1943.It is alleged that the plaintiffs are husband and wife, make their home on one quarter section of this land, and have done so for many years past.

The school land was purchased by Clarence Dixon at a public sale held in Bottineau County on August 28, 1945, and pursuant thereto he entered into a contract with the State of North Dakota, through the Board of University and School Lands, which contained the following provision:

'The grantor, however, reserves to itself fifty (50) per cent of all oil, natural gas, or minerals which may be found on or underlying such land as required by Chapter 149 of the Session Laws of North Dakota for 1939 as amended by Chapter 165 S. L. of North Dakota for 1941(Sec. 38-0901,Code 1943), together with the right of ingress and egress at all times for the purpose of mining, drilling, exploring, operating and developing said land for oil, gas, and other minerals, and storing, handling, transporting and marketing the same therefrom with the right to remove from said land all of Grantors' property and improvements.'

After providing for the issuance of patent upon payment of full purchase price, it was further provided:

'said patent, however, shall contain the reservation required by Chapter 149, Laws of 1939, as amended as aforesaid by Chapter 165, S. L. 1941.(Sec. 38-0901,Code 1943.)'

Section 38-0901, NDRC 1943, provides:

'In every transfer of land, whether by deed, contract, lease, or otherwise, by the state of North Dakota, or by any department thereof, fifty percent of all oil, natural gas, or minerals which may be found on or underlying such land shall be reseved to the state of North Dakota.Any deed, contract, lease, or other transfer of any such land made after February 20, 1941, which does not contain such reservation shall be construed as if such reservation were contained therein.The provisions of this section shall apply to all lands owned by this state or by any department thereof regardless of how title thereto was acquired.'

The patent under which Dixon claims title recites that he has complied with his contract of purchase and is entitled to a patent 'subject, however, to all legal reservations and exceptions made by law.'And the grant recited in the patent provides: 'reserving and excepting from the operation of this grant all rights and privileges vested in the State of North Dakota under the provisions of the constitution and laws of said state.'

The history of the acquisition of the bank land by Clarence L. Dixon shows that on January 26, 1942, he entered into a contract with the state treasurer, as trustee for the State of North Dakota, which contained the provision 'That vendor hereby reserves to the State of North Dakota fifty per centum (50%) of all oil, natural gas and minerals which may be found on or underlying said land * * *.'The state treasurer's deed issued to him pursuant to this contract provided:

'Reserving and excepting, however, to the State of North Dakota, fifty per centum (50%) of all oil, natural gas and minerals which may be found on or underlying said lands, pursuant to the provisions of Chapter 165 of the 1941 Session Laws of North Dakota, and further reserving and excepting title to all archaeological materials, whether found upon or below the surface of said lands, pursuant to the provisions of Chapter 223 of the 1939 Session Laws of North Dakota, and further excepting all minerals, including oil, gas and coal, and all mineral rights not now owned by the party of the first part according to the records in the office of the Register of Deeds of said County and State, * * *.'

The instruments of title by which Clarence L. Dixon has established his right, title, and interest which he originally acquired in the property were subject to the reservation, among others, of fifty per cent of all oil, natural gas, or minerals that may be found on or underlying the land.The issues revolve around the ownership of oil, gas, or minerals on or underlying the land, the validity of certain oil leases, and the right of some of the defendants to enter upon the surface for the purpose of exploiting that which lies underneath.

The answering defendants present claims to or interest in the property in question that fall into two categories--one, fee simple title to a fractional part or a percentage of all the oil, gas, and other minerals on or under the land; two, a leasehold interest in and to oil, gas, and other minerals lying on or under said lands or specifically described portions thereof.We will first consider the issues presented by the claims of those defendants who assert that they are owners in fee simple of an interest in the oil, gas, and other minerals.Neither the State of North Dakota nor any of its agencies or departments are parties to this action.There is, consequently, no issue with respect to the ownership of the fee simple title to fifty per cent of all oil, natural gas, or minerals under any of these lands reserved in and by the patent and the treasurer's deed issued in behalf of the state by its duly constituted officials.The trial court properly rendered no judgment herein affecting the interests of the state reserved in the conveyances to the plaintiff Dixon.

The defendant Kaufman claims no present interest adverse to the plaintiffs.He nevertheless answered and alleged that the plaintiffs sold to him on December 22, 1949, an undivided one-half interest in all oil, gas, and other minerals on and under the land involved in this action; that the plaintiffs executed and delivered to him a mineral deed conveying such interest, which deed was duly recorded on December 23, 1949, in the office of the Register of Deeds of Bottineau County.He then alleges that thereafter and on December 24, 1949, he conveyed by mineral deed in writing an undivided one-fourth...