Stracka v. Peterson, 10925

• Court: North Dakota Supreme Court
• Writing for the Court: LEVINE; ERICKSTAD; PEDERSON, Surrogate Justice, sitting in place of GIERKE
• Citation: Stracka v. Peterson, 377 N.W.2d 580 (N.D. 1985)
• Decision Date: 21 November 1985
• Docket Number: No. 10925,10925
• Parties: Barbara F. STRACKA and Eugenia F. Whelihan, Plaintiffs and Appellants, v. Harvey A. PETERSON; Norman L. Peterson; Oil Development Company of Texas, a foreign corporation; Traverse Oil Company, a foreign corporation, Defendants and Appellees. Civ.

Page 580

377 N.W.2d 580

Barbara F. STRACKA and Eugenia F. Whelihan, Plaintiffs and Appellants, v. Harvey A. PETERSON; Norman L. Peterson; Oil Development Company of Texas, a foreign corporation; Traverse Oil Company, a foreign corporation Defendants and Appellees.

Civ. No. 10925.

Supreme Court of North Dakota.

Nov. 21, 1985.

E.J. Rose, Bismarck, for plaintiffs and appellants.

Alfred C. Schultz, Bismarck, for defendant and appellee Norman L. Peterson.

Conmy, Feste, Bossart, Hubbard & Corwin, Fargo, for defendant and appellee Harvey A. Peterson.

Fleck, Mather, Strutz & Mayer, Bismarck, for defendant and appellee Oil Development Co. of Texas; argued by Jane Fleck Romanov.

LEVINE, Justice.

Barbara F. Stracka and Eugenia F. Whelihan appeal from a judgment which quieted title to all oil, gas, and minerals in 160 acres of land in Harvey A. Peterson, Norman L. Peterson (Petersons), Oil Development Company of Texas (ODCT), and Traverse Oil Co. (Traverse). We affirm.

1. BACKGROUND

In 1946 McKenzie County conveyed 160 acres of land to Margaret Friday and reserved fifty percent of the minerals. Later that year Friday conveyed the land to Palmer Peterson by a special warranty deed which contained the language: "subject to the reservation of 50% of all oil or minerals." The respective interests in the minerals of each of the parties to this appeal are traceable to this deed and contingent upon what Friday and Palmer Peterson intended by the quoted language.

Stracka and Whelihan claim that this language reserved fifty percent of the minerals in Friday and therefore, as her successors in interest, they own fifty percent of the minerals. The Petersons, successors in interest to Palmer Peterson, and ODCT and Traverse, which hold mineral leases in the land from the Petersons, assert that this language was not a reservation but rather an exclusion from Friday's warranty of McKenzie County's prior fifty percent reservation. They maintain that Friday conveyed to Palmer Peterson the fifty percent of the minerals which remained after the prior McKenzie County reservation and that by virtue of the 1946 conveyance to Palmer Peterson, Friday owned no mineral interests and thus Stracka and Whelihan inherited no mineral interests. ¹

The issue is whether the trial court erred in quieting title to the disputed fifty percent of the mineral interests referred to in the 1946 Friday-Palmer Peterson deed, based on its finding that there was no reservation of those minerals intended.

2. STANDARD OF REVIEW

We interpret deeds to ascertain and effectuate the parties' mutual intentions. North Dakota Century Code Secs. 47-09-11, 9-07-03; Miller v. Schwartz, 354 N.W.2d 685 (N.D.1984). If the deed is unambiguous, we determine the intent of the parties from the instrument itself and only if there is ambiguity do we consider extrinsic evidence. NDCC Sec. 9-07-04; Miller v. Schwartz, supra. Stracka and Whelihan interpret the quoted language to be a reservation while the Petersons, et al., claim it was a limitation on Friday's warranty. Under the circumstances of this case these are both rational yet contrary interpretations of the deed. We therefore conclude the trial court was correct in finding the deed ambiguous, Mueller v. Stangeland, 340 N.W.2d 450 (N.D.1983), and in allowing extrinsic evidence to ascertain Friday and Palmer Peterson's mutual intent in executing the deed. NDCC Secs. 9-07-03, 9-07-12; Mueller, supra; Perschke v. Burlington Northern, Inc., 311 N.W.2d 564 (N.D.1981). The determination of Friday and Palmer Peterson's mutual intent is a finding of fact which will not be overturned unless clearly erroneous. NDRCivP 52(a); Bismarck Realty Co. v. Folden, 354 N.W.2d 636 (N.D.1984). This case was decided on the basis of stipulated facts and the record of title. Previously, when the record consisted of undisputed facts or documentary evidence we did not apply the clearly erroneous standard of NDRCivP 52(a). See, e.g., Krohnke v. Lemer, 300 N.W.2d 246 (N.D.1980); Dolajak v. State Farm Auto & Cas. Underwriters, 252 N.W.2d 180 (N.D.1977). Recently, however, the United States Supreme Court held the clearly erroneous standard applies regardless if findings are based on undisputed or documentary evidence, Anderson v. City of Bessemer City, N.C., 470 U.S. ----, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). Because the Supreme Court's interpretation of Rule 52(a) is highly persuasive, In re Estate of Elmer, 210 N.W.2d 815 (N.D.1973), we will follow Anderson and apply the clearly erroneous standard in this case. ²

The facts, law, and equities supporting all parties' positions are strong and competing, making this a difficult case. We cannot conclude however that the district court finding was clearly erroneous. Several considerations lead us to this conclusion.

