Spring Creek Ranch, LLC v. Svenberg, 980326

• Decision Date: 18 June 1999
• Docket Number: No. 980326,980326
• Citation: 595 N.W.2d 323,1999 ND 113
• Parties: SPRING CREEK RANCH, LLC, Plaintiff and Appellee, v. Zoulia V. SVENBERG, also known as Zoulia V. Swedberg; Maurilla Lundeen, also known as Marilla Lundeen; and all other persons, unknown claiming any right, title, estate, lien, or interest, in the real property described in the Complaint adverse to Plaintiff's ownership, or any cloud upon Plaintiff's title thereto, Defendants, Gideon E. Swedberg; Stephen E. Swedberg; Terry Richardson, individually and a Personal Representative of the Estate of C.L. Fondable, deceased, Defendants and Appellants.
• Court: North Dakota Supreme Court

Page 323

595 N.W.2d 323

1999 ND 113

SPRING CREEK RANCH, LLC, Plaintiff and Appellee, v. Zoulia V. SVENBERG, also known as Zoulia V. Swedberg Maurilla Lundeen, also known as Marilla Lundeen; and all other persons, unknown claiming any right, title, estate lien, or interest, in the real property described in the Complaint adverse to Plaintiff's ownership, or any cloud upon Plaintiff's title thereto, Defendants Gideon E. Swedberg; Stephen E. Swedberg; Terry Richardson individually and a Personal Representative of the Estate of C.L. Fondable, deceased, Defendants and Appellants.

No. 980326.

Supreme Court of North Dakota.

June 18, 1999.

Rehearing Denied July 13, 1999.

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

John L. Sherman of Mackoff, Kellogg, Kirby & Kloster, PC, Dickinson, for defendants and appellants.

KAPSNER, Justice.

¶1 Gideon E. Swedberg, Stephen E. Swedberg, and Terry Richardson, individually and as the personal representative of the estate of C.L. Fondable, appealed from summary judgment granted in favor of Spring Creek Ranch (Spring Creek). The trial court decided as a matter of law Spring Creek made a reasonable inquiry to locate the addresses of the mineral interest owners under N.D.C.C. § 38-18.1-06(2). Judgment was entered quieting title to an undivided one-half interest in mineral rights in favor of Spring Creek. We hold whether Spring Creek made a reasonable inquiry to locate the addresses of the mineral interest owners is a question of fact and inappropriate for summary judgment disposition. We therefore reverse the judgment and remand the quiet title action for further proceedings.

I.

¶2 In 1941, Zoulia V. Svenberg and Maurilla Lundeen owned property in Bowman County described as:

Township 131 North, Range 106 West

Section 22: NW 1/4

On December 28, 1950, Svenberg and Lundeen conveyed the property to C.J. Clark by warranty deed, reserving "one half of the oil & gas rights and minerals." The deed was recorded in the Bowman County Register of Deeds office on February 15, 1951.

¶3 After numerous transfers, Victor R. Uttke obtained title to the property's surface and an undivided one-half interest in the minerals. Uttke filed an Affidavit of Service of Notice of Claim and Claim of Ownership under N.D.C.C. § 38-18.1 regarding Svenberg and Lundeen's "undivided one-half ( 1/2) interest in all oil, gas and all other mineral rights in, on or under" the property. Uttke stated he:

made reasonable inquiry as to the address of Zoulia V. Svedberg, a/k/a Zoulia V. Swedberg, and Maurilla Lundeen, a/k/a Marilla Lundeen, the last record owners of the interest claimed, whose addresses are not shown of record. That I made or caused to be made such inquiry of the Bowman County Sheriff, Bowman County Auditor, Bowman County Treasurer and Bowman County Register of Deeds and none of the aforesaid officers or the records of their office indicate any last known address.

Uttke published a Notice of Lapse of Mineral Interest and Claim of Ownership in the Bowman County Pioneer on November 18, 25, and December 2, 1989. The notice was recorded in the Bowman County Register of Deeds office. Neither Uttke nor his attorney mailed a copy of the notice to Svenberg or Lundeen.

¶4 Uttke and others to whom Uttke had executed mineral deeds conveyed their interests in the minerals underlying this property to Spring Creek. Victor R. Uttke is the president of Spring Creek. On December 22, 1995, Spring Creek brought an action to quiet title in the undivided one-half mineral interest reserved by Svenberg and Lundeen. Uttke filed an affidavit as president of Spring Creek stating he made an unsuccessful reasonable inquiry to ascertain Svenberg and Lundeen's addresses. Service was by publication in the Bowman County Pioneer on December 29, 1995, January 5, 1996, and January 12, 1996.

¶5 On May 28, 1996, the trial court issued its findings of fact, conclusions of law, and an order for default judgment. The court concluded Spring Creek "made a diligent, but unsuccessful effort to locate" the addresses of the mineral interest owners. Title to the mineral interests originally reserved by Svenberg and Lundeen was quieted in Spring Creek.

