987 N.W.2d 363
N.D.2023Background
- In 1960 Angus and Lois Kennedy executed deeds conveying surface but excepting and reserving “unto the parties of the first part, their heirs, successors or assigns, all right, title and interest in and to any and all...minerals” although Lois did not own an interest in the property.
- Angus died in 1965; Lois died in 1980. Angus had six children from a prior marriage; Lois had one child (Julia Nevin), who predeceased and whose husband Stanley Nevin later leased minerals to Northern Oil.
- Stanley Nevin (and Northern Oil, as intervenor) sued in 2018 claiming Lois owned half the reserved minerals; Angus’s heirs (the Kennedy heirs) countered Angus did not intend to reserve minerals to Lois.
- The district court denied cross-motions for summary judgment, found the 1960 deeds ambiguous, admitted extrinsic evidence, and after a bench trial found Angus did not intend to reserve minerals to Lois and that Angus’s probate decree precluded the claims; it quieted title to the Kennedy heirs.
- Northern Oil appealed, arguing the deeds were unambiguous; the North Dakota Supreme Court affirmed, agreeing the deeds were ambiguous in light of their wording and the law in 1960 and that the district court’s findings were not clearly erroneous.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1960 deeds are ambiguous as to reserving minerals to Lois | Deeds are unambiguous; reservation to “parties of the first part” shows intent to reserve to Lois | Language is ambiguous because Lois was not an owner and the common‑law rule in 1960 disfavored reservations to strangers | Deeds are ambiguous; court may consider extrinsic evidence and district court’s factual findings affirmed |
| Whether a reservation can convey a property interest to a non‑owner spouse (a “stranger”) | Modern rule permits reservation to a third party if grantor intent exists; therefore Lois could have received minerals | Under the common‑law rule in effect in 1960 (Stetson), a reservation cannot convey to a stranger—only prevents title from passing to the grantee | Court recognized ND’s 1960 law followed the common‑law rule but Malloy later allowed reservations to a spouse when grantor intent is shown; ambiguity exists given wording and legal context |
| Admissibility of extrinsic evidence to ascertain grantor intent | Extrinsic evidence unnecessary because deed language is plain | Extrinsic evidence admissible because deed is ambiguous and intent must be ascertained from surrounding circumstances | Because the deeds are ambiguous, extrinsic evidence was properly considered; district court’s findings on intent are not clearly erroneous |
| Preclusive effect of Angus’s probate decree on Nevin’s claim | Probate decree does not bar later quiet‑title claim | Final probate decree precludes relitigation of the same interests | District court’s conclusion that the probate decree precluded Nevin’s/Northern Oil’s claims was affirmed |
Key Cases Cited
- Malloy v. Boettcher, 334 N.W.2d 8 (N.D. 1983) (abandoned or limited common‑law rule by allowing reservation to spouse when grantor intent shown)
- Stetson v. Nelson, 118 N.W.2d 685 (N.D. 1962) (common‑law rule that reservation in favor of a stranger cannot operate as conveyance to that stranger)
- Hallin v. Lyngstad, 837 N.W.2d 888 (N.D. 2013) (deed interpretation principles; Malloy’s effect on spouse‑reservations)
- Nichols v. Goughnour, 820 N.W.2d 740 (N.D. 2012) (whether a contract/deed is ambiguous is a question of law; extrinsic evidence admissible if ambiguous)