Texaro Oil Co. v. Mosser
| Decision Date | 27 October 1980 |
| Docket Number | No. 9740,9740 |
| Citation | 299 N.W.2d 191 |
| Parties | TEXARO OIL COMPANY, Plaintiff, Appellee, and Cross-Appellant. v. Ralph W. Mosser, Defendant, Appellant, and Cross-Appellee. Ralph W. MOSSER and Meta C. Mosser, joint tenants; Kathleen O'Connell; Walter T. Cooper; Gulf Oil Corporation of Michigan; A. G. Golden; Langdon G. Williams; Vincent T. Larson; Jase O. Norsworthy; James W. Reger; Dennis C. Rehrig; The Equitable Life Assurance Society of the United States; Production Credit Association, Mandan, North Dakota; Donald H. Brengle; Ethel C. Brengle; James Weldon Birdwell; and all other persons unknown claiming any estate or interest in, or lien or encumbrance upon, the property described in the Complaint, Defendants. Civ. |
| Court | North Dakota Supreme Court |
Pringle & Herigstad, Minot, for plaintiff, appellee, and cross-appellant; argued by Thomas A. Wentz, Minot.
Mackoff, Kellogg, Kirby & Kloster, Dickinson, for defendant Kathleen O'Connell; argued by Ward M. Kirby, Dickinson.
Beyer & Holm, Dickinson, for defendant Ralph W. Mosser; submitted on brief.
This is an appeal from a judgment resulting from a quiet title action regarding adverse claims to an undivided one-half interest in the oil, gas, and other minerals in the following real estate located in Billings County, North Dakota:
Township 141 North, Range 101
All of Section 17;
South Half of the North Half and the
Southeast Quarter of Section 20;
South Half of Section 21.
Walter T. Cooper (Cooper) was the original owner of this undivided one-half mineral interest. By virtue of several conveyances and a sheriff's sale, three parties each claim an interest of this undivided one-half mineral interest, some of which are in dispute. The total of these three claims exceeds the available one-half mineral interest.
Plaintiff, Texaro Oil Company (Texaro), claims a one-fourth interest in the minerals through a mineral deed given by Cooper and his wife to Geo. H. Anderson, dated 27 June 1958, and recorded 8 July 1958. Subsequent conveyances, the validity of which are not in dispute in this action, vested this one-fourth interest in Texaro.
Defendant Kathleen O'Connell (O'Connell) claims ownership of the following portion of the disputed minerals:
139/640 of the minerals in Section 17;
5/16 of the minerals in Section 20;
1/8 of the minerals in Section 21.
The basis of O'Connell's claim is a notice of attachment recorded on 15 Apr 1958 in the case of Adele F. McEntee, Plaintiff, versus Walter T. Cooper and wife, levying attachment on Cooper's one-half interest in the oil, gas, and minerals in the above-described real estate. The case between McEntee and Cooper resulted in a money judgment, levy, and sale of some of the attached minerals. A sheriff's deed to Adele F. McEntee was recorded on 6 June 1961. O'Connell is a successor in interest to McEntee.
Defendants Ralph W. Mosser and Meta Mosser 1 claim an undivided 200/1597. 20 interest in the minerals in the above-described land. The basis of the Mossers' claim is a mineral deed given by Cooper to Ralph and Meta Mosser dated 14 Mar 1960, and recorded 18 Mar 1960. The Mossers assert that this mineral deed was pursuant to an option given to Ralph Mosser by Cooper on 28 Oct 1955, and recorded on 10 Dec 1957.
A brief graphic outline of the sequence of events will be helpful to understand the claims:
3-5-52 Walter Cooper record owner
10-28-55 Option to Ralph Mosser for royalty
4-15-58 Notice of Attachment by O'Connell's
predecessor in interest
7-8-58 Mineral Deed to Texaro's predecessor
in interest
11-5-59 Judgment entered in Attachment action
3-18-60 Mineral Deed to the Mossers
6-2-60 Sheriff's Certificate of Sale
6-6-61 Sheriff's Deed
The district court determined that O'Connell's claim had priority over the claims of Texaro and the Mossers, and that the Texaro claim had priority over the Mossers' claim. Thus, the district court divided the one-half mineral interest as follows:
Land Texaro O'Connell Mosser Total
---------- ------- --------- -------- -----
Section 17 160/640 139/640 21/640 0.5
Section 20 3/16 5/16 0 0.5
Section 21 1/4 1/8 1/8 0.5
Mosser appealed to this court, and Texaro filed a cross-appeal. We affirm.
