State v. Amerada Petroleum Corp.

• Decision Date: 03 August 1955
• Docket Number: No. 7468,7468
• Parties: STATE of North Dakota and the Carter Oil Company, a corporation, Plaintiffs and Respondents, v. The AMERADA PETROLEUM CORPORATION, a corporation, Defendant and Appellant, and Ernest Bylin; Alma L. Bylin, his wife; E. A. Moline and Mabel H. Moline, his wife; Lars Kvam; Mattie M. Moe; Martha Iverson; Hilda Ramberg; Inga L. Kjerstad; Mary K. Nelson; Ida G. Moe; Agnes K. Haakenson; Peter Kvam; Edward Kvam; 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

Page 675

71 N.W.2d 675

STATE of North Dakota and the Carter Oil Company, a corporation, Plaintiffs and Respondents, v. The AMERADA PETROLEUM CORPORATION, a corporation, Defendant and Appellant, and Ernest Bylin; Alma L. Bylin, his wife; E. A. Moline and Mabel H. Moline, his wife; Lars Kvam; Mattie M. Moe; Martha Iverson; Hilda Ramberg; Inga L. Kjerstad; Mary K. Nelson Ida G. Moe; Agnes K. Haakenson; Peter Kvam; Edward Kvam; and all other persons unknown claiming any estate or interest in or lien or encumbrance upon the property described in the complaint, Defendants.

No. 7468.

Supreme Court of North Dakota.

Aug. 3, 1955.

Syllabus by the Court

1. The state has a right to bring an action to quiet title to any real estate in which it claims an interest. The attorney general is designated by Section 54-1202, NDRC 1943, to bring such action when it is in the best interests of the state.

2. In an action to quiet title the claims of the defendants are directly challenged and it is the duty of the court to determine the validity, superiority and priority of the claims of the parties.

3. As a general rule courts will not pass upon a constitutional question unless a decision upon that point becomes necessary to the determination of the case.

4. It is well settled that a person who is seeking to raise a question as to the validity of a discriminatory statute has no standing for that purpose unless he belongs to the class which is prejudiced by the statute.

5. One of the elementary principles of constitutional law, firmly established by the authorities, is that the constitutionality of a legislative act is open to attack only by a person whose rights are affected thereby and who can show a damage by the enforcement thereof.

6. When a department of the state has gained title to a piece of land by foreclosure of its mortgage and on a resale thereof has received more than its appraised value and more than enough to pay the amount due on the original loan on said land, there is no donation to the purchaser in violation of Section 185 of the constitution.

7. When the state has had to foreclose a mortgage securing a loan of the permanent trust funds donated to the state by the United States such lands do not become a part of the permanent trust fund but may be sold by the state as nongrant lands for the purpose of replenishing the trust funds so loaned.

8. The Board of University and School Lands is by the constitution and statutes of North Dakota in full control of the appraisement and sale of all lands acquired by the state as the result of mortgage foreclosure or otherwise. The decision of said board in the absence of fraud or collusion that a sale has been made according to the provisions of the law is final and will not be set aside by the courts.

9. The issuance of a sheriff's deed upon failure of the mortgagor to redeem conveys to the purchaser at the foreclosure sale all the right, title and interest to the land the mortgagor possessed at the time of signing the mortgage.

10. The state upon transfer of real property, which it has obtained under a sheriff's deed, may, unless restricted by constitutional provision, reserve any interest therein.

11. After the enactment of Section 38-0901, NDRC 1943, Chapter 165, S.L.1941, the state reserved 50 percent of oil, natural gas and minerals on or underlying any land owned and transferred by the state or any department thereof to any person except as modified by Chapter 231, S.L.1951.

Cox, Cox, Pearce & Engebreston, Bismarck, for appellant Amerada Petroleum Corporation.

Duffy & Haugland, Devils Lake, and Bjella & Jestrab, Williston, for respondent Carter Oil Company.

Paul Benson, Atty. Gen., for respondent State of North Dakota.

Aylmer & Butts, Jamestown, for defendants, Ernest Bylin, E. A. Moline and Mabel H. Moline, his wife.

Walter O. Burk, Williston, for defendant Lars Kvam.

GRIMSON, Judge.

This is an action to determine adverse claims to the Southeast Quarter of the Southwest Quarter (SE 1/4 of SW 1/4) and Lot Four (4) of Section Eighteen (18); the Northeast Quarter of the Northwest Quarter (NE 1/4 of NW 1/4) and Lot One (1) of Section Nineteen (19), all in Township One Hundred Fifty-six (156), North, Range Ninety-five (95) West of the 5th. P.M.

The complaint is in the statutory form. It sets out that plaintiffs have an estate and interest in property, challenges the defendants to set out the claims they make to the property and asks that such claims may be found invalid.

