Court Opinion

ID: 893095
Source: CourtListenerOpinion
Date Created: 2013-06-05 18:47:34.137021+00
Date Added: 2024-06-11T15:13:51.667582
License: Public Domain

I attest to the accuracy and
                                                     integrity of this document
                                                       New Mexico Compilation
                                                     Commission, Santa Fe, NM
                                                    '00'04- 15:07:58 2011.04.26
Certiorari Granted, December 20, 2010, No. 32,707

      IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2011-NMCA-003

Filing Date: October 19, 2010

Docket Nos. 28,248; 28,263

EDWIN SMITH, LLC, a New Mexico limited
liability company, and JERRY T. WALMSLEY,
trustee of the June Walmsley Bypass Trust under
the Will of June H. Walmsley dated April 7, 1992,

      Plaintiffs-Appellees,

v.

KRISTI CLARK, F. KEVIN KURTZ, and
F. NORMAN KURTZ,

      Defendants-Appellants,

and

EDWIN SMITH, LLC, a New Mexico limited
liability company, and JERRY T. WALMSLEY,
trustee of the June Walmsley Bypass Trust under
the Will of June H. Walmsley dated April 7, 1992,

      Plaintiffs-Appellees,

v.

SYNERGY OPERATING, LLC, a New Mexico
limited liability company, ANNEMARIE KELLER,
CHARLA VARNER; JODIE YATES-SIMON;
KIMBERLY BRAUTIGAM; ROBERT E. KOUNS;
and THEROLYN K. WILLIAMS,

      Defendants-Appellants.

APPEAL FROM THE DISTRICT COURT OF SAN JUAN COUNTY

                                        1
Karen L. Townsend, District Judge

Sutin, Thayer & Browne, P.C.
C. Shannon Bacon
Kerry Kiernan
Derek V. Larson
Albuquerque, NM

Montgomery & Andrews, PA
J. Scott Hall
Santa Fe, NM

for Appellees

Finch & Olson PA
Kyle M. Finch
Farmington, NM

Holland & Hart, LLP
Larry J. Montaño
Santa Fe, NM

for Appellant Synergy Operating, LLC

Dixon, Scholl & Bailey, P.A.
Gerald G. Dixon
Albuquerque, NM

for Appellants Kristi Clark, F. Kevin Kurtz, & F. Norman Kurtz

                                        OPINION

CASTILLO, Judge.

{1}     In this consolidated case, we review the law of joint tenancies in New Mexico as it
applies to property in a quiet title action. We also evaluate whether the district court had
authority to order proceeds suspended from two wells situated on the property. We affirm
the district court’s determination as to the quiet title issue, dismiss the proceedings
regarding suspension of proceeds for lack of subject matter jurisdiction, and remand this
matter for further proceedings consistent with this opinion.

I.     BACKGROUND

{2}    The subject property is a 160-acre tract of land located in San Juan County, New

                                             2
Mexico (the Property). We begin with a summary of the title history of the Property and
basic information related to the development of two gas wells on the Property. Additional
facts will be developed in the context of the issues discussed.

A.      Title History

{3}    The pertinent history of title to the Property stretches over a period of more than a
half century. The first material event occurred in 1951 when Margaret, Julia, May, and
Jennie Hasselman (collectively, the Hasselman Women) acquired by intestate succession an
undivided one-half interest in the surface and mineral rights of the Property. On April 26,
1951, the Hasselman Women conveyed their entire interest in the Property to May’s
husband. Immediately thereafter, May’s husband conveyed the Property back to the
Hasselman Women as joint tenants. The language of the deed from May’s husband to the
Hasselman Women explicitly stated: “Not in tenancy in common but in joint tenancy[.]”

{4}     In June 1958, the Hasselman Women filed a quiet title action in the San Juan County
District Court. The judgment, entered in August 1958, quieted title to the Property as
follows: the Hasselman Women were decreed the owners of an undivided one-half interest
in the surface and mineral rights; Claude Smith was decreed the owner of the other one-half
interest in the surface rights as well as a 75/160 mineral interest; George B. Robbins was
decreed the owner of a 4/160 mineral interest; and J.R. Robbins was decreed the owner of
a 1/160 mineral interest. Appellee Edwin Smith, LLC (Smith) is the successor in interest
to the ownership interest of Claude Smith.

{5}     May died in November 1962. Julia died in November 1973. Margaret died in May
1974. In September 1981, Jennie executed a warranty deed conveying an undivided one-half
interest in the property to herself and her daughter June as joint tenants. In this deed, Jennie
is described as the last “surviving joint tenant of” the Hasselman Women. Appellee Jerry
Walmsley (Walmsley) is the surviving spouse of June.

