Village of Kalkaska v. Shell Oil Co.
| Decision Date | 11 September 1989 |
| Docket Number | Docket No. 81915 |
| Citation | 433 Mich. 348,446 N.W.2d 91 |
| Parties | VILLAGE OF KALKASKA and County of Kalkaska, Plaintiffs, and MGM Petroleum, Ltd., Plaintiff-Appellant, v. SHELL OIL COMPANY, the State of Michigan, and Abutting Land Owners, Defendants-Appellees. (After Remand) 433 Mich. 348, 446 N.W.2d 91 |
| Court | Michigan Supreme Court |
Thomas J. Jewett, Lansing, Thomas L. Moore, Traverse, for plaintiff/appellant MGM Petroleum, Ltd.
William S. Gregory, Suttons Bay, for plaintiffs The Village of Kalkaska, The County of Kalkaska.
Wayne Richard Smith, for individual defendants/appellees.
Russell E. Prins, Michael C. McDaniel, for defendant/appellee State of Mich.
Mark A. Kehoe, for defendant/appellee Shell Oil Co.
Wayne Richard Smith, Marco, Litzenburger, Smith, Brown & Erhart, P.C., Petoskey, for Abutting Landowners/appellees.
Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., counsel of record, Lansing, Richard R. Roesch, Russell E. Prins, Asst. Attys. Gen., Lansing, for defendant-appellee State of Mich.
James R. Neal, Chairman, Rodger T. Ederer, John O. Juroszek, Loomis, Ewert, Ederer, Parsley, Davis & Gotting, Lansing, brief of amicus curiae Standing Committee on Oil and Gas Law of the State Bar of Michigan in support of defendants-appellees.
The question presented is whether the Village or County of Kalkaska obtained a proprietary interest in oil and gas lying beneath the surface of land that was designated, on plats recorded in 1876, 1888, and 1918, for public use as streets or alleys. We agree with the circuit judge and the Court of Appeals that a proprietary interest in oil and gas was not conveyed to the village or county when the plats were recorded, and that the village and county may not sell the oil and gas lying beneath the surface of the land.
Defendant Shell Oil Company explored for and apparently discovered oil or gas in two eighty-acre drilling units within plaintiff Village of Kalkaska. After Shell had developed the drilling units, plaintiff MGM Petroleum, Ltd., leased from Kalkaska an interest in oil and gas lying beneath streets and alleys of the village. 1 The Village and County of Kalkaska commenced this action against Shell to determine interests in land. 2 The owners of lots abutting platted streets and alleys within the drilling units were joined as defendants. The State of Michigan also joined as a defendant, claiming fee title to mineral rights under platted roadways adjacent to platted lots respecting which the state had reserved fee title to minerals.
There are, within the drilling units, three recorded plats, Sweet's Addition, recorded in 1876, Sweet's Second Addition, recorded in 1888, and Phelp's Addition, recorded in 1918. 3
The plat acts provided that a subdivision map or plat recorded in compliance with the acts "shall be deemed a sufficient conveyance to vest the fee of such parcels of land as may be therein designated for public uses in the city or village within the incorporate limits of which the land platted is included [or in the township where the parcel is not within an incorporated city or village] in trust to and for the uses and purposes therein designated, and for no other use or purpose whatever." 4
The circuit judge granted summary judgment in favor of the defendants and dismissed plaintiffs' complaint, 5 stating that "the Legislature did not intend that the recordation of the subject plats would constitute a conveyance to the municipality of the roadways in fee simple absolute...." He said that the "statutory conveyance referred to is the conveyance of a 'base fee,' " 6 i.e., the fee was subject to the "qualification or a condition subsequent" that the "street or alley be continued to be used" as such, and, if it were not, "the fee in the municipality would terminate."
The judge said that by the plat act language providing that the conveyance was in trust to and for the uses and purposes designated in the plat, the Legislature evidenced its "intent to limit the nature and extent of the interest of the trustee municipality to what was reasonably sufficient to exercise its responsibility." He continued that the Legislature "went on additionally to say that the fee was to be used for no other use or purposes than those designated, whatsoever." He concluded that the Legislature intended to limit the trustee municipality "to utilization of the property to the extent necessary to effect the purposes and uses designated and anything reasonably and necessarily incidental thereto."
