No. 89-129 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

HOLLAND HUNTER, HENRY F. HUNTER, 

FLORENCE HUNTER, DEBORAH HUNTER, 

ALISON HUNTER KINCADE, MARGARET S. 

REYNOLDS, TOM. H. REYNOLDS, and 

JAMES H. REYNOLDS, 

plaint iff s and Appellants, x u 0 03 -vs- Z eo 

-jn C3 

ROSEBUD COUNTY, a local governmental 2 a ni 

C3 3- (J> entity located in the State of Montana, Cf' :. 

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et al., C-: - - - , r 

Defendants and Respondents. - - - - .-I * 

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APPEAL FROM: District Court of the Sixteenth Judicial gistrfit, 

In and for the County of Rosebud, -i 

The Honorable Alfred B. Coate, Judge presidinq. 

COUNSEL OF RECORD: 

For Appellant: 

Joseph W. Sabol arg,ued, Bozeman, Montana 

For Respondent : 

W. H. Bellingham argued; Moulton, Bellingham, Longo & 

Mather, Billings, (True Oil Col, USA Petro. Corp., 

Carlson, Lair, Brown & Tesoro Petro. Corp.) 

Rodd A. Hamman argued; Calton, Hamrnan, Calton & Wolff, 

Billings, Montana (Enfield Energy) 

Thomas A. Ask argued; Ask & Pratt, Roundup, Montana 

(Kincheloe, Mysse, Nielsen, Hendrix, Jennaway) 

Robert J. Waller; Veeder, Broeder & Michelotti, Billings, 

Montana (Petro-Lewis Funds, Petro-Lewis Agency Corp., 

Petro-Lewis Corp.) 

William E. Berger; Wilkins & Berger, Lewistown, Montana 

(Ferrell, Rydholm) 

Robert L. Johnson, Lewistown, Montana (Johnson) 

McKinley Anderson, Bozeman, Montana (Orleman) 

Filed: 

Submitted: October 19, 1989 

Degided: December 7, 1989 
Justice R. C. McDonough delivered the Opinion of the Court. 

This is an appeal from an action instituted to quiet 

title to the minerals, mineral interest, and mineral estate 

previously severed from a parcel of real property located in 

Rosebud County Montana. Plaintiffs (hereinafter Hunters) 

appeal from an order granting summary judgment in favor of 

defendants, Boyd Kincheloe, True Oil Company, Petro-Lewis 

Funds Inc . , et a1 . (hereinafter Kincheloes) . We affirm. 

The issues on appeal are: 

1. Whether there was a merger of the mineral estate and 

the remaining estate. 

2. Whether the Hunters' claims are barred by virtue of 

the doctrine of laches. 

The facts of this case are complicated. On May 22, 

1914, the United States issued a patent to the Northern 

Pacific Railway Company which included the land that is the 

subject of this cause of action. Northern Pacific owned the 

land until 1926. On December 17 of that year, it conveyed, 

by warranty deed, an undivided one-half interest to F.R. 

Bentley, and to Lena E. Hess and Dorothy A. Hess, an undivided one-quarter interest each. This deed specificall-y 

excepted the mineral estate as follows: 

. . . excepting and reserving unto the grantor, its 

successors and assigns, forever, all minerals of 

any nature whatsoever, including coal, iron, 

natural gas and oil upon or in said lands, together 

with the use of such of the surface as may be 

necessary for the exploring for and mining or 

otherwise extracting and carrying away of the same, ... 

Through conveyances the Bentley and Hess interests in the 

property was acquired by Harry and Hester Hunter on October 

14, 1929. 
Because taxes for the year 1928 had not been paid, after 

tax deed proceedings the county treasurer issued to Rosebud 

County a tax deed to the property. The tax deed was issued 

on August 15, 1932. At that time Northern Pacific still 

owned the mineral estate. Therefore, the tax deed only 

purported a conveyance of real property less the mineral 

estate. In 1933, the Northern Pacific Railroad quitclaimed 

its mineral estate "to the owner or owners of the . . . land." Thereafter the plaintiffs succeeded to the interest 

of Harry and Hester Hunter. 