{6}     Jennie died in July 1988. June died in October 1995. In her will, June established
the June H. Walmsley Bypass Trust (the Trust) under which Walmsley was named
administrator and sole trustee. June devised her interest in the Property to the Trust. We
recognize that Walmsley is acting in his capacity as trustee in this appeal, but will continue
to refer to him as Walmsley.

B.      Synergy’s Development of Mineral Interests on the Property

{7}    During and after October 2004, various heirs of May, Julia, and Margaret assigned
mineral rights on the Property to Appellant Synergy. Synergy also signed a farm-out
agreement with Joseph C. Robbins, an heir of J.R. Robbins, and a joint operating agreement
(JOA) with Walmsley authorizing Synergy to operate wells on the Property.

{8}    On May 24, 2005, Synergy filed an application with the Oil and Conservation

                                               3
Division (the Division) of the New Mexico Energy, Minerals, and Natural Resources
Department to pool mineral interests on the Property to form a 320-acre compulsory-pooled
gas spacing unit and to drill a well, well 104. Walmsley and Smith opposed this application,
claiming that Synergy did not possess an interest in the Property.

{9}    Despite Walmsley and Smith’s opposition, the Division granted Synergy’s
application. Walmsley and Smith appealed that decision to the New Mexico Oil
Conservation Commission (the Commission), the supervising agency for the Division,
challenging Synergy’s right to drill on the basis that Synergy did not possess any interest in
the Property. Walmsley and Smith also filed a complaint to quiet title to the property in the
Eleventh Judicial District Court (the 2006 quiet title action).

{10} At the Commission hearing on well 104, Synergy claimed its right to drill well 104
derived from three sources: a twenty-five percent mineral interest it obtained from the heirs
of Julia and May; the farm-out agreement it held with Joseph C. Robbins, an undisputed
owner of a 3.125 percent mineral interest on the Property; and the JOA with Walmsley.
Walmsley and Smith refuted these contentions. They claimed that the heirs of Julia and May
owned no interest in the Property and that Walmsley was the owner of the entire interest of
the Hasselman Women. Therefore, according to Walmsley, Synergy could not derive an
interest in the Property from the heirs of Julia and May. Walmsley and Smith also submitted
an affidavit and unsworn statement from Joseph C. Robbins that they claimed showed that
he had rescinded his farm-out agreement. It is unclear whether Walmsley and Smith
challenged Synergy’s claim under the JOA. In addition to asking the Commission to find
that Synergy possessed no interest in the Property, Walmsley and Smith also asked the
Commission to suspend all proceeds from well 104.

{11} After the Commission hearing, but before the Commission rendered a decision on
Synergy’s right to drill well 104, Synergy filed another application with the Division to pool
mineral interests on the Property and drill a second well, well 105. Synergy again based its
right to drill on the twenty-five percent mineral interest it allegedly obtained from the heirs
of Julia and May, the farm-out agreement, and the JOA. Smith and Walmsley again objected
to the application on the ground that Synergy did not possess any interest in the Property.

{12} In March 2006, the Commission entered an order regarding well 104. The
Commission first observed that it lacked jurisdiction to make any determination regarding
title to the Property. The Commission then found that there was no admissible evidence
submitted to support Walmsley and Smith’s claim that Joseph C. Robbins rescinded the
farm-out agreement. Accordingly, the Commission concluded that Synergy was entitled to
drill well 104 pursuant to the farm-out agreement and pursuant to the JOA. Because
Synergy possessed the right to drill well 104, the Commission concluded that pooling all
uncommitted interests on the Property was appropriate to avoid the drilling of unnecessary
wells, to protect correlative rights, to prevent waste, and to achieve an efficient distribution
of the natural resources underlying the Property. The Commission also authorized Synergy
to recoup costs associated with the drilling, operating, and supervising of well 104 from the

                                               4
proceeds of that well. The Commission did not grant Walmsley and Smith’s request to
suspend proceeds.

{13} Following the entry of the March 2006 order, Walmsley filed a motion to suspend
proceeds from well 104 in district court under the docket number that was generated from
Walmsley and Smith’s complaint to quiet title. Smith did not join the motion to suspend
proceeds filed in district court. In his motion, Walmsley requested that the district court
place 100 percent of the proceeds attributable to the disputed interest in well 104 into a
suspense account pending the resolution of the 2006 quiet title action.

{14} In September 2006, the Division granted Synergy’s request to pool mineral interests
and drill well 105. The Division based its decision on the fact that Synergy had a farm-out
agreement with Joseph C. Robbins, an undisputed owner of mineral rights on the Property.
By virtue of that interest, the Division concluded that Synergy had the right to drill.
Accordingly, the Division authorized Synergy to pool mineral interests. The Division
further authorized Synergy to recoup costs associated with drilling, operating, and
supervising well 105 from proceeds derived from the well. The Division rejected the
requests of Walmsley and Smith to suspend proceeds from well 105 until the quiet title
action was resolved. According to the Division, suspending proceeds from well 105 would
preclude Synergy from recouping its expenses. After this order was entered, Walmsley
amended the motion to suspend proceeds filed in district court to include 100 percent of the
proceeds attributable to the disputed interest in well 105.

