December 18, 2018

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.

Colorado Court of Appeals: Use of Stock Certificate as Exhibit Does Not Qualify as a Filing or Recording

The Colorado Court of Appeals issued its opinion in Battle North, LLC v. Sensible Housing Co. on Thursday, June 18, 2015.

Spurious Documents—CRS §§ 38-35-201(3) and -204.

This case involves a dispute over ownership of real property in Eagle County (Pine Martin parcel). In 1998, Mortgage Investment Corporation (MIC) filed for judicial foreclosure on a deed of trust encumbering the Pine Martin parcel and the Piney Lumber parcel. Defendants included Pine Martin Mining Company (PMMC) and Piney Lumber Company (PLC). PMMC claimed ownership of the Pine Martin parcel and PLC claimed ownership of the Piney Lumber parcel. This essentially converted the foreclosure case to a quiet title action.

In 2000, PMMC and PLC moved for partial summary judgment and MIC filed a cross-motion for partial summary judgment. In 2004, the motions still pending, MIC assigned its interest in the matter to Ginn Battle Lender, LLC (Ginn). PMMC and PLC purported to transfer their interests in the parcels to respondent Sensible Housing Company (Sensible) by quitclaim deeds that Sensible recorded in the Eagle County Clerk and Recorder’s Office. Two of the deeds, one recorded in 2006 and one in 2008, were from PMMC to Sensible and concerned the Pine Martin parcel. These deeds are at issue in this case.

Pursuant to an approved stipulation for how to proceed to resolve the quiet title case, Sensible filed as an exhibit a purported 1915 Stock Certificate certifying that 1,251,000 shares of the capital stock of PMMC had been issued to Bouvier. Sensible’s principal, Tucker, claimed he had obtained those shares from Bouvier’s heir in 1996. On that authority, Tucker created and recorded the 2006 and 2008 quitclaim deeds.

In 2009, the district court granted Ginn’s cross-motion for summary judgment and denied Sensible’s motion. It found the 1915 Stock Certificate and related documents were incredible as a matter of law and therefore Sensible had no interest in either parcel. Sensible appealed, and a division of the Court affirmed summary judgment as to the Piney Lumber parcel but reversed as to the Pine Martin parcel, finding the 1915 Stock Certificate not “so incredible that no reasonable jury could believe it.”

In April 2012, Battle North, LLC (Battle North) filed a petition for an order to show cause pursuant to CRS § 38-35-204 and CRCP 105.1, alleging the 1915 Stock Certificate was a spurious document and requesting an order directing Sensible to show cause why it should not be declared invalid. Battle North amended the petition to request that the two quitclaim deeds also be declared invalid as spurious documents. Following a hearing, the district court made extensive findings, including that the 1915 Stock Certificate was created by Tucker and was a sham, and that both it and the two quitclaim deeds were spurious documents; the court therefore “released” the three documents. The court also awarded Battle Mountain attorney fees and costs pursuant to CRS § 38-35-204(2).

On appeal, Sensible argued that the priority rule required the district court to stay this case pending resolution of the quiet title action. The Court disagreed, holding that CRCP 105.1 allowed Battle North to bring this petition in a separate action and that staying the case would not further the policies behind the priority rule.

Sensible then argued that allowing Battle North to litigate this action contravened the mandate of the Court in an earlier appeal of the quiet title action where it remanded for further proceedings as to the Pine Martin parcel. The Court found nothing in that order precluding Battle North form proceeding as permitted by CRS § 38-35-204 and CRCP 105.1.

Sensible contended that its use of the 1915 Stock Certificate as an exhibit in the quiet title action did not entitle Battle North to relief under CRS § 38-35-204; filing a document as an exhibit in a civil case does not qualify as recording or filing a document within the meaning of the statute. The Court agreed. It held that “recorded or filed” as used in CRS § 38-35-204(1) is limited by its having to affect a person’s real or personal property. The filing of an exhibit in a civil case does not affect a person’s real property. Moreover, there would be no way to “release” such a document (the remedy in the statute). Thus, although the Court did not disturb the finding that the 1915 Stock Certificate was a sham, it was error to rule it was a spurious document under the statute, and that part of the order was reversed.

Sensible argued that the quitclaim deeds were not spurious because a quitclaim deed can convey only the title or interest that the grantor had, and the district court determined that the newly created PMMC had no title or interest to convey. Therefore, Battle North’s property could not have been affected by the recording of the quitclaim deeds. The Court found this argument to be without merit. Sensible argued that unless a document was a valid lien or encumbrance against real property, it cannot be a spurious document, because it cannot affect real property. However, in that case, the document would not be spurious.

Sensible argued that Battle North is not a “person whose real . . . property is affected by” the 1915 Stock Certificate and quitclaim deeds because it does not own the Pine Martin parcel. This argument was based on deficiencies in the treasurer’s deeds by which Battle North claimed title. The Court rejected those arguments on multiple grounds.

The Court also awarded Battle Mountain reasonable appellate attorney fees for defending the judgment as to the quitclaim deeds. The case was remanded to the district court for a determination of that amount.

