Williams v. Watt

• Decision Date: 30 December 1972
• Citation: 668 P.2d 620
• Parties: Maurice WILLIAMS, Appellant (Plaintiff), v. Joseph H. WATT and Nellie Arlene Watt, Trustees for the Joseph H. Watt Trust, dated
• Court: Wyoming Supreme Court

Page 620

668 P.2d 620

Maurice WILLIAMS, Appellant (Plaintiff), v. Joseph H. WATT and Nellie Arlene Watt, Trustees for the Joseph H. Watt Trust, dated December 30, 1972; and Tim Watt, the Robert E. Watt Trust, Tim Watt and Vance Watt as Co-Trustees, and Tim Watt and Vance Watt as Trustees of the Robert E. Watt Trust, Appellees (Defendants).

No. 5799.

Supreme Court of Wyoming.

Aug. 12, 1983.

S. Thomas Throne, Sheridan, for appellant.

Henry A. Burgess of Burgess & Davis, Sheridan, for appellees.

Before ROONEY, C.J., and RAPER, ^* THOMAS, ROSE and BROWN, ^** JJ.

ROSE, Justice.

In this appeal we are asked to examine the effect of deed and contract language in order to resolve an ownership-of-minerals issue.

FACTS

On April 10, 1940 the Federal Land Bank of Omaha, Nebraska entered into a contract for deed with appellant Maurice Williams, pursuant to which it agreed to transfer ranch land titles to him upon payment of the purchase price. On December 28, 1954, the Land Bank delivered its warranty deed containing the following language.

" * * * [E]xcepting and reserving an undivided one-half interest in all oil, gas, and mineral rights in and under the balance of the land for a period of 20 years from the 10th day of April, 1940, and as long thereafter as oil, gas, or other minerals continue to be produced therefrom or said property is being so developed or operated". ¹

On October 27, 1949 Mr. Williams executed a contract for warranty deed with appellee Joseph H. Watt, undertaking to convey and, by deed dated December 7, 1956, did convey an undivided two-thirds interest to Joseph H. Watt and an undivided one-third interest to Robert E. Watt in certain of the lands which had been included in the Land Bank transaction. The contract and deed contained this provision:

"Excepting and reserving to the first party [Williams], his heirs, successors and assigns, all of the oil, gas and mineral rights running with said lands and to which he is entitled under the present ownership of said lands, and which have not been reserved to the United States or heretofore have been reserved or conveyed by previous owners and as may show of record * * *."

As can be seen, this exception was effected before the base term of the 20-year-or-production condition in the first deed had expired.

The only minerals or interest in mineral rights with which this appeal has any concern whatsoever have to do with those which the Land Bank excepted from its grant. It is certain rights which pertain to these minerals that Williams asserts he withheld from his subsequent transfer of real property to the Watts. It is conceded that the half of the minerals which were not excepted by the Land Bank were excepted from the deed from Williams to Watts and the Watts make no claim to these minerals.

On April 10, 1960, (20 years from the date of the agreement between the Land Bank and Williams) there had been no production of oil, gas or other minerals from the lands and therefore the Federal Land Bank exception no longer burdened the controversial mineral interest. The trial court held that the disputed half of the minerals became the property of the Watts in fee simple absolute when the contingency expired.

We will reverse, holding that by expressly excepting from the Williams-Watt contract for deed and deed,

"all of the oil, gas and mineral rights * * * to which he is entitled under the present ownership of said lands, and which have not been * * * heretofore * * * reserved or conveyed by previous owners * * *",

the parties intended to and did withhold from the grant to the Watts a vested remainder. This remainder was owned by Williams at all times following the Land Bank-Williams transaction until the minerals themselves were automatically transferred to him upon the expiration of the 20-year contingency, no other oil, gas or other minerals then having been produced. When the condition contemplated by the 20-years-or-production provision in the Land Bank contract for deed and deed expired, the minerals became the property of Williams in fee simple by operation of law and thus did not either remain with the Land Bank by reason of any rule against perpetuity proscriptions, ² nor did they follow the land to its ownership in the Watts.

