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Goodall v. Monson

Supreme Court of North Dakota

April 25, 2017

Steve P. Goodall, Robert L. Goodall, Anne M. Stout, Joanne M. Quale, and Darrel Quale, Plaintiffs and Appellees
v.
Charles W.H. Monson, LeeAnn Tarter, KayCee Williams, Defendants and Appellants and Enerplus Resources (USA) Corporation, and Northern Oil and Gas, Inc. Defendants

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

          Jon Bogner, for plaintiffs and appellees.

          Megan J. Lindquist, for defendants and appellants.

          OPINION

          McEvers, Justice.

         [¶ 1] Charles W.H. Monson, LeeAnn Tarter, and KayCee Williams ("the Monsons") appeal a district court judgment reforming a deed executed in 1980 and quieting title in favor of Steve P. Goodall, Robert L. Goodall, Anne M. Stout, Joanne M. Quale, and Darrel Quale ("the Goodalls"). We conclude the district court did not err in admitting extrinsic evidence to support the Goodalls' argument that a mutual mistake had been made, and the district court's findings supporting reformation of the deed are not clearly erroneous. We affirm. I

         [¶ 2] This case involves the sale of mineral rights to four tracts of land ("the subject property") executed in one deed. In 1980, George and Dorothy Hoffman executed a deed transferring an undivided 508.26/876.26 mineral interest to Francis and Alice Goodall. The deed was recorded in McKenzie County. Approximately two weeks prior to the date of the deed the parties signed a document titled "Contract and Receipt, " but it was not recorded with the deed. The Goodalls are successors in interest to Francis and Alice Goodall. The Monsons are the successors in interest to the Hoffmans. All individuals who were a party to or present when the deed was signed were deceased prior to commencement of this action.

         [¶ 3] It is not disputed that prior to the 1980 deed George and Dorothy Hoffman owned the following mineral interests in four separate tracts of land:

154.06 mineral acres in Tract 1: Township 152 North - Range 93 West [, ] Section 19: E1/2SW1/4, Lots 3, 4, SE1/4 (containing 308.06 acres)
150 mineral acres in Tract 2: Township 152 North - Range 93 West [, ] Section 20: SW1/4, W1/2NW1/4SE1/4 (containing 180 acres).
124.20 mineral acres in Tract 3: Township 152 North - Range 93 West[, ] Section 30: Lots 1, 2, E1/2NW1/4, NE1/4 (containing 308.20 acres).
80 mineral acres in Tract 4: Township 152 North - Range 93 West [, ] Section 30: N1/2SE1/4 (containing 80 acres).

         Neither party disputes the accuracy of this description of the subject property. Both parties agree at one time the Hoffmans owned 100 percent of the mineral interests beneath the subject property. The Hoffmans executed eight separate deeds conveying mineral acres beneath the subject property to various parties between 1955 and 1965. Subsequent to the execution of these deeds, the Hoffmans retained a total of 508.26 mineral acres out of 876.26 total acres in the subject property. On June 2, 1980, the Hoffmans executed a mineral deed transferring an undivided 508.26/876.26 mineral interest below the subject property to the Goodalls. This fractional interest language in the 1980 deed is at the center of this dispute.

         [¶ 4] Dorothy Hoffman died in 1985. George Hoffman died intestate in 1998. The Monsons acquired by intestate succession any mineral interests the Hoffmans retained beneath the subject property. Sometime after George Hoffman's death, members of the Monson family entered into oil and gas lease agreements with Enerplus Resources and Northern Oil and Gas, Inc.

         [¶ 5] On July 1, 2013, the Goodall's filed a complaint requesting the district court quiet title in their favor. While the Goodalls named the oil companies as defendants in their complaint, neither oil company is a party to this appeal. On December 30, 2013, the Monsons moved for summary judgment. They argued the 1980 deed was unambiguous, the Hoffmans only transferred a fractional interest to the Goodalls, and the Monsons inherited their interests from what the Hoffmans retained in the transaction. The Goodalls claimed the deed did not reflect the parties' intentions, which was to transfer all of the Hoffmans' 508.26 mineral acres to Francis and Alice Goodall. After a hearing on April 14, 2014, the district court denied the Monsons' motion for summary judgment.

         [¶ 6] On November 9, 2015, a bench trial was held in McKenzie County. At trial, the Goodalls offered the eight previous mineral deeds and the contract and receipt as evidence of ambiguity and to show the parties' intent at the time the deed was executed. The district court admitted the contract and receipt over the Monsons' objection. After both parties submitted post-trial briefs, the district court issued its findings of fact, conclusions of law, and order for judgment in April 2016. The district court found "[t]he Goodall Deed while being unambiguous on its face is latently ambiguous when it is read with the entire title chain, and extrinsic evidence is allowed to explain the parties' intent." The district court used the contract and receipt to determine the parties intended for the Hoffmans to transfer their entire interest to the Goodalls through the 1980 deed. The district court found the deed did not reflect the true intentions of the parties, the Monsons were not good-faith purchasers and concluded that, as a result of mutual mistake, the deed did not express the true intent of the parties. The district court reformed the deed, quieted title in favor of the Goodalls, and entered judgment on April 19, 2016. The Monsons appealed. II

         [¶ 7] The Monsons argue the language of the deed unambiguously transferred an undivided 508.26/876.26 mineral interest to the Goodalls, the Hoffmans retained any remaining mineral interests in the subject property, and the Monsons inherited this retained interest. The rule for interpreting the language of a deed is well established:

The primary purpose in construing a deed is to ascertain and effectuate the grantor's intent. However, deeds that convey mineral interests are subject to general rules governing contract interpretation, and we construe contracts to give effect to the parties' mutual intentions. When the language of a deed is plain and unambiguous and the parties' intentions can be ascertained from the writing alone, extrinsic evidence is inadmissible to alter, vary, explain, or change the deed. If a contract is ambiguous, extrinsic evidence may be considered to clarify the parties' intentions. A contract is ambiguous when rational arguments can be made for different ...

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