Court Opinion

ID: 9402484
Source: CourtListenerOpinion
Date Created: 2023-06-15 19:12:11.485046+00
Date Added: 2024-06-11T17:20:00.088205
License: Public Domain

Nos. 22-0139 and 22-0140 – Collingwood Appalachian Minerals III, LLC., et al. v. Richard
              L. Erlewine                                                           FILED
                                                                                  June 15, 2023
Justice Hutchison, concurring, in part, and dissenting, in part:                     released at 3:00 p.m.
                                                                                 EDYTHE NASH GAISER, CLERK
                                                                                 SUPREME COURT OF APPEALS
                                                                                      OF WEST VIRGINIA

               This case involves separate tax deed conveyances in Wetzel County: the first

are two 1991 tax deeds, and the second is a 1995 tax deed. As I explain herein, I concur

with the majority opinion’s ruling concerning the 1995 tax deed that conveyed a 25% share

of the oil and gas royalties to Trio Petroleum and Waco Oil & Gas. But I dissent to the

majority opinion’s interpretation of Richard Erlewine’s 1991 tax deed. I am firmly of the

belief that Erlewine received a tax deed to the land undivided from a different 25% share

of the oil and gas royalties in 1991, and thus, that the majority opinion’s interpretation of

the law of tax deeds is incorrect. Moreover, due to the ambiguities in the laws regarding

tax deeds, particularly West Virginia Code § 11A-3-63, I call on the Legislature to clarify

its statutes on this topic.

               Any tax deed lawyer looking at the chain of title recorded in Wetzel County

would fairly conclude that in 1945, Osburn Dunham bought 135 acres of land on Huff

Ridge with a 25% share of the subjacent oil and gas from Joseph and Myrtle Rogers. In

1949, Dunham bought another 25% share from James Sivert. Hence, in 1968, when

Dunham conveyed to Russell F. Stiles “the same land conveyed to the said Osburn Dunham

by Joseph E. Rogers” in 1945, it is fair to say that Stiles purchased land with only a 25%

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share of the oil and gas. Dunham continued to own a 25% share. And if there is any

confusion or ambiguity here, after 1968, Stiles paid taxes on 25% of the oil and gas and

Dunham paid taxes on another 25% share. While the majority opinion claims that the 1968

deed is unambiguous, it is actually Dunham’s and Stiles subsequent conduct which

clarified the intent behind the 1968 deed. Hence, when Dunham defaulted and failed to

pay his taxes, and the sheriff sold Dunham’s 25% share to Trio/Waco (for a mere $16.36),

the 1995 tax deed to Trio/Waco was unassailable. Trio/Waco and its successors clearly

own that 25% share under the 1995 tax deed.

                That said, it is the other 25% share bought by Stiles in 1968 that is at the

heart of my dissent. There are several legal opinions in the record, known to every tax

assessor in the State of West Virginia, which show that this case does not involve a

procedural hiccup. No, the assessor’s actions in this case were in clear violation of West

Virginia law.

                It is a long-standing problem in West Virginia deed law that tax assessors

have improperly and illegally sent landowners, who own a unified estate, multiple tickets

taxing the estate in pieces. Tax assessors, for a century, illegally split oil and gas, or coal,

or whatever royalties or minerals from the surface estate and slapped a tax on each interest

separately. The result was multiple, improper assessments that caused confusion, the

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              This analysis, obviously, sets aside any questions about the effect of the
1949 merger of Osburn Dunham’s oil-and-gas shares.

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duplication and overpayment of taxes, accidental defaults, and multiple overlapping and

competing tax deeds following an auction of such interests.

              The records of the Attorney General demonstrate that tax assessors botching

the taxation of land, and illegally taxing the surface separate from the minerals, is nothing

new. More importantly, those records demonstrate tax assessors knew those actions were

illegal. For instance, nearly a century ago, in 1928, a landowner sold the coal underlying

his tract of land in Harrison County and retained an undivided interest in the rest (the land

and the non-coal minerals underlying the land). The tax assessor charged taxes to the

landowner for “the surface” and the landowner paid the taxes. Then, oil and gas were

discovered beneath the tract, and a prosecuting attorney questioned (on behalf of his

county’s tax assessor) whether the landowner had forfeited ownership of the oil and gas

interest because the landowner never paid a separate tax on the oil and gas.

