ND WORKERS COMP. BUREAU v. General Inv. Corp.

• Decision Date: 07 December 2000
• Docket Number: No. 20000116.,20000116.
• Citation: 619 N.W.2d 863,2000 ND 196
• Parties: NORTH DAKOTA WORKERS COMPENSATION BUREAU and Empire Oil Company, Plaintiffs and Appellants, v. GENERAL INVESTMENT CORPORATION; NBB Energy Partners I, L.P.; Raymond T. Duncan Oil Properties, Ltd; JEM Trust dated 2/09/93; Corlena Oil Company; KO-OP XVI, RTD; Petroro Corporation; Vincent Joseph Duncan Trust; Meyer Oil Properties; DKD Petroleum, LLC; James R. Oltmans, II; Sally Jane Oltmans; Patricia J. Barnett; Pangloss Oil Partners, LLC; Nomura Babcock & Brown Energy Corporation; Raymond F. Sebastian; MCNIC Oil & Gas Properties, Inc.; Pin Point Partners; Providence Energy Corp.; DEN Trust c/o Duncan Energy Co.; Timothy L. Smith; Bruce E. Johnston; Susan E. Johnston; Leon R. Bailey; Susan G. Bailey; Van Z. Spence; Susan K. Spence; D-T Company; David R. Duncan; Kevin V. Duncan; Leanne J. Paez Duncan; John V. Cestia; Brenda A. Cestia; Robert C. Lentz; Linda L. Lentz; William S. Fallin; Judith L. Fallin; John A. Bettridge; Elizabeth S. Bettridge; Gene R. Carlson; Cynthia L. Carlson; the City of Dickinson; Park District for the City of Dickinson; Burlington Resources; Duncan Oil Partners; Raymond T. Duncan, Trustee of the Raymond Twomey Duncan Trust; Lodgepole, LLC; Raymond T. Duncan; Electra Energy Company; CoEnergy Rockies, Inc., Defendants and Appellees, The Industrial Commission of North Dakota, acting as the North Dakota Housing Finance Agency, an agency of the State of North Dakota; John J. Gulka; Marion R. Gulka; Earl J. Quick; Ruth A. Quick; Reinhold Mayer, Jr. a/k/a Reinhold Mayer; Gertrude Mayer; Diane Hatzenbuehler; Rodney A. Praus; Raynald Praus; Laura F. Praus; Marvin Morel; Judy Morel; Northern Energy Corporation; W.H. Champion; American Royalty Corp.; Lonesome Dove Petroleum, Inc.; Gregory E. Garstang; and U.S. Bank National Association, Defendants.
• Court: North Dakota Supreme Court

619 N.W.2d 863

2000 ND 196

NORTH DAKOTA WORKERS COMPENSATION BUREAU and Empire Oil Company, Plaintiffs and Appellants, v. GENERAL INVESTMENT CORPORATION; NBB Energy Partners I, L.P.; Raymond T. Duncan Oil Properties, Ltd; JEM Trust dated 2/09/93; Corlena Oil Company; KO-OP XVI, RTD; Petroro Corporation; Vincent Joseph Duncan Trust; Meyer Oil Properties; DKD Petroleum, LLC; James R. Oltmans, II; Sally Jane Oltmans; Patricia J. Barnett; Pangloss Oil Partners, LLC; Nomura Babcock & Brown Energy Corporation; Raymond F. Sebastian; MCNIC Oil & Gas Properties, Inc.; Pin Point Partners; Providence Energy Corp.; DEN Trust c/o Duncan Energy Co.; Timothy L. Smith; Bruce E. Johnston; Susan E. Johnston; Leon R. Bailey; Susan G. Bailey; Van Z. Spence; Susan K. Spence; D-T Company; David R. Duncan; Kevin V. Duncan; Leanne J. Paez Duncan; John V. Cestia; Brenda A. Cestia; Robert C. Lentz; Linda L. Lentz; William S. Fallin; Judith L. Fallin; John A. Bettridge; Elizabeth S. Bettridge; Gene R. Carlson; Cynthia L. Carlson; the City of Dickinson; Park District for the City of Dickinson; Burlington Resources; Duncan Oil