{15} In February 2007, the district court granted the amended motion to suspend proceeds
from wells 104 and 105 and later denied Synergy’s motion to reconsider that order. The
district court ordered that all of the proceeds derived from wells 104 and 105 be placed in
an interest bearing account until a final allocation of the interests in the Property was
determined. Pursuant to a stipulation from the parties, the order was later amended to apply
only to those proceeds derived from the disputed interest.

{16} On November 30, 2007, the district court entered an order resolving the quiet title
action. The following is a summary of the district court’s conclusions. Jennie, as the last
surviving member of the Hasselman Women, acquired the one-half undivided interest in the
Property that had originally been held by the Hasselman Women as joint tenants. That
interest, upon Jennie’s death, vested in June. Upon June’s death, her interest was devised
to the bypass trust established in her will. Title to the disputed interest was quieted in favor
of the Trust.

II.    DISCUSSION

{17} On appeal, Synergy challenges the district court’s order regarding the title to the
Property as well as the order suspending proceeds from both wells. We will address the title
questions first and then turn to the issue of suspension of proceeds.

                                               5
A.     The Quiet Title Action

{18} The district court quieted title in favor of the Trust. Synergy asserts two points of
error. It relies on the conveyance that created the joint tenancy interest in the Hasselman
Women and argues that a joint tenancy among the sisters never came into existence because
May failed to sign that deed. Alternatively, Synergy contends that even if a joint tenancy
were created, the Hasselman Women treated the joint tenancy as if it were a tenancy in
common and, thus, the joint tenancy was severed. We begin with the standard of review and
follow with a discussion of the law of joint tenancies.

1.     Standard of Review

{19} The district court resolved the 2006 quiet title action on the parties’ cross-motions
for summary judgment. “Summary judgment is appropriate where there are no genuine
issues of material fact and the movant is entitled to judgment as a matter of law.” Weise v.
Washington Tru Solutions, L.L.C., 2008-NMCA-121, ¶ 2, 144 N.M. 867, 192 P.3d 1244
(internal quotation marks and citation omitted). “[W]here the parties agree to have the trial
court decide a case on cross-motions for summary judgment and where neither party claims
that disputed facts exist, this Court will review the case as presented by the parties and
decide it one way or the other.” Farmington Police Officers Ass’n Commc’n Workers of Am.
Local 7911 v. City of Farmington, 2006-NMCA-077, ¶ 33, 139 N.M. 750, 137 P.3d 1204
(Pickard, J., specially concurring in part and dissenting in part). Our review of the parties’
arguments on appeal regarding the 2006 quiet title action reveals that the facts are not
disputed. Rather, the parties’ disagreement centers on the significance of the undisputed
facts as a matter of law—in this case, the law of joint tenancies.

2.     The Law of Joint Tenancies

a.     Historical overview

{20} A joint tenancy is a concurrent estate that dates back to the thirteenth century under
the early common law. R. H. Helmholz, Realism and Formalism in the Severance of Joint
Tenancies, 77 Neb. L. Rev. 1, 4 (1998). “As the preferred form of common ownership in
earlier English law, the joint tenancy’s existence was presumed over a tenancy in common
in cases where there was doubt about which had been created.” Id. “[T]he chief incident of
a joint tenancy is the right of survivorship[.]” Swink v. Fingado, 115 N.M. 275, 281, 850
P.2d 978, 984 (1993). Under survivorship, “[t]he joint tenant who survives the other
cotenants takes the entire estate; the estates of deceased joint tenants have no interest.” 7
Richard R. Powell, Powell on Real Property § 51.03[3] (Michael Allan Wolf ed. 2010).

{21} The traditional test for the creation and continuation of a joint tenancy depended
upon the presence of the four unities: time, title, interest, and possession. Id. Describing
the four unities, Blackstone wrote in his commentaries that

                                              6
        [t]he properties of a joint estate are derived from its unity, which is fourfold;
        the unity of interest, the unity of title, the unity of time, and the unity of
        possession; or, in other words, joint tenants have one and the same interest,
        accruing by one and the same conveyance, commencing at one and the same
        time, and held by one and the same undivided possession.

2 William Blackstone, 2 Commentaries *180 (1979) (emphasis omitted).

{22} Soon after achieving independence from Great Britain, Americans abandoned the
English legal preference for joint tenancy as the preferred form of concurrent ownership and
adopted a preference for tenancy in common. David A. Thomas, Anglo-American Land
Law: Diverging Developments from a Shared History - Part III: British & American Real
Property Law & Practice - A Contemporary Comparison, 34 Real Prop. Prob. & Tr. J. 443,
467 (1999). Joint tenancies, however, remain in frequent use. Helmholz, supra, at 4.

