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Spring Creek Ranch v. Svenberg, 1999 ND 113, 595 N.W.2d 323

June 18, 1999

Gideon E. Swedberg, Stephen E. Swedberg, and Terry Richardson ... appealed from summary judgment granted in favor of Spring Creek Ranch (Spring Creek). The trial court decided as a matter of law Spring Creek made a reasonable inquiry to locate the addresses of the mineral interest owners under N.D.C.C. § 38-18.1-06(2). Judgment was entered quieting title to an undivided one-half interest in mineral rights in favor of Spring Creek. We hold whether Spring Creek made a reasonable inquiry to locate the addresses of the mineral interest owners is a question of fact and inappropriate for summary judgment disposition. We therefore reverse the judgment and remand the quiet title action for further proceedings.

I.

In 1941, Zoulia V. Svenberg and Maurilla Lundeen owned property in Bowman County ... On December 28, 1950, Svenberg and Lundeen conveyed the property to C.J. Clark by warranty deed, reserving "one half of the oil & gas rights and minerals." The deed was recorded in the Bowman County Register of Deeds office on February 15, 1951.

After numerous transfers, Victor R. Uttke obtained title to the property's surface and an undivided one-half interest in the minerals. Uttke filed an Affidavit of Service of Notice of Claim and Claim of Ownership under N.D.C.C. § 38-18.1 regarding Svenberg and Lundeen's "undivided one-half (1/2) interest in all oil, gas and all other mineral rights in, on or under" the property. Uttke stated he:

made reasonable inquiry as to the address of Zoulia V. Svedberg, a/k/a Zoulia V. Swedberg, and Maurilla Lundeed, a/k/a Marilla Lundeen, the last record owners of the interest claimed, whose addresses are not shown of record. That I made or caused to be made such inquiry of the Bowman County Sheriff, Bowman County Auditor, Bowman County Treasurer and Bowman County Register of Deeds and none of the aforesaid officers or the records of their office indicate any last known address.

Uttke published a Notice of Lapse of Mineral Interest and Claim of Ownership in the Bowman County Pioneer on November 18, 25, and December 2, 1989. The notice was recorded in the Bowman County Register of Deeds office. Neither Uttke nor his attorney mailed a copy of the notice to Svenberg or Lundeen.

Uttke and others to whom Uttke had executed mineral deeds conveyed their interests in the minerals underlying this property to Spring Creek. Victor R. Uttke is the president of Spring Creek. On December 22, 1995, Spring Creek brought an action to quiet title in the undivided one-half mineral interest reserved by Svenberg and Lundeen. Uttke filed an affidavit as president of Spring Creek stating he made an unsuccessful reasonable inquiry to ascertain Svenberg and Lundeