CHAPTER 12 PROFESSIONAL RESPONSIBILITIES OF MINERAL TITLE EXAMINERS

• Jurisdiction: United States

Mineral Title Examination III
(Feb 1992)
CHAPTER 12
PROFESSIONAL RESPONSIBILITIES OF MINERAL TITLE EXAMINERS
David G. Ebner
Lohf, Shaiman & Ross A professional corporation
Denver, Colorado

A request for a title opinion is a certain indication that the client believes he has a prospect worth developing; when an attorney accepts the request, he does so knowing that the client will begin investing substantial sums as soon as the opinion has been received and reviewed. If the attorney errs in preparing that opinion, the resulting liability can easily be enough to bankrupt him or even, if the property has proven as valuable as the client originally hoped, his insurance company.

But not every title problem is the responsibility of the examining attorney. As a general rule of the black letter law, an attorney promises only to have the requisite knowledge for proper performance of his duties and, in accepting the assignment, undertakes only to use a reasonable degree of care and skill in his examination. There are, however, many exceptions, extensions and other variations to this general rule of black letter law as applied to specific attorney conduct. This paper will explore some of them and attempt to determine the minimum level of care which every client rightfully may demand of his attorney, as well as certain ethical matters which govern, if not the way in which such work is performed, at least where and for whom such work is undertaken.

LEGAL RESPONSIBILITIES

Legal Knowledge

The requirement in our rule of black letter law that an attorney is responsible for knowing the law is both too narrow and too broad. If a lawyer is responsible for "knowing" anything, he is responsible for knowing, in addition to statutory and common law, applicable administrative rules, orders and even drafting customs in the legal community where the property is situated.¹ Before extending this proposition too far, however, it's important to recognize that a lawyer examining title is not actually required to know — in a testing or examination sense — much beyond the most elementary legal propositions.

Instead, the title examiner is required to recognize potential problems, research applicable legal matters and exercise his professional judgment to determine the effect of statute, precedent and commentary on a particular instrument and, in turn, the effect of that instrument on title.²

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When an attorney has applied both his education and experience diligently to perform each of these steps, he has fulfilled his responsibility to his client and cannot be held responsible if title to the property is later determined to be otherwise than he found it.³

This safe harbor, afforded by adherence to proper procedures rather than achieving correct results, flows from the law's inherent uncertainty. In every field of legal endeavor, there are questions which cannot be answered with certainty, whether as a result of statutory ambiguity, conflicting case law or the complete absence of direct authority. These problems are only magnified in the area of title examination, where the particular language used in a specific clause or provision is unlikely ever to have been expressly construed by a court in a reported decision. Given this inability to predict the final judicial resolution of an unsettled legal proposition, clients can expect no more than that their lawyers will use informed, professional judgment in arriving at opinions as to title.

Being released from the impossible burdens of prescience, certainty and crystal ball gazing comes only at the price of adhering to the required procedures. While the client cannot demand an absolute guarantee in respect as to his title, he is clearly entitled to receive his attorney's informed judgment. Thus, an attorney who prepares an opinion which would be defensible had the proper procedures been followed may find himself liable if these procedures were not used.⁴ For example, an ambiguity in a fee lease as to the time delay rentals are deemed paid may be resolved against a client and the lease consequently held to have terminated. An attorney who expressed an opinion as to the lease's validity will not be held liable if he discovered the problem, researched it and reasonably concluded that the rentals had been properly paid. The attorney who expressed an opinion as to the lease's validity without performing the necessary factual or legal research, however, may find himself uncomfortably responsible for the damages suffered by his client when the lease is declared ineffective. Each lawyer may reach the same result, but because the requirement of appropriate knowledge of the law entails adherence to proper procedures and not proper result, one is liable and the other not. While an attorney will never be liable if, through luck or happenstance, he adopts the view ultimately accepted by the courts, he may nonetheless find himself liable if, without diligent factual and legal research, he unluckily adopts the same position as other attorneys on a matter subsequently found otherwise by the courts.

Under any system of professional responsibility, questions of undisputed law provide little difficulty. Any attorney encountering an unpatented lode mining claim which was recently staked and described as 1800 feet long and 600 feet wide will conclude that the claim is invalid as to its excess 300 feet in length; in practical terms, it makes no difference whether the attorney guessed, researched the question or simply knew the answer off the top of his head. There is, after all, only one answer. Especially with the increased sophistication of contemporary legal research systems — computers, well-indexed newsletters and other current information sources — virtually every issue which has a definite answer known to practicing attorneys or easily available through customary research techniques may be viewed as a matter of undisputed law for which the attorney must reach

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the correct answer.⁵ Reaching an incorrect result on a known matter of undisputed substantive law belies the attorney's claim that he conducted even the most preliminary research on the matter. His only claim is that his memory failed him, which is no defense: the client retained a professional title examiner, not a memory bank.

Such undisputed matters are relatively rare; much time and attention has been devoted to analyzing whether the remaining matters are most properly characterized as uncertain, unsettled, doubtful or debatable.⁶ For our purposes, however, no such fine distinctions are required: a principle is either settled or it is not. For example, an attorney examining a federal oil and gas lease covering property in Wyoming may uncover assignments and other significant instruments in the case file in Cheyenne which do not appear in the county records. Careful research will reveal the Wyoming Supreme Court's 1959 decision that documents filed in the BLM State Office do not impart constructive notice;⁷ such research also might uncover the BLM's adoption on May 23, 1980, of a regulation that "all purchasers are on notice ... as to all Bureau of Land Management records pertaining to the [oil and gas] lease and the lands covered by the lease."⁸ In determining whether to require recordation of the concerned documents in the county, the attorney should, of course, err on the side of caution by requiring such recordation; it is relatively inexpensive, ensures sound title, and has no adverse consequences. It is far from clear, however, that he would be found liable if, after researching the question, he concluded that the 1980 rule superseded the 1959 decision and removed the need for county recordation.

Given the conflicting authorities — one state, one federal and one older, one newer — an attorney might not be held responsible for failing to predict which rule will ultimately be applied to the title he is examining if the matter is ever brought into issue. The protection afforded by this informed judgment rule extends, generally, to any legal issue "which has not been settled by the court of last resort and in which reasonable doubt may be entertained by well-informed lawyers."⁹ This rule suggests another problem all too frequent in the mineral title examination area, especially in respect to unpatented mining claim examinations: the existence of clear rules of law, either from a State's or the United States' Supreme Court, which in view of shifting regulatory and public attitudes toward the mining industry, may be considered unsettled merely as a result of being unlitigated or otherwise unconsidered by the courts and legislators for the past century.

Due Care

The requirement that an attorney undertake to use a reasonable degree of care and skill when performing mineral title examinations is perfectly accurate, although completely uninformative. In their definitive treatise, Ronald E. Mallen and Jeffrey M. Smith formulates a clearer and more

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useful standard based on contemporary reported decisions: "the attorney should exercise the skill and knowledge ordinarily possessed by attorneys under similar circumstances."¹⁰ While still dependent on the particular facts and circumstances involved, this standard at least provides a basis from which specific aspects of the due care requirement may be explored.

At the outset, it's important to recognize that we are concerned with the minimum acceptable standard of care and accountability; as one court has observed, reliance on a standard of average skill and knowledge would make one-half of all practicing professionals automatically guilty of malpractice.¹¹ Such a standard of minimally acceptable conduct is generally determined, not through averages or norms, but by references to the skill and knowledge which ordinarily or reasonably would be exercised by attorneys under similar circumstances.¹² The distinction between average skill and the...