{23} In 1852, New Mexico enacted the territory’s first laws regulating conveyances and
allowing joint tenancy. See Fletcher’s Estate v. Jackson, 94 N.M. 572, 576, 613 P.2d 714,
718 (Ct. App. 1980) (discussing the 1852 version of the joint tenancy law). The language
from the 1852 law is now complied as NMSA 1978, Section 47-1-15 (1915) (“All interest
in any real estate, either granted or bequeathed to two or more persons other than executors
or trustees, shall be held in common, unless it be clearly expressed in said grant or bequest
that it shall be held by both parties.”). Relying on Section 47-1-15, our Supreme Court
stated in Brown v. Jackson, 35 N.M. 604, 605, 4 P.2d 1081, 1081 (1931) that “[w]hile it is
true that joint tenancy is no longer favored, as at common law, yet it still exists when by
grant it is clearly expressed that the estate is to be a joint tenancy.”

{24} In 1971, NMSA 1978, Section 47-1-36 (1971) was enacted. This statute defined the
joint tenancy as it relates to real property and established the prerequisites for creating a joint
tenancy in real property. Swink, 115 N.M. at 286, 850 P.2d at 989. Section 47-1-36
provides the following:

               A joint tenancy in real property is one owned by two or more persons,
        each owning the whole and an equal undivided share, by a title created by a
        single devise or conveyance, when expressly declared in the will or
        conveyance to be a joint tenancy, or by conveyance from a sole owner to
        himself and others, or from tenants in common to themselves, or to
        themselves and others, or from husband and wife when holding as
        community property or otherwise to themselves or to themselves and others,
        when expressly declared in the conveyance to be a joint tenancy, or when
        granted or devised to executors or trustees.

{25} Our Supreme Court has previously acknowledged that Section 47-1-36 embraces the
classical doctrine of the four unities. See Swink, 115 N.M. at 286, 850 P.2d at 989.

                                                7
b.      Creation of a joint tenancy

{26} As we have explained, the doctrine of the four unities both describes the nature of
a joint tenancy and was at common law the touchstone for determining whether a transfer
of real property resulted in a joint tenancy. 4 David A. Thomas, Thompson on Real Property
§ 31.06(b) at 15 (2d ed. 2004). The case law predating the enactment of Section 47-1-36
shows that this common law tradition prevailed in New Mexico. See In re Trimble’s Estate,
57 N.M. 51, 54, 253 P.2d 805, 807 (1953) (“[a] joint tenancy arises where two or more
persons have any subject of property jointly in which there is a unity of interest, unity of
title, unity of time, and unity of possession” (internal quotation marks and citation omitted)),
superseded by statute as stated in Fletcher’s Estate, 94 N.M. at 576, 613 P.2d at 718.
Because Section 47-1-36 embraces this classical doctrine, the test in New Mexico to
determine whether a joint tenancy has been established remains whether the requirements
embodied by the doctrine of the four unities have been satisfied. See Swink, 115 N.M. at
286, 850 P.2d at 989. We have previously described what this entails.

       The unities of time and title require that the joint tenants’ interests accrue at
       the same time by the same conveyance. By unity of interest is meant that the
       joint tenants’ shares are all equal and the duration and quality (legal or
       equitable) of their estates are the same. Unity of possession means that each
       joint tenant is in possession of the whole estate, and that each is also entitled
       to an equal undivided share of the whole.

Id. at 286 n.15, 850 P.2d at 989 n.15 (internal quotation marks and citation omitted).

{27} In addition to satisfying the requirements embodied by the four unities, our statutes
require that the document purporting to create the joint tenancy include express language
that the real property is to be held jointly. See § 47-1-15 (“All interest in any real estate,
either granted or bequeathed to two or more persons other than executors or trustees, shall
be held in common, unless it be clearly expressed in said grant or bequest that it shall be held
by both parties.”). This statutory requirement is reflective of the modern preference in favor
of tenancies in common and, conversely, the now well-entrenched view that joint tenancies
are no longer preferred. See Brown, 35 N.M. at 605, 4 P.2d at 1081 (“While it is true that
joint tenancy is no longer favored, as at common law, yet it still exists when by grant it is
clearly expressed that the estate is to be a joint tenancy.”). A conveyance to two or more
grantees that includes the language “as joint tenants” is sufficient to overcome the modern
presumption against joint tenancies and satisfies the express language requirement set out
in Section 47-1-15. See NMSA 1978, § 47-1-35 (1947) (“In a conveyance or mortgage of
real estate, the designation of two or more grantees ‘as joint tenants’ shall be construed to
mean that the conveyance is to the grantees as joint tenants, and not as tenants in common,
and to the survivor of them and the heirs and assigns of the survivor.”).

