CHAPTER 9 ADVANCED MINERAL CONVEYANCING AND TITLE ISSUES (TOUGH TITLES TOP TWELVE)
| Jurisdiction | United States |
(Sep 2007)
ADVANCED MINERAL CONVEYANCING AND TITLE ISSUES (TOUGH TITLES TOP TWELVE)
Attorney
Fleck, Mather & Strutz, Ltd.
Bismarck, North Dakota
Brian is a shareholder in the law firm of Fleck, Mather & Strutz, Ltd., in Bismarck, North Dakota. He received his law degree from the University of North Dakota in 1979. Prior to joining the firm, he served as an Assistant Attorney General for the State of North Dakota, representing the Board of University and School Lands in supervision of the state's mineral interests. Brian is admitted to practice in the States of North Dakota and Montana.
Brian's primary areas of practice are mineral law and public utilities law. He has extensive experience in preparation of title opinions, siting of energy facilities, and litigation of contract and property law issues before state and federal courts.
Brian has been very active in the Rocky Mountain Mineral Law Foundation. He served several terms on the Board of Trustees of the Foundation. He currently serves on the Special Institutes Committee and the Long Range Planning Committee. He was on the program committee of the following Foundation special institutes: Mineral Title Examination III (1992); Oil & Natural Gas Pipelines (1995); The Electric Industry (1997); and Water Quality and Wetlands (2002). He also served as co-chair of the landman's section for the 2006 annual institute. Brian authored the following papers for Foundation institutes: "Removing the Operator Under the Joint Operating Agreement," (1999); "Management of Water and Water Quality in Coal Mining: A Legal Perspective" (2002); and "Are Landmen Practicing Law? The Legal & Ethical Issues," (2003).
The purpose of this paper is to review some of the more complicated title issues that you, as a title examiner, will likely come across at some point in your career. The goal is to give you a general overview of these issues and some legal authority to research further. There will be many more complicated title issues that you will come across in your career; but the following are, in my experience, advanced title issues that tend to reoccur. In analyzing each topic, I have identified what I perceive to be the general rule in most states in the western United States. However, I caution that when you come across one of these title issues in your practice, you must ascertain the law in the state in which you are working, as it could vary from the general rule. So now, onto Tough Titles Top Twelve.
I. Issue: Ownership of Minerals Under Adjoining Lakes and Rivers.
Analysis: On occasion lands being examined contain water bodies such as lakes or rivers. A clue to the title examiner is a legal description by lots, which do not appear to be the more typical correction line lots found in irregular sections of lands. The issue is who owns the mineral rights under such lakes or rivers. The results may surprise you, as it is not uncommon to discover that the state owns minerals under lakes or rivers. Generally, ownership of a riverbed or lakebed is determined based upon whether it is navigable or non-navigable. If navigable, ownership is in the state. If non-navigable, ownership is in the adjoining landowners.
The question of navigability for purposes of title is a federal question to be determined according to federal law and usage, generally fixed as of the time of admission of the state into the union. Often times, navigability is determined by virtue of whether the river or lake was used in commercial ventures at the time of statehood. If the water body is deemed non-navigable, title is determined by extending lot lines into the river or lake bed, typically in a pie-shaped fashion.
Initially, you will have to research state and federal case law in your jurisdiction to determine whether the particular water body you are concerned with has been determined to be navigable or non-navigable. You will also have to obtain maps or plats showing the location and acreage of the river or lake; and also whether it has changed location over time.
Authority: George J. Morgenthaler, Surveys of Riparian Real Property: Omitted Lands Make Rights Precarious, 30 Rocky Mtn. Min. L. Inst. 19-1 (1984). Kemp Wilson, Ownership of Mineral Interests Underlying Inland Bodies of Water and the Effects of Accretion and Erosion, 30 Rocky Mtn. Min. L. Inst. 14-1 (1984). Richard H. Bate, Strip Searches: Leasing Minerals Underlying Streets, Highways, Ditches, Railroads, and Water Bodies, 32 Rocky Mtn. Min. L. Inst. 19-1 (1986). Pollard's Lessee v. Hagan, 44 U.S. 212
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(1845). North Dakota v. United States, 972 F.2d 235 (8th Cir. 1992). Walter G. Robillard and Lane J. Bouman, Clark on Surveying and Boundaries, (5th Ed. 1987).
