Court Opinion

ID: 9376666
Source: CourtListenerOpinion
Date Created: 2023-03-03 15:05:54.695693+00
Date Added: 2024-06-11T17:17:08.223343
License: Public Domain

FILED
                                                                   IN THE OFFICE OF THE
                                                                CLERK OF SUPREME COURT
                                                                       MARCH 3, 2023
                                                                 STATE OF NORTH DAKOTA

                    IN THE SUPREME COURT
                    STATE OF NORTH DAKOTA

                              2023 ND 33

Stanley R. Nevin,                                                  Plaintiff
     and
Northern Oil and Gas, Inc.,             Plaintiff, Intervenor and Appellant
     v.
Helen L. H. Kennedy; Gena Baker f/k/a Gena
Kennedy; Nona Kennedy; Jason Craig Newburn,
as personal representative of Maura Kay Newburn,
deceased: Keira Kennedy Adams; Jess Anne Knutson;
Charles Herbert Jacobson; Miles G. Johnsrud
and Marlene Kay Johnsrud, as Co-Trustees of
the Miles and Marlene Johnsrud Family Mineral
Trust under Agreement dated July 13, 2011;
JoAnn Kennedy; Scott Cameron, as Trustee of the
Scott Cameron Trust dated June 13, 2013;
Shannon Kristine Dusek and David Alan Dusek,
as Trustees of the Shannon and David Dusek
Family Revocable Trust; Tiffany Papagno,
as Personal Representative of the Estate of
Thomas W. Kennedy, deceased; Robert W. Kennedy;
Michael Kennedy; Lisa Marie Kennedy; Lisa Marie Kennedy;
James M. Kennedy; Jodie Thompson Woroniecki, as
Personal Representative of the Estate of
Barbra Kennedy Johnson a/k/a Barbara Kennedy Johnson,
deceased; Michelle Grass; Colleen Zychowicz
f/k/a Colleen Kennedy; Debra Kennedy Griffie;
Benjamin J. Larson; Rainbow Energy
Marketing Corporation; Northern Energy
Corporation; Landmark Oil and Gas, LLC,
Missouri River Royalty Corporation; Spartan
Minerals & Royalty LLC; Sven Resources,
LLC; Continental Resources, Inc.; Burlington
Resources Oil & Gas Company LP;                  Defendants and Appellees
     and
XTO Holdings, LLC; PetroShale (US), Inc.;
Bole Resources LLC; Brooks Energy Inc.;
CJC Energy Inc.; KT Energy Inc., Mel Energy Inc.;
Noble Royalty Access Fund 12 LP; Noble Access
Royalty Fund 13 LP; North Fork AD3, LLC;
Outdoor Entourage Inc.; G. William Hurley Revocable
Trust; Hurley Oil Properties Inc.; Wind River Resources
Inc.; WHC Exploration LLC; Dakota West, LLC; Marvin
J. Masset; Avalon North, LLC; Peter Masset;
Newport Minerals, Ltd.; Deep Rock Resources, LLC;
Donald James Kennedy, Jr,; Steven Shannon Kennedy;
and all other persons unknown claiming any estate
or interest in or lien or encumbrance upon the property
described in the Complaint, whether as heirs,
devisees, legatees, or personal representative
of any of the above-named persons who may
be deceased or under any other title or interest,                Defendants

                               No. 20220136

Appeal from the District Court of McKenzie County, Northwest Judicial
District, the Honorable Robin A. Schmidt, Judge.

AFFIRMED.

Opinion of the Court by Crothers, Justice, in which Chief Justice Jensen, and
Justices McEvers and Tufte joined. Hagerty, S.J., filed a dissenting opinion.

Nick A. Swartzendruber, Denver, CO, for plaintiff and appellee Northern Oil
and Gas, Inc.
Trevor A. Hunter, Williston, ND, for defendants and appellees Helen L. H.
Kennedy, Gena Baker f/k/a Gena Kennedy; Nona Kennedy, Jason Craig
Newburn, as personal representative of Maura Kay Newburn, deceased; Keira
Kennedy Adams; Jess Anne Knutson; Charles Herbert Jacobson; Miles G.
Johnsrud and Marlene K Johnsrud, Co-Trustees of the Miles and Marlene
Johnsrud Family Mineral Trust under agreement dated July 13, 2011; JoAnn
Kennedy; Scott Cameron, Trustee of the Scott Cameron Trust dated June 13,
2013; Shannon Kristine Dusek and David Alan Dusek, as Trustees of the
Shannon and David Dusek Family Revocable Trust; Tiffany Papagno, as
Personal Representative of the Estate of Thomas W. Kennedy, deceased; Robert
W. Kennedy; Michael Kennedy; Lisa Marie Kennedy; James M. Kennedy; Jodie
Thompson Woroniecki, as Personal Representative of the Estate of Barbra
Kennedy Johnson a/k/a Barbara Kennedy Johnson, deceased; Michelle Grass;
Colleen Zychowicz f/k/a Colleen Kennedy; and Debra Kennedy Griffie.