              In a 1948, opinion, the Attorney General concluded the prosecuting

attorney’s question was balderdash. Specifically, the Attorney General found absolutely

no authority for a tax assessor to split a landowner’s undivided interest in land into pieces

for tax purposes. The Attorney General said:

              Until there has been a severance of an estate in minerals there
              is no authority for a separate assessment of the mineral interest.
              Conversely there is no authority to omit from assessment an
              unsevered estate in minerals. . . . There is no authority for the
              separate assessment of unsevered interests in land. In the
              instant case therefore the owner and assessor must have
              intended to report for taxation the entire estate remaining after
              the severance of coal, including the unsevered interest in oil
              and gas.

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Attorney General’s Opinion of April 20, 1948, 42 W. Va. Op. Att’y Gen. 309 (1948)

(emphasis added).

              A similar question reappeared two decades later. In 1966, the Attorney

General issued an opinion to Hardy County regarding land on which a well was producing

natural gas. The natural gas was not severed from the land in the owner’s deed, but the

county assessor still issued two tax tickets to the owner: one for the land, and one for the

natural gas royalties. Regarding those tax tickets, the Attorney General explained that West

Virginia law – then, as now – requires an assessor to place one unified tax on “[t]he value

of land, the value of buildings, and the aggregate value” of all tracts or interests. W. Va.

Code § 11-4-2(5)(A). See also W. Va. Code § 11-4-9 (requiring the assessor to charge

only one tax for an owner’s undivided interest in any estate in land). Hence, the Attorney

General concluded:

              Where land is owned and there has been no severance of an
              estate in the gas mineral from such land, but there is known
              natural gas within and underlying such land (regardless of
              whether or not gas royalties are being paid to the owner thereof
              pursuant to the terms of a lease), such land should be assessed
              annually for ad valorem taxation purposes at its “true and
              actual value”, taking into consideration all pertinent
              indications of value, including, among any others, reliable
              estimates, gas production reports, and royalties paid to the
              landowner. Until there has been a severance of an estate in
              the gas mineral, there is no authority for a separate assessment
              of the gas underlying such land. There cannot be any separate
              assessment of unsevered interests in land.

Attorney General’s Opinion of October 27, 1966, 52 W. Va. Op. Att’y Gen. 135 (1966)

(emphasis added).

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              Accordingly, by 1966, it should have been clearly understood by county tax

assessors across the State that if an interest in natural gas has not been severed from the

land in a deed or will or other written conveyance, then there is no authority for the assessor

to issue a separate tax assessment for the gas underlying the land.

              Now, recall that two years later, in 1968, Osburn Dunham conveyed to

Russell Stiles the same thing Dunham bought in 1945: “[a] tract of land situated on the

Huff Ridge” with an undivided, unsevered, one-quarter share of the oil and gas royalties.

Despite the repeated admonitions of the Attorney General, the Wetzel County tax assessor

mailed Stiles two separate tax tickets, one for the land, and one for the share of oil and gas.

This separate assessment had no basis in the law. Nevertheless, the Wetzel County assessor

sent two separate tax tickets for the next two decades.

              One might presume the assessor was confused, or that the likely changing of

the guard caused a loss of institutional memory in Wetzel County. However, we have an

opinion from the West Virginia State Tax Department that applies to this situation. In

1988, the Department wrote a letter to the assessor of Wetzel County encouraging the

assessor to make “every effort” to repair his tax assessment books and to stop taxing

mineral interests separately from undivided land interests. The Department pointed out

that West Virginia Code § 11-4-2 prohibits a ”separate assessment of unsevered interests

in land.” More importantly, the Department made clear to the assessor that the tax sale of

a separate but unsevered mineral interest “would in all likelihood be considered invalid[.]”

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Letter from Robert A. Hoffman, Director, Property Tax Division, State Tax Department of
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West Virginia, to Ralph E. Phillips, Assessor of Wetzel County (November 7, 1988).

              Hence, by 1988, the Wetzel County assessor’s office was clearly on notice

that it could not issue separate tax tickets on an unsevered, unified interest in land. Thus,

the sale of an improper duplicate tax ticket, for an interest in minerals, would in all

likelihood be considered invalid. Yet Russell Stiles continued to receive two tax tickets on

his unified estate, and when he failed to pay those two tax tickets, Wetzel County’s assessor

and sheriff put both of those tickets up for sale. Plaintiff Richard Erlewine bought one

ticket, and Trio/Waco bought the other, and those purchases resulted in the competing and

confusing 1991 tax deeds at issue in this appeal.