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

Bill to Increase Number of Judges in 18th Judicial District and More Signed by Governor

Governor Hickenlooper has continued to sign bills into law this week. Some of the legislation signed into law includes bills prohibiting greyhound racing, creating the Rural Economic Development Initiative, adding judges to the Eighteenth Judicial District, encouraging enrollment of people with developmental disabilities in appropriate programs, and regarding recording of deeds. These bills and more are summarized here.

  • HB 14-1146 – Concerning a Prohibition Against Greyhound Racing in Colorado, by Rep. KC Becker and Sen. Lois Tochtrop. The bill bans greyhound racing in Colorado; Colorado has not had a greyhound race track since 2008.
  • HB 14-1241 – Concerning a Supplemental Appropriation to the Department of Local Affairs, by Rep. Crisanta Duran and Sen. Pat Steadman. The bill allows the Office of Economic Development to administer grants to businesses to create jobs in rural areas.
  • HB 14-1050 – Concerning an Increase in the Number of Judges for the Eighteenth Judicial District, and, In Connection Therewith, Making an Appropriation, by Rep. Daniel Kagan and Sen. Lucia Guzman. The bill increases the number of judges in the Eighteenth Judicial District from 21 to 23.
  • HB 14-1051 – Concerning a Strategic Plan Enrolling all Eligible Persons with Intellectual and Developmental Disabilities into Programs at the Time Services and Supports are Needed, and, in Connection Therewith, Requiring the Department of Health Care Policy and Financing to Develop and Implement the Strategic Plan and to Report Annually on the Number of Persons Waiting for Services and Support, by Reps. Sue Schafer and Lois Landgraf and Sens. John Kefalas and Larry Crowder. The bill requires CDHCPF to develop plans to enroll eligible applicants in Home- and Community-Based Services at the time they are requested.
  • HB 14-1073 – Concerning the Recording of Legal Documents, by Rep. Dan Pabon and Sen. George Rivera. The bill amends several statutory sections regarding the recording of legal documents.
  • HB 14-1112 – Concerning Limited Authorization for a County Clerk and Recorder to Redact the First Five Digits of a Social Security Number from a Public Document Recorded with the Clerk and Recorder at the Request of the Individual to Whom the Social Security Number is Assigned, by Rep. Steve Lebsock and Sens. Jessie Ulibarri and Ellen Roberts. The bill requires county clerks and recorders to redact from public documents the first five digits from a person’s social security number if that person so requests.
  • HB 14-1166 – Concerning the Renewal of Concealed Handgun Permits by Colorado County Sheriffs, by Rep. Edward Vigil and Sen. Lois Tochtrop. The bill allows a holder of a concealed weapons permit to renew the permit with a sheriff other than the one who originally issued the permit.

To date, the governor has signed 57 bills into law this legislative session. For a complete list of Governor Hickenlooper’s 2014 legislative decisions, click here.

HB 14-1073: Amending Many Statutory Provisions Related to Recording Legal Documents

On January 8, 2014, Rep. Dan Pabon introduced HB 14-1073 – Concerning the Recording of Legal Documents. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill makes the following modifications to various statutory provisions involving the recording of deeds or other legal documents:

  • Current statutory provisions governing the issuance of bonds by a school district provide that the bonds are required to be registered by a county clerk and recorder (clerk). The bill eliminates the existing fee of $25 charged for the registration and specifies that the amount of the fee is the amount required to be paid under general provisions authorizing a clerk to impose a fee for filing or recording.
  • In connection with the Colorado Open Records Act, the bill removes from the group of records that may only be inspected by a person in interest records of an application for a marriage or a civil union license.
  • Existing statutory provisions providing the right of inspection of abstract books and related papers give abstractors, title insurance personnel, and others the opportunity to subscribe on an annual basis for a daily copy in bulk of all documents recorded and filed. The bill eliminates the ability to subscribe on an annual basis.
  • The bill specifies when a document is deemed to be received, accepted, or recorded. With respect to recorded documents, the bill requires the clerk to keep record of any reception number, volume, film, or page that is unused, and to immediately make entry into the clerk’s index. Finally, this section of the bill generally obligates the clerk to record any document by the end of business on the next business day and to keep record of the name of the recipient of the delivery of a recorded document.
  • The bill modifies existing statutory provisions governing the process of filing with the clerk an order dissolving a special district. In such circumstances, where there are no remaining funds of the district, this section of the bill permits the division of local government to claim an existing statutory exemption from payment of recording fees at the time the document is offered for recording.
  • The bill establishes that a verification of death document may be filed with the clerk as an alternative to a death certificate in connection with legal proceedings adjudicating an interest in real property of a person who is deceased.
  • Current statutory provisions provide grounds under which the clerk is not required to return the original release of a deed of trust. The bill also permits the clerk to retain the original release where it is electronically recorded. Under current law, a documentary fee is charged upon the conveyance of real property and the clerk is required to establish payment of the fee by imprinting evidence of payment on each document to which the fee applies. The bill alternately permits the clerk to establish payment of the fee in the recording annotation.
  • Under current law, a documentary fee is charged upon the conveyance of real property and the clerk is required to establish payment of the fee by imprinting evidence of payment on each document to which the fee applies. The bill of the bill alternately permits the clerk to establish payment of the fee in the recording annotation.

The bill passed second reading in the House on Friday, Feb. 7.

Since this summary, the bill passed 3rd Reading in the House. It was introduced in the Senate and assigned to the Judiciary Committee.