Energy & Natural Resources Alert: The Supreme Court of Ohio Defines of the Nature of Deed References Sufficient to Preserve an Interest under Ohio’s Marketable Title Act … and Hints that the Dormant Mineral Act May Trump the Marketable Title Act

Today, the Supreme Court of Ohio issued a decision in the case Blackstone v. Moore, Slip Opinion No. 2018-Ohio-4959, concerning Ohio’s Marketable Title Act (O.R.C. §§ 5301.47 – 5301.55) (“MTA”) that – while explicitly narrow in its scope – served to resolve previous questions and ambiguities regarding the termination of oil and gas interests under the MTA.  Specifically, the Court described what type of deed references are sufficient to preserve interests from termination under the MTA.  However, almost as importantly, the Court hinted that following the enactment of the more specific Dormant Mineral Act (“DMA”) (enacted March 22, 1989), the MTA is no longer the applicable statutory vehicle for terminating abandoned oil and gas interests.

Issue

The very narrow issue considered in Blackstone v. Moore is as follows: does the specific identification requirement set forth in the MTA require a deed reference to include the volume and page number of the record in which the interest is recorded or the date on which the interest was recorded?

 Background

In a 1915 deed, the Kuhns conveyed a 60-acre tract subject to the following royalty reservation: “Except Nick Kuhn and Flora Kuhn, their heirs and assigns reserve one half interest in oil and gas royalty in the above described Sixty (60) acres”.

Every subsequent deed in the record chain of title for this property, including the 1969 deed serving as the current landowners’ root of title under the MTA, included the following deed reference to the Kuhn’s severed royalty interest: “Excepting the one-half interest in the oil and gas royalty previously excepted by Nick Kuhn, their [sic] heirs and assigns in the above described sixty acres.”

The current landowners, the Blackstones, brought a quiet title action against the Kuhn heirs seeking, among other things, to extinguish the Kuhn’s severed royalty interest under the MTA by arguing that the aforementioned deed reference in their root of title is not sufficiently specific to be preserved under the MTA.

The MTA

 The purpose of the MTA is to simplify and facilitate title transactions by allowing landowners to rely on the record chain of title.  In general, the MTA allows a landowner with an unbroken chain of title to the land for a period of at least 40 years to transfer title free of any other interests or encumbrances that existed prior to the beginning of that 40-year chain of title.  The anchor for this span in the land’s chain of title is the root of title, which is any conveyance of land which is the most recent to be recorded as of 40 years from the present.

However, an interest or encumbrance affecting the land that was created prior to the root of title will be protected from being terminated under the MTA if it is specifically identified in either the root of title or any subsequent recorded conveyance of the land.  If the root of title contains merely a “general reference” to the interest or encumbrance, then it will be extinguished.

Up to this point, Ohio’s appellate courts were split as to whether the “specific identification” contemplated in the MTA requires “sufficient reference so that a title examiner may locate the prior conveyance by going directly to the identified conveyance record in the recorder’s office without checking conveyance indexes.”  Duvall v. Hibbs, 5th Dist. Guernsey No. CA-709, 1983 WL 6483, ¶ 2 (Jun. 8, 1983).

 The Court’s Holding

 The Court concluded that the plain language of the MTA does not require specific identifications to the volume and page number of the record in which the interest is recorded or the date on which the interest was recorded.

In distinguishing between a general or specific deed reference, the Court looked to whether the reference “includes details and particulars about the interest in question.”  Based on this standard, the Court concluded that it is clear that the aforementioned reference to the Kuhn’s severed royalty interest in the landowner’s root of title is sufficiently specific under the MTA because both the nature of the interest (a “one-half interest in oil and gas royalty”) and the identity of the reserving party (“Nick Kuhn, their [sic] heirs and assigns”) are listed therein.  Thus, the Kuhn’s severed royalty interest is preserved under the MTA.

 The Concurring Opinion Questions the MTA’s Applicability to Future Oil & Gas Cases

The opinion in Blackstone v. Moore included a concurring opinion from Justice DeGenaro that is important for two reasons.

First, the concurring opinion emphasized the extremely narrow scope of the holding in this case, namely: “a reference that includes the type of interest created and to whom the interest was granted is sufficiently specific to preserve the interest in the record title”.  Thus, while this case may have involved an oil and gas royalty interest, “[the Court’s] opinion should not be read to implicitly hold that the more general Marketable Title Act continues to apply to mineral interests following the enactment of the Dormant Mineral Act, R.C. 5301.56—a more specific statute providing for the termination of those interests.”

Second, the concurring opinion hinted at future holdings in cases seeking to extinguish oil and gas interests through the MTA.  Specifically, Justice DeGenaro stated:

The fact that the legislature amended the more general Marketable Title Act to include the Dormant Mineral Act, which provides a distinct process specifically for the termination of mineral interests, strongly suggests that the Dormant Mineral Act should be the controlling law and the exclusive remedy for this discrete class of real-property interests…

[…]

Given that this question is not squarely before us, we cannot reach its merits.  For now, it remains an open issue that is ripe for this court’s future review.

Based on the contents of the concurring opinion, it seems clear that the Court is suggesting to future litigants that while it is true that the MTA previously served to extinguish oil and gas interests that existed prior to a landowner’s root of title, following the enactment of the DMA, the MTA may no longer be the applicable statutory vehicle for terminating such interests.

For Additional Information

 A complete copy of the Blackstone v. Moore Opinion can be found here.

If you have any questions about this Alert, please contact Brian Boyer, David Hall  or any of the attorneys in our Energy and Natural Resources Services Group.

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