ISSUE

The appellant Williams describes the issue for our resolve as follows:

"Did the District Court err in holding that the Appellees-Watts were the owners of 50% of the mineral rights in the subject real property despite the facts that: (1) Both Appellant-(Seller) Williams and Appellees-(Buyer) testified that it was their intent at the time of the sale of this property for all minerals to be reserved to Appellant; (2) the deed on its face reserves all of the minerals to Appellant Williams."

The Court's Identification of the Relevant Questions

We view the essential questions for consideration to be these: When Williams agreed to sell and did sell the land to the Watts in 1949 with delivery of deed in 1956, and, given the fact that the Land Bank's exception of one-half of the minerals was not to terminate until 1960 or until oil, gas or other minerals ceased to be produced, what was the nature and what were the characteristics of the mineral interest or estate that the Federal Land Bank had excepted from its grant to Williams? What present and/or future interest or interests in these minerals did Williams possess after the conveyance from the Land Bank but prior to the expiration of the condition--if any? If, following the Land Bank's exception from its grant, Williams was then possessed, or at some later time was to be possessed, of some sort of mineral interest or estate which he attempted to withhold when he conveyed the land to the Watts, was this such an interest as he then possessed and could lawfully withhold? Finally, did the minerals which were excepted by the Land Bank from its conveyance to Williams ultimately pass to the Watts upon the expiration of the term contemplated by the 20-year-or-production exception--as the trial court held--or did they remain the property of the Land Bank for the reason that the conveyance was void as being in violation of the rule against perpetuities, supra n. 2--or did the minerals then become the property of Williams in fee simple by reason of the purported exception language which is contained in the deed to the Watts?

Introduction

By way of introduction to the decisional aspects of this opinion, it is appropriate to make this observation: All participating justices are secure in their interpretation of the Williams-Watt contract to the effect that it was the intent of these parties that Williams would come into ownership of the remaining disputed minerals when the condition contained in the Land Bank-Williams contract and deed no longer encumbered them. We consider the overriding obligation of this court to be to give effect to this intention of the parties--if that is possible. In fulfilling this obligation, the majority and the concurring justice reach the same result, but, in traveling through the complicated maze of future-interest concepts, we disagree about the labeling of the interest held by Williams as we all undertake to give effect to the intention of the parties. The majority of the justices hold that, contemporaneous with the execution of the Land Bank contract for deed and deed to Williams, Mr. Williams was possessed of a vested remainder. Justice Thomas, on the other hand, would identify Williams' interest as an executory interest.

The majority take issue with the executory-interest theory for the reason that the Wyoming statute (n. 2, supra) which adopts the rule against perpetuities would be violated under this concept. Justice Thomas objects to the majority position because he finds the law to be that there can be no remainder after an estate in fee simple determinable, ³ which estate we all hold to be the interest which the Land Bank possessed in the disputed minerals prior to the expiration of the condition.

The majority concede the historical viability of Justice Thomas' objection, but find the modern law to be to the contrary--i.e., that a remainder can, in circumstances such as those which confront us here, follow a limited or qualified fee and may be excepted from a subsequent grant prior to the expiration of the qualification. On this issue, Gray, The Rule Against Perpetuities, 4th Ed., § 114, p. 108, n. 3, says that the concept which holds that there can be no remainder following a fee

"must be regarded, under modern conditions at least, as purely artificial * * *."

Thus, in more recent times, the rule against the possibility of an estate remaining after a fee is thought about as an historical anachronism. Indeed, were it not for the perpetuities problem discussed infra, it would not be necessary to distinguish between executory interests and remainders.

In 28 Am.Jur.2d Estates § 197, "Distinctions--generally; from executory interest," p. 341, the text undertakes to distinguish remainders and executory interests and comes to this conclusion:

" * * * Most of the litigation involving remainders, vested and contingent, and executory interests, has been concerned with such questions of construction. Once the question of construction is settled, however, the further question of the technical designation of the future interest--whether it is a remainder or an executory interest and, if a remainder, whether it is vested, vested subject to being divested, or contingent--is one of decreasing significance. There is a tendency to disregard the historical distinctions between contingent remainders and executory interests, and some modern statutes in effect abolish the practical distinctions between them. Also, there is a rule that a limitation will be construed as creating a remainder rather than an executory interest if such can be done consistently with other rules of law." (Emphasis added.)

Broadly speaking, executory interests or limitations are...