Hallin v. Inland Oil & Gas Corp.

• Decision Date: 17 October 2017
• Docket Number: No. 20170145,20170145
• Citation: 903 N.W.2d 61
• Parties: Joan Marie HALLIN and John P. Hallin, and Susan Kay Bradford, Plaintiffs and Appellants v. INLAND OIL & GAS CORPORATION, Defendant and Appellee
• Court: North Dakota Supreme Court

903 N.W.2d 61

Joan Marie HALLIN and John P. Hallin, and Susan Kay Bradford, Plaintiffs and Appellants

v.INLAND OIL & GAS CORPORATION, Defendant and Appellee

No. 20170145

Supreme Court of North Dakota.

Filed October 17, 2017

Kerry J. Carpenter, Bismarck, ND, for plaintiffs and appellants.

Wade C. Mann, Bismarck, ND, for defendant and appellee.

Jensen, Justice.

[¶ 1] Joan Hallin, John Hallin and Susan Bradford (collectively Hallin and Bradford) appeal from a judgment in favor of Inland Oil & Gas Corporation. The district court interpreted oil and gas leases and concluded they were unambiguous and transferred all of Hallin and Bradford's mineral interests at issue to Inland. We affirm.

I

[¶ 2] In 2007, Hallin and Bradford each leased to Inland mineral interests they owned in 160 acres of land in Mountrail County. The leases provided Hallin and Bradford leased to Inland "all that certain tract of land situated in Mountrail County."

[¶ 3] Hallin and Bradford, along with members of their extended family, owned a fraction of the minerals in the entire 160 acres. On the basis of irregularities in the chain of title, it was unclear whether Hallin and Bradford collectively owned sixty net mineral acres or eighty net mineral acres when the parties executed the leases. Hallin and Bradford believed they owned sixty net mineral acres and their relatives owned sixty acres. When Hallin and Bradford executed the leases, they also received payment drafts for a rental bonus showing they each leased thirty acres to Inland. The leases provide royalty compensation based upon the number of net mineral acres.

[¶ 4] In 2011, Hallin and Bradford sued to determine the mineral ownership between themselves and their relatives. In Hallin v. Lyngstad, 2013 ND 168, ¶ 19, 837 N.W.2d 888, this Court decided Hallin and Bradford collectively owned eighty net mineral acres and their relatives owned forty net mineral acres.

[¶ 5] Inland and Hallin and Bradford disagreed whether the leases covered all of Hallin and Bradford's mineral interests. Hallin and Bradford sued Inland, arguing they leased sixty acres and the remaining twenty acres were not leased. Inland argued Hallin and Bradford leased eighty acres because the leases cover all of their mineral interests. Both parties moved for summary judgment. Hallin and Bradford argued an earlier case, Borth v. Gulf Oil Exploration and Prod. Co., 313 N.W.2d 706 (N.D. 1981), was factually similar and should control. They also argued the leases and the payment drafts should be read together to show they each leased thirty net mineral acres. Inland argued the leases were unambiguous and cover all of Hallin and Bradford's mineral interests. The district court granted summary judgment to Inland, concluding the leases were unambiguous and that "as a matter of law, the Hallins and Bradford leased to Inland whatever interest they had in the subject property at the time the leases were executed."

II

[¶ 6] The standard of review for a district court's grant of summary judgment is well established:

Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.

THR Minerals, LLC v. Robinson, 2017 ND 78, ¶ 6, 892 N.W.2d 193 (quoting Markgraf v. Welker, 2015 ND 303, ¶ 10, 873 N.W.2d 26 ). "Summary judgment is inappropriate if neither party is entitled to judgment as a matter of law or if reasonable differences of opinion exist as to the inferences to be drawn from the undisputed facts." Markgraf, at ¶ 10 (quoting Northern Oil & Gas, Inc. v. Creighton, 2013 ND 73, ¶ 11, 830 N.W.2d 556 ).

[¶ 7] Hallin and Bradford argue the district court erred in granting summary judgment to Inland. They argue the court erred by misapplying the precedent in Nichols v. Goughnour, 2012 ND 178, 820 N.W.2d 740, by failing to consider the payment drafts issued to Hallin and Bradford at the time the leases were executed to show they leased sixty mineral acres to Inland.

