Hokanson v. Zeigler
2017 ND 197
| N.D. | 2017Background
- Curtis and Joan Hokanson sued to quiet title to an alleged 50% mineral interest under NE1/4 Sec.16, T158N R99W in Williams County, after the Bibler defendants leased minerals in 2013.
- Chain of title: 1957 installment sale contract (State to Edson & June Bibler) reserved minerals; 1967 warranty deed (Biblers to Hans Hanson) purported to reserve "all" minerals to the Biblers; 1971 patent (State to Hanson) reserved 50% of minerals to the State; 1971 warranty deed (Hanson to Hokansons) conveyed surface with no mineral reservation.
- Statutory scheme: N.D.C.C. § 38-09-01 (and its predecessor) mandates that transfers by the State reserve 50% of minerals; a 1960 constitutional amendment later required reservation of all minerals for sales after that date, but the contract here predates the amendment.
- Hokansons argued the 1971 patent and the 1971 warranty deed to them conveyed the remaining 50% mineral interest to Hanson and thus to the Hokansons.
- Biblers argued they retained equitable title to 50% of the minerals by virtue of the 1957 contract and the 1967 deed reservation; upon patent issuance the Biblers’ equitable interest matured into legal title.
- The district court granted summary judgment for the Biblers; the Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Hokanson) | Defendant's Argument (Biblers) | Held |
|---|---|---|---|
| Whether the vendee under the 1957 installment sale could reserve and transfer equitable mineral interests | Hanson (via Hokansons) received the other 50% minerals by the 1971 patent and Hanson’s later deed to Hokansons contained no reservation, so Hokansons own 50% | Biblers reserved 50% of minerals in the 1967 deed and succeeded to that interest; the 1971 patent reserved 50% to the State and did not divest Biblers’ reserved 50% | Held for Biblers: vendee under installment contract can reserve/transfer equitable interests; Biblers reserved 50% and acquired legal title when patent issued |
| Effect of N.D.C.C. § 38-09-01 on the 1957 contract and subsequent instruments | Hokansons emphasized the 1971 patent language granting surface and reserving 50% to State, arguing remaining 50% passed to Hanson | Biblers argued the 1957 contract was subject to § 38-09-01 and limited the State’s reservation to 50%, so Biblers’ 1967 reservation encompassed the other 50% | Court applied § 38-09-01 to limit State reservation to 50% and treated Biblers’ reservation as to their equitable 50% interest |
| Whether equitable title under the installment contract could be conveyed without state’s written consent | Hokansons suggested transfer to Hanson was invalid without written assignment consent, undermining Biblers’ chain | Biblers noted patent to Hanson and subsequent records evidence state’s consent; equitable interests under contract are transferable | Court treated equitable title as transferable; patent indicates State’s consent, so transfer valid |
| Whether the Biblers’ equitable reservation matured into legal title upon patent issuance | Hokansons argued patent and subsequent warranty deed to them showed Hanson (and then Hokansons) owned remaining minerals | Biblers argued their equitable reservation ripened into legal title upon patent issuance, relating back to contract date | Court held Biblers’ equitable 50% ripened into legal title when patent issued, so Biblers own the 50% |
Key Cases Cited
- State ex rel. Bd. of Univ. & Sch. Lands v. Sherwood, 489 N.W.2d 584 (N.D. 1992) (describing restrictions on disposition of school trust lands and statutory framework)
- Convis v. State, 104 N.W.2d 1 (N.D. 1960) (statute limits State's reservation to 50% and requires construing transfers as containing that reservation)
- Abbey v. State, 202 N.W.2d 844 (N.D. 1972) (1960 constitutional amendment reserved all minerals for sales after amendment)
- Haag v. State, 219 N.W.2d 121 (N.D. 1974) (applicability of mineral-reservation statute to State transfers)
- Farmers State Bank v. Slaubaugh, 366 N.W.2d 804 (N.D. 1985) (purchaser under contract for deed acquires equitable title)
- United Accounts, Inc. v. Larson, 121 N.W.2d 628 (N.D. 1963) (equitable title merges into legal title upon completion of contract)
- Sox v. Miracle, 160 N.W. 716 (N.D. 1916) (purchaser under deferred payments obtains equitable title; vendor retains legal title)
- Johnson v. Finkle, 837 N.W.2d 132 (N.D. 2013) (conveyance after contract performance perfects existing rights and relates back to contract)