II. Issue: Ownership of Minerals Under Railroad and Highway Rights of Way.
Analysis: Highways - Conveyances of highway rights-of-way by easement generally do not convey any mineral rights. However, conveyance by deed will result in different interpretations depending upon the jurisdiction, with some courts holding that a fee simple title conveyance includes title to the minerals under the highway, whereas other courts have found that minerals do not pass. The rationale being that had the landowner not voluntarily signed a deed that the county or state would have had to condemn, which would generally result only in acquiring the estate needed and likely would not include title to fluid minerals. However, title to solid minerals may be transferred. The law of your particular jurisdiction must be thoroughly researched to determine ownership of minerals under highways acquired by deed.
Railroads - in most cases, railroads acquired rights-of-way either from the federal government by acts of Congress, or by deed from an adjoining landowner. If the railroad's right-of-way was acquired by act of Congress, in most instances no deed from the United States of America to the railroad appears in the chain of title. Often times, the title examiner will only become aware of the presence of a railroad by references in other documents in the chain of title. In such cases, the title examiner will have to make further inquiry to determine if a railroad right-of-way actually exists within the lands being examined, and if it does exist, how it was acquired.
Many railroad rights-of-way in the western United States were acquired from the federal government under what is known as either the 1862 and 1864 acts, or the 1875 act. These are known as charter rights-of-way.
Title granted to a railroad under either the 1862 or 1864 acts has generally been held to be a limited fee title. While coal and iron were conveyed to a railroad under these charter rights-of-way, title to the remaining minerals was not conveyed to the railroad or patented to the adjoining patentee. As to oil and gas, the railroad or its assignee may apply to the Bureau of Land Management for a lease, which then gives notice to the adjoining landowner or his lessee who may file a compensatory royalty bid. The BLM will accept the best offer by entering into a Compensatory Royalty Agreement with one of these entities.
Under the 1875 act for charter rights-of-way, the courts have held the railroad only acquired an easement to the surface. As a result, all minerals would pass to a subsequent patentee of adjoining land.
However, if the railroad acquired title to its right-of-way by deed from an adjoining landowner, case law varies greatly by jurisdiction as to whether the railroad acquired fee simple title to the lands including all minerals; or if certain language in the deed, such as "right-of-way" indicated merely an easement or limited fee was conveyed. Case law must be thoroughly researched in your jurisdiction to determine status of minerals under private grants for railroad.
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Authority: Highways - Richard H. Bate, Exotic Easement Problems to Intrigue the Title Examiner, Rights-of-Way, Paper No. 12 Rocky Mtn. Min. L. Fdn. (1998); William G. Odell, Solving Mineral Leasing Problems Created by Mineral Rights Located Under Easements and Rights-of-Way, 19 Rocky Mtn. Min. L. Inst. 483 (1974); and David S. Dale, Title to Other Commonly Encountered Lands, Mineral Title Examination III, Paper No. 6 Rocky Mtn. Min. L. Fdn. (1992). 3 American Law of Mining, § 87.03 (2d Ed. 2006). Railroads - David G. Ebner, Mineral Ownership Beneath Railroad Rights-of-Way, 31 Rocky Mtn. Min. L. Inst. 17-1 (1985); and David S. Dale, Railroad Grant Lands and Rights-of-Way: Title to the Minerals, 35 Rocky Mtn. Min. L. Inst. 20-1 (1989).
III. Issue: The "Duhig Rule."
Analysis: The traditional Duhig rule situation is A owns title to the surface and 50% of the minerals, with 50% of the minerals outstanding in a third party. A conveys the land to B by warranty deed, reserving 50% of the minerals. At issue is who owns 50% of the minerals, as A cannot both reserve and convey 50% of the minerals to B. Under the Duhig rule, as A warranted title to 50% of the minerals by his deed, he retains no mineral interest and B owns 50%...
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