Ellis v. McKenzie
| Decision Date | 26 January 2018 |
| Docket Number | No. 16,16 |
| Parties | JAMES H. ELLIS, ET AL. v. OLIN L. McKENZIE, ET AL. |
| Court | Court of Special Appeals of Maryland |
JAMES H. ELLIS, ET AL.
v.
OLIN L. McKENZIE, ET AL.
No. 16
COURT OF APPEALS OF MARYLAND
Argued: October 11, 2017
September Term, 2017
January 26, 2018
MARYLAND CONSTITUTIONAL LAW - Declaration of Rights, Article 24 and Constitution, Article III, Sec. 10 - Constitutional challenge to Dormant Mineral Interests Act (DMIA) by owners of mineral rights severed over 100 years ago, in defense of action by surface owners to terminate, under DMIA, mineral rights never "used" by mineral owners or their predecessors. Mineral owners assert that, under Muskin, 422 Md. 544 (2011) and Dua, 370 Md. 604 (2002), Md. Const. affords greater protection of vested rights against retrospective legislation and uncompensated taking than does the federal constitution.
HELD: Validity of DMIA sustained. Under Landgraf test, 511 U.S. 244, adopted in John Deere Const., 406 Md. 139, DMIA is not retrospective and vested rights are not subject to Maryland's enhanced protection rule. Under modern due process principles, there is no taking.
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Circuit Court for Garrett County
Case No. 11-C-13-012941
Barbera, C.J. Greene Adkins Watts Hotten Getty Rodowsky, Lawrence F. (Senior Judge, Specially Assigned), JJ.
Opinion by Rodowsky, J.
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The Dormant Mineral Interests Act (DMIA or the Act), Maryland Code (1982, 2014 Repl. Vol.), §§ 15-1201 through 15-1206 of the Environment Article (En.) authorizes a circuit court, under specified circumstances, to terminate a dormant "severed mineral interest," thereby effecting a merger of that mineral interest with the estate overlying it. Respondents, Olin L. McKenzie, et al., owners of surface estates, invoked the Act in the Circuit Court for Garrett County. Petitioners, James H. Ellis, et al., owners of severed mineral interests, challenged, inter alia, the constitutionality of the Act. The circuit court sustained the Act and terminated petitioners' mineral interests. On appeal, the Court of Special Appeals affirmed in an unreported opinion. We granted certiorari. 453 Md. 356, 162 A.3d 837 (2017). For the reasons hereinafter set forth, we affirm.
Between 1884 and 1898, one Sarah Wright conveyed, cumulatively, hundreds of acres in Garrett County by seven deeds that, by variously phrased clauses, reserved the mineral interests. She died in 1900, leaving a will that divided her estate into four equal shares. The respondents are the present owners of the fee simple interests in the surface tracts who trace their titles back to the seven deeds from Sarah Wright. Petitioners are, to the extent known, the individuals and personal representatives who, prior to the termination of dormant mineral interests, owned or had claims to those mineral interests by tracing back to one of the four shares of Sarah Wright's testamentary estate. Prior to the filing of the initial Petition for Termination in this action, none of the petitioners in this case knew of the existence of the severed mineral interests.
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DMIA was enacted by the Acts of 2010, Chapters 268 and 269, effective October 1, 2010. The respondents learned that the mineral interests were severed from their surface interests and employed a genealogy expert who conducted a study to identify the present heirs and descendants who inherited the mineral interests. The respondents filed a Petition for Termination of Dormant Mineral Interests on January 10, 2013. Service of process was effected on the petitioners in personam or by publication.
The circuit court entered default against forty-six of the petitioners. The remaining mineral interest owners filed answers to the petition, asserting that the DMIA is unconstitutional and that the petition failed properly to name several parties. Specifically the latter contention was that the petition incorrectly named Edward C. Boyce and his brothers, Kenneth and Leslie, as deceased parties with unknown heirs. It was further contended that the petition failed to name the personal representatives of Emma Englar Ellis and Helen L. Patchen Hafer pursuant to Md. Code (1974, 2011 Repl. Vol.), § 1-301 of the Estates & Trusts Article. The respondents thereupon conducted discovery to identify the missing parties. During this period, George Thomsen, as personal representative of the Estate of Emma Englar Ellis, filed a notice of intent to preserve mineral interest on April 10, 2013; Doris J. Erb, as personal representative of the Estate of Helen Patchen Hafer, filed a notice of intent to preserve mineral interest on April 19, 2013; and Edward C. Boyce filed a notice of intent to preserve mineral interest on behalf of himself and his brothers on June 27, 2013.