c.     Severing a joint tenancy

                                               8
{28} In Romero v. Melendez, 83 N.M. 776, 778, 498 P.2d 305, 307 (1972), our Supreme
Court discussed severance of joint tenancies. The Court first established that “[a] joint
tenancy will be severed by the destruction of any one or more of its necessary units.” Id.
(internal quotations marks and citation omitted). Historically, this was the test to determine
whether a joint tenancy had been severed. See Mamalis v. Bornovas, 297 A.2d 660, 661 (N.H.
1972) (“In determining whether an act of a joint tenant is sufficient to terminate or ‘sever’ a
joint tenancy, the courts have historically resolved the question upon an analysis of whether
the act destroyed one of the essential four unities of time, title, interest or possession.”); see
also Blackstone, supra, at *185. Thus, it is settled that a conveyance by a joint tenant of his
interest to a third party “necessarily destroys the unity of title,” and with it, severs the joint
tenancy. 2 Tiffany, The Law of Real Property § 425, at 209 (3d ed. Jones 1939).

{29} The second way in which a joint tenancy may be severed, as our Supreme Court
explained in Romero, is “by a mutual agreement between the parties . . ., or by any conduct
or course of dealing sufficient to indicate that all parties have mutually treated their interests
as belonging to them in common.” 83 N.M. at 778, 498 P.2d at 307 (alteration in original).
Synergy claims that, by this language, our Supreme Court adopted a modern development
in the law of severance in which courts look not to whether one of the unities has been
destroyed to determine whether a joint tenancy has been severed but only to whether the
parties intended to sever the joint tenancy. See Helmholz, supra at 18-19. This argument
implicates significant policy considerations that Synergy has not addressed. See 4 Thomas,
supra, § 31.09, at 73-74 (discussing the future of the law of joint tenancies and recognizing
that increased emphasis on the intention of the parties in the creation and severance of joint
tenancies has contributed to the erosion in the distinctions between tenancies in common and
joint tenancies). Notwithstanding this concern, we are unpersuaded that the modern intent-
based theory of severance is compatible with the current statutory framework governing joint
tenancies in New Mexico.

{30} As previously discussed, joint tenancies are defined by statute in New Mexico, and
Section 47-1-36 embraces the four unities doctrine. The modern intent-based theory is
premised on the abandonment of the four unities doctrine, see Helmholz, supra, at 1-2, and
this is reflected in decisions from jurisdictions that have adopted the modern theory. See,
e.g., Taylor v. Canterbury, 92 P.3d 961, 967 (Colo. 2004) (en banc) (observing that the four
unities have been abolished by statute in Colorado and, after recognizing the development
of the intent based theory, holding that whether a joint tenancy has been created or severed
is merely a question of the intent of the parties); In re Estate of Bates, 492 N.W.2d 704, 706-
07 (Iowa Ct. App. 1992) (observing that the four unities common law rule required to create
and continue a joint tenancy is not applicable in Iowa and finding a severance of a joint
tenancy based solely on the intent of the parties who agreed to sell certain property but never
actually sold it); Mamalis, 297 A.2d at 662 (abandoning the requirement that severance of
a joint tenancy requires destruction of one of the unities and adopting the intent based
approach because, in New Hampshire, all that is required to create a joint tenancy is the
manifestation of intent to do so and, therefore, this is all that should be required to sever
one).

                                                9
{31} When, in Romero, our Supreme Court recognized that a joint tenancy may be severed
by mutual agreement or by any conduct or course of dealing sufficient to indicate that all
parties have mutually treated their interests as belonging to them in common, the Court did
not, as Synergy argues, adopt the modern intent-based theory of severance. Rather, our
Supreme Court merely recognized the theory of severance by implication. That a joint
tenancy may be severed by implication is widely recognized. See In re Estelle’s Estate, 593
P.2d 663, 665 (Ariz. 1979) (in banc); Brodzinsky v. Pulek, 182 A.2d 149, 154 (N.J. Super.
Ct. App. Div. 1962); Young v. McIntyre, 672 S.E.2d 196, 203 (W. Va. 2008). Varying
language has been used to express the theory. See Duncan v. Suhy, 37 N.E.2d 826, 829 (Ill.
1941) (stating that “an agreement between joint tenants to hold as tenants in common will
sever an existing joint tenancy and such agreement may be inferred from the manner in
which the parties deal with the property”). The language employed by our Supreme Court
in Romero is but one example and appears in Corpus Juris, in exactly the same form, as
early as 1924. 33 C.J. Joint Tenancy § 11, at 909 (1924). Whether a severance by
implication has occurred turns on two questions: (1) whether there was an express
agreement between all of the joint tenants; and (2) whether that agreement was inconsistent
with one of the unities or with the right of survivorship. See Harold J. Romig, Jr. & John M.
Shelton, Comment, Severance of a Joint Tenancy in California, 8 Hastings L.J. 290, 294
(1957). Romero itself is a useful illustration of the application of the doctrine of severance
by implication.

