No. 85-178 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

VIRGIL S. PROCTOR, Personal Representative, 

of the ESTATE OF JESSIE M. SMART, Deceased, 

IDA S. MIEWALD, ETHEL V. HESS, JULIA E. 

REID, and JOHN R. STAM, Personal Representative of the ESTATE OF MINNIE MAY STAM, 

Deceased, JOHN R. STAM, Heir and Devisee of 

MINNIE MAY STAM, and RICHARD S. STAEI, Heir 

and Devisee of MINNIE MAY STAM, 

Plaintiffs and Appellants, 

and 

TERESA E. PUCKETT, POLLY KEITH, CECELIA 

OLSON, PATRICIA LEINHART, BRIDGET M. 

MATHES and BERNADETT THORNLAND, 

Defendants and. Appellants, 

-vsCALISTA M. WERK, ELLA ORTNER, GEORGE 

ORTNER and LINDA ORTNER, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Seventeenth Judicial District, 

In and for the County of Blaine, 

The Honorable Chan Ettien, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jardine, Stephenson, Blewett & Weaver; Alex Blewett 

argued, Great Falls, Montana 

Thompson & Swenson; Bruce E. Swenson argued, Havre, 

Montana 

For Respondent: 

Sias & Ra.nstrom; Bruce W. Moerer argued, Chinook, 

Montana 

Submitted: October 29, 1985 

Decided: February 20 I 1986 

Filed: FEB ;?g 1986 

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-- Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

The Blaine County District Court, interpreting a deed 

reservation as clear and unambiguous, granted summary judgment for respondents (mineral owners) and against appellants 

(royalty owners). Royalty owners appeal. We reverse and 

remand. 

The sole and dispositive issue on appeal is whether the 

deed reservation was ambiguous, thereby demonstrating a 

genuine issue of materia.1 fact which precluded summary 

judgment. 

In June 1944, Rlaine County deeded land to John H. 

Miewald, reserving 5% of all oil, gas and other mineral-s. 

Later, in August of the same year, Mr. Miewald deeded the 

land to Minnie May Stam. The deed contained a reservation to 

Mr. Miewald of "six percent of all royalties received for oil 

and gas removed from the above-described property." 

Mr. Miewald's 6% royalty reservation of 95% of oil and 

gas removed has now become vested in the large group of 

parties referred to as royalty owners but listed as 

plaintiffs/appellants and defendants/a.ppellants. 

In 1968, the mineral owners leased the property subject 

to a 1/8 landowners' royalty, that being 12+% of oil and gas 

produced. Later, the property began producing oil and a 

dispute arose. The mineral owners, whose deed is subject to 

the royalty reservation, contended that the royalty reserved 

was 6% of the landowners' roya.lty of 124% of 95% of oil and 

gas produced. Stated differently, if 100 barrels of oil were 

produced, Blaine County would be entitled to 5% of production 

or 5 barrels and royalty owners would be entitled to 6% of 

12%% of the remaining 95 barrels or approximately 3/4 of one 

barrel of oil. 
In contrast, royalty owners argued that they were 

entitled to 6% of 95% of production. In other words, if 100 

barrels of oil were produced, they would be entitled to 6% of 

95 barrels or 5.7 barrels. 

Thus, at issue, was whether the deed reservation conferred a royalty of 5.7 barrels out of every hundred or 

approximately 3/4 of a barrel out of every hundred. 

In District Court, each side moved for summary judgment. 

The District Court, ruling on the basis the reservation was 

not ambiguous, granted summary judgment for the mineral 

owners. 

Was the deed reservation ambiguous, thereby demonstrating a genuine issue of material fact which precluded summary 

judgment? 

Section 70-1-513, MCA, provides that grants of real 

property are to be interpreted according to the same princiE 

ples as contracts. Thus, und.er S 28-3-401, MCA, the language 

of the deed reservation is to govern interpretation if the 

language is clear and explicit. "Where the language of a 

written contract is clear and unambiguous, there is nothing 

to construe and the duty of the court is to apply the language, as written, to the facts of the case.'' Peterson v. 

Hopkins (Mont. 1984), 684 P.2d 1061, 1063, 41 St.Rep. 1140, 

1142-43. 