The judge added that "to the extent, the plaintiffs can prove that the gas and oil and/or any other mineral deposits were of a reasonable and practical utility for the use or maintenance of the property as a street or alley, the taking of the same by the defendants may be actionable to such extent." The circuit judge reviewed at length the case law and concluded that summary judgment dismissing plaintiffs' complaint should be entered for the defendants.
The Court of Appeals, in affirming, adopted the opinion of the circuit judge. 7 This Court remanded the case to the Court of Appeals for reconsideration in light of Eyde Bros. Development Co. v. Eaton Co. Drain Comm'r, 427 Mich. 271, 398 N.W.2d 297 (1986). 8 On remand, the Court of Appeals reaffirmed, 163 Mich.App. 534, 415 N.W.2d 267, stating that it did not believe its earlier decision was inconsistent with Eyde Bros. which held that "a public easement in a highway dedicated by user is not limited to surface travel, but includes those uses, such as the installation of sewers, contemplated to be in the public interest and for the public benefit." 9 The Court said, and we agree:
Kalkaska v. Shell Oil Co. (On Remand ), 163 Mich.App. 534, 537; 415 N.W.2d 267 (1987).
Kalkaska contends that a statutory dedication of land pursuant to the plat act for a specific purpose conveys, by reason of the language of the act, 10 an absolute fee absent an express exception or reservation in the recorded plat. Statutory dedication, it is said, differs from common-law dedication which creates only a public easement. 11 Kalkaska asserts that a base fee, although subject to termination, transfers all the incidents of ownership that attach to an absolute fee.
Kalkaska relies on Des Moines v. Hall, 24 Iowa 234, 237 (1868), and Belgum v. Kimball, 163 Neb. 774, 782, 81 N.W.2d 205 (1957), which held that minerals under streets and alleys dedicated in a statutory plat belong to the municipality. The Iowa and Nebraska statutes provided that the recording of the plat was "equivalent to a deed in fee simple of" the portion of the land set apart on the plat for streets or other "public use."
Other courts have construed similar statutes as conveying "only the surface and so much of the subsurface as is necessary for street construction and municipal services," and that the city "acquired no interest in the oil, gas or other minerals underlying its streets and alleys as a result of the recording and acknowledgment of subdivision plats...." Evanston v. Robinson, 702 P.2d 1283, 1289-1290 (Wyo.1985). 12
Kalkaska's reliance on Cuming v. Prang, 24 Mich. 514 (1872), and Bissell v. Collins, 28 Mich. 277 (1873), is misplaced. In Cuming, gravel found in the alley was distributed over the whole alley. As stated in Bissell, Cuming "recognized the right of the city to make use of the gravel found within the limits of the alley in improving any part of it." 13 But, as stated in Cuming, the city had no right to take the gravel "for the purpose of sale, unless the plaintiff had assented to" using or disposing of it in that manner. 14 Cuming also recognized a right in the city "to sink water-pipes and gas-pipes, and to use it for like purposes." Id., pp. 523-524.
Kalkaska's reliance on Central Land Co. v. Grand Rapids, 302 Mich. 105, 4 N.W.2d 485 (1942), is also misplaced. Land had been conveyed to the City of Grand Rapids by deed on condition that it be used for street and park purposes. This was an absolute conveyance on a condition subsequent that would take effect if the land were not used solely for the purposes for which conveyed and not a conveyance pursuant to a plat act. The Court ruled that oil production on the park lands was not a violation of the condition subsequent because it was not inconsistent with use for street and park purposes:
"Defendants have taken rather extraordinary care in so operating the oil wells on the park property that this activity does not materially impair the use of the land for the purposes for which it was conveyed to the city." Id., p. 110, 4 N.W.2d 485.
"Neither the park property as a whole nor any substantial portion thereof is being used in any way or for any purpose which in any substantial degree interferes with the uses for which the property was conveyed to the city." Id., p. 113, 4 N.W.2d 485.
In Wayne Co. v. Miller, 31 Mich. 447, 449 (1875), the county attempted to recover lands dedicated as a street. In rejecting the county's claim, the Court said, "It is very clear that no purpose existed [in the 1839 plat act] 15 to give a title in the nature of private ownership." 16 (Emphasis added.) In Bay Co. v. Bradley, 39 Mich. 163, 166 (1878), the Court held that the county could not maintain an ejectment action with respect to land dedicated pursuant to the 1839 plat act for...
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