{32} As a preliminary matter, we observe that Romero does not deal with the conveyance
of real property which is the issue before us. However, the Romero court did discuss
severance and held that a joint tenancy had been severed in that case and denied a surviving
spouse’s claim to right of survivorship over a mutual fund and checking account. 83 N.M.
at 778-79, 498 P.2d at 307-08. The Court observed that a divorce decree had been entered
before the death of the deceased spouse and concluded that the decree severed the joint
tenancy, rendering the accounts the sole and separate property of the estate of the deceased.
Id. The fact that the parties divorced was not, in and of itself, the basis for the holding.
There is little disagreement over the fact that “a divorce decree alone does not effect a
severance of a joint tenancy.” 48A C.J.S. Joint Tenancy § 17, at 347 (1981); see 4 Thomas,
supra, § 31.08(c), at 66. Rather, our Supreme Court reasoned that the divorce decree was
inconsistent with and eliminated the unity of possession that severed the joint tenancy.
Romero, 83 NM at 779, 498 P.2d at 308. The decree was an express agreement that
destroyed one of the four unities, a severance by implication. Having set forth the law
governing the creation and severance of joint tenancies, we turn to Synergy’s arguments in
the present matter.

3.     Synergy’s Arguments Regarding Joint Tenancy

{33} Synergy’s first claim deals with the 1951 deed to the Hasselman Women. Relying
on principles of community property law, Synergy contends that the conveyance from May’s
husband to the Hasselman Women failed to establish a joint tenancy because May did not
sign the deed in which her husband conveyed the Property to the Hasselman Women as joint

                                             10
tenants. According to Synergy, this rendered that conveyance void because the conveyance
of community property by one spouse acting alone is void.

{34} The district court responded to this contention by observing that May conveyed her
interest, as had all of her sisters, to her husband before he conveyed their interests back to
them as joint tenants. Thus, according to the district court, it was not necessary for May to
have signed the conveyance creating the joint tenancy because the Property had momentarily
become May’s husband’s separate property. Synergy claims this reasoning is flawed
because it assumes the other Hasselman Women were deeding their interest to May’s
husband as his sole and separate property and further that this reasoning assumes the
Hasselman Women intended to create a joint tenancy through this transaction. We find little
merit to these claims.

{35} Historically, there was a question as to whether or not an individual could deed title
to real property in joint tenancy to himself and others.

               The old common law rule that a grantor could not create a joint
       tenancy by conveying to himself and another (or others), or by conveying an
       undivided interest to another, generally has been evaded by conveying the
       entire estate to a third party “straw man” who, by prearrangement, then
       conveys the estate back to the entire group of intended joint tenants
       (including the grantor).

Roger A. Cunningham, William B. Stoebuck & Dale A. Whitman, The Law of Property, §
5.3, at 198 (2d ed. 1993). It appears that this is what occurred in this case; May’s husband
was the straw man. The Hasselman Women deeded the Property to him, and he re-deeded
the Property to them as joint tenants. The Hasselman Women accrued the same interest in
the Property at the same time by the same conveyance and possessed an equal undivided
share in the Property and the conveyance clearly indicated that the Hasselman Women held
the property not as tenants in common but as joint tenants. Where a dispute arises as to
whether property was initially acquired in joint tenancy, the status of the property may be
established by a preponderance of the evidence. Fletcher’s Estate, 94 N.M. at 578, 613 P.2d
at 720 (citing NMSA 1978, § 47-1-16 (1955)). As evidenced by the straw man transaction
and the words on the 1951 deed, a joint tenancy was established.

{36} Further, Synergy relies on “basic principles of community property law” but does not
cite specific statutes or cases. Where a party cites no authority to support an argument, we
may assume no such authority exists. In re Adoption of Doe, 100 N.M. 764, 765, 676 P.2d
1329, 1330 (1984). Although we are not certain, it appears that these basic principles may
be part of New Mexico’s Community Property Act. That legislation was not enacted until
1973, over twenty years after the 1951 conveyances were made. Synergy’s arguments are
unavailing.

{37}   Synergy’s second argument is based on severance. Synergy contends that even if a

                                             11
joint tenancy were created, the Hasselman Women treated the joint tenancy as if it were a
tenancy in common and, thus, the joint tenancy was severed.

