Nelson v. McAlester Fuel Co.

• Decision Date: 07 March 2017
• Docket Number: No. 20160007,20160007
• Citation: 891 N.W.2d 126
• Parties: Ronnie L. NELSON, Plaintiff and Appellant v. MCALESTER FUEL COMPANY, Defendant and Appellee and All unknown heirs of McAlester Fuel Company and all other persons unknown claiming any Estate or Interest in or Lien or Encumbrance upon the property described in the complaint, Defendants
• Court: North Dakota Supreme Court

891 N.W.2d 126

Ronnie L. NELSON, Plaintiff and Appellant

v. MCALESTER FUEL COMPANY, Defendant and AppelleeandAll unknown heirs of McAlester Fuel Company and all other persons unknown claiming any Estate or Interest in or Lien or Encumbrance upon the property described in the complaint, Defendants

No. 20160007

Supreme Court of North Dakota.

Filed March 7, 2017

Erin M. Conroy, 606 Main Street, P.O. Box 137, Bottineau, ND 58318, for plaintiff and appellant.

Zachary E. Pelham (argued) and Benjamin W. Keup (appeared), 314 East Thayer Avenue, P.O. Box 400, Bismarck, ND 58502–0400, for defendant and appellee McAlester Fuel Company.

Kapsner, Justice.

[¶ 1] Ronnie Nelson appeals from an order and subsequent judgment dismissing his action to quiet title with prejudice. We affirm, concluding N.D.C.C. § 38–18.1–06(2) (2004) requires a surface owner to mail notice of lapse to the most recent address of record.

I

[¶ 2] Ronnie Nelson ("Nelson") is the owner of a surface estate in Burke County who sought to use the mineral lapse statutes to obtain the mineral rights associated with the surface estate. Nelson published a notice of lapse of mineral interest against McAlester Fuel Company ("McAlester") for three consecutive weeks. The notice was published in the Burke County Tribune on January 31, February 7, and February 14 of 2007. Nelson mailed a notice of claim to P.O. Box 210 in Magnolia, Arkansas on February 15, 2007. On December 4, 2008, Nelson filed an action to quiet title on 108 mineral acres in Burke County, a notice of no personal claim, and a sheriff's return in district court. Before filing his action to quiet title, Nelson also mailed a notice of claim and attempted to personally serve McAlester. The address to which Nelson mailed notice of claim appeared on a mineral deed dated March 6, 1958. McAlester filed no statement of claim within 60 days after Nelson published the notice of lapse. Nelson's complaint alleged he had substantially complied with the statutory procedure for claiming abandoned minerals. The complaint alleged the mineral interests were abandoned, and the last use of the minerals by McAlester was evidenced by a 1968 oil and gas lease executed by McAlester. On January 15, 2009, Nelson filed a certified mail receipt stating the notice sent to P.O. Box 210 in Magnolia, Arkansas was undeliverable.

[¶ 3] Nelson moved for entry of default judgment against McAlester. Based upon what was provided to the district court and the fact McAlester did not file a statement of claim, the district court found McAlester had failed to use the mineral interests. The district court ordered Nelson was entitled to succeed in ownership to the mineral interests and entered a default judgment on February 3, 2009.

[¶ 4] On January 28, 2015, McAlester filed a motion to vacate default judgment with the district court. Along with a brief in support of its motion to vacate, McAlester filed several exhibits, including the 1958 mineral deed and an oil and gas lease for the subject mineral interest dated February 12, 1968. Notably, the 1968 oil and gas lease listed the address for McAlester as P.O. Box 10 in Magnolia, Arkansas. In its brief in support of motion to vacate, McAlester argued the district court should vacate the default judgment under N.D.R.Civ.P. 60(b)(4) and (6). Nelson filed a responsive brief, and McAlester filed a reply brief. Neither party requested a hearing on the motion to vacate the default judgment.

[¶ 5] The district court concluded the judgment against McAlester was void and entered an order vacating the judgment quieting title on July 1, 2015. In its order to vacate, the district court determined Nelson failed to comply with the notice requirements of the statutory procedure for claiming abandoned minerals. McAlester moved to dismiss Nelson's action to quiet title for failure to state a claim and judgment on the pleadings. Nelson filed a brief opposing the motion. Neither party requested a hearing on the motion. Ultimately, the district court granted McAlester's motion to dismiss Nelson's quiet title action. The district court entered judgment on November 9, 2015. Nelson filed a notice of appeal on January 8, 2016.

