MACDONALD OIL GAS LLC v. SLEDD 93 (2010)

¶ 1 This is a dispute over the ownership of a mineral interest in a parcel of property in Pittsburg County. Defendant/Appellant, Keith Sledd, Trustee of the Nedbalek Family Trust (Sledd) appeals from the trial court's Order granting summary judgment in favor of Plaintiff/Appellant MacDonald Oil & Gas, LLC (MacDonald), finding that two quitclaim deeds¹ in the chain of title are clear and unambiguous on their face and in accordance with applicable rules of construction, conveyed to Sledd's predecessors in interest an interest in the surface estate only and none of the minerals. The trial court quieted title in MacDonald to an undivided 168 acre net mineral interest in a 240 acre tract, and in Sledd to an undivided 168 acre surface interest in the same 240 acre tract. Sledd appeals on the basis that the trial court erred in determining the deeds to be unambiguous as a matter of law, that the deeds were in fact ambiguous and extrinsic evidence should have been allowed to determine the grantors' intent. We agree. The trial court erred in granting Plaintiff's motion for summary judgment.²

¶ 2 Sledd's predecessors in interest to the subject property were Joe and Margaret Nedbalek (husband and wife), the grantees under the two subject quitclaim deed conveyances in 1974. MacDonald's predecessors in interest, the grantors of the 1974 conveyances were Edna R. Feeney and Agnes Feeney Grady and her husband. Edna Feeney owned an undivided 112 acre interest in both the surface and minerals of the 240 acre tract at the time of the conveyance. Agnes Feeney Grady and her husband owned an undivided 56 acre interest in both surface and minerals of the same tract at the time of the conveyance. Both quitclaim deeds conveyed all “right, title and interest” of the grantors in the following property:

Northwest Quarter (NW/4) and West Half (W/2) of Northeast Quarter (NE/4) of Section 35, Township 8 North, Range 16 East, Pittsburg County, Oklahoma,

EXCEPTING from this conveyance and reserving to the grantor an undivided1/212 interest in and to the oil, gas and all other minerals of every kind and character in and under said premises, together with the right of ingress and egress thereto․

(emphasis added).

¶ 3 The issue here is the construction of the language in the two deeds reserving or excepting the1/212 interest in the minerals. Although each grantor owned less than half of the surface and mineral estates, MacDonald contends the deeds except and reserve to each grantor an undivided1/212 interest in the minerals in the entire 240 acre tract. By that construction, McDonald argues and the trial court agreed, the grantors effectively reserved all the minerals they owned resulting in the deeds conveying only the surface and no minerals. Sledd, on the other hand, argues the quitclaim deeds are ambiguous and that the grantors' intent was to convey half and reserve half of the minerals actually owned by them. Because the grantors owned a combined total 168 acres at the time of the conveyance, Sledd contends the grantors intended to convey 84 net mineral acres.

¶ 4 There is considerable law in Oklahoma explaining the duties and limitations of the courts in construing deeds. First, whether a deed (or any contract) is ambiguous is a question of law. American Economy Ins. Co. v. Bogdahn, 2004 OK 9, ¶ 11, 89 P.3d 1051, 1054.³ “The test for ambiguity is whether the language ‘is susceptible to two interpretations on its face ․ from the standpoint of a reasonably prudent lay person, not from that of a lawyer.’ “ Id. (quoting Cranfill v. Aetna Life Ins. Co., 2002 OK 26, ¶¶ 7-8, 49 P.3d 703, 706).

¶ 5 If the deed is unambiguous it is not subject to interpretation. Messner v. Moorehead, 1990 OK 17, ¶ 9, 787 P.2d 1270. The clear and unambiguous deed will be governed by the laws in force at the time of the deed's execution. Id. However, deeds that are ambiguous or uncertain must be construed. The first priority is to ascertain the true intent of the parties. Messner, 1990 OK 17, ¶ 8, 787 P.2d 1270. “A cardinal rule in construing a deed is [to determine] the true intent of the makers, as that intent may be discerned from the instrument itself, taking it all together, considering every part of it, and viewing it in the light of the circumstances surrounding the makers at the time of its execution; and their later acts in connection therewith may be considered in arriving at their intention.” Lanford v. Cornett, 1966 OK 112, 415 P.2d 984 (Syllabus by the Court # 1); see also K & K Food Services, Inc. v. S & H, Inc., 2000 OK 31, ¶ 8, 3 P.3d 705; Riedt v. Rock Island Improvement Co., 1974 OK 30, ¶ 18, 521 P.2d 79 and Davis v. Moore, 1963 OK 228, ¶ 19, 387 P.2d 483.

¶ 6 MacDonald would have us rely on the Court of Civil Appeals decision Young v. Vermillion, 1999 OK CIV APP 114, 992 P.2d 917. Young relies on the Mississippi case of Rosenbaum v. McCaskey, 386 So.2d 387, 389 (Miss.1980).⁴ In Young, the grantor owned the surface and 1/8 of the minerals. He quitclaimed his interest in the property to the grantee, but reserved a1/212 interest in the minerals. The Court held that reserving1/212 of the minerals, which was more than the 1/8 interest the grantor actually owned, had the effect of reserving all the minerals the grantor owned and thus no minerals were conveyed by the quitclaim deed.

¶ 7 It should be noted, Young was not an appeal of a summary judgment. In fact, a motion for summary judgment had been previously denied. The order appealed was the result of an evidentiary hearing. Young is silent on the extent to which extrinsic evidence was necessary to demonstrate the grantor's intent with respect to the mineral interest reservation. Young also does not state the quitclaim deed was unambiguous. To the extent Young was based upon an implicit finding that the quitclaim deed there was unambiguous as a matter of law, we disagree with such a finding and decline to follow Young here.

¶ 8 In the instant case, our de novo review of the quitclaim deeds finds them to be inherently ambiguous in the extent to which they conveyed or reserved mineral interests. They appear to be susceptible to at least two interpretations from the standpoint of a reasonably prudent lay person. This case necessitates an examination of evidence beyond the four corners of the deeds to determine what the grantors intended. Given the ambiguity of the deeds, the trial court erred in granting summary judgment to MacDonald. This case is remanded for an evidentiary hearing consistent herewith.

¶ 9 The trial court's Order is REVERSED AND REMANDED.

BAY MITCHELL, Judge.

JOPLIN, P.J., and BELL, V.C.J., concur.