Ell v. Ell, 9772

Decision Date17 July 1980
Docket NumberNo. 9772,9772
Citation295 N.W.2d 143
PartiesNick ELL, Plaintiff and Appellee, v. Adam ELL and Irene Ell, Defendants and Appellants. Civ.
CourtNorth Dakota Supreme Court

Maurice R. Hunke, Dickinson, and Marshall T. Bergerud, Killdeer, for plaintiff and appellee; argued by Marshall T. Bergerud, Killdeer.

Mackoff, Kellogg, Kirby & Kloster, Dickinson, for defendants and appellants; argued by Ward M. Kirby, Dickinson.

ERICKSTAD, Chief Justice.

This is an appeal from a judgment entered in Dunn County District Court which granted the plaintiff's application for revision and reformation of a written contract. We affirm.

The plaintiff, Nick Ell (Nick), and the defendant, Adam Ell (Adam), are brothers who reside on separate farmsteads in Dunn County, North Dakota. Nick and Adam are the sons of Adolph and Frances Ell, both of whom are now deceased. During their childhood, Nick and Adam lived on a farm which consisted of approximately 480 acres and which included a parcel described as the "Southwest Quarter (SW1/4) of Section Thirty-three (33), Township One Hundred Forty-five (145) North, Range Ninety-six (96) West of the Fifth Principal Meridian, Dunn County, North Dakota" (hereinafter referred to as the Ell quarter). This action concerns title to one-half of the mineral rights to the land described above.

The trial court's findings of fact are not in dispute. On April 2, 1962, Nick purchased the Ell quarter, as well as an additional 320 acres of the family farmstead, from his parents on a contract for deed. Nick and Adam farmed the land together and engaged in a cooperative farming arrangement on various other lands they owned and leased. The record reveals that there was a 240-acre parcel of land located near the Ell quarter which was commonly referred to as the "Jepson land." It is undisputed that the Ell family had long desired to acquire this tract of land. It was undeniably understood among the Ell family members that if the Jepson land ever became available for purchase, Nick was to acquire the property and transfer the 160-acre tract of land known as the Ell quarter to Adam.

The Jepson land eventually became available for sale in 1963. Nick purchased the 240-acre tract on a contract for deed dated October 24, 1963. The purchase price was $13,200. All mineral rights to the Jepson land were reserved by the seller.

The record reveals that shortly after Nick acquired the Jepson land, he and Adam met relative to the purchase of said property and the forthcoming transfer of the Ell quarter to Adam. The following colloquy between Nick and his attorney on direct examination discloses what took place at that meeting:

"Q. After you purchased the Jepson property, in 1963, did you then discuss with Adam or did you discuss with Adam such purchase?

"A. Yes.

"Q. And where did this discussion take place?

"A. I suppose it was at home.

"Q. At your home where your mother and yourself lived?

"A. Yes.

"Q. Did you advise him of the fact that you had made the purchase?

"A. Yes.

"Q. Was there anything else said by yourself to Adam at such time?

"A. Well, all I said was I was going to reserve the minerals because I didn't get any from the Jepson land.

"Q. You said that you had not received minerals on the Jepson property?

"A. That's right.

"Q. And that you were going to reserve the minerals on the southwest quarter of Section 33 (the Ell quarter)?

"A. Yes.

"Q. Did he indicate any agreement or disagreement with such arrangement?

"A. Well, he didn't say either way.

"Q. He didn't say yes or he didn't say no?

"A. No.

"Q. No argument took place?

"A. No.

"Q. Did you discuss the financial arrangements insofar as the payment of the Jepson property was concerned?

"A. Yes.

"Q. What was the arrangement as to such payment?

"A. Well, he was to pay half of the payments and that then I would give him that quarter of land.

"Q. He was to pay half of the purchase price on the Jepson property?

"A. Yes."

Adam's testimony is in accord with Nick's testimony with respect to the discussion which took place after Nick had purchased the Jepson land.

J. Kenneth Eckes, an attorney from Killdeer, North Dakota, who is now deceased, had been the Ell family's attorney for several years. Nick testified that he approached Eckes sometime around 1963 and asked him to draft a contract for deed for the conveyance of the Ell quarter to Adam. Nick stated that he told Eckes to include a reservation of mineral rights in the deed. Eckes thereafter prepared a contract for deed which was signed by Nick, Adam, and Irene Ell, Adam's wife, on October 21, 1964. Irene had no knowledge of any prior agreement between the two brothers. The contract for deed called for a conveyance of the Ell quarter to Adam and Irene for the sum of $6,600. It is undisputed that neither the contract for deed nor the quit claim deed which conveyed the Ell quarter to Adam and Irene contained a reservation of the mineral rights in Nick.

