Farnik v. Board of County Com'rs of Weld County

• Decision Date: 22 June 1959
• Docket Number: No. 18593,18593
• Parties: Frank FARNIK, Plaintiff in Error, v. BOARD OF COUNTY COMMISSIONERS OF The COUNTY OF WELD, Colorado, Amerada Petroleum Corporation, and The Durland Trust Company, Defendants in Error.
• Court: Colorado Supreme Court

Page 467

341 P.2d 467

139 Colo. 481

Frank FARNIK, Plaintiff in Error, v. BOARD OF COUNTY COMMISSIONERS OF The COUNTY OF WELD,

Colorado, Amerada Petroleum Corporation, and The

Durland Trust Company, Defendants in Error.

No. 18593.

Supreme Court of Colorado, En Banc.

June 22, 1959.

As Modified on Denial of Rehearing July 13, 1959.

Haffke & Johnson, Fort Morgan, for plaintiff in error.

J. Fred Schneider, Denver, amicus curiae.

Robert G. Smith, Greeley, for defendant in error, Board of County Commissioners of County of Weld.

HALL, Justice.

The parties appear here in the same order they appeared in the trial court, and we refer to them as plaintiff and defendants or by name.

Prior to December 1936, the defendant, Durland Trust Company, was the owner of E 1/2, Sec. 35, Twp. 7 North, Range 59 West of the 6th p. m., Weld County, Colorado. Taxes levied for the year 1935 against said property being unpaid, the County Treasurer of Weld County, on December 14, 1936, caused said property to be sold for nonpayment of taxes. The tax sale certificate was isssued to Weld County, as provided by law, and thereafter on November 15, 1940, a treasurer's deed to said land was issued to Weld County. The validity of the proceedings leading up to the issuance of this deed and the validity of the deed itself are not in question. Weld County, on December 10, 1942, more than two years after receiving the treasurer's deed, through court decree quieted its title to said lands. On November 22, 1943, twenty days short of one year after the decree quieting the title had been entered, the county offered at public sale the above tract and 166 other tracts, title to all of which had been acquired through treasurer's deeds issued on account of nonpayment of taxes. Offers of sale expressly provided that the county would reserve all minerals. Farnik purchased said E 1/2, Sec. 35, and paid therefor the sum of $800. The deed issued to him on December 9, 1943, by Weld County expressly provided:

'* * * Weld County * * * does grant, bargain and sell the following described real estate, to-wit:

E 1/2: Section 35, Township 7 North, Range 59 West of the 6th P.M.

except reservations in favor of the Union Pacific Railroad Company and except reservations in the United States patent and reserving existing reservoir sites and existing rights of way for roads and irrigation ditches and subject to existing leases; and reserving therefrom, to grantor, the oil, gas or other minerals therein.' (Emphasis supplied.)

Farnik was well aware of the terms of sale and the reservations set forth in the deed. All deeds issued by Weld County had this same reservation.

On July 26, 1949, Weld County entered into an oil and gas lease with one Babcock, covering said E 1/2, Sec. 35, (together with other lands); said lease is for a primary period of ten years, contains a provision for an annual deferred drilling rental of 50 cents per acre, and reserves as rental the usual 1/8 of the oil produced.

On September 14, 1949, Babcock assigned the lease to the defendant, the Amerada Petroleum Corporation. On June 16, 1955, Amerada assigned to Durland Trust Co. a 2 1/2% overriding royalty of all oil, gas, etc. produced from the leased land. Plaintiff was not aware of this lease, or of Durland's royalty interest until 1955, when Amerada requested him to sign an affidavit to the effect that he claimed no interest in the minerals in the E 1/2, Sec. 35. Plaintiff refused to sign such affidavit and, on the contrary, claimed he owned the minerals. On August 29, 1955, Farnik entered into a primary period four-year oil and gas lease with Amerada Petroleum Corporation covering said E 1/2, Sec. 35.

On November 18, 1955, Plaintiff commenced this action, seeking to quiet the title in himself to said E 1/2, Sec. 35, and to have all claims of Weld County, the Durland Trust Company, and claims of Amerada arising out of the lease from Weld County, declared void and of no force or effect.

As of April 29, 1957, royalties from the oil produced from said E 1/2, Sec. 35, amounted to $26,627.04, and those royalties, including royalties subsequently accruing, are being withheld by The Pure Oil Company, the crude oil purchaser, pending determination of this action.