James E. Dallner (appeared), Parker, CO, for defendant and appellee
Continental Resources, Inc.

Jonathon D. Bergman (appeared) and Jennifer S. Allen (appeared), Denver,
CO, for defendant and appellee Burlington Resources Oil & Gas Company LP.

Lawrence Bender (on brief) and Spencer D. Ptacek (on brief), Bismarck, ND,
for defendants and appellees Rainbow Energy Marketing Corporation,
Northern Energy Corporation, Landmark Oil and Gas, LLC, Missouri River
Royalty Corporation, Spartan Minerals & Royalty LLC, and Sven Resources,
LLC.
                        Nevin, et al. v. Kennedy, et al.
                                No. 20220136

Crothers, Justice.

[¶1] Northern Oil and Gas, Inc., appeals from a quiet title judgment deciding
Northern Oil did not own mineral interests in certain McKenzie County
property. Northern Oil argues the district court erred in concluding the deeds
at issue are ambiguous as to whether Angus Kennedy intended to reserve
minerals to his wife, Lois Kennedy. We affirm.

                                         I

[¶2] Angus Kennedy owned real property and mineral interests in McKenzie
County. On March 10, 1960, Angus Kennedy and his wife, Lois, executed two
deeds conveying the surface and “excepting and reserving unto the parties of
the first part, their heirs, successors or assigns, all right, title and interest in
and to any and all . . . minerals in or under the foregoing described lands.” Lois
Kennedy did not own an interest in the property when Angus and Lois
Kennedy executed the deeds.

[¶3] Angus Kennedy died in 1965, and Lois Kennedy died in 1980. Angus and
Lois Kennedy did not have children together. Angus Kennedy had six children
from a previous marriage. Angus Kennedy’s heirs executed numerous mineral
leases for the property. Lois Kennedy had one child, Julia Nevin, who died in
1989. In 2016 and 2017, Julia Nevin’s surviving husband, Stanley Nevin,
executed mineral leases with Northern Oil.

[¶4] In 2018, Stanley Nevin sued the successors in interest to Angus Kennedy,
alleging Lois Kennedy owned half of the minerals reserved in the 1960 deeds.
In response, the Angus Kennedy heirs claimed Angus Kennedy did not intend
to reserve any minerals to Lois Kennedy because she did not own an interest
in the property conveyed in the 1960 deeds. The district court granted
Northern Oil’s motion to intervene.

[¶5] Nevin and the Kennedy heirs each moved for summary judgment. The
district court denied both parties’ summary judgment motions, concluding “the

                                         1
evidence before the court permits reasonable inferences that support the
positions of both sides in this controversy.” It further determined “the
reservation clause in the 1960 Deeds is ambiguous as to what Angus intended,
and thus extrinsic evidence . . . must be considered in order to properly
determine intent.”

[¶6] At a March 2021 bench trial, the district court heard testimony from
Angus Kennedy’s grandson, James M. Kennedy. The court considered the
deposition testimony of a former attorney who knew Angus Kennedy. The
Kennedy heirs presented evidence relating to Angus Kennedy’s probate
proceedings. The court found Angus Kennedy did not intend to reserve
minerals to Lois Kennedy in the 1960 deeds. The court also concluded the final
decree entered in Angus Kennedy’s probate precluded Nevin’s and Northern
Oil’s claims against the Kennedy heirs. The court ruled Nevin and Northern
Oil do not own mineral interests in the property. The court entered a judgment
quieting title in the minerals to the Kennedy heirs. Northern Oil appeals the
judgment.

                                        II

[¶7] Northern Oil argues the district court erred in concluding the 1960 deeds
were ambiguous.

[¶8] Deeds are interpreted in the same manner as contracts, and the primary
purpose in construing a deed is to ascertain and effectuate the grantor’s intent.
Hallin v. Lyngstad, 2013 ND 168, ¶ 8, 837 N.W.2d 888. Whether a contract is
ambiguous is a question of law. Nichols v. Goughnour, 2012 ND 178, ¶ 12, 820
N.W.2d 740. “On appeal, we independently review a contract to determine if it
is ambiguous.” Id. The language of a deed governs its interpretation if the
language is clear and explicit. N.D.C.C. § 9-07-02. If possible, the parties’
mutual intentions must be ascertained from the four corners of the deed.
N.D.C.C. § 9-07-04; Hallin, at ¶ 8. Like a contract, deeds must be interpreted
“to give effect to the mutual intention of the parties as it existed at the time of
contracting.” N.D.C.C. § 9-07-03. “A contract may be explained by reference to
the circumstances under which it was made and the matter to which it relates.”
N.D.C.C. § 9-07-12.

                                        2
[¶9] When the language of a deed is plain and unambiguous and the parties’
intentions can be ascertained from the document alone, extrinsic evidence is
not admissible to alter, vary, explain, or change the deed. Nichols, 2012 ND
178, ¶ 12. If a deed is ambiguous, extrinsic evidence may be considered to
clarify the parties’ intentions. Id.