The issues raised by this appeal are as follows:
1. Whether or not the option to purchase royalties meant or included the right to purchase mineral rights; and
2. Whether or not Texaro and the Mossers can collaterally attack the attachment process.
The Mossers assert that the mineral deed dated 14 Mar 1960 and recorded 18 Mar 1960 was pursuant to the option 2 given to Ralph Mosser on 28 Oct 1955, and recorded on 10 Dec 1957. Thus, the Mossers claim that pursuant to Nodland v. Plainsman Petroleum, Inc., 265 N.W.2d 252 (N.D.1978), the mineral deed relates back to the recording of the option and gives the Mossers priority over any claims arising after the recording. 3 We disagree.
The recorded option provides in pertinent part as follows:
"First party (Cooper) does hereby grant to second party (Mosser) the option to purchase a 1/8th of 1/8th royalty, covering:
All-17; S 1/2 N 1/2; SE 1/4 - 20;
S 1/2 - 21; S 1/2 - 22-141-101;
The recorded mineral deed provides in pertinent part, as follows:
"(Walter T. Cooper) Conveys to second parties (Mossers) as joint tenants and not as tenants in common, their assigns, the survivors of said parties and the heirs and assigns of the survivor, an undivided 200/1597.20 mineral acre interest in and to all of the oil, gas, casinghead gas, casinghead gasoline and other minerals in and under and that may be produced ..."
The terms "mineral" and "royalty" are totally separable terms with distinct characteristics. This distinction is dealt with at length in I Williams and Meyers, Oil and Gas Law, § 302-307.4. The term "royalty interest" generally refers to the landowner's share in the production of oil and gas at severance. Stratmann v. Stratmann, 204 Kan. 658, 465 P.2d 938 (1970). A royalty interest is personal property and refers to the owner's right to receive a certain part of the proceeds from oil and gas, leases if and when there is production. Stratmann v. Stratmann, supra. A "mineral interest" is a real property interest created in oil and gas in place. Stratmann v. Stratmann, supra. The prime characteristic of a mineral interest is the right to enter the land to explore, drill, produce and otherwise carry on mining activities. Stratmann, supra. It is this attribute of operating rights that distinguishes a mineral interest from a royalty interest.
Additionally, there are important differences between these two recordings. The grantee in the option is Ralph Mosser, and the grantees in the mineral deed are Ralph and Meta Mosser. Additionally, the quantities and interests described in the recordings are different. The interest described in the option is a one-eighth of one-eighth royalty, and the interest described in the mineral deed is a 200/1597.20 mineral interest.
Because these terms represent two different interests and because of the difference between the two recordings, we conclude that the royalty option was not exercised by the mineral deed.
The Mossers also contend that there should be a reformation of the option to the terms they claim they agreed on with Cooper. Reformation of a written instrument to conform to the true intention of the parties is permissible and parol evidence is admissible for that purpose. Ell v. Ell, 295 N.W.2d 143 (N.D.1980); Oliver-Mercer Electric Cooperative, Inc. v. Fisher, 146 N.W.2d 346 (N.D.1966). The parol evidence of an alleged mutual mistake for reformation must be clear, satisfactory, specific, and convincing. Ell v. Ell, supra; Oliver-Mercer Electric Cooperative, supra. The burden of proof is on the parties who allege the mistake to establish by competent evidence that the written instrument does not fully or truly state the agreement that the parties had intended to make. Ell v. Ell, supra; Oliver-Mercer Electric Coop, supra. The Mossers offered evidence to show Ralph Mosser's expectations and understanding of the royalty option. Ralph Mosser testified as follows:
Cooper did not appear at trial to corroborate the understanding and expectations of Ralph Mosser. The trial court found that Mosser's testimony did not include admissible evidence of the actual conversations between Mosser and Cooper upon which it would determine whether or not the option expressed the true intent of the parties. We agree that the evidence does not clearly, satisfactorily, specifically, and convincingly support reformation of the option to the expectations of Ralph Mosser. Accordingly, reformation is not available to the Mossers, and the mineral deed does not relate back to the option. Therefore, the Mossers' title dates from the recording of the mineral deed on 18 Mar 1960.
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