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Nelson v. McAlester Fuel Co.

Supreme Court of North Dakota

March 7, 2017

Ronnie L. Nelson, Plaintiff and Appellant
v.
McAlester Fuel Company Defendant and Appellee and All Unknown Heirs of McAlester Fuel Company and All Other Persons Unknown Claiming Any Estate or Interest In or Lien or Encumbrance Upon the Property Described In the Complaint, Defendants

         Appeal from the District Court of Burke County, North Central Judicial District, the Honorable Gary H. Lee, Judge.

         AFFIRMED.

          Erin M. Conroy, 606 Main Street, for plaintiff and appellant.

          Zachary E. Pelham (argued) and Benjamin W. Keup (appeared), for defendant and appellee McAlester Fuel Company.

          KAPSNER, JUSTICE.

         [¶ 1] Ronnie Nelson appeals from an order and subsequent judgment dismissing his action to quiet title with prejudice. We affirm, concluding N.D.C.C. § 38-18.1-06(2) (2004) requires a surface owner to mail notice of lapse to the most recent address of record.

         I

         [¶ 2] Ronnie Nelson ("Nelson") is the owner of a surface estate in Burke County who sought to use the mineral lapse statutes to obtain the mineral rights associated with the surface estate. Nelson published a notice of lapse of mineral interest against McAlester Fuel Company ("McAlester") for three consecutive weeks. The notice was published in the Burke County Tribune on January 31, February 7, and February 14 of 2007. Nelson mailed a notice of claim to P.O. Box 210 in Magnolia, Arkansas on February 15, 2007. On December 4, 2008, Nelson filed an action to quiet title on 108 mineral acres in Burke County, a notice of no personal claim, and a sheriff's return in district court. Before filing his action to quiet title, Nelson also mailed a notice of claim and attempted to personally serve McAlester. The address to which Nelson mailed notice of claim appeared on a mineral deed dated March 6, 1958. McAlester filed no statement of claim within 60 days after Nelson published the notice of lapse. Nelson's complaint alleged he had substantially complied with the statutory procedure for claiming abandoned minerals. The complaint alleged the mineral interests were abandoned, and the last use of the minerals by McAlester was evidenced by a 1968 oil and gas lease executed by McAlester. On January 15, 2009, Nelson filed a certified mail receipt stating the notice sent to P.O. Box 210 in Magnolia, Arkansas was undeliverable.

         [¶ 3] Nelson moved for entry of default judgment against McAlester. Based upon what was provided to the district court and the fact McAlester did not file a statement of claim, the district court found McAlester had failed to use the mineral interests. The district court ordered Nelson was entitled to succeed in ownership to the mineral interests and entered a default judgment on February 3, 2009.

         [¶ 4] On January 28, 2015, McAlester filed a motion to vacate default judgment with the district court. Along with a brief in support of its motion to vacate, McAlester filed several exhibits, including the 1958 mineral deed and an oil and gas lease for the subject mineral interest dated February 12, 1968. Notably, the 1968 oil and gas lease listed the address for McAlester as P.O. Box 10 in Magnolia, Arkansas. In its brief in support of motion to vacate, McAlester argued the district court should vacate the default judgment under N.D.R.Civ.P. 60(b)(4) and (6). Nelson filed a responsive brief, and McAlester filed a reply brief. Neither party requested a hearing on the motion to vacate the default judgment.

         [¶ 5] The district court concluded the judgment against McAlester was void and entered an order vacating the judgment quieting title on July 1, 2015. In its order to vacate, the district court determined Nelson failed to comply with the notice requirements of the statutory procedure for claiming abandoned minerals. McAlester moved to dismiss Nelson's action to quiet title for failure to state a claim and judgment on the pleadings. Nelson filed a brief opposing the motion. Neither party requested a hearing on the motion. Ultimately, the district court granted McAlester's motion to dismiss Nelson's quiet title action. The district court entered judgment on November 9, 2015. Nelson filed a notice of appeal on January 8, 2016.

         II

         A

         [¶ 6] Nelson argues the district court erred by finding Nelson failed to strictly comply with the notice requirements of the mineral lapse statute and asks this Court to reverse and remand in favor of Nelson. Specifically, Nelson argues the district court erred because it concluded the abandoned mineral statute "requires a surface owner to conduct a reasonable inquiry to find a mineral owner's current address, even when an address appears of record." This was not the basis for the district court's decision. The district court stated Nelson's mailing was not "reasonably certain" to reach McAlester. However, the district court then stated, "[a]llowing a claimant to pick any address from the record would encourage the claimant to always mail notice to the oldest address in the record in hopes that the address is stale, and that the notice would therefore not reach the intended target." These statements appeared within a discussion of interpreting the statutory notice procedure.

         [¶ 7] The district court's decision was based on a conclusion Nelson's actions failed to comply with the abandoned minerals statutory notice procedure because he did not mail notice to the most recent address of record, not because he failed to conduct a reasonable inquiry. As a result, the district court concluded title to the mineral interest never vested in Nelson. The district court concluded:

Nelson had no estate or interest in the minerals when he initiated his quiet title action. As a stranger to the separate parcel, the minerals, he has no estate or interest sufficient to maintain his quiet title action. The judgment of January 27, 2009, is therefore void and must be vacated.

         [¶ 8] The district court had authority to vacate the default judgment under N.D.R.Civ.P. 60(b)(4). "Although the decision to vacate a judgment under Rule 60(b) is ordinarily left to the discretion of the trial court, the court has no discretion under [ Rule 60(b)(4) ] if the judgment is void." Eggl v. Fleetguard, Inc., 1998 ND 166, ¶ 4, 583 N.W.2d 812. "If the judgment is valid, the motion to vacate must be denied; if the judgment is void, the court has no discretion to protect it and it must be vacated." Id. We have previously recognized the abandoned minerals statutory procedure is "wholly self-executing, and once the notice procedure under the statute is completed, title to the mineral interest vests in the surface owner as of the date of abandonment, without the necessity of a subsequent quiet title action." Peterson v. Jasmanka, 2014 ND 40, ¶ 12, 842 N.W.2d 920 (citing N.D.C.C. § 38-18.1-02; Johnson v. Taliaferro, 2011 ND 34, ΒΆΒΆ 15-17, 793 N.W.2d 804). Thus, if the surface owner complies with the statutory notice procedure, title vests in the surface owner; if not, title remains with the ...


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