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Following discovery, the respondents filed their fourth amended petition, joining all of the owners of mineral interests. The parties commendably stipulated to the facts and limited the issues to the constitutionality of the DMIA and the validity of the Notices of Intent to Preserve Mineral Interest ("notices to preserve"). The stipulation also detailed that "[n]o Notice of Intent to Preserve Mineral Interests as allowed under § 15-1204 of the Environment Article was filed in the Land Records of Garrett County by or on behalf of any Respondent or by any person identifying any of the Severed Mineral Interests in this proceeding before the initial Petition for Termination was filed in this action on January 10, 2013." The stipulation listed each of the notices to preserve recorded after the original petition and then noted that the "[petitioners] who are parties to this Stipulation contend that the Notices of Intent are effective to preserve some or all of the Severed Mineral Interests. The [respondents] contend that the Notices of Intent are not effective to preserve any of the Severed Mineral Interests."
The circuit court heard argument on September 14, 2015. By memorandum and order entered on September 18, 2015, it concluded that (1) the DMIA is constitutional; (2) the respondents made the diligent inquiry to find unknown mineral interest owners required by the DMIA, as reflected in an affidavit; and (3) the notices to preserve are void because they were recorded after the commencement of an action to terminate mineral interests. On September 29, 2015, the circuit court entered a final order merging the terminated mineral
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interests of the petitioners into the surface estates of the respondents.1 The order also voided the notice of intent to preserve mineral interest that had been filed in the Land Records of Garrett County.
The petitioners noted an appeal to the Court of Special Appeals on October 15, 2015. That court affirmed on both issues. It concluded that the instant case is indistinguishable from Harvey v. Sines, 228 Md. App. 283, 137 A.3d 1045 (2016), in which the Court of Special Appeals had held that the DMIA is constitutional because the Act does not retrospectively abrogate a property right. The Court of Special Appeals also determined that the notices to preserve did not preserve the interests because they were filed after the action commenced despite minor errors in the petition. The mineral interest owners petitioned for a Writ of Certiorari on March 27, 2017, and the respondents answered on April 10, 2017. This Court granted the writ on June 21, 2017. Additional facts will be stated in the discussion of the issues.
"1. Does the DMIA violate Article 24 of the Maryland Declaration of Rights and Article III, § 40 of the Maryland Constitution by retrospectively
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taking a vested property interest from a mineral owner and transferring it to a surface owner without compensation?
"2. Is a notice of intent to preserve a severed mineral interest effective if recorded by the personal representative of a deceased owner's estate while an action to terminate the interest is pending against the decedent's descendants but not against the personal representative?"
DMIA creates a right in a surface owner of realty that is subject to a severed mineral interest to maintain an action to terminate that severed mineral interest as long as the mineral interest is dormant. No such action was permitted during a one-year grace period following the effective date of the Act. En. § 15-1203(a)(1). A mineral interest is dormant if, for twenty or more years preceding an action to terminate, it has not been used and it is not the subject of a notice recorded during that minimum twenty-year period. En. § 15-1203(a)(2).2
Owners of mineral interests can prevent a court from concluding that their interests are dormant by acting in such a way that is "using" the interest. These actions are active mineral operations, payment of certain taxes relating to the mineral interest, "[r]ecordation
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of an instrument that creates, reserves, or otherwise evidences ... the mineral interest," or recordation of a judgment that specifically references the interest. § 15-1203(c).3
The owner of a mineral interest who wishes to preserve it "may record, at any time, a notice of intent to preserve the mineral interest," or part thereof. § 15-1204(a)(1). Certain information identifying the mineral interest is required. § 15-1204(c).
In addressing both the petition to terminate mineral interests and the notice of intent to preserve such interests, the Act recognizes that there most likely will be difficulties in identifying the owners of a severed, dormant, mineral interest. Section 15-1201(g)(1) defines "'Unknown or missing owner'" as
"any person vested with a severed mineral interest whose present identity or location cannot be determined:
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"(i) From the records of the county where the severed mineral interest is located; or
"(ii) By diligent inquiry in the vicinity of the owner's last known place of residence."
The defined term includes heirs, successors, or assignees. § 15-1201(g)(2).
Thus, § 15-1203(b)(2) provides that an action to terminate "may be maintained, whether or not the owner of the severed mineral interest is an unknown...
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