{38} Synergy points to five different facts as proof of severance in the present matter: (1)
the pleadings filed to initiate the 1958 quiet title action and language in the judgment
stemming from that action wherein the Hasselman Women are described as the “heirs at law
of Herman Hasselman” and “the owners in fee simple;” (2) that the surviving Hasselman
Women and May’s heirs executed a power of attorney permitting Jennie’s husband to
develop mineral interests on the Property; (3) that the surviving Hasselman Women
designated Jennie as agent to receive payments from a gas company operating on the
property and that Jennie, acting as agent for the surviving Hasselman Women, entered into
leases to further develop mineral interests on the property; (4) the language in a title opinion
rendered by Pan American Petroleum in 1965 indicating that the heirs of the deceased
Hasselman Women held interests in the Property; and (5) that heirs of May, Julia, and
Margaret received royalties. The evidence Synergy cites as proof the Hasselman Women
severed the joint tenancy is insufficient as a matter of law to prove a severance. None of the
alleged acts destroyed one of the four unities that is necessary under either mode of
severance recognized in New Mexico.

4.     Conclusion as to Joint Tenancy

{39} The undisputed facts in this matter prove that the Hasselman Women established a
joint tenancy. The joint tenancy was not severed. None of the Hasselman Women conveyed
their interests in the Property during their lives. Nor did the Hasselman Women sever the
joint tenancy by an express agreement inconsistent with one of the four unities or the right
of survivorship. Accordingly, upon June’s death, the property passed to the Trust.

B.      Suspension of Proceeds

{40} As explained in the background section of this opinion, Walmsley and Smith’s
original requests to suspend proceeds from both wells were made in conjunction with their
objections to Synergy’s applications to pool mineral interests on the Property. After the
requests were effectively denied by the Division and Commission, Walmsley alone filed a
motion in the quiet title action to suspend proceeds as to well 104. Later, he filed an
amended motion requesting that proceeds be suspended as to both wells. The arguments
made in the administrative proceedings were similar to those made to the district
court—essentially that the suspension of proceeds would eliminate unnecessary litigation
regarding payment of proceeds pending a final determination of the title dispute. The district
court ordered the proceeds suspended and to be placed in an interest-bearing account until
a final allocation could take place. Synergy appeals this order.

{41} Although Synergy does not actually argue the issue of subject matter jurisdiction on
appeal, we posed this question to the parties during oral argument. Jurisdiction is a
controlling consideration to be resolved as a preliminary matter, and an appellate court may

                                              12
raise the question of jurisdiction on its own. See State v. Doe, 91 N.M. 356, 357, 573 P.2d
1211, 1212 (Ct. App. 1977). Moreover, “it is incumbent upon the appellate court to raise
jurisdiction questions sua sponte when the Court notices them.” Smith v. City of Santa Fe,
2007-NMSC-055, ¶ 10, 142 N.M. 786, 171 P.3d 300. The question of subject matter
jurisdiction is a question of law that we review de novo. Ottino v. Ottino, 2001-NMCA-012,
¶ 6, 130 N.M. 168, 21 P.3d 37.

{42} To address the question of jurisdiction, we first look to certain provisions of the Oil
and Gas Act (the O&G Act), NMSA 1978, §§ 70-2-1 to -38 (1935, as amended through
2010). The O&G Act provides the Division with “jurisdiction and authority over all matters
relating to the conservation of oil and gas” and “jurisdiction, authority and control of and
over all persons, matters or things necessary or proper to enforce effectively the provisions
of th[e O&G A]ct or any other law of this state relating to the conservation of oil or gas.”
Section 70-2-6(A). The O&G Act further empowers the Division “to make and enforce
rules, regulations and orders, and to do whatever may be reasonably necessary to carry out
the purpose of th[e] [O&G Act], whether or not indicated or specified in any section [of the
O&G Act].” Section 70-2-11(A). The O&G Act provides the Commission with concurrent
jurisdiction to carry out these responsibilities. Sections 70-2-6(B), -11(B).

{43} The Division and Commission are statutorily authorized to set forth the procedural
rules governing the proceedings before them. Section 70-2-7. Pursuant to those rules,
adjudicatory hearings must be brought in the first instance before the Division. 19.15.4.8(A)
NMAC (12/1/08). The Division’s order may be appealed to the Commission for a de novo
hearing. Section 70-2-13; 19.15.4.23 NMAC (12/1/08). A party dissatisfied with the
Commission’s order may request a rehearing before the Commission. Section 70-2-25(A);
19.15.4.25 NMAC (12/1/08). The Commission’s decision at the rehearing proceeding may
be appealed to the district court. Section 70-2-25(B).

{44} Walmsley, dissatisfied with the denial of the request to suspend proceeds from well
104 by the Division and well 105 by the Commission, did not follow the appellate process
set forth by statute. Instead, he filed a motion and amended motion to suspend proceeds
from both wells in the district court quiet title actions. This procedural tactic, effectively an
end-run around the appellate procedures specified in the O&G Act, raises significant
concerns that our Supreme Court discussed at length in Smith, 2007-NMSC-055, ¶ 21.