On October 21, 1971, Frances Ell executed a warranty deed conveying approximately 480 acres (including the so-called Ell quarter) to Nick pursuant to the 1962 contract for deed between Frances and Adolph Ell (his parents) and himself. On October 21, Nick and Frances Ell (Adolph having died since execution of the contract for deed) also executed a quit claim deed to Adam and Irene Ell which conveyed the Ell quarter to them as "joint tenants and not as tenants in common with the right of survivorship." The quit claim deed, which was also prepared by Eckes, was recorded in the office of the Dunn County Register of Deeds on October 22, 1971. Although Nick testified that he had told Eckes to include a mineral reservation in the quit claim deed, it is undisputed that no such reservation was contained in the instrument.

On September 12, 1972, Nick executed and delivered an oil and gas lease to one C. E. Beck which covered the lands owned by Nick as well as the Ell quarter. This lease was later assigned to Amoco Production Company. Nick received a bonus consideration for execution of the lease and had continued to receive annual delay rental payments for each of the years of the existing ten-year primary term of the lease.

On September 19, 1972, Adam and Irene Ell had executed and delivered an oil and gas lease to Patrick Petroleum Company which covered the lands they owned in Dunn County. The following colloquy between Nick's attorney and Adam is revelatory of Adam's intent with respect to the mineral rights to the Ell quarter:


"Q. Now, at the time that you and your wife signed that oil and gas lease (to Patrick Petroleum Company) which is now Plaintiff's Exhibit I, um, you intended to lease all of the minerals that you owned in Dunn County, North Dakota, didn't you?

"A. Yes.

"Q. And at that time, you did not lease the minerals under the southwest quarter of Section 33 (the Ell quarter) because you thought that Nick owned them and you did not, is that also true?

"A. Yes.

"Q. At the time you and your wife signed that oil and gas lease, in September of 1972, and, when you intended to lease all the minerals you owned, if you had known or thought that you owned the minerals under the southwest quarter of Section 33, you would have leased them also, wouldn't you?

"A. Well, I just didn't pay no attention at that time.

"Q. I know that, but, because you thought Nick owned them, right?

"A. Yes.

"Q. But, if you had known or thought that you had owned the minerals under the southwest quarter of 33, in September of 1972, you would have leased them to the same oil company that you gave the lease on your other land in Dunn County?

"A. Well, yes."

A careful examination of the record reveals that in 1978 Nick and Adam became aware of the absence of a mineral reservation in the quit claim deed of 1971.

In March of 1978, Earle R. Foster, Jr., an independent title examiner and lease broker, was employed by Amoco Production Company to examine titles to oil and gas leases which Amoco held in Dunn County. The purpose was to determine whether or not those titles and leases were in order. Foster's title examinations disclosed that, although Nick had leased the mineral rights to the Ell quarter to C. E. Beck in September of 1972 (the lease was later assigned to Amoco), Nick was not the record title owner to said property. The title examination showed that one-half of the mineral rights to the Ell quarter were vested in Adam, whereas the remaining one-half undivided interest belonged to the State of North Dakota.

After he discovered this discrepancy in the records, Foster paid a visit to the farmstead of Adam and Irene Ell for the purpose of attempting to secure a lease on their one-half interest in the minerals in the Ell quarter. Foster informed Adam that he (Adam) was the record title owner to one-half of the minerals, and Foster offered Adam $30 per net mineral acre as a bonus from Amoco for acquisition of an oil and gas lease on the Ell quarter. The events which took place at that first visit, and subsequent visits to the Ell farmstead by Foster, are best revealed in the following colloquy at trial between Adam and opposing counsel:


"Q. He (Foster) came to you three times then and the first time he just came to you and talked about maybe whether he could get a lease from you and he explained to you that the records showed that even though Nick had given an oil and gas lease on the southwest quarter of 33 (the Ell quarter), the records showed that Nick didn't own the minerals, but, that you did. Do you recall that he just told you about that?

"A. Yes.

"Q. And of course, you were surprised to learn that, isn't that right?

"A. Yes.

"Q. And in fact, you didn't believe it when Mr. Foster told you that, so, he said, well, I'll come back again and I'll bring a copy of the deed and show it to you. Do you remember that?

"A. Yes.

"Q. And then Mr. Foster came back a second time, a few...

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