However, under 55 28-2-905 and 70-20-202, MCA, if the 

language is not clear and explicit, extrinsic evidence may be 

used to explain an ambiguity. "Where the terms of an agreement are uncertain and ambiguous, par01 evidence is admissible to prove the interpretation meant by the parties." Rumph 

v. Dale Edwards Inc. (1979), 183 Mont. 359, 368, 600 ~.2d 

163, 168. -- See also Souders v. Montana Power Co. (Mont. 
Was the deed reservation ambiguous? A deed reservation 

is deemed ambiguous when taken as a whole, its wording or 

phraseology is reasonably subject to two different interpretations. See Souders, 662 P.2d at 290. The deed here 

stated: 

[slubject to a reservation hereby made to the party 

of the first part to six percent of all royalties 

received for oil and gas removed from the 

above-described property . . . The District Court found Mr. Miewald's reservation comparable 

to an unambiguous reservation in Nourse v. Kovacevich 

(Cal.Ct.App. 1941), 109 P.2d 999. In Nourse, which awarded a 

percents-ge of the landowner's royalty and not a percentage of 

production, the deed reserved: 

[elqual one-eighth of any royalty . . . developed 

on or received from said land, together with 

one-eighth of any cash bonus . . . 

Citing Nourse, the District Court concluded that there was no 

ambiguity and that Mr. Miewald's reservation could only mean 

that the reserving party would take 6% of X% land.ownersf 

royalty from 95% of the minerals. While we might disagree 

with the analysis of the District Court, certainly there is a 

basis for arguing that its interpretation of Nourse was 

reasonably applicable. 

We do not find that to be the only conclusion which can 

be reached from the reservation. The District Court in 

reaching its decision that the deed reservation was unambiguous, referred to the 1968 leases executed on the land, under 

which the landowners' royalty was 12+% of oil, gas and minerals produced. Yet, as pointed out by the District Court, 

this was a perpetual nonparticipating royalty because at the 

time of the reservation, no oil and gas lease was in existence. As a result, the reserved royalty is in no wa.y dependent upon the terms or provisions of an oil. and gas lease 
executed in 1968. In Stokes v. Tutvet (1958), 134 Mont. 250, 

328 P.2d 1096, relied upon by the District Court for the 

definition of perpetual nonparticipating royalty, we stated 

that in the broadest sense, royalty refers to an interest the 

landowner may create by outright reservation either before or 

after the execution of an oil and gas lease, and constitutes 

a share in production. Clearly, a landowner could reserve 

50% or one-half of all oil and gas to be produced prior to 

execution of a lease so that he would receive 50 barrels out 

of every 100 barrels produced. While oil and gas Leases 

frequently have a 124% landowners' royalty, as was here 

executed in 1968, there are other oil a.nd gas leases for 

lesser and greater percentages of production. 

The present reservation is 6% of - all roya.lties received 

for oil and gas removed. The Nourse reservation was 1/8 of 

any oil royalties developed or received. Starting with the 

Stokes analysis of royalty interests, in contrast to the 

Nourse analysis by the District Court, it is possible to 

contend that the reservation meant 6% of all production when 

it spoke of 6% of all royalties. If that were the intent, it 

would then entitle the royalty owners to substantially more 

than was awarded under the District Court order. 

We conclude that it is reasonably possible to construe 

the reservation as meaning 6% of all production received as 

well as meaning 6% of the landowners' royalty. As a result, 

we conclude that the deed reservation was ambiguous. 

It is a well-established principle that summary judgment 

is only appropriate when there is no genuine issue as to any 

material fact. In this case, the determinative fact is the 

interpretation of the deed reservation. Yet the reservation 

is ambiguous and the true intent of the parties is discernable only with reference to extrinsic evidence. "Summary 
judgment is usually inappropriate where the intent of the 

contracting parties is an important consideration." Twite v. 

First Bank (N.A.) Western Mont. (Mont. 1984), 692 P.2d 471, 

472, 41 St.Rep. 2518, 2520; Fulton v. Clark (1975), 167 Mont. 

399, 404, 538 P.2d 1371, 1374. We hold that summary judgment 

was inappropriate because the deed alone did not establish 

the true intent of the parties. 

We reverse and remand for further proceedings consistent 

with this opinion. 

We concur: A 

i&f Justice 

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