Rosebud County, on December 3, 1945, quitclaimed its 

interest in the real property to Art Kincheloe. This deed of 

conveyance reserved unto the county a six and one-quarter 

percent (6*%) royalty interest "of all oil, gas and minerals 

recovered and saved from the lands." 

On April 29, 1950, Art Kincheloe filed an action to 

quiet title to the property. Subsequently a judgment 

pursuant to the complaint was entered in favor of Kincheloe 

finding Kincheloe to be the owner in fee simple absolute of 

all the interest in the lands subject to the county's royalty 

reservation. Art Kincheloe and his successors have remained 

in possession and use of the property since the conveyance by 

Rosebud County in 1945. 

On January 2, 1978 drilling for oil and gas was 

commenced by lessees of Kincheloes, and since that time four 

oil and gas wells have been drilled. As of 1983, over eight 

million dollars in revenue had been realized from the wells. 

In 1982, the Hunters filed a lawsuit against Rosebud 

County, the Kincheloes, and several oil lessees, seeking 

title to the mineral estate which included the oil and gas in 

the property. The only defendant originally served with 

summons and complaint was Rosebud County who was served 

during July of 1983. A judgment. was filed on June 8, 1984 in 
favor of the Hunters and against Rosebud County as to the 

county's 6:% royalty interest and such interest is not 

involved in the present controversy nor was it appealed. 

No further action was taken in the case until August of 

1985. At that time, the remaining defendants were served. 

In 1988, the Hunters filed a motion for summary judgment, 

seeking judgment against the defendants. Subsequently, each 

of the defendants in this action filed a motion for summary 

judgment against the Hunters. The court found for the 

defendants and against the Hunters. This appeal followed. 

The trial court ruled that there was a merger of the 

remaining estate and the mineral estate when the Northern 

Pacific quit claimed its mineral interest to "the owner or 

owners of the land." Therefore, when the county conveyed the 

land to the Kincheloes, it conveyed the entire estate in the 

land including all interest in the mineral estate. 

The Hunters disaqree and maintain that once the mineral 

estate was severed from the remaining interest they could not 

merge into a unitary estate. According to the Hunters, 

mineral estates and the remaining estate are of equal dignity 

and estates of equal dignity can never merge. In order for a 

merger to occur there must be estates of greater and lesser 

dignity. Therefore, in order for Rosebud County to have 

conveyed the mineral estate to the Kincheloes, it would have 

been necessary to effect a separate conveyance of the mineral 

estate. Hunters maintain that the conveyance by the county 

without mentioning the mineral estate, by way of quitclaim, 

deed did not effectively transfer the mineral estate. In 

support of this argument, they rely upon a line of Texas 

cases. See Humphreys-Mexia Company v. Gammon (Texas 1923) , 

254 S.W. 296; Joyner v. R.H. Dearinq and Sons (Texas 1937), 

112 S.W. 2d 1109. 
We disagree with Hunters' argument. Their assertion 

that the mineral estate and the remaining estate are of equal 

dignity is not correct. The general rule is that the owner 

of the mineral estate enjoys the dominant estate and the 

surface owner of the remaining estate holds the subservient 

estate. This theory is based upon the realities that 

accompany mineral exploration and development. Obviously, in 

order to fully utilize a mineral estate, one usually must 

have access to the surface. - See Lacy, "Conflicting Surface 

Interests: Shotgun Diplomacy Revisited", 22 Rocky Mtn. Min. 

L. Inst., 731 (1976). See also, Western Energy Co. v. Genie 

Land Co. (1981), 195 Mont. 202, 635 P.2d 1297. 

When the Northern Pacific conveyed its previously 

excepted mineral estate to the owner or owners of the 

subservient remaining estate, and both estates came together 

in the same owner, the remaining estate was merged into the 

mineral estate and there is no reason for further existence 

as separate estates. Therefore an unrestricted grant by one 

who claims to be the owner of the remaining estate at the 

time of the Northern Pacific deed after the merger effected 

by such deed, conveys all estates in such real property. 