3. DISCUSSION

The district court construed the words "subject to" in the phrase "subject to the reservation of 50% of all oil or minerals" as excluding from Friday's warranty McKenzie County's fifty percent reservation. ³ This interpretation accords with the generally accepted view that the words "subject to" mean "limited by," or "subservient or subordinate to" and connote a limitation on a grantor's warranty rather than a reservation of rights. ⁴ Shell Oil Co. v. Manley Oil Corp., 124 F.2d 714 (7 Cir.1942); Texaco, Inc. v. Pigott, 235 F.Supp. 458 (S.D.Miss.1964); Hendrickson v. Freericks, 620 P.2d 205 (Alaska 1980); Renner v. Crisman, 80 S.D. 532, 127 N.W.2d 717 (1964); Hedin v. Roberts, 16 Wash.App. 740, 559 P.2d 1001 (1977).

The district court also found it significant that the disputed language in the Friday-Palmer Peterson deed was virtually identical to the wording in the McKenzie County-Friday deed. ⁵ It is apparent the district court concluded that Friday reproduced the wording from the McKenzie County deed in her own deed in order to exclude the County's reservation from her warranty. We do not find either of these findings to be clearly erroneous.

Stracka and Whelihan contend NDCC Sec. 47-09-13 requires interpreting the deed in favor of Friday. Section 47-09-13 provides that a reservation in any grant is to be interpreted in favor of the grantor. However here, the issue is whether a reservation exists, not the interpretation of a reservation. Not only is Sec. 47-09-13 inapposite, the deed should be interpreted against Friday because she, as drafter of the deed, caused the ambiguity. NDCC Secs. 9-07-19; 47-09-11.

Stracka and Whelihan further argue that the post-1946 conduct of Friday and the Petersons demonstrates that the 1946 deed was intended to contain a reservation. If a deed is ambiguous, the parties' conduct subsequent to the deed's execution may be used to help determine the meaning of ambiguous language. Beck v. Lind, 235 N.W.2d 239 (N.D.1975).

The Petersons were not parties to the 1946 deed and so their conduct is immaterial. Friday's 1951 execution of an oil and gas lease in the land could be construed as indicating that she intended to reserve fifty percent of the minerals in the 1946 deed. However, it could also indicate Friday's mistaken belief that she acquired fifty percent of the minerals by the judicial invalidation of McKenzie County's reservation. See footnote 1, supra. Thus, from the evidence there is at least one plausible explanation for Friday's conduct which supports the district court judgment. The fact the evidence might support findings contrary to the district court's findings does not render them clearly erroneous. Walch v. Jacobson, 361 N.W.2d 617 (N.D.1985).

Finally, Stracka and Whelihan contend that Friday's use of a special warranty deed, ⁶ rather than a warranty deed, indicates that the disputed language was a reservation. Stracka and Whelihan argue that Friday's special warranty deed, by definition, excluded the McKenzie County reservation from her warranty. Therefore, it would have been unnecessary for Friday to include the language "subject to the reservation of 50% of any oil or minerals" in order to exclude the McKenzie County reservation. Consequently, they claim that this language could only have been intended to be a reservation.

Although this argument has merit, in view of all the considerations previously discussed, we are not convinced that the trial court made a mistake in finding that Friday did not intend to reserve fifty percent of the minerals. ⁷ An equally reasonable explanation for Friday's use of the special warranty deed is the added protection it gave her. The special warranty deed excluded from Friday's warranty, not only the McKenzie County reservation, but all interests and claims in the land arising prior to her ownership. This is a reasonable explanation, supported by the record, for Friday's use of a special warranty deed which is consistent with the district court judgment. Again, merely because the evidence might also support other findings does not render the district court's findings clearly erroneous. Walch, supra.

Viewing the entire record we are not left with a definite and firm conviction that the trial court erred in finding that Friday and Palmer Peterson mutually intended that there be a limitation on Friday's warranty rather than a reservation of mineral interests.

Accordingly, the judgment of the district court is affirmed.

ERICKSTAD, C.J., VANDE WALLE and MESCHKE, JJ., and PEDERSON, Surrogate Justice, concur.

PEDERSON, Surrogate Justice, sitting in place of GIERKE, J., disqualified.

1 In a series of decisions this Court held that the statute under which McKenzie County purported to reserve 50% of the minerals was invalid because there was no statutory authority for counties to make such mineral reservations. Adams County v. Smith, 74 N.D. 621, 23 N.W.2d 873 (1946); Kershaw v. Burleigh County, 77 N.D. 932, 47 N.W.2d 132 (1951); Kopplin v. Burleigh County, 77 N.D. 942, 47 N.W.2d 137 (1951); State v. The California Company, 79 N.D. 430, 56 N.W.2d 762 (1953). Therefore, because McKenzie...