¶6 On May 20, 1997, Gideon E. Swedberg, Stephen E. Swedberg, and Terry Richardson, individually and as the personal representative of the Estate of C.L. Fondable, filed a motion under N.D.R.Civ.P. 60 to vacate the judgment. Gideon and Stephen are the sole heirs of Svenberg's estate. C.L. Fondable was the sole heir to Lundeen's estate; however, he died October 29, 1996, leaving Terry Richardson as the sole devisee and personal representative of Fondable's estate. Gideon, Stephen, and Terry (the successors) moved the trial court for an order "allowing them to defend against the Complaint on the grounds that they were purportedly served by publication, had no knowledge of the existence of the action, and that they have a meritorious defense." They asked the trial court to declare them owners in fee simple of an undivided one-half interest in the mineral rights.

¶7 The judgment was vacated in August 1997 after the trial court learned Zane Anderson, the initial trial judge who had entered default judgment in Spring Creek's favor, had been Uttke's attorney for the chapter 38-18.1 filings. The successor trial court declined to rule on the issue of mineral ownership deciding a finding on the issue was unnecessary to vacate the judgment. In March 1998, the trial court granted the successors' motion to intervene as parties to the quiet title action.

¶8 On March 23, 1998, Spring Creek moved for summary judgment. The successors answered the motion arguing summary judgment should be granted in their favor. A hearing was held in May 1998, and on August 27, 1998, the trial court held "as a matter of law that [Spring Creek] made reasonable inquiry to ascertain the mineral interest owners, and that [chapter 38-18.1] was complied with strictly." The court granted Spring Creek's motion for summary judgment, denied the successors' motion, and quieted title to the mineral interest in Spring Creek. The successors appealed on October 8, 1998.

II.

¶9 In 1983, the North Dakota Legislature enacted a statute declaring any mineral interest unused for twenty or more years preceding the first publication of a notice of lapse under N.D.C.C. § 38-18.1-06 is deemed to be abandoned unless the mineral owner files a statement of claim in the register of deeds office under N.D.C.C. § 38-18.1-04. See N.D.C.C. § 38-18.1-02. "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.

¶10 At common law, mineral interests were not extinguished by lapse of time. See generally Vitauts M. Gulbis, J.D., Annotation, Validity and Construction of Statutes Providing for Reversion of Mineral Estates for Abandonment or Nonuse, 16 A.L.R. 4th 1029, § 2[a] (1982); 53A Am.Jur.2d Mines and Minerals § 178 (1996). Chapter 38-18.1 was a legislative change to the common law rule. Statutes created in derogation of the common law which create a forfeiture are strictly construed. See Goodman Inv., Inc. v. Swanston Equip. Co., 299 N.W.2d 786, 788 (N.D.1980). Therefore, trial courts and this court must review for strict construction and application of statutory requirements.

¶11 Whether the successors' interest was unused for the statutorily mandated twenty years is not in dispute in this case. However, whether Spring Creek complied with the statutory notice requirements under N.D.C.C. § 38-18.1-06 is at issue. N.D.C.C. § 38-18.1-06 requires:

1. Any person intending to succeed to the ownership of a mineral interest upon its lapse, shall give notice of the lapse of the mineral interest by publication.

2. The publication provided for in subsection 1 must be made once each week for three weeks in the official county newspaper of the county in which the mineral interest is located; however, if the address of the mineral interest owner is shown of record or can be determined upon reasonable inquiry, notice must also be made by mailing a copy of the notice to the owner of the mineral interest within ten days after the last publication is made.

3. The notice must state:

a. The name of the record owner of the mineral interests;

b. A description of the land on which the mineral interest involved is located; and

c. The name of the person giving the notice.

4. A copy of the notice and an affidavit of service of the notice must be recorded in the office of the register of deeds of the county in which the mineral interest is located and constitutes prima facie evidence in any legal proceedings that such notice has been given.

¶12 In May 1998, the trial court had a summary judgment hearing on whether Spring Creek effectively complied with the forfeiture provisions of N.D.C.C. chapter 38-18.1. The successors argued Spring Creek failed to make a "reasonable inquiry" to ascertain the addresses of the mineral interest owners under N.D.C.C. § 38-18.1-06(2). Both parties submitted extensive documents to the trial court in support of their motions for summary judgment. The documents included a copy of the Affidavit of Service of Notice of Claim and Claim of Ownership, an accompanying affidavit of publication, the successors' affidavits, the affidavit of the Bowman County Treasurer, and the affidavit of Peter Masset, the president of Altair Corporation, the owner and holder of three separate oil and gas leases on the property. The affidavit of John L. Sherman, the successors' attorney, was also submitted, stating he had examined title to the property in the Bowman County public records. Sherman attached copies of records found during his search including warranty deeds from 1950 and 1952, a 1952 judgment and decree and the accompanying affidavits of service, 1996 oil and gas leases, a portion of Uttke's...