[¶ 8] Assignments and deeds are interpreted in the same manner as contracts. THR Minerals, 2017 ND 78, ¶ 8, 892 N.W.2d 193. The same rules of contract interpretation apply to leases. Irish Oil and Gas, Inc. v. Riemer, 2011 ND 22, ¶ 11, 794 N.W.2d 715. The primary purpose in interpreting contracts, deeds, and leases is to ascertain and effectuate the parties' or grantor's intent. See THR Minerals, at ¶ 8 (citing Sargent Cty. Water Res. Dist. v. Mathews, 2015 ND 277, ¶ 6, 871 N.W.2d 608 ; Golden v. SM Energy Co., 2013 ND 17, ¶ 11, 826 N.W.2d 610 ; N.D.C.C. § 9–07–03 ). Grants of property, including grants within leases, are interpreted in a manner consistent with the interpretation of contracts. Lario Oil & Gas Co. v. EOG Res., Inc., 2013 ND 98, ¶ 11, 832 N.W.2d 49.

[¶ 9] Contract interpretation is governed by N.D.C.C. ch. 9–07. The parties' intent is ascertained from the writing alone if possible. N.D.C.C. § 9–07–04. "The language of a contract is to govern its interpretation if the language is clear and explicit and does not involve an absurdity." N.D.C.C. § 9–07–02. "When the parties' intent can be determined from the contract language alone, interpretation of a contract presents a question of law." THR Minerals, 2017 ND 78, ¶ 8, 892 N.W.2d 193 (quoting Border Res., LLC v. Irish Oil & Gas, Inc., 2015 ND 238, ¶ 15, 869 N.W.2d 758 ). When an agreement has been memorialized in a clear and unambiguous writing, extrinsic evidence should not be considered to ascertain intent. Golden, 2013 ND 17, ¶ 11, 826 N.W.2d 610. When a contract's language is plain and unambiguous and the parties' intentions can be ascertained from the writing alone, extrinsic evidence is not admissible to alter, vary, explain, or change the contract. Nichols, 2012 ND 178, ¶ 12, 820 N.W.2d 740. If a contract is ambiguous, extrinsic evidence may be considered to determine the parties' intent, and the contract terms and parties' intent become questions of fact. Border Res., at ¶ 15.

[¶ 10] In Nichols, nine siblings each owned an undivided ¹/₉interest in the surface and an undivided ¹/₁₈interest in the minerals in 640 acres of land in Mountrail County. 2012 ND 178, ¶ 2, 820 N.W.2d 740. Eight of the siblings each executed warranty deeds to the ninth sibling conveying their surface interest. Id. Each deed also reserved twenty-five percent of the minerals. Id.

[¶ 11] A dispute arose between the nine siblings' successors in interest and a quiet title action ensued. Nichols, 2012 ND 178, ¶ 6, 820 N.W.2d 740. The successors to the eight siblings (Goughnour) argued the eight deeds were part of a single transaction with the intent to equally divide the family's one-half mineral interest so the eight siblings would collectively own ¼ of the minerals and the ninth sibling would own the other ¼. Id. They also presented extrinsic evidence showing that was the parties' intent. Id. The successors to the ninth sibling (Nichols) argued the eight deeds were not part of a single transaction. Id. at ¶ 11. They argued each deed was unambiguous and the eight siblings each reserved only ¼ of their ¹/₁₈interest. Id. The district court concluded the eight separate deeds were not ambiguous and could not be considered as part of a single transaction. Id. at ¶ 7. The court concluded the separate deeds were unambiguous and each deed reserved ¼ of the ¹/₁₈mineral interest that each sibling owned. Id. The court decided Nichols owned ⁷/₁₈of the mineral interests and Goughnour collectively owned ¹/₉of the mineral interests. Id.

[¶ 12] On appeal, this Court recognized that contracts may be read and construed together:

Instruments that have been executed at the same time, by the same parties, in the course of the same transaction, and concerning the same subject matter, may be read and construed together. Trengen v. Mongeon, 206 N.W.2d 284, 286 (N.D. 1973).... Under N.D.C.C. § 9–07–07, "[s]everal contracts relating to the same matters between the same parties and made as parts of substantially one transaction are to be taken together." In First Nat'l Bank v. Flath, 10 N.D. 281, 287, 86 N.W. 867, 870 (1901), this Court interpreted that language and stated the requirement that several contracts are to be "taken together" does not mean they are to be joined into a single contract. This Court said that language means the contracts "are to be taken together" for the purpose of interpreting either the transaction to which they relate, or the several contracts themselves. Id. This Court explained the statute does not purport to destroy the separate identity of the several contracts and does not unite two or more contracts relating to a transaction into a single contract. Id.

Nichols, 2012 ND 178, ¶ 13, 820 N.W.2d 740. We nevertheless declined to apply this rule of interpretation and concluded the eight separate warranty deeds were unambiguous and could not be read together as part of a single contract or one transaction. Id. at ¶ 14. Each deed was clear and unambiguous, and extrinsic evidence was not admissible to alter, vary, explain, or change the deeds. Id."The plain language...