Simpson v. Kistler Inv. Co.
| Decision Date | 22 January 1986 |
| Docket Number | No. 85-129,85-129 |
| Citation | 713 P.2d 751 |
| Parties | Ina May SIMPSON and Donal C. Brayton, Executors and Personal Representatives of the Estate of Erle Simpson, Deceased; Donal C. Brayton, a/k/a Donald C. Brayton, and William J. Kirven, Trustees of the Trust created under the Last Will and Testament of Erle Simpson, which has been duly admitted to probate; Erle J. Simpson; Scott Douglas Forbes Simpson: Dan Burnett; John Visconti; Musetta Martin, and Ina May Simpson, Appellants (Defendants), v. KISTLER INVESTMENT COMPANY, and Cornelia F. Vaillancourt, Appellees (Plaintiffs). |
| Court | Wyoming Supreme Court |
Bruce P. Badley and Clay B. Jenkins of Badley & Rasmussen, P.C., Sheridan, for appellants.
Rebecca W. Thomson and Henry A. Burgess of Burgess & Davis, Sheridan, for appellees.
Before THOMAS, C.J., and ROONEY, * BROWN, CARDINE and URBIGKIT, JJ.
This case is an appeal from a declaratory judgment imposing a constructive trust on interests in severed mineral estates derived from a ranching business relationship of ancestors to the present litigants. Two separate ranches were involved.
The trial court's decision in granting the relief requested by imposition of a constructive trust will be affirmed.
The three groups of participants as claimants to the severed mineral interests are the Simpson family (Simpson), successors to Erle Simpson, as defendants and now appellants with the Kistler Investment Company, as successor to W.L. Kistler, Jr., deceased (Kistler), and Cornelia F. Vaillancourt (Vaillancourt), as plaintiffs and now appellees.
Simpson defines the appellate issue as to the Flying MY Ranch mineral-interest controversy:
"The District Court erred, as a matter of law, in ordering a conveyance of minerals to the appellees (a deceased partner's heirs and successors) in violation of the Wyoming Uniform Partnership Act," (partnership liquidation real-property question),
and as to the Three Bar Ranch:
"The District Court erred in holding that the 1959 assignment from Erle Simpson, an individual, to Three Bar Ranch, Inc., a corporation created vested mineral interests [by stated reservation or exception] in W.L. Kistler, Jr. and Robert and Cornelia Vaillancourt, contrary to Burnell v. Roush, Wyo., 404 P.2d 836 (1965)." (Reservation or exception-in-favor-of-third-party rule.)
Kistler and Vaillancourt differently stated the issues: (1) that it was the intent of the parties to own the underlying minerals in their proportionate share; (2) that a new partnership was created between the heirs of Kistler and the surviving partner, Erle Simpson, after the death of W.L. Kistler, Jr.; (3) since the mineral estate remained in the name of Simpson, that a trust should be imposed to denominate the beneficial ownership interests of the participants in proportion to their contribution for acquisition and partnership operation.
We would find three questions presented:
(1) Status of the mineral estates in the Three Bar Ranch transaction as affected by the rule that a conveyance cannot be accomplished by a reservation or exception in favor of a stranger to title.
(2) Status of partnership real property after dissolution and termination of the partnership.
(3) Imposition of a constructive trust on the interests in the severed mineral estates to establish title rights without assignment documents executed as conveyances.
There is no significant factual dispute. The basic facts and extensive exhibits were introduced by stipulation. At issue is a severed mineral interest remaining after the sale of ranchlands in northern Wyoming and southern Montana.
The parties in the present conflict include the heirs, distributees and devisees of Erle J. Simpson, as appellants, with the distributee and devisee of W.L. Kistler, Jr., and Cornelia Vaillancourt (now widowed, and the only original remaining participant) as appellees.
Simpson was a Wyoming rancher, Kistler an oil and gas real estate and ranching entrepreneur from Oklahoma, and Cornelia and Robert Vaillancourt were friends of the Kistler family and residents of California. Cornelia was a sister of Simpson's first wife, Edith.