Trial of the matter to the court was had August 27, 1957, and at the close thereof the trial judge announced that he found the issues in favor of the defendants and directed the county attorney to prepare findings and decree. On November 12, 1957, extensive findings of fact, conclusions of law, and judgment and decree were entered by the court, wherein the trial court quieted in plaintiff title to the surface only, quieted in Weld County title to the oil, gas and other minerals, subject only to the oil and gas lease from Weld County to Amerada and Durland's overriding royalty interest. The court also held as absolutely void the oil and gas lease from plaintiff to Amerada.

Plaintiff is here by writ of error seeking reversal, contending (1) that Weld County had no right or power to retain the minerals; (2) that its powers and duties in acquiring and disposing of real property on account of nonpayment of taxes are defined by the revenue statutes governing assessment, levy and collection of taxes, rather than general statutes defining the powers and duties of Boards of County Commissioners; (3) that the revenue statutes, though granting to the county power to sell parts or parcels from lands acquired by tax deeds, do not grant to the county power to divide the land horizontally, to reserve minerals, or to convey any title less than that held by the county; and (4) that the deed of conveyance to plaintiff is valid--the reservation therein void.

The trial court concluded, among other things, that as a matter of law:

'12. Even if said county and said Board of County Commissioners had not had full authority to make said sale of said surface estate and to retain said mineral estate as was done in this case, nevertheless said sale of said lands without the minerals and said exception of said oil, gas and mineral estate was ratified, confirmed and validated by the validating statute of 1949, Section 36-11-4, C.R.S. '53.'

The plaintiff contends that general powers granted by the Constitution and statutes to Boards of County Commissioners have no application to duties to be by them performed in disposing of title to lands acquired by counties through treasurer's deeds issued for nonpayment of taxes and that the commissioners have only such powers as are conferred by the statutes; that the revenue statutes provide for the foreclosure of tax liens by sale of the property against which the lien accrued as a means of collecting taxes, and contemplate that the property will be promptly sold and restored to the tax rolls and thus again produce tax revenue, not only for the county, but also for the state, school district, and other entities authorized to levy taxes. Weld County takes the position that it can, under its general powers, do as it sees fit with any property to which it acquires title. The findings, conclusions of law and decree herein, prepared by the county attorney, and signed by the court, mirror the views and contentions of Weld County.

The published notice of sale clearly states that the minerals are to be reserved by the county; the bid made and signed by plaintiff recites that the minerals are to be excepted. Preceding the auction sale, the county attorney announced that 'all mineral rights are being reserved by the county'; the deed issued and delivered to the plaintiff granted the land and provided:

'* * * and reserving therefrom to grantor, (Weld County) the oil, gas or other minerals therein.'

The plaintiff for eleven years prior to the commencement of this action had possession of the land pursuant to his recorded deed, and during that time he made no claim to the minerals. Clearly the record shows that the county never intended to sell the minerals and that plaintiff knew he was not buying or paying for the minerals. He now claims that the statutes provide that the county having acquired title through a treasurer's deed, being part of the foreclosure proceedings of the tax lien, was duty bound to sell the property and was without power to reserve anything, and that the attempted reservation was void and mere surplusage and that plaintiff acquired a fee simple title. This contention of plaintiff finds strong support in: Burke v. Southern Pacific Railroad Co., 234 U.S. 669, 34 S.Ct. 907, 58 L.Ed. 1527; Walpole v. State Board of Land Com'rs, 62 Colo. 554, 163 P. 848; Kopplin v. Burleigh County, 77 N.D. 942, 47 N.W.2d 137.

We find it unnecessary to resolve this question, for the reason that even though the reservation was without authority and invalid when made, it was validated by Laws of 1949, Chapter 140, § 4, being: 'An Act Relating To Oil, Gas And Other Minerals In County Lands,' which provides:

'Section 4. All reservations of oil and gas and other mineral rights and sales of previously reserved oil and gas and other mineral rights in county lands heretofore made or entered into by any county acting by its Board of County Commissioners and all leases of oil and gas or rights and all unit agreements relating to or dealing with oil and gas and containing provisions similar to those set forth in Section 3 of this Act, affecting county lands, heretofore made or entered into by any county acting by its Board of County Commissioners are hereby confirmed, validated and declared to be legal and valid in all respects.'

Plaintiff contends that this act does not apply to lands acquired through tax foreclosures. Much of the argument is predicated on the fact that in compiling the 1953 Colorado Revised Statutes, the above chapter is found under Chapter 36, C.R.S. '53, 'County Powers And Functions,' rather than under Chapter 137, 'Taxation I--General Property Tax.' We feel that counsel attaches undue significance to the...