II

A

[¶ 6] Nelson argues the district court erred by finding Nelson failed to strictly comply with the notice requirements of the mineral lapse statute and asks this Court to reverse and remand in favor of Nelson. Specifically, Nelson argues the district court erred because it concluded the abandoned mineral statute "requires a surface owner to conduct a reasonable inquiry to find a mineral owner's current address, even when an address appears of record." This was not the basis for the district court's decision. The district court stated Nelson's mailing was not "reasonably certain" to reach McAlester. However, the district court then stated, "[a]llowing a claimant to pick any address from the record would encourage the claimant to always mail notice to the oldest address in the record in hopes that the address is stale, and that the notice would therefore not reach the intended target." These statements appeared within a discussion of interpreting the statutory notice procedure.

[¶ 7] The district court's decision was based on a conclusion Nelson's actions failed to comply with the abandoned minerals statutory notice procedure because he did not mail notice to the most recent address of record, not because he failed to conduct a reasonable inquiry. As a result, the district court concluded title to the mineral interest never vested in Nelson. The district court concluded:

Nelson had no estate or interest in the minerals when he initiated his quiet title action. As a stranger to the separate parcel, the minerals, he has no estate or interest sufficient to maintain his quiet title action. The judgment of January 27, 2009, is therefore void and must be vacated.

[¶ 8] The district court had authority to vacate the default judgment under N.D.R.Civ.P. 60(b)(4). "Although the decision to vacate a judgment under Rule 60(b) is ordinarily left to the discretion of the trial court, the court has no discretion under [Rule 60(b)(4) ] if the judgment is void." Eggl v. Fleetguard, Inc. , 1998 ND 166, ¶ 4, 583 N.W.2d 812. "If the judgment is valid, the motion to vacate must be denied; if the judgment is void, the court has no discretion to protect it and it must be vacated." Id. We have previously recognized the abandoned minerals statutory procedure is "wholly self-executing, and once the notice procedure under the statute is completed, title to the mineral interest vests in the surface owner as of the date of abandonment, without the necessity of a subsequent quiet title action." Peterson v. Jasmanka , 2014 ND 40, ¶ 12, 842 N.W.2d 920 (citing N.D.C.C. § 38–18.1–02 ; Johnson v. Taliaferro , 2011 ND 34, ¶¶ 15–17, 793 N.W.2d 804 ). Thus, if the surface owner complies with the statutory notice procedure, title vests in the surface owner; if not, title remains with the mineral interest owner. The district court concluded Nelson failed to comply with the statutory notice procedure, never obtained an interest in the subject mineral interest, and therefore had no interest sufficient to maintain a quiet title action under N.D.C.C. § 32–17–01.

[¶ 9] Considering an earlier statute that governed quiet title actions and had the same personal interest requirement as N.D.C.C. § 32–17–01, this Court stated:

If the defendant defaults and fails to appear or answer it is still incumbent upon the plaintiff to prove that he has such estate or interest in, or lien or encumbrance upon, the premises as is alleged in his complaint and if he fails to establish that he has any estate or interest in, or lien or encumbrance upon, the premises it is the duty of the trial court to hold that he has failed to establish a cause of action.

State v. Rosenquist , 78 N.D. 671, 705, 51 N.W.2d 767, 787 (1952). We recognized the continued significance of the principles underlying the requirement a plaintiff have an interest in property in order to bring a quiet title action in Kjolsrud v. MKB Mgmt. Corp. , 2003 ND 144, ¶ 15, 669 N.W.2d 82, where we stated:

It is regarded as fundamental that no person may maintain an action respecting a subject matter, in respect of which he has no interest, right, or duty, either personal or fiduciary. One cannot rightfully invoke the jurisdiction of the court to enforce private rights or maintain a civil action for the enforcement of such rights unless he has in an individual or representative capacity some real interest in the cause of action, or a legal or equitable right, title, or interest in the subject matter of the controversy.

(quoting Rosenquist , 51 N.W.2d at 788–89 (internal citations omitted)). As a result, the district court had authority to vacate the default judgment as void if its legal conclusions regarding Nelson's failure to comply with the statutory notice procedure were correct. We have determined the district court did not err by concluding Nelson failed to comply with the statutory notice procedure as explained below.

B

[¶ 10] "Chapter 38–18.1, N.D.C.C., provides the procedure for a surface owner to succeed to the ownership of an abandoned mineral interest under his land." Sorenson v. Felton , 2011 ND 33, ¶ 9, 793 N.W.2d 799. " Section 38–18.1–06, N.D.C.C., was amended effective August 1, 2007 and August 1, 2009." Felton , 2011 ND 33, ¶ 9, 793 N.W.2d 799. The abandonment proceedings in this case were initiated by Nelson before either amendment became effective. This Court has previously determined neither amendment was made retroactive. Id . Under the law applicable to this case, a mineral interest is "deemed to be abandoned, unless a statement of claim is recorded in accordance with section 38–18.1–04. Title to the abandoned mineral interest vests in the owner or owners of the surface estate in the land in or under which the mineral interest is located on the date of abandonment." Id . at ¶ 10 (quoting ...