Ulrich v. Amerada Petroleum Corp.

• Decision Date: 02 October 1954
• Docket Number: No. 7426,7426
• Citation: 66 N.W.2d 397
• Parties: R. J. ULRICH and L. B. Schulte, Plaintiffs and Appellants, v. AMERADA PETROLEUM CORPORATION and McKenzie County, a Municipal Corporation, Defendants and Respondents.
• Court: North Dakota Supreme Court

Page 397

66 N.W.2d 397

R. J. ULRICH and L. B. Schulte, Plaintiffs and Appellants, v. AMERADA PETROLEUM CORPORATION and McKenzie County, a

Municipal Corporation, Defendants and Respondents.

No. 7426.

Supreme Court of North Dakota.

Oct. 2, 1954.

Rehearing Denied Oct. 29, 1954.

Syllabus by the Court.

1. A valid tax deed clothes the grantee with a new and complete title to the land described.

2. County commissioners have only such authority in conducting affairs of the county as is prescribed by statute.

3. Repeals by implication are not favored and the courts will not find such repeal to have been effected if there are reasonable grounds to hold to the contrary.

4. In the construction of statutes the intention of the legislature must be ascertained if possible and given effect to the fullest extent. Every statute must be construed with reference to the policy intended to be accomplished.

5. The word 'all' as used in Chapter 286 S.L.1941 now Section 57-2819 NDRC 1943, and referring to the right of the prior owner to repurchase 'all real estate' which is forfeited to the county means 'the whole of' such real estate.

6. An oil or gas lease conveys an interest in real property.

7. Before the county commissioners can consummate a private sale of any interest in tax forfeited real estate, including an oil and gas lease, the prior owner, his executor, administrator or any member of his immedate family must have a written notice thereof by the county auditor sent by registered mail and shall have thirty days from the date of such notice to make redemption or repurchase of property so forfeited. Sections 57-2818 and 57-2819 NDRC 1943.

8. An oil and gas lease granted without notice to the prior owner, his executor, administrator or any member of his immediate family, is subject to the right of said group to repurchase the real estate.

9. Such an opportunity to repurchase tax forfeited real estate is a privilege extended only to the prior owner and the statutory group enumerated.

Q. R. Schulte, Stanley, for plaintiffs and appellants.

Harold J. Fisher, Williston, John S. Miller, Tulsa, Okl., for defendant and respondent, Amerade Petroleum Corporation.

Strutz, Jansonius & Fleck, Cox, Pearce & Engebretson, Bismarck, amici curiae.

GRIMSON, Judge.

This is an action to quiet title. Plaintiffs claim to be the owners of Lots One and Two (1-2), East Half (E 1/2) of Northwest Quarter (NW 1/4) and the Northeast Quarter (NE 1/4) of Section Thirty-one (31), Township One Hundred Fifty-one (151), North, Range Ninety-four (94) West of the 5th P.M. The defendant, Amerada Petroleum Corporation, claims to hold an oil and gas lease on said premises. McKenzie County makes no appearance. The purpose of the lawsuit is to determine the validity of said oil and gas lease. The district court found for the defendant and plaintiffs appeal demanding trial de novo.

The facts show that a patent to the land in question was issued by the United States to George Parshall, (also known as Geo. Parshall) on Oct. 28, 1919. He remained the owner thereof until his death in 1951. On March 1, 1940, the county auditor of McKenzie County, after due tax sale proceedings, conveyed the premises by an auditor's tax deed to McKenzie County on default in payment of taxes for the year 1928 and subsequent years. McKenzie County thereupon entered into possession of said land. On Feb. 1, 1949, McKenzie County executed and delivered an oil and gas lease covering said premises to A. M. Fruh and Thomas W. Leach as lessees which they duly filed and had recorded in the office of the Register of Deeds of McKenzie County on Feb. 7, 1949. No notice of this pending lease was given to the prior owner before its issue. On March 28, 1949, the said lease was assigned to the defendant, Amerada Petroleum Corporation, who is still the owner thereof. The assignment was recorded in the office of the Register of Deeds of McKenzie County on Sept. 7, 1949. In 1950 McKenzie County had an offer for the purchase of the premises and on Oct. 2, 1950, the county auditor duly notified George Parshall in accordance with Section 18, Chapter 286 S.L.1941, now Section 57-2818 NDRC 1943, of said offer and the amount necessary for him to make redemption under said chapter. Within thirty days said George Parshall did make such redemption of the premises from McKenzie County and a county deed was executed and delivered to him, dated Nov. 6, 1950, recorded March 4, 1952, conveying said property to him 'in as full and ample manner as the said county is empowered by law to sell the same.' After said George Parshall died in 1951 a decree of heirship was filed and recorded, naming his heirs. All of said heirs quitclaimed to one Guy Fox who thereafter conveyed said premises to the plaintiffs by warranty deed. No ratification of said lease has been made except to 80 mineral acres sold by one of the plaintiffs and ratified by the successors in interest of the prior owner.

