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Specific References in Deed Sufficient to Preserve Oil and Gas Rights

The Ohio Supreme Court today rejected a Monroe County couple’s claim that an oil and gas royalty interest in their property — originally reserved by prior owners in 1915 — was extinguished because it was not described in enough detail in  the couple’s deed to their property.

David and Nicolyn Blackstone argued that under Ohio’s Marketable Title Act, the reference to the interest in their 1969 deed needed to note the volume and page number of the record where the interest was recorded or the date on which the interest was recorded. In a 7-0 decision, the Court ruled that the law does not require such specificity.

Writing for the Court majority, Justice R. Patrick DeWine stated that the reference to the interest in the Blackstones’ deed, which noted the type of interest and the individuals who had originally reserved it, was sufficient to preserve the royalty interest in the oil and gas.

Chief Justice Maureen O’Connor and Justices Terrence O’Donnell, Sharon L. Kennedy, Judith L. French, and Patrick F. Fischer joined the opinion.

In a concurring opinion, Justice Mary DeGenaro cautioned that today’s ruling should be considered very narrow and questioned whether the Marketable Title Act is still applicable to oil and gas rights.

Couple Seeks Mineral Rights
In 1915, Nick and Flora Kuhn conveyed 60 acres of Monroe County property to another couple. The Kuhns reserved a royalty interest by stating in the deed that they, their heirs, and assigns reserved an oil and gas interest in the 60 acres of surface property. Each succeeding conveyance noted the Kuhns’ royalty interest, including David Blackstone’s deed when he bought the property in 1969.

About 10 years after owning the property, Blackstone attempted to purchase the royalty interest from the Kuhn family, but negotiations failed. In 2001, he conveyed the land to himself and his wife in a new deed that also referenced the Kuhns’ interest.

In 2012, the Blackstones attempted to declare abandoned the Kuhn family interests in the oil and gas rights. The Blackstones argued that under the state’s old and updated versions of the Dormant Mineral Act, R.C. 5301.56, and the Marketable Title Act, the royalty interest was abandoned.

The trial court granted the Blackstones summary judgment, agreeing with all their arguments. The Kuhn heirs appealed to the Seventh District Court of Appeals. The Seventh District reversed the trial court.

By the time the Seventh District ruled on the case, the Ohio Supreme Court had clarified the procedures  necessary to deem oil and gas rights abandoned under the Dormant Mineral Act. The Blackstones appealed to the Supreme Court, but did not contest the decision that the Kuhn family properly preserved their rights under the Dormant Mineral Act. The Blackstones argued that the Marketable Title Act also could be used to extinguish old oil and gas rights, and the Court agreed to consider the matter.

Court Examines Title Act
The Court noted the Marketable Title Act was enacted in the 1960s to simplify and facilitate land title transactions “by allowing persons to rely on a record chain of title.” The act provides that anyone who has an unbroken chain of title for 40 years or more has a marketable title, and that the law operates to extinguish interests and claims that existed prior to the effective date of the “root of title.”

The opinion explained that balanced against the right to facilitate title transactions is the need to protect older interests in the land, and that the law has provisions to preserve older claims.

The Blackstones argued that their “root of title” began in 1969 when David Blackstone bought the property, and that the reference to the Kuhn oil and gas interest is not specific enough in the deed to be valid. Justice DeWine wrote that the question for the Court is “what makes a reference to an interest sufficient to preserve that interest under the Marketable Title Act?”

The Blackstones sought a bright-line rule that the reference include the volume and page number of the record or, at the very least, the date on which it was recorded. They argued that such a rule would be consistent with the act’s goal to simplify title transactions and shorten the time of a title search.

Court Views Law’s Requirements
The opinion explained that R.C. 5301.49 lists what is required for an earlier interest to be preserved. The law indicates that a general reference in a title record, such as a deed, is not sufficient to preserve it unless it includes “specific identification” of “recorded title transaction.”

The Court found the 1969 deed did contain a reference to the interest. The opinion noted the law does not define a “general reference” but that the ordinary meaning of the term is “marked by a broad, overall character.” The reference to the Kuhn royalty interest includes details and particulars, including the type of interest and with whom the interest was originally reserved.

“There is no question which interest is referenced in the 1969 deed. Thus, it is a specific reference,” the Court stated. The Court concluded the reference was sufficient to preserve the royalty interest.

The Court noted that the plain language of the Marketable Title Act does not require the specificity the Blackstones advocate and that their policy arguments are best directed to the legislature.

The Court affirmed the Seventh District’s decision.

Concurrence Questions Applicability
Justice DeGenaro stated that she wrote separately to emphasize the narrow scope of the Court’s holding and that the opinion “should not be read to implicitly hold the more general Marketable Title Act continues to apply to mineral interests.”

Justice DeGenaro questioned whether the act is applicable in the context of oil and gas interest since Ohio enacted the Dormant Mineral Act, which pertains specifically to oil and gas, and similar mineral interests.

The concurrence points to the Supreme Court’s 2016 Corban v. Chesapeake Exploration LLC decision, which indicated that the Dormant Mineral Act is a specific act that is included in the more general Marketable Title Act.

“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,” the concurring opinion stated.

2017-1639. Blackstone v. Moore, Slip Opinion No. 2018-Ohio-4959.

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