              Now, put yourself in Richard Erlewine’s shoes in 1991 and ask, what did he

think he was buying at the tax sale? 3 The majority opinion repeatedly says he bought the

“property,” but the record says otherwise. If Erlewine had researched the chain of title, he

would not have seen the word “property” but, rather, would have seen the repeated use of

               The letter indicates carbon copies were sent to “All County Assessors” in
              2

the State of West Virginia.
              3
                 One question that might come to mind is whether Erlewine knew or should
have known that two tax sales were occurring regarding the Huff Ridge land on the same
day, and therefore “knew” that he was not buying the one-quarter oil-and-gas interest.
There is no proof of that in the record. We know, today, that there were two overlapping
sales because of the power of hindsight. Further, there is no duty in either the common law
or the West Virginia Code that requires a tax purchaser of one unpaid tax ticket to research
the other tax tickets being concurrently sold, to determine if the tax assessor has erred and
created any duplication or overlap.

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the word “land.” For instance, he would have seen that, beginning in 1968, Stiles had title

to “a tract of land situated on Huff Ridge” with an undivided interest in one-quarter of the

oil and gas. If Erlewine saw an advertisement for the tax sale of Stiles’s property and had

looked in the county assessor’s tax books, then he would have seen that Stiles owned 135

acres of land on Huff Ridge. When Erlewine paid the sheriff and assessor $6,000 for

Stiles’s unpaid taxes, the notices to redeem described the property as “Land – 135 Huff

Ridge” and “135 acres of land on Huff Ridge.” The 1991 tax deed to Erlewine said the

same thing: he was “the purchaser of 135 acres of land on Huff Ridge.”

              My dissent, in part, is based on the majority opinion’s avoidance of the word

“land” and its clear meaning under West Virginia’s tax laws, a meaning which undermines

the majority opinion. The majority opinion repeatedly says that Erlewine only bought the

“property,” but that is incorrect. The numerous deeds and documents in the record say

Erlewine bought “135 acres of land” at the tax sale. West Virginia Code § 11A-1-1 says

that “[t]he words land or lands or tract or tracts of lands . . . shall be deemed to include an

undivided interest in any freehold estate in land.” Likewise, West Virginia Code § 11-4-9

says “the words land or lands or tract or tracts of lands . . . shall be read to include an

undivided interest in land and an undivided interest in any estate in land[.]”

              Hence, from Erlewine’s perspective in 1991 when he received a tax deed to

“135 acres of land,” he could fairly believe that the tax assessor and sheriff followed the

law, and believe he had purchased “an undivided interest in any freehold estate in land” or

an “undivided interest in any estate in land” that had been owned by Stiles, and by Dunham,

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and by Rogers. In other words, Erlewine could believe he bought an undivided interest in

135 acres of land and one-quarter of the oil and gas. When Erlewine brought his lawsuit,

he could have fairly believed that he, and not Trio/Waco and its successors, owned at least

a 25% share of the oil and gas. Therefore, the majority opinion avoided the legal definition

of “land” by repeatedly invoking the term “property” to describe Erlewine’s interest.

              The majority opinion also makes much of the fact that Stiles failed to pay

both tax tickets, and it uses that fact to differentiate this case from Orville Young, LLC v.

Bonacci, 246 W. Va. 26, 866 S.E.2d 91 (2021), where one duplicate tax ticket was paid,

and another was not. I do not think that fact is controlling because, as I detailed above, the

law is clear that the tax assessor never should have split Stiles’s undivided estate into two

separate tax tickets for the two decades after 1968. However, despite the tax assessor’s

grievous violation of the law, the majority opinion ignores the rule applied in Orville Young

that “[a] deed made pursuant to a tax sale under a void assessment is void.” Syl. pt. 4,

Blair v. Freeburn Coal Corp., 163 W. Va. 23, 253 S.E.2d 547 (1979). I understand that,

when Trio/Waco forked over $700 for its 1991 deed to “135A Huff Ridge OG ¼ Int.” it

believed it was buying a one-quarter share of the oil and gas royalties.4 But the fact remains

that Stiles’s separate oil-and-gas interest should never have been on the tax assessor’s

              4
                Of the many odd facts in this case, the oddest is this: Stiles was charged
$700 a year in taxes for a one-quarter share of the oil and gas interest, while Dunham was
charged $16.36 for an identical one-quarter share.

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books, and any tax sale under a void assessment is itself void. That is a legal fact and is

why I am convinced that Trio/Waco bought nothing in 1991.

              Clearly, Legislative action is needed because the majority opinion has
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overextended West Virginia Code § 11A-3-63 (1994) by interpretation.                That Code

section, which I call § 63, excuses any procedural “irregularity, error or mistake” in the

delivery of a tax deed, and then allows the original, taxpaying estate owner to bring an

action to void the tax deed in limited circumstances.

