Opinion ID: 2338385
Heading Depth: 2
Heading Rank: 1

Heading: Duration of the Mineral Rights Reservation

Text: Petitioner's final question to which we granted certiorari deals with the duration of the mineral rights interests created by respondents' express reservation in the special warranty deed. Petitioner claims, despite the clear language in Section 4-105 of the Real Property Article of the Maryland Code stating that words of inheritance are not necessary to create a fee simple estate, that respondents' reservation is limited to a life estate in the mineral rights because no words of inheritance are used. This contention has no merit. [30] The Maryland Legislature codified the principle that words of inheritance are not necessary to create a perpetual estate when it enacted § 4-105 of the Real Property Article, which states: No words of inheritance are necessary to create an estate in fee simple or an easement by grant or by reservation. Unless a contrary intention appears by express terms or is necessarily implied, every grant of land passes a fee simple estate, and every grant or reservation of an easement passes or reserves an easement in perpetuity. Md.Code (1974, 1996 Repl. Vol) § 4-105 of the Real Property Article. This principle pre-dates the case of Hawkins v. Chapman, 36 Md. 83, 94 (1872), when this Court said: The text writers and reports establish beyond doubt that words of limitation or inheritance are not essential to create an estate in fee; nor is the nature of the estate conveyed, whether a trust or use executed, determined so much by the terms used, as the object to be effected. In Hill on Trustees, 455, it is said, `A trustee will take the fee without the word heirs, when necessary for the trust.' The same principle is announced in Spessard, et al., v. Rohrer, et al., 9 Gill 261, where the deed conveyed lands without the word `heirs' to a trustee, with power to sell to pay debts. See also Farquharson v. Eichelberger, 15 Md. 63 (1860). This Court rearticulated this principle in the case of Case v. Marshall, 159 Md. 588, 594, 152 A. 261, 264 (1930), when we said: With the statutes now in force in this state, it is, we think, well settled that, where a contrary intention is not clearly shown, both deeds and assignments, as well as wills, though without words of limitation or perpetuity, are presumed to carry such estate as the grantor, assignor, or testator has the power to convey, assign, or dispose of by will, and not an estate limited to the life of the grantee, assignee, devisee, or legatee, or an estate or interest less than that over which such party has the power of disposition. Additionally, as to reserved easements, we reiterated the principle in Greenwalt v. McCardell 178 Md. 132, 136, 12 A.2d 522, 524 (1940), where we stated: It is well established that whenever it appears from a fair construction of a deed that it was the purpose of the parties to create or reserve an easement in the property conveyed for the benefit of other land owned by the grantor, regardless of the form in which the purpose may have been expressed, such a right is deemed to be appurtenant to the land of the grantor and binding on that conveyed to the grantee; and the right thus created or reserved will pass to all subsequent owners of the land to which it is appurtenant. As the evolution of this long standing principle culminating in the creation of § 4-105 suggests, there is no question that Maryland law has long favored estates in fee simple even in the absence of words of inheritance. Given the unambiguous language of § 4-105, the only way in which petitioner could possibly prevail given the positions argued by the parties would be if respondents' reservation necessarily implied that only an interest for life was reserved. Although in its argument petitioner points to several factors in the deed's, and land installment contract's, language that, petitioner argues, necessarily implies a conveyance of a life estate, not one of those factors, either reviewed in conjunction or isolation, rise to the level required to support the desired implication sought by petitioner. We do not believe, as petitioner does, that the omission of words of inheritance in a reservation of the right to execute leases or other documents relating to mineral rights, which specifically and unequivocally identified only the names of respondents, necessarily implies that the duration of the interests was for only the lives of those named people. Nor do we believe that language stating that any dispute regarding the terms and conditions is to be resolved by the contract as written and not by any prior documented agreements or understandings, implies the same. In fact, respondents counter by arguing that the lease language signifies that the right to decision-making with respect to the minerals is reserved, along with the actual mineral rights, to the respondents and their heirs and that it instructs that the owner of the surface, i.e., petitioner, has no voice in any issues arising from the leasing of respondents' mineral rights. Similarly, the dispute-resolving language merely illustrates an intention by the parties to resolve any disputes with respect to their intent at the time the document was conveyed. The very existence of these reasonable alternative meanings to petitioner's contention that the deed's language purportedly limits the interests reserved by respondents to a life estate, dispels any notion that petitioner's interpretation is necessarily implied. Additionally, language in the deed of October 1996 that specifically grants the property to the Grantee ... its successors and assigns, in fee simple without using parallel language for the reservation clause, is not enough to overcome the substantial burden imposed on petitioner by § 4-105. Given Maryland's long history of favoring the creation of estates in fee simple and the fact that the deed contains no express terms expressing a limitation of the duration of the estate, we affirm the lower court on this issue. There is also another reason why a strong inference exists, in the absence of any evidence to the contrary, that the parties intended no time limitations on the character of the minerals rights' interest created by the conveyance at issue. A life estate in mineral rights would be, basically, commercially unmarketable. Life estates, of necessity reference a life in esse. When that life ceases, the right to mine minerals from the total estate would also cease. In other words, in the present case if the respondents had died the day after the subject conveyance, their minerals rights' interest would have ceased. This very pertinent fact is well known to investors, purchasers, lenders and anyone conversant with aspects of titles. No bank would lend money to respondents to mount a mining venture using the mineral rights as collateral, by mortgage or otherwise, because the mineral rights would have a limited life, and could have a very limited lifedays, minutes even. Upon the death of the holders of the life estate, paramount title in the minerals, in the circumstances of a grant with a reservation of a life estate in the minerals, would pass to the owners of the whole estatein the present case, petitioner. In other words, the collateral would vanish. Likewise, no reasonable buyer would purchase the right to mine minerals when the right would be extinguished if the holders of the life estate were killed in an automobile accident on the way home from signing the documents that granted the mineral rights. [31] In order to convey the mineral rights they have reserved, if they had only reserved a life interest, respondents in this case would have to obtain the agreement of the owner of the total subject to estate, petitioner, and have it sign over its rights as remainderman (or remainder persons) in the minerals in order to market the mineral rights, by lease or otherwise. The Land Installment Contract and the subsequent deed included the reservation to respondents of the right to execute leases and other documents relating to the production of oil, gas, and other minerals upon such terms and conditions as are acceptable to sellers [respondents]. (alteration added). The language of the documents themselves are inconsistent with the language that would, under the circumstances here present, need to be used in order to create a life interest. Generally, inferences would not suffice to create such a severely limited interest. [32] To create a life interest limitation that would so severely affect the marketability of that interest, the language (whether exception, grant or reservation) in the creating document must explicitly so provide. The mineral rights reservation in the case sub judice is not so limited.