Partners; Raymond T. Duncan, Trustee of the Raymond Twomey Duncan Trust; Lodgepole, LLC; Raymond T. Duncan; Electra Energy Company; CoEnergy Rockies, Inc., Defendants and Appellees,

The Industrial Commission of North Dakota, acting as the North Dakota Housing Finance Agency, an agency of the State of North Dakota; John J. Gulka; Marion R. Gulka; Earl J. Quick; Ruth A. Quick; Reinhold Mayer, Jr. a/k/a Reinhold Mayer; Gertrude Mayer; Diane Hatzenbuehler; Rodney A. Praus; Raynald Praus; Laura F. Praus; Marvin Morel; Judy Morel; Northern Energy Corporation; W.H. Champion; American Royalty Corp.; Lonesome Dove Petroleum, Inc.; Gregory E. Garstang; and U.S. Bank National Association, Defendants.

No. 20000116.

Supreme Court of North Dakota.

December 7, 2000.

Kent A. Reierson (argued), McKennett Stenehjem Reierson Forsberg & Hermanson, P.C., Williston, for plaintiff and appellant Empire Oil Company.

Anne Jorgenson Green (appeared), Special Assistant Attorney General, North Dakota Workers Compensation Bureau, Bismarck, for plaintiff and appellant North Dakota Workers Compensation Bureau.

Lawrence A. Bender (argued), Pearce & Durick, Bismarck, for defendants and appellees NBB Energy Partners I, L.P., Raymond T. Duncan Oil Properties, Ltd, JEM Trust dated 2/09/93, Corlena Oil Company, KO-OP XVI, RTD, Petroro Corporation, Vincent Joseph Duncan Trust, Meyer Oil Properties, DKD Petroleum, LLC, James R. Oltmans, II, Sally Jane Oltmans, Patricia J. Barnett, Pangloss Oil Partners, LLC, Nomura Babcock & Brown Energy Corporation, Raymond F. Sebastian, MCNIC Oil & Gas Properties, Inc., Pin Point Partners, Providence Energy Corp., DEN Trust c/o Duncan Energy Co., Timothy L. Smith, Bruce E. Johnston, Susan E. Johnston, Leon R. Bailey, Susan G. Bailey, Van Z. Spence, Susan K. Spence, D-T Company, David R. Duncan, Kevin V. Duncan, Leanne J. Paez Duncan, John V. Cestia, Brenda A. Cestia, Robert C. Lentz, Linda L. Lentz, William S. Fallin, Judith L. Fallin, John A. Bettridge, Elizabeth S. Bettridge, Gene R. Carlson, and Cynthia L. Carlson.

Timothy A. Priebe, Mackoff, Kellogg, Kirby & Kloster, PC, Dickinson, for defendant and appellee the City of Dickinson.

Craig C. Smith, Fleck, Mather & Strutz, Bismarck, for defendant and appellee Burlington Resources.

Albert J. Hardy, Hardy, Maus & Nordsven, for defendant and appellee General Investment Corporation; and Mary E. Nordsven, Dickinson, for defendant and appellee Park District for the City of Dickinson.

MARING, Justice.

[¶ 1] The North Dakota Workers Compensation Bureau ("the Bureau") and Empire Oil Company ("Empire") have appealed a judgment ruling parties claiming a mineral interest in certain land through the Bureau "have no estate, right, title, lien or interest in title to the mineral estate and mineral leasehold estate in those lands," and quieting title to the subject lands in General Investment Corporation and the other defendants in the action. We conclude the Bureau and Empire have no interest in the subject mineral estate, and we affirm.

[¶ 2] Dickinson Fire and Pressed Brick Co. acquired title to the surface and the mineral estate in the subject land in 1902. In 1928, Dickinson Fire and Pressed Brick Co. mortgaged the land to secure the issuance of bonds and created a trust for the bondholders. The mortgage was foreclosed and a sheriff's certificate, dated December 4, 1934, was issued to M.A. Brannon, Trustee. On December 17, 1934, Brannon assigned the sheriff's certificate to Dickinson Clay Products Company. The State, through the Bureau, obtained a judgment against Dickinson Clay Products Company for unpaid workers compensation premiums. A May 16, 1939, sheriff's certificate was issued to the State, doing business as the Bureau. On July 30, 1940, the sheriff executed a deed to the State, reciting, in part, he does "hereby, give, grant and convey to the said State of North Dakota all the estate, right, title and interest in and to said land ... of ... said Dickinson Clay Products Company." The 1940 sheriff's deed was filed for record with the register of deeds on January 21, 1948.

