Tuesday, February 14, 2012

Summary 2012 WY 21

Summary of Decision February 14, 2012

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Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name:  Whitney Holding Corp. v. Terry

Citation:  2012 WY 21          

Docket Number: S-11-0075

Appeal from the District Court of Sheridan County, The Honorable John G. Fenn, Judge

Representing Appellant (Defendant):  Mistee L. Godwin and Dan B. Riggs, Lonabaugh & Riggs, LLP, Sheridan, Wyoming; Joseph E. Jones, Fraser Stryker PC, Omaha, Nebraska.  Argument by Mr. Jones.

Representing Appellee (Plaintiffs):  S. Thomas Throne and Jacob T. Haseman, Throne Law Office, P.C., Sheridan, Wyoming.  Argument by Mr. Throne and Mr. Haseman.

Date of Decision: February 14, 2012

Facts:  Appellees owned property for many years prior to entering into an agreement to sell the property to Appellant.  Appellant wanted the property in order to expand its coal mining operation in the area, and initially contacted Appellees in the early 1970’s about purchasing the property.  Appellant maintained its interest and ultimately Appellees agreed to sell.  In 1979, Appellant and Appellees entered into a Contract for Deed.  In the Contract for Deed, Appellees are identified as “Seller” and Appellant is identified as “Buyer.”  In the contract, Appellees were provided the option of receiving the purchase price in cash, in installments, or by making a “like-kind” exchange.  Appellees chose the “like-kind” exchange option and informed Appellant they had selected a property for the exchange.  Appellant entered into an agreement with third parties to purchase the property.  In the agreement, the third parties are identified as “Sellers.”  Appellant is identified as “Buyer.”  The agreement referenced a life estate in one-half of the minerals that burdened the property.  In the agreement, the third parties expressly represented the life estate would terminate upon the death of the remaining life tenant.

The transactions closed in 1980.  At the closing, the third parties executed a Warranty Deed conveying their property to Appellant.  Appellant, in turn, executed a Limited Warranty Deed conveying the property to Appellees. 

The Warranty Deed to Appellant identified the third parties as “Grantors” and in the body of the deed, specified that the conveyance was “SUBJECT TO the reservation of coal, oil, gas and other minerals set forth in Exhibit ‘A.’”  Exhibit A provided a lengthy legal description reserving one-half of the minerals. The Warranty Deed did not mention the life estate.

In the Limited Warranty Deed from Appellant to Appellees, Appellant is identified as “Grantor.”  The deed also contains an Exhibit A that is identical to the Exhibit A in the  Deed to Appellant, with two exceptions:  the term “Grantors” is changed to “sellers,” and there is a specific reference to the life estate.  It is this deed that is at the center of the dispute between the parties.

Three months after the closing, Appellees executed an oil and gas lease for their mineral interest in the property.  They also executed a Ratification of Oil and Gas Lease that had previously been signed by the life tenant.  Through the years, Appellees executed additional mineral leases for the property.  Appellees also recorded the termination of the life estate in the minerals.  There is no indication in the record that Appellant ever claimed any mineral interest in the property.

Eventually, Appellees became aware of potential title problems, but their efforts to resolve them were unsuccessful.  Subsequently, Appelless filed a “Complaint to Quiet Mineral Title” against Appellant.  Appellant denied nearly all of the allegations of the Complaint and raised several affirmative defenses including an allegation that Appellees’ claim “is barred by the applicable statute of limitations.”

Prior to trial, the parties entered into a joint stipulation.  In that stipulation, the parties agreed to the admissibility of several documents, including:  The Contract between Appellant and Appellees, the Agreement for Warranty Deed between the third party and Appellant, the Warranty Deed to Appellant, and the Limited Warranty Deed from Appellant to Appellees.  Appellant also filed a motion in limine seeking to exclude other extrinsic evidence that Appellees might attempt to introduce to interpret the Limited Warranty Deed.  Appellant contended that the deed was unambiguous.  Appellees resisted the motion.  They asserted that the deed was ambiguous and that extrinsic evidence was admissible to interpret the deed.  The district court took the motion under advisement and trial proceeded.  Appellant renewed its objection to specific extrinsic evidence throughout the trial.  At the conclusion of the trial, the district court determined that the Limited Warranty Deed was ambiguous and, after considering the language of the deed and extrinsic evidence, quieted title to the minerals in the appellees.  Appellant filed a timely appeal.

Issues:  1) Whether the District Court erred in finding that extrinsic evidence was admissible to discern the true intent of the parties and meaning of the Limited Warranty Deed; 2) Whether the District Court erred when it concluded that the language of the Limited Warranty Deed was unclear and ambiguous;  3) Whether the District Court erred by finding that Appellant does not own a mineral interest in the subject property and that Appellees own one-half of the mineral rights in the subject property and 4) Whether the District Court erred in its determination that Appellees were not barred by the statute of limitations for a reformation action because they were pursuing a quiet title action.

Holdings:  The Court held the district court properly determined that the Limited Warranty Deed was ambiguous because there was more than one reasonable interpretation for the plural term “sellers”, used but not defined, in the Limited Warranty Deed.  The Court held the district court did not err in admitting extrinsic evidence to interpret the deed.  The Court agreed with the district court’s analysis that the parties intended, and the deed reflected, that Appellant did not reserve a mineral interest in the conveyed property. 

Appellant also claimed that the district court erred in failing to hold that Appellees’ claim was barred by the ten year statute of limitations applicable to claims to reform a contract.  The Court held that disagreement as to the meaning of a term in an agreement does not convert a quiet title action into an action for reformation.  Appellees’ quiet title action was therefore not barred by the statute of limitations.


J Burke delivered the opinion for the court.

J. Hill, joined by C.J. Kite, dissented, stating that the Limited Warranty Deed clearly and unambiguously reserved a one-half mineral interest to the seller, Appellant.  The dissent believed the district court and majority improperly used parol evidence to contradict the terms of the contract, and the parties’ statements as to their subjective intent were not relevant or admissible under any circumstances to interpret the deed.  The dissent observed that the reservation may have been a mistake.  The dissent would conclude that the district court erred by saving the Appellees from the reformation statute of limitations by improperly using deed interpretation principles to completely remove a mistaken, but clear, reservation of mineral interest.

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