{45} In Smith, there were two sets of plaintiffs—the Smiths and the Stillmans—who
wanted to drill wells on property they owned located within the boundaries of a municipality.
Id. ¶ 3. Separately, they obtained well permits from the Office of the State Engineer after
which the municipality notified them that they were also required to obtain municipal
permits to drill. Id. The Stillmans did not apply for a city permit but the Smiths did. Id. ¶
4. After the city denied the Smiths’ applications for a permit, the Smiths followed the
administrative appeals process set forth in the letter of denial. Id. Ultimately, the city
council upheld the decision to deny the permit. Id. The Smiths and the Stillmans then filed
an action for declaratory relief in district court. Id. ¶ 5. The district court granted summary

                                               13
judgment in favor of them, and the city appealed.

{46} Our Supreme Court first looked to the question of jurisdiction. Id. ¶¶ 8-10. As to the
Stillmans, it concluded that the district court did have jurisdiction to consider the declaratory
judgment action. Id. ¶ 25 (“By not invoking the administrative review process and the
corresponding judicial review procedures embodied in Rule 1-075 [NMRA], the Stillmans
were free to initiate their claim for declaratory relief at the time of their own choosing.”).
As to the Smiths, however, our Supreme Court held that the district court lacked jurisdiction
to rule on the claim for declaratory relief. Id. ¶ 24. The Court explained that, because the
Smiths chose to initiate the administrative appeals process, they were, therefore, required to
abide by the procedural mechanisms that governed that process. Id. ¶ 23. “To hold
otherwise,” the Court stated, “would invite chaos and preclude certainty in the finality of
administrative decisions that might otherwise be subject to multiple avenues of judicial
review at unpredictable times.” Id. The Court explained its reasoning:

                We perceive no sound judicial policy for allowing a party aggrieved
        by an administrative decision to forego an available avenue of judicial review
        only to allow that same party to initiate judicial review in another form at
        some future date that no one can predict or rely upon with any certainty.
        Indeed, the efficient administration of justice requires just the opposite.

Id. ¶ 24.

{47} Here, there is no question about the propriety of the quiet title suit—it can properly
be brought to decide the title issues related to the property upon which the wells are situated.
NMSA 1978, § 42-6-1 (1951). Consideration of the issue of suspension of proceeds from
the mineral interests on the property is another matter. Suspension of proceeds was first
raised as an issue before the Division and the Commission. Neither party challenges the
Division and the Commission’s authority to hear or decide a request for suspension of
proceeds. Once the authority of the Division and the Commission as to suspension of
proceeds from the wells was invoked, Walmsley was obligated to comply with the
comprehensive appellate procedures provided under the O&G Act that govern the
proceedings before those agencies. Because Walmsley failed to follow the applicable
statutory procedures, we conclude that the district court lacked subject matter jurisdiction
to rule on the motion and amended motion to suspend proceeds. See Smith, 2007-NMSC-
055, ¶ 24; In re Application of Angel Fire Corp., 96 N.M. 651, 652, 634 P.2d 202, 203
(1981) (observing that, where a statute establishes an administrative procedure for taking a
case or controversy out of the administrative framework into the judicial system for review,
jurisdiction of the matter in dispute does not lie in the district court until the statutorily
required administrative procedure has been complied with).

III.    CONCLUSION

{48}    We hold that the district court did not err in concluding that the Property passed to

                                               14
the Trust. The district court’s order in the quiet title action is affirmed. Because the district
court lacked subject matter jurisdiction regarding the suspension of proceeds, the motion and
amended motion filed in the quiet title action are hereby dismissed, and all orders entered
based on the motions are hereby vacated. This matter is remanded for proceedings
consistent with this opinion.

{49}    IT IS SO ORDERED.

                                                ____________________________________
                                                CELIA FOY CASTILLO, Judge

WE CONCUR:

____________________________________
CYNTHIA A. FRY, Chief Judge

____________________________________
ROBERT E. ROBLES, Judge

Topic Index Edwin Smith, LLC v. Clark, Docket Nos. 28,248/28,263

AL                      ADMINISTRATIVE LAW AND PROCEDURE
AL-AA                   Administrative Appeal
AL-EX                   Exhaustion of Administrative Remedies
AL-HR                   Hearings
AL-JR                   Judicial Review

AE                      APPEAL AND ERROR
AE-SR                   Standard of Review

JD                      JURISDICTION
JD-SM                   Subject Matter

NR                      NATURAL RESOURCES
NR-MM                   Mines and Minerals
NR-OG                   Oil and Gas
NR-RO                   Royalties

PR                      PROPERTY
PR-CP                   Community Property
PR-DP                   Disbursement of Proceeds
PR-JT                   Joint Tenancy
PR-LG                   Land Grants

                                               15
PR-MD   Mineral Deed
PR-MR   Mineral Resources

                            16