There is no need to specifically describe such individual 

estates. At this time Rosebud County claimed to be the owner 

and had as a minimum, color of title to the land and was the 

record title owner. It follows that the subsequent conveyance from the county to the Kincheloes transferred the 

county's entire estate, including the mineral estate except 

for the royalty reservation previously noted. It was not 

necessary for the county to make separate and distinct 

transfers of the two estates. It has long been recognized 

that a conveyance of property without reference to the 

mineral estate carries with it all of the grantor's interest 

in the mineral estate. Voyta v. Clonts (1958), 134 Mont. 
156, 328 P.2d 655. Based upon this deed, the Kincheloes 

received at a minimum color of title to the surface and the 

minerals. 

The District Court held that the Hunters were barred 

under the doctrine of laches from asserting any claim to the 

land or otherwise contesting the validity of the tax deed, 

which the Hunters maintain was void. It is argued by the 

Hunters that they were not required to take any positive 

steps to protect their interest in the mineral estate until 

active production began. Once production did begin they 

actively and promptly moved to protect their right, by filing 

this action within the five year period of limitation 

provided by S 70-19-401, MCA. Having met this obligation, 

they maintain that it cannot now be said that the doctrine of 

laches applies. 

This argument, however, is not valid in light of our 

holding that a merger occurred between the surface and the 

mineral estates. Because there was a merger, and the two 

interests coincided in the Kincheloes, the doctrine of 

laches, if it applies, will apply to all of the interest in 

the land including the mineral estate. We must examine the 

doctrine of laches and apply its tenents to this case in 

order to determine whether it will bar the Hunters' claims. 

We begin our discussion by reviewing the pertinent 

elements of laches. There is no statutory defense of laches 

in Montana, it is a creature of equity. Cremer v. Cremer 

Rodeo Land and I;ivestock Company (1979), 181 Mont. 87, 592 

P.2d 485. In Montana, there is no absolute rule as to what 

constitutes laches. In each case, it must be determined 

according to its own particular circumstances. It is not a 

mere matter of elapsed time, but rather, is principally a 

question of the inequity of permitt-ing a claim to be 
enforced. Matter of Estate of Wallace (1980), 186 Mont. 18, 

606 P.2d 136. 

In two recent cases, this Court has had the opportunity 

to examine the doctrine of laches and apply it to circumstances similar to the case at bar. See Richardson v. 

Richland County (1985), 219 Mont. 48, 711 P.2d 777; Anderson 

v. Richland County (1985), 219 Mont. 60, 711 P.2d 784. In 

both Richardson and Anderson, this Court itemized significant 

factors which it considered in determining the issue of 

laches. We will apply these factors to this case. 

1) The length of time which the present owners have 

used and occupied the land. 

In 1945 Art Kincheloe, the respondents' predecessor 

in interest, received a quitclaim deed from Rosebud 

County, conveying the real property involved in 

this case. Since that time, the Kincheloes have 

occupied and used the land. They have paid all 

real property taxes assessed aqainst the property 

for almost fifty years. 

2) The length of time during which the plaintiffs and 

their predecessors abandoned the property and have not 

cla.imed any right to the physical possession of the land and 

have not paid any taxes assessed against that land. 

In 1932, the Hunters' predecessor in interest and 

Hunters lost record title to the property due to 

their failure to pay real property taxes on the 

land in 1927 and 1928, and since that time neither 

they nor their successors have attempted to redeem 

the property by payment of the back taxes. It is 

clear, therefore, they have had no contact with the 

land for approximately fifty years. 

3) Whether the property interest claimed has become 

extremely valuable. 

The subject lands have greatly increased in value 

since the Kincheloes obtained title. Four oil and 
gas wells have been discovered yielding revenues of 

over eight million dollars. 

4) Whether or not the plaintiffs first learned of their 

claim after the discovery of oil. 