There is no question raised as to the validity of the tax sale proceedings. The only question for determination is whether McKenzie County had the authority to enter into an oil and gas lease during the time it held title to the premises subject to the right of the former owner to repurchase.

The counties are political subdivisions of the state. The authority of the county commissioners and of the administrative county officers in the management of the business affairs of the county is prescribed by statute. Title 57 NDRC 1943 provides for the assessment of property and the collection of taxes. Provision is also made for the sale of land for delinquent taxes and for the redemption thereof by the owner. Chapter 57-28 NDRC 1943 establishes the rights of the county when the lands are not redeemed.

Section 57-2802 NDRC 1943 provides that the failure to make redemption passes the 'right, title, and interest of the owner, mortgagee, or lienholder in and to said premises, to the county by operation of law'. This court has repeatedly held that a valid tax deed grants a complete title to the land. In Baird v. Stubbins, 58 N.D. 351, 226 N.W. 529, 530, 65 A.L.R. 1009, it is held:

'A valid tax deed clothes the grantee with a new and complete title in the land, under an independent grant from the sovereign authority, which bars and extinguishes all prior titles and encumbrances of private persons whether of record or otherwise.' See also Peterson v. Reishus, 66 N.D. 436, 266 N.W. 417, 105 A.L.R. 724; Nelson v. Murton, 68 N.D. 108, 277 N.W. 390; Buman v. Sturn, 73 N.D. 561, 568, 16 N.W.2d 837; Hefner v. Northwestern Mut. L. Ins. Co., 123 U.S. 747, 8 S.Ct. 337, 31 L.Ed. 309, 311; Coverston v. Grand Forks County, 74 N.D. 552, 23 N.W.2d 746.

When the county receives a tax deed the prior owner or lienholder loses all interest in the property. The county has foreclosed its tax lien and is not holding the land any more as security for the payment of the taxes. The county's lien is merged in the tax deed vesting in the county complete title to the land in lieu of the payment of the delinquent taxes. The cases cited by plaintiffs involved the rights of the owner before the issuance of a tax deed to the county, and do not apply after tax deed issues. Eikevik v. Lee, 73 N.D. 197, 13 N.W.2d 94; Buman v. Sturn, 73 N.D. 561, 16 N.W.2d 837.

With the ownership of the land absolute in the county since March 1, 1940 defendant claims that the county had a right on Feb. 1, 1949 to make an oil and gas lease on said property under Chapter 156 S.L.1937. Section 1 of that act grants the county commissioners 'the right, power and authority to demise, lease and let, both real and personal property, which the County may have acquired through purchase, forfeiture or operation of law, for the purpose of mining, and operating for oil and gas, laying pipe lines, and for establishing and maintaining tanks, power stations and structures thereon, to produce, save, sell and take care of said product.' Lands obtained by the county through tax procedure are lands acquired by the county 'through forfeiture or operation of law.' Rosenstein v. Williams County, 73 N.D. 363, 15 N.W.2d 378; Buman v. Sturn, 73 N.D. 561, 16 N.W.2d 837; McDonald v. Abraham, 75 N.D. 457, 28 N.W.2d 582.

The plaintiffs contend that this chapter, 156 S.L.1937, is superceded by Chapter 237 S.L.1939. They claim that the latter chapter repeals by implication the right of the county commissioners to lease for oil and gas.

A comparison of the title of the two acts shows that the 1937 act gives general authority to the county commissioners to lease tax acquired real estate of the county for mining and drilling purposes while Chapter 237 S.L.1939 gives the county commissioners authority to lease real property acquired by tax deed and not sold or leased. The former is a general act for the leasing of county property for the purpose of mining and operating for oil and gas. The latter is clearly a general act for leasing for agricultural and grazing purposes the tax acquired lands of the county that have not already been sold or leased for oil and gas and provides the terms thereof. There is no conflict between the two acts. Both can be reconciled and both made effective. Coulter v. Ramberg, N.D., 55 N.W.2d 516.

Moreover, Chapter 163 S.L.1942, now Section 38-0905 to Section 38-0910 NDRC 1943, authorizes the county to approve and adopt oil and gas leases executed by the owner of lands which have been later forfeited to the county in tax proceedings. That is really complementary to the general authority of the county to grant oil and gas leases as provided by Chapter 156 S.L.1937, now Section 38-0911 NDRC 1943, and confirms the intention of the legislature to grant full authority to the counties to lease tax acquired lands for oil and gas.

It is further claimed for the plaintiffs that when the prior owner, their predecessor in title, repurchased his land from McKenzie County on Nov. 6, 1950, under Sections...