              What the majority opinion appears to miss here is that this case has nothing

to do with the delivery of a tax deed; it instead involves a tax assessment that was improper

and void from the get-go. This wasn’t a procedural misstep; it was a violation of

substantive law. For that matter, the majority opinion does not venture to guess what

“procedure” means in § 63, it simply presumes that the issuance of illegal duplicate tax

tickets for decades is a ”step in the procedure leading up to and including delivery of the

tax deed.” Id. The majority opinion also misses that § 63 is designed to preserve “the due

              5
                  West Virginia Code § 11A-3-63 provides:

                      No irregularity, error or mistake in respect to any step
              in the procedure leading up to and including delivery of the tax
              deed by the deputy commissioner shall invalidate the title
              acquired by the purchaser unless such irregularity, error or
              mistake is, by the provisions of section forty-nine of this article
              or section two, three, four or six, article four of this chapter,
              expressly made ground for instituting a suit to set aside the sale
              or the deed.

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process rights of owners of real property,” W.Va. Code § 11A-3-1, and it might also be

designed to protect assessors and sheriffs from lawsuits by tax deed purchasers. But § 63

does not, and it cannot, limit the rights of the purchasers of conflicting tax deeds like

Erlewine and Trio/Waco from suing to clarify the quality of their deeds. The assessor sold

Trio/Waco something that was a legal fiction, but sold Erlewine something that had, as a

matter of law, the appearance of being complete, undivided title. The majority opinion

rewrites the 1991 deeds and chalks it up as nothing more than an irregularity, error, or

mistake in the delivery of the two tax deeds. While the 1991 deed to Trio/Waco put a cloud

on Erlewine’s 1991 deed, the majority opinion interprets § 63 to say that Erlewine has no

right to clear that cloud in a courtroom.6

              Worse, let us take the majority opinion to its logical (but clearly wrong)

conclusion. If the majority opinion is correct, Erlewine should never have filed this

lawsuit. Instead, Erlewine should have put a cloud on Trio/Waco’s tax deed by claiming

his deed encompasses all of the oil and gas estate, and then commenced drilling on his 135

acres of land. Under the majority opinion’s interpretation of § 63, Trio/Waco and its

              6
                To bring my concerns full circle, let me return to the Orville Young v.
Bonacci case and this Court’s inconsistent interpretation of § 63. Recall that in Bonacci,
the majority opinion concluded that a lawsuit could be brought to interpret the meaning of
a tax deed for a simple, factual reason: one of the two duplicate tax tickets had been paid.
In the case at bar, the majority opinion says a case is precluded by § 63 because neither of
the two duplicate tax tickets was paid. The majority opinion fails to explain what language
in § 63 would permit the action in Bonacci but preclude the action in this case.

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successors would have been prohibited from bringing a lawsuit to challenge Erlewine’s

interpretation of his tax deed.

              I simply cannot believe that this is what the Legislature intended.

              This case is all about public policy. The focus of any case interpreting deeds

is on preserving the sanctity of titles and maintaining the stability of land transfers. The

presumption should be that county tax assessors follow the law and assess a property based

on its entire, undivided value. Courts should not permit assessors to violate the law, nor

should courts be required to sanction those violations of law, yet that is what the majority

opinion seems to suggest. I realize that it might not seem “fair” that an oil-and-gas

company spent $700 for a tax deed to oil and gas that might now be worthless. But the

policy question here is: who is the law going to protect? The sanctity of land titles and the

notion that tax assessors comply with the law? Or, speculators who buy tax deeds to

properties, sight unseen, gambling that the purchase might someday be worthwhile?

Someone who buys “land” at a tax sale should be allowed to assume the law has been

followed, and that the “land” encompasses the undivided estate of the prior owner who

failed to pay their taxes. By permitting assessors to “get away” with double, triple, or

quadruple assessments on land interests in violation of state law, the Court is encouraging

gambling by tax purchasers. If the majority opinion had been decided differently and had

applied the settled law that tax assessors are supposed to tax undivided interests in land

only once, then buyers of tax liens would be motivated to investigate whether a purchase

is void because it violates the law. Assessors would no longer be able to pawn off multiple

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assessments to the same property interest, generating litigation between buyers, because

there would be no more buyers of worthless tax liens. That said, it is for the Legislature to

establish policy in such matters.

              In sum, I respectfully dissent. I believe the circuit court correctly interpreted

the 1991 tax deed as giving Erlewine the same interest as his predecessor, Stiles.

Erlewine’s 1991 tax deed conveyed to him a 100% interest in the land and all the minerals

except for an undivided one-quarter interest in the oil and gas. The majority opinion,

therefore, errs in holding otherwise, and I hope that the Legislature intervenes to clarify its

intent as to how duplicate, unpaid tax deeds should be handled, by courts and counties, in

the future.

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