In response to Requests for Admissions propounded 

by True Oil Company, the Hunters admitted that they 

first learned of their possible claims after oil 

was discovered. 

5) Whether reimbursement of royalties will result in 

undue hardship upon the defendants. 

In this case, the Kincheloes and the oil companies 

would be responsible for the reimbursement of many 

thousands of dollars in revenues. In light of the 

resources put into the drilling and upkeep of the 

wells over a twelve year period, a reimbursement 

would work undue and unfair hardship upon the 

defendants. 

6) Whether or not there are principal parties to the 

tax deed proceedings who could furnish first hand knowledge 

of the facts surrounding the proceedings. 

At least two of the principal parties to the tax 

deed proceedings are now deceased. Art Kincheloe, 

the defendants' predecessor in interest is dead, as 

is the chairman of the Board of County Commissioners who executed the 1945 deed. In view of the 

time which has elapsed, it appears unlikely that 

anyone who was involved with the tax deed 

proceedings or the delinquencies of the tax 

payments are still alive. 

7) Whether the plaintiffs have demonstrated any reason 

for the unexplained delay in claiming their asserted rights 

between the time of the tax deed, quit claim of minerals 

estate by Northern Pacific, and the filinq of the complaint. 

In this case, no testimony of any kind has been 

introduced either orally or in documentary form to 
account for such delay. During oral argument, the 

attorney for the Hunters maintained that they did 

not do anything to protect their interest between 

the time of the tax deed until the filing of the 

complaint because they did not have to act until 

actual extraction began. However, we note that 

during this time period of approximately fifty 

years the Hunters made no effort to remain in 

contact with the property. As a result of this 

neglect, they failed to respond to a quiet title 

action brought by the Kincheloes in 1950, despite 

the fact that they were named as defendants and 

were served by publication. This action resulted 

in a decree quieting title in the name of the 

Kincheloes in fee simple absolute, which 

necessarily carries with it all interests in the 

minerals. It is presumed that a person stays in 

contact with his property. The fact that the 

Hunters did not respond to the quiet title action 

and did not remain in contact with the land for 

approximately fifty years leads to the conclusion 

that any claim they may have had comes within the 

doctrine of laches. 

8) Whether the plaintiffs sought to redeem the property 

and assert their title at any time. 

Neither the plaintiffs nor their predecessors in 

interest have paid any of the real property taxes 

levied against the property since 1927. None of 

the foregoing parties have ever sought to redeem 

the property from the tax sale. This is especially 

pertinent in view of our holding there was a merger 

of title. They have not acted in any way which 

would assert that they were the "owners" at the 

time the Northern Pacific executed its quit claim 

deed in 1933, except this belated quiet title 

action. 

It is clear that all of the significant factors which 

this Court considered in the Richardson and Anderson cases 

have been answered in favor of the Kincheloes and against the 

Hunters. Hunters attempt to distinguish the instant case 

from - Richardson and Andersoq, by pointing out that this case 

does not involve roya.lty interests held by a county. 
Therefore, unlike those two cases, a ruling in favor of the 

Hunters will not deprive the county of revenue nor overburden 

the taxpayer by forcing reimbursement of the royalties. We 

note, however, that a decision in favor of the Hunters would. 

create a significant hardship upon the Kincheloes and the 

leaseholders by not only eliminating their interests in the 

mineral and leasehold estates and all its ramifications and 

loss of investment, but by also requiring payment of 

thousands of dollars in royalties. The doctrine of laches 

was created to avoid such inequitable results. We therefore 

hold that the Hunters are barred by laches from contesting 

the validity of the tax deed. Moreover, because we have also 

held that a merger occurred between the remaining estate and 

mineral estate, it follows that the Hunters are similarly 

barred from contesting the Kincheloes title to the mineral 

estate. 

In view of our holding that the doctrine of laches 

applies to the Hunters it is not necessary to discuss issues 

relating to adverse possession and res judicata. The 

District Court in sranting judgment for the defendants is 

affirmed. 
sitting for us tide John C. 

Sheehy .