[¶10] Here, the district court concluded without explanation that the 1960
deeds are ambiguous. Because that is a question of law, we apply de novo
review. Hallin, 2013 ND 168, ¶ 8. Upon that review, we also conclude the deeds
are ambiguous because of the deeds’ wording and the state of the law in 1960.

[¶11] When the deeds were executed in 1960, North Dakota followed the
common law rule, as we described in Malloy v. Boettcher:

            “In Stetson v. Nelson, 118 N.W.2d 685 (N.D. 1962), this Court
      followed the common law rule that a reservation or exception in a
      deed of conveyance cannot operate as a conveyance to a third party
      who is a stranger to the title or deed:

                  ‘While a reservation and exception purporting to
            be in favor of a stranger cannot operate as a
            conveyance to him of the excepted interests in the
            land, such an exception is effectual to prevent the title
            to the excepted interests from passing to the grantee.

            ....

                  ‘Thus a reservation or exception purporting to be
            in favor of a stranger operates in favor of the grantor
            and prevents the title to the excepted or reserved
            property from passing to the grantee.’ 118 N.W.2d at
            688.”

334 N.W.2d 8, 8-9 (N.D. 1983).

[¶12] Not until 1983 in Malloy did this Court suggest the common law rule had
been abandoned:

                                       3
             “For reasons hereinafter discussed, we abandon the common
      law rule and apply, in its stead, the rule that a reservation or
      exception can be effective to convey a property interest to a third
      party who is a stranger to the deed or title of the property where
      that is determined to have been the grantor’s intent.”

334 N.W.2d at 9.

[¶13] In Hallin v. Lyngstad, 2013 ND 168, ¶¶ 12-13, we described the effect of
the holding in Malloy:

      “Malloy was a split decision in which four Justices in three
      separate concurrences agreed only in the result reached by Chief
      Justice Erickstad. Malloy, at 10-12. The concurring Justices
      refused to abrogate the holding in Stetson [v. Nelson, 118 N.W.2d
      685 (N.D. 1962)], because a spouse is not a true ‘stranger’ to the
      title or deed. See Malloy, at 10-12.

             “The effect of Malloy was to retain the common law rule, as
      stated in Stetson, but to hold an exception or reservation may be
      effective to convey property to a spouse who does not have an
      interest in the property but joins in the deed’s execution, when that
      is determined to have been the grantor’s intent.”

[¶14] Here, the district court acknowledged that “[i]f the language used in the
1960 Deed[s] were unambiguous, the decision in Malloy would control.
However, the reservation clause in the 1960 Deeds is ambiguous as to what
Angus intended, and thus extrinsic evidence, which was not available in
Malloy, must be considered in order to properly determine intent.”

[¶15] Like the deed in Malloy, the deeds here identify Angus and Lois Kennedy
as “parties of the first part.” The deeds excepted and reserved “unto the parties
of the first part, their heirs, successors or assigns, all right, title and interest
in and to any and all . . . minerals in or under the foregoing described lands.”

[¶16] The 1960 deeds were executed when North Dakota followed the common
law rule; yet they were drafted with wording suggesting the grantors believed
a different rule applied. The language in these deeds is ambiguous as a result
of using words that were inconsistent with the law, and in light of the change

                                         4
in legal rules between then and now. Specifically, the reservation of an interest
to “parties of the first part,” one of whom had no interest in the property, makes
the deeds ambiguous about whether the deeds expressed an intent to effect a
conveyance to a stranger to the title. See also N.D.C.C. § 47-09-17 (“A present
interest and the benefit of a condition or covenant respecting property may be
taken by any natural person under a grant although not named a party
thereto.”); Malloy, 334 N.W.2d at 11-12, Sand, J., concurring (suggesting
common law may have been abrogated with the adoption of N.D.C.C. § 47-09-
17).

[¶17] Because the 1960 deeds are ambiguous when viewed in the context of the
circumstances when they were made, the district court properly considered
evidence beyond the four corners of the deeds. On this record, the evidence
supports the court’s findings of the meaning and effect of the ambiguity, and
therefore are not clearly erroneous.

[¶18] The judgment quieting title to the minerals in favor of the successors to
Angus Kennedy is affirmed.

                                      III

[¶19] We have considered the parties’ remaining arguments and conclude they
are either without merit or not necessary to our decision. The judgment is
affirmed.

[¶20] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte

Hagerty, S.J., dissenting.

[¶21] Because I conclude the language of the 1960 deeds was unambiguous, I
would reverse.

[¶22] Honorable Gail Hagerty, S.J.

                                        5
[¶23] Gerald W. VandeWalle, who was a member of the Court when this matter
was submitted, was disqualified and did not participate in this decision. The
Honorable Gail Hagerty, S.J., sitting.

                                     6