[¶ 3] In 1947, proceedings were brought in district court about the administration of the trust created by Dickinson Fire and Pressed Brick Co. in 1928. In that proceeding, the district court found M.A. Brannon, as trustee for the bondholders, foreclosed and became the owner of the Dickinson Fire and Pressed Brick Co. for the benefit of the bondholders. The court found the "sheriff's certificate issued to the Dickinson Fire and Pressed Brick Company for the sale of the real estate was assigned and delivered to the said Dickinson Clay Products Company" without any consideration and in violation of an agreement between Trustee Brannon, the bondholders, and Dickinson Clay Products Company. On April 2, 1947, the court removed Brannon as the trustee of the trust and appointed J.A. O'Brien and Martin Binek as trustees. The court ordered the trustees to "institute such actions ... as shall be necessary to recover for the said trust the title and possession of that certain real estate ... and any other property, real or personal, in which the said trust has a claim."

[¶ 4] By petition of December 2, 1947, O'Brien and Binek sought authority to sell the subject real estate and to compromise claims. The petition recited, in part:

That the title and ownership of said real estate is, and has been since May 16th, 1939, claimed by the State of North Dakota, doing business as The North Dakota Workmen's Compensation Bureau, under and by virtue of a judgment and execution sale obtained against Dickinson Clay Products Company... the property can now be sold for an amount several times in excess of its former value.

The petition recited the petitioners had received bids totaling $17,000 for the three tracts involved. The petition further recited:

In order to consummate said sale proposed herein it is necessary to settle the claim of the State of North Dakota in said premises.... That petitioners have been engaged in extended negotiations with the North Dakota Workmen's Compensation Bureau, and have finally secured an offer from such agency to release its interest in the said premises and convey the same to the petitioners or such parties as may be purchasers for the sum of $1610.05, the principal amount of the judgment obtained by the State ... thus waiving all costs and interest, and also waiving their claim to title to the real estate.

The petitioners sought authority to accept the offers they had received for the real estate, and "to settle the claim of the State of North Dakota for the sum of $1610.05 and to receive such conveyances as may be necessary to properly release the interest of the State in said premises."

[¶ 5] Minutes of a December 5, 1947, meeting of the Board of Commissioners of the North Dakota Workmen's Compensation Bureau also reflect negotiations about the Bureau's claim:

WHEREAS, an action has been commenced by Martin Binek and J.A. O'Brien trustee of a trust ... in which action it is alleged that the Dickinson Clay Products Company had fraudulently obtained the assets of the Dickinson Fire and Press[ed] Brick Company ...

WHEREAS, said action is at issue and the results of a trial of said action being uncertain, and

WHEREAS, the bond holders represented by the said trustee have made an offer of compromise ...

WHEREAS, the Attorney General of the State of North Dakota, recommends that said offer be accepted for the reason that said payment will reimburse the Bureau for premiums charged against the Dickinson Clay Products Company during the period involved together with penalties and costs of judgment, said recommendation being further made upon the ground and for the reason that the Workmen's Compensation Bureau was organized for the purpose of giving protection to injured employees and not for the purpose of making any profit in real estate; and the acceptance of said compromise is further recommended for the reason that it is not certain that the State of North Dakota would prevail in the pending action, and

WHEREAS, it appears it be to the best interest of the North Dakota Workmen's Compensation Bureau and the North Dakota Workmen's Compensation Fund to accept said offer of compromise in the sum of $1610.05.

NOW, THEREFORE, BE IT RESOLVED that the proper officers of the State of North Dakota ... hereby are authorized ... to execute a quit claim deed to the General Investment Corporation of Dickinson, North Dakota ... for the following described land....

[¶ 6] On December 13, 1947, the State, for the benefit of the Bureau, executed a quitclaim deed to General Investment Corporation of "all its right, title, interest, claim or demand in and to" the subject land. That quitclaim deed incorporated the resolution adopted by the Board of Commissioners of the North Dakota Workmen's...