Mau v. Schwan, 890396

• Decision Date: 09 August 1990
• Docket Number: No. 890396,890396
• Citation: 460 N.W.2d 131
• Parties: Ernest W. MAU and Sharon M. Mau, Plaintiffs and Appellees, v. Carol SCHWAN and Gabriel Schwan, Defendants and Appellants, and General Atlantic Energy Corporation, Estuary Corporation and Thermal Exploration, Inc., Defendants. Civ.
• Court: North Dakota Supreme Court

Page 131

460 N.W.2d 131

Ernest W. MAU and Sharon M. Mau, Plaintiffs and Appellees, v. Carol SCHWAN and Gabriel Schwan, Defendants and Appellants, and General Atlantic Energy Corporation, Estuary Corporation and Thermal Exploration, Inc., Defendants.

Civ. No. 890396.

Supreme Court of North Dakota.

Aug. 9, 1990.

Peterson & Wilkes, Bowbells, for plaintiffs and appellees; argued by Jeffrey J. Peterson. Appearance by Michel W. Stefonowicz.

Stokes Law Offices, Wahpeton, for defendants and appellants; argued by A.W. Stokes.

MESCHKE, Justice.

Carol and Gabriel Schwan appealed from a judgment denying reformation of a contract and a deed, and quieting title to oil, gas, and minerals in Ernest W. and Sharon M. Mau. We affirm.

In 1943 Carol Schwan's father, Louis Dockter, purchased a quarter-section of land in Renville County, including all minerals. Later, Dockter and his wife conveyed 90 of the 160 mineral acres to a third party. Dockter's wife died in 1966. In 1970, Dockter contracted to sell the quarter-section to Maus. The contract reserved part of the oil, gas, and minerals:

excepting and reserving to [Dockter] an undivided one-half ( 1/2) of all the oil, gas and minerals in and under the described land, it being the intent to convey herewith an undivided one-half ( 1/2) of all the oil, gas and minerals in and under the described land....

When Dockter died in 1972, Carol Schwan, an only child, inherited her father's interests. The final decree in Dockter's estate distributed the land to her, "subject to Contract for Deed dated 8-6-70" and also distributed to her " 35/160 of the oil, gas and minerals" under the land.

In July 1978, Maus paid Schwans the final installment on the contract, and Schwans executed and delivered a warranty deed to the Maus, containing a reservation identical to the one in the contract:

excepting and reserving to [Schwans] an undivided one-half ( 1/2) of all the oil, gas and minerals in and under the described land, it being the intent to convey herewith an undivided one-half ( 1/2) of all the oil, gas and minerals in and under the described land.

Maus first leased for oil and gas development in 1976 and continued to do so after 1978. In 1986, Schwans also leased for oil and gas to General Atlantic Energy Corporation. In January 1987, General filed an affidavit in the office of the Register of Deeds for Renville County showing that a producing oil and gas well had been completed on this land. General refused to pay royalties until mineral ownership was clarified. Maus sued Schwans to quiet title to 70 mineral acres. Schwans counterclaimed for reformation of the conveyances, claiming they were entitled to 35 mineral acres, half of the minerals owned by Dockter when he contracted to sell to Maus, and alleging fraud, undue influence, and mistake.

After a trial without a jury, the trial court ruled that Schwans "submitted very little evidence which would tend to show that the contract for deed and the deed were the result of fraud, undue influence or mistake." The trial court determined:

I.

[Schwans] have failed to show by clear, satisfactory, specific and conv[i]ncing evidence any grounds for reformation of the contract for deed or the deed in this case.

II.

The presumption that those documents accurately reflect the [i]ntention of the parties has not been overcome.

III.

[Schwans] counterclaim for reformation must ... be denied.

IV.

The legal effect of the reservation language in the contract for deed and deed was to convey to plaintiffs all the 70 mineral acres remaining as part of the premises.

The judgment decreed that Schwans had no interest in the minerals and that Schwans' oil and gas lease to General was void. Schwans appealed.

On appeal, Schwans argue that Maus should be estopped from "receiving any more than 35 mineral acres" and that the documents of conveyance should be reformed for mutual mistake.