All of the defendants make a general denial to the allegations of the plaintiffs' claim of any estate or interest in the land. The defendant, Lars Kvam, in his separate answer sets out the purchase of this land from the State of North Dakota by a quitclaim deed. The plaintiffs reply with a general denial but admit the execution of said deed. Defendant, Amerada Petroleum Corporation, in its answer sets out the ownership of an oil and gas lease on the premises given by Lars Kvam to A. M. Fruh and Thomas W. Leach and assigned to the Amerada Petroleum Corporation. Plaintiffs reply thereto admitting the execution of said lease but deny all claims of the defendants. The defendants, Ernest Bylin, E. A. Moline and Mabel H. Moline answer jointly setting out the ownership of Ernest Bylin of a mineral deed to an undivided 10/143rds interest in all the oil, natural gas and other minerals in said land and the ownership of E. A. Moline of a deed to an identical interest in said land, both deeds executed by Lars Kvam. Plaintiffs reply admitting the deeds but denying the claim of the defendants.

No answer or appearance is made by any of the other defendants.

The case was tried to the court who awarded a judgment in favor of the plaintiffs quieting title of the land in the state subject to the oil and gas lease of the Carter Oil Company. The defendants, Lars Kvam and the Amerada Petroleum Corporation appeal, demanding a trial de novo.

The facts are stipulated. Briefly, they show that on August 8, 1929, Ernest Bylin was the owner in fee simple of the land in controversy. On that date he and his wife executed a real estate mortgage to the State of North Dakota to secure a loan of $1,200. The money so loaned was from a trust fund held by the state for the Hospital for the Insane at Jamestown. Default was made in the payments under this mortgage and a foreclosure was had. No redemption was made. Sheriff's deed was issued to the State of North Dakota on August 21, 1941, and duly recorded in the office of the Register of Deeds of Williams County on September 25, 1941.

An examination of the land by agents of the Board of University and School Lands was made in 1941 and again in 1944. The land was duly appraised at $1,800.

Lars Kvam, then a tenant of the state on this land but not related to Ernest Bylin, made application to purchase said land on August 23, 1944, at the minimum price of $1,800. Thereupon a public sale of said land was advertised and Ernest Bylin, as former owner, was notified of the proposed sale, and that he was entitled to repurchase until three days before the sale. He answers: 'I would be interested in knowing the amount required for me to redeem this property before sale, as I might wish to repurchase.' After some correspondence an agreement was consummated whereby Bylin agreed to pay $2,055 for the land. A contract was entered into September 28, 1944, and $411, twenty (20) percent of the purchase price, was paid. The record shows that this was done under Sec. 15-0715(5), NDRC 1943. A reservation by the state of 50 percent of the oil, gas and minerals, under Section 38-0901, NDRC 1943, was contained in that contract. Mr. Kvam was notified and the public sale was abandoned. On Oct. 3, 1945, Ernest Bylin assigned his contract to Lars Kvam, and on his payment of the balance due on the contract, the State of North Dakota, on December 8, 1945, issued its quitclaim deed to the premises to Lars Kvam 'to fulfill and complete the terms of that * * * certain contract for deed' dated September 28, 1944. On Nov. 23, 1949, Lars Kvam executed an oil and gas lease to A. M. Fruh and Thomas W. Leach, which they on Jan. 25, 1950, assigned to the Amerada Petroleum Corporation. He also gave the mineral deed to Bylin and Moline described in their answer.

On October 1, 1952, the State Land Commissioner advertised sale of oil and gas leases on real estate, including the premises in question and upon said sale, and in accordance therewith, on October 28, 1952, entered into a preliminary, five year, oil and gas lease with the Carter Oil Company, covering a one-half interest in the oil and gas on the premises involved, for a consideration of 25 cents per acre and a bonus of $76,862.50 and retaining the customary one-eighth (1/8) royalty.

In combating the claims of the defendants which arise out of the repurchase of the land by Bylin the plaintiffs contend that the statute, Sec. 15-0715(5), NDRC 1943 under which said repurchase was made is unconstitutional and that the proceedings under it were therefore void. The defendants and appellants contend that the plaintiffs have no right to attack the constitutionality of that statute under the evidence in this case. As a first ground for that claim the appellants question the right of an officer of the state to make such an attack and cite State ex rel. Johnson v. Baker, 74 N.D. 244, 21 N.W.2d 355.

The case at bar is an action to quiet title brought by the state itself under Chapter 32-17, NDRC 1943. It is an action to determine adverse claims in property in which the state, and the Carter Oil Company claim to have an interest. It is not an action directly brought to raise any constitutional question. The constitutionality question is raised incidentally in the determination of such claims. It is brought by the attorney general who is authorized by Section 54-1202, NDRC 1943, to institute and prosecute all cases in which the state is a party whenever in...