August 25, 2019

Colorado Court of Appeals: Reservation of Rights in 1950 Deed Conveyance Preserved Mineral Interests

The Colorado Court of Appeals issued its opinion in Owens v. Tergeson on Thursday, November 5, 2015.

Mineral Rights—Summary Judgment.

Plaintiffs and defendants both asserted they were the rightful owners of certain mineral interests located in four adjacent tracts of land (Tracts A–D) in Weld County. The claims revolved around an interpretation of two warranty deeds dated November 25, 1950 (1950 Deeds). One deed conveyed Tract A; the other conveyed Tracts B–D. The disagreement was whether the language in the 1950 Deeds reserved all oil, gas, and other mineral interests in the land to the original grantors or fully conveyed those interests to the deeds’ grantees. Plaintiffs argued that as successors-in-interest to the deeds’ grantors, they were the rightful owners of the mineral rights reserved in the deeds. Defendants, as successors-in-interest to the grantees, argued they owned the mineral rights.

Defendants also asserted that a 1973 quiet title action (1973 Action) and a subsequent conveyance also gave them ownership in at least some of the disputed mineral rights. Plaintiffs argued that the 1973 Action was void because they were not named as parties and their predecessors-in-interest were not properly served. On cross-motions for summary judgment, the district court ruled in favor of plaintiffs, and the Court of Appeals affirmed.

The Court noted that the clear modern rule that a reservation of mineral interests referenced only in a deed’s habendum clause is effective despite the absence of a similar restriction in the deed’s granting clause. In other words, the deed is read as a whole. The 1950 Deeds both contained clear reservation of mineral interests contained only in the habendum clauses. The Court found it clear that the parties intended the mineral rights to be reserved to the grantors.

The parties agreed that, based on the Court’s interpretation of the 1950 Deeds, the 1973 Action only affected Tract A. The district court held the 1973 Action void because of inadequate service of process on plaintiffs’ predecessors-in-interests. They were served only by publication based on assertions that their address was unknown notwithstanding the 1950 Deeds listing the address as “Tulsa, Oklahoma” and a 1960 oil and gas lease (1960 Lease) also of public record listing a specific street address in Tulsa. The district court voided the 1973 Action judgment for failure to use due diligence in searching for an address and withholding pertinent information when moving for service by publication. The Court agreed with the district court’s analysis. It rejected an argument by defendants that they only had to demonstrate there was no address in Colorado for the defendants in the 1973 Action. The judgment was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

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