Schulz v. Hauck

• Decision Date: 12 November 1981
• Docket Number: No. 9982,9982
• Citation: 312 N.W.2d 360
• Parties: Ralph SCHULZ, Personal Representative of the Estate of Frank P. Schulz, Deceased, Plaintiff and Appellee, v. Alex J. HAUCK and Hildegard Hauck, Defendants, and Carl W. Schnaidt and Anna Schnaidt, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 360

312 N.W.2d 360

Ralph SCHULZ, Personal Representative of the Estate of Frank

P. Schulz, Deceased, Plaintiff and Appellee, v. Alex J. HAUCK and Hildegard Hauck, Defendants, and Carl W. Schnaidt and Anna Schnaidt, Defendants and Appellants.

Civ. No. 9982.

Supreme Court of North Dakota.

Nov. 12, 1981.

Jon Bogner of Kubik, Bogner, Bleth & Ridl, Dickinson, for plaintiff and appellee.

David F. Senn of Baird Law Firm, Dickinson, for defendants and appellants.

VANDE WALLE, Justice.

Carl W. Schnaidt and Anna Schnaidt appealed from a judgment of the district court, Dunn County, which determined their mineral interest in a parcel of land. We affirm.

The Schnaidts purchased 480 acres of land and contend that they received one-half of the mineral interest in the entire 480 acres. It is uncontested that the State of North Dakota owns the other one-half interest. The estate of a prior grantor, Frank Schulz, claimed that it owned a one- fourth interest in the entire 480 acres, or 120 mineral acres, and brought an action to quiet title. The trial court ruled that intervening conveyances were ambiguous and allowed as evidence an unrecorded land-purchase agreement to show that the intent of prior grantors and grantees was to convey a one-fourth mineral interest to the Schnaidts' grantor.

A number of conveyances are involved in the facts of this appeal. There is no question by either party that Frank Schulz and Anna Schulz obtained 480 surface acres and 240 mineral acres on September 15, 1950.

The Schulzes subsequently entered into a purchase agreement with Alex and Hildegard Hauck on December 15, 1958. The agreement never was recorded. It provided that the sellers, the Schulzes, were to retain a 25-percent mineral interest, or 120 mineral acres. However, when a warranty deed conveying the land to the Haucks was executed on March 8, 1959, no mineral interest was reserved. On March 28, 1959, the Haucks executed a mineral warranty deed to the Schulzes conveying an undivided one-half interest in the minerals in and under the entire 480 acres. The deed was limited to the mineral interest owned by the Haucks "as disclosed by the public records." Approximately one year later, on March 18, 1960, the Schulzes executed a mineral warranty deed to the Haucks. This deed conveyed "an undivided one-fourth (1/4) interest in and to all of the oil, gas, casinghead gas, casinghead gasoline and other minerals in and under and that may be produced from (the entire 480 acres) ... It is the intention of the grantors herein to sell and convey unto the grantees an undivided one hundred twenty (120) mineral acres." On October 20, 1967, the Haucks conveyed the 480 acres by warranty deed to the Schnaidts. No reservation of mineral interest was contained in the deed. The Schnaidts claim that because they were good-faith purchasers their interests should be protected. If true, they would not be on notice that they purchased anything less than what the record title indicated the Haucks owned. The trial court, however, ruled that the record title to the mineral interest created a question about the amount of mineral interest the Haucks owned. Because a question existed in the record title, the Schnaidts had constructive notice that they may not have received 240 mineral acres with the land they purchased from the Haucks. Because they had constructive notice they were not innocent purchasers. The trial court then permitted the use of the land-purchase agreement to explain the intent of the Schulzes and the Haucks as to the extent of the mineral interest conveyed by the mineral deeds. The agreement stated that the Schulzes were reserving a 25-percent interest in the minerals.

Two questions are presented:

1. Were the Schnaidts on notice that the mineral record title did not clearly indicate the mineral interest which the Haucks could convey?

2. Did the trial court err when it permitted the use of the land-purchase contract to explain the intent of the Haucks and the Schulzes in the two mineral deeds?

The warranty deed from the Haucks to the Schnaidts conveyed the entire 480 surface acres and did not reserve any mineral interest. We have previously decided that "It is a well-established rule that a general conveyance of land, without any exception or reservation of the minerals therein, carries with it the minerals as well as the surface." Kadrmas v. Sauvageau, 188 N.W.2d 753, 755 (N.D.1971). ¹ A person dealing with real property is charged with notice of properly recorded instruments affecting the title. Northwestern Mutual Savings & Loan v. Hanson, 72 N.D. 629, 10 N.W.2d 599, 602 (1943). "A 'mineral interest' is a real property interest ..." Texaro Oil Co. v. Mosser, 299 N.W.2d 191, 194 (N.D.1980). As between the Schnaidts and third parties who might claim a mineral interest in the property, the Schnaidts are held to notice of the record title of the mineral interests. The record title indicates that the State of North Dakota owns a one-half mineral interest in the entire 480 acres. The record title also contains the warranty deed from the Schulzes to the Haucks and the two mineral warranty deeds; one from the Haucks to the Schulzes, on March 28, 1959, and the other from the Schulzes to the Haucks, on March 18, 1960. The Schnaidts' interest, therefore, is whatever interest the Haucks owned after March 18, 1960.

The Schulzes started with 480 surface acres and a one-half mineral interest, or 240 mineral acres. They executed a warranty deed to the Haucks with no reservation of minerals, thereby conveying the entire surface and one-half of the mineral interest, or 240 acres. The first mineral warranty deed from the Haucks to the Schulzes, on March 28, 1959, granted an undivided one-half mineral interest in the entire 480 acres. However, within the granting clause and following the land description is: "The foregoing conveyance shall each and all be with reference only to such mineral rights as the grantor herein may own, as disclosed by the public records." Without that sentence the Haucks appear to be conveying back to the Schulzes the one-half mineral interest. But the intent of the quoted sentence is not clear. Does it condition the warranty to the extent of the minerals that the Haucks owned or does it mean that the Haucks intended to convey a one-half interest in the mineral rights that they owned? The language is clearly ambiguous. If the Haucks used that language only to limit their warranty, it appears that they intended to convey a one-half interest in the entire 480 acres. If they used that language to convey a one-half interest in their one-half interest, then...