These interrelations and associations led to the mutual arrangement for their acquisition of the Three Bar Ranch in 1955. After the ranch commenced operation as a partnership, the parties then organized a corporation for its continued operation, and Simpson assigned the ranchlands, as first acquired in his individual name, to the corporation, with the following included in the filed document:
"Excepting and reserving, however, all mineral rights mentioned in said agreement, in that it has been heretofore understood and agreed that the mineral rights pertaining to the Three Bar Ranch shall be distributed and vested as follows, to-wit: 37 1/2% to W.L. Kistler, Jr., 37 1/2% to Erle Simpson and Edith F. Simpson, and 25% to Cornelia F. Vaillancourt."
Simpson claims retention of all originally acquired mineral interests.
The original partnership interests as then continued in the shares issued in the corporation, were Simpson 225 shares or 37.5 percent; Kistler 225 shares or 37.5 percent; Cornelia Vaillancourt and Robert Vaillancourt 150 shares or 25 percent. From 1956 through 1970, W.L. Kistler, Jr. (and his heirs after his death in 1964), Simpson and Vaillancourt continued to make capital contribution in their respective percentages toward the operation of the Three Bar Ranch. Those contributions, which were substantial, are reflected in the books and income tax return for the ranch operation and corporate records.
In 1957, the Flying MY Ranch also became available for purchase, and Simpson, through an intermediary, arranged for its purchase again as acquired in his individual name. The Vaillancourts declined to participate in this additional acquisition, and the ranch was purchased and then operated as a fifty-fifty partnership of Simpson and Kistler, with each contributing one-half of the purchase and operating capital requirements, which amounts were again substantial. Kistler died in 1964, which left Simpson surviving as the remaining partner in the Flying MY Ranch. The interest of Kistler in that partnership and stock in the Three Bar Ranch devolved by devise and distribution to the present Kistler plaintiffs-appellees.
Simpson claims retention of all acquired mineral interest in this ranch also.
In 1970, the Three Bar Ranch (as the corporate owner for Three Bar) and Simpson (as the managing partner for Flying MY) executed a sales agreement to sell both ranches, and provided by agreement:
A mineral quit-claim deed from Robert M. Vaillancourt, Cornelia F. Vaillancourt and representatives of the Kistler interests, as well as Erle Simpson, was consequently executed, delivered and recorded in accord with the sales agreement. The conveyance by Simpson for the Flying MY Ranch included a reservation of three-fourths of the mineral interest.
The Three Bar Ranch corporation was liquidated in 1971 by assignment of all of its right, title and interest to the shareholders in accord with the proportion of shareholding ownership, and the assets of the Flying MY partnership were divided one-half to each partner. By 1975, distribution and liquidation of the ranch business entities were then generally completed without any consideration of the reserved mineral interests which had been acquired with the original purchase. In 1980, Simpson died.
In the period between 1955 and 1980, various oil and gas leases had been executed as generally signed by Simpson, Kistler or his heirs, and Vaillancourt.
The present conflict first surfaced in 1981, when the Simpson heirs made claim to the total acquired mineral interests in their negotiations for an exploration lease. This suit followed by Kistler and Vaillancourt to contest that claim and assert a proportionate interest in the original interests as acquired with ranch purchases.
No direct mineral conveyance had been executed by Simpson to transfer the mineral rights in the Three Bar Ranch to the individual shareholders or to transfer the interest in mineral rights in the Flying MY to his partner, Kistler.
Restated, Simpson does not now brief or attack the factual basis or sufficiency of evidence for the imposition of the constructive trust, but challenges the inclusion or transfer of any mineral interests as subject to the trust.
Simpson first premises their appeal on the trial court's failure to apply the long-established rule as discussed in Burnell v. Roush, Wyo., 404 P.2d 836 (1965). The rule is variously stated, but is most succinctly defined in two authorities with more comprehensive discussions:
"No interest or estate in land may be created in favor of the stranger to the title by means of a reservation or exception in the conveyance thereof." Harris, Reservations in Favor of Strangers to the Title, 6 Okla.L.Rev. 127, 131 (1953).
" * * * [I]n a deed neither a reservation nor an exception in favor of a stranger to the instrument can, by force of ordinary words of exception or reservation, create in the stranger any title, right or interest in or respecting the land conveyed." Annot., 88 A.L.R.2d 1199, 1201-1202.
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