Ernest Mau testified that, on the day in 1970 when he received the executed contract from Dockter, Mau promptly went to record it. At the register of deeds, Mau first learned that only 70 mineral acres remained because Dockter had earlier sold 90 mineral acres. Mau testified that he immediately returned to the attorney's office and complained, but the attorney told him that he would get those 70 mineral acres and that he could sue Dockter for the shortfall of 10 acres. Mau testified that he decided not to pursue the matter because 70 mineral acres was close enough to one-half. From this evidence, Schwans argue that Mau "should be estopped by his conduct." Schwans argue that Mau "knowingly did nothing upon discovering the mistake," while "Schwan had no reason to suspect that she had less than the 35 mineral acres" described in her decree of distribution from her father's estate. But, Schwans put the estoppel shoes on the wrong feet.

Estoppel binds Schwans, not Maus. "[A] grantor who, by warranty deed, purports to convey a fractional mineral interest is estopped from asserting title to a reserved fractional mineral interest in contradiction to the interest purportedly conveyed." Sibert v. Kubas, 357 N.W.2d 495, 496, n. 1 (N.D.1984), citing Duhig v. Peavy-Moore Lumber Company, 135 Tex. 503, 144 S.W.2d 878 (1940). In Sibert, applying the Duhig doctrine, we explained that " '[t]he key question is, not what the grantor purported to retain for himself, but what he purported to give to the grantee.' " 357 N.W.2d at 497. " 'If both grant and reservation cannot be given effect, the reservation must fail.' " Id. at 498. Dockter's reservation cannot be given effect.

Before Sibert, this court decided a similar case and explained that estoppel was the reason. Kadrmas v. Sauvageau, 188 N.W.2d 753 (N.D.1971). Sauvageaus conveyed land to Kadrmases, reserving one-half of all minerals in the warranty deed. However, the State then owned half of the minerals and Sauvageaus only owned half. "The question [was]: could the Sauvageaus retain one-half of the minerals when they warranted the title to one-half and owned but one-half?" 188 N.W.2d at 755. The answer was no. "[They] could not convey and warrant, and reserve and retain, the same thing at the same time, but the warranty obligation is superior to the Sauvageaus' reservation rights." Id. at 756. Therefore, Kadrmases' were entitled to the half of the minerals that Sauvageaus owned.

Kadrmas explained that this result was based on estoppel by warranty, a subset of estoppel by deed, which precludes a warrantor of title from questioning the title warranted. 188 N.W.2d at 756. Similarly, estoppel bars Schwans from questioning the warranty of minerals to Maus.

In the contract for deed, Dockter reserved one-half and conveyed one-half of the oil, gas, and minerals, when he then owned less than one-half, only 70 of the 160 mineral acres in the quarter. Likewise, in the warranty deed, Schwans reserved one-half and conveyed one-half of the oil, gas, and minerals, when they had less than one-half to convey. Although these documents conveyed all of the surface acreage and one-half of the mineral acreage to Maus, Maus received only that part of the mineral acreage that Dockter and Schwans had power to convey, 70 mineral acres.

North Dakota statutes reinforce this result. NDCC 47-09-16 says:

A transfer vests in the transferee all the actual title to the thing transferred which the transferor then has unless a different intention is expressed or is necessarily implied.

NDCC 47-10-08 says:

Every grant of an estate in real property is conclusive against the grantor and every one subsequently claiming under him.

The Duhig doctrine, as explained in our Sibert and Kadrmas opinions, prevents Schwans from disputing their warranty, and the warranty of Dockter, to the oil, gas, and minerals actually transferred to Maus. The grants by Dockter and Schwans are conclusive against them unless grounds exist to reform those conveyances. Sibert, 357 N.W.2d at 499; Ell v. Ell, 295 N.W.2d 143 (N.D.1980). This brings us to Schwans' argument about reformation, an argument that was not made in Kadrmas or Sibert, but that was recognized in Sibert and decided in Ell.

In Ell, the trial court granted reformation "to conform to the agreement or intention of the parties." 295 N.W.2d at 149. A contract for deed had been made in 1964 and a quitclaim deed issued in 1971, neither of which contained a reservation of minerals. This court affirmed reformation, adding a reservation and concluding that parol evidence that the parties intended a reservation of all minerals was clear, satisfactory, specific, and convincing. Id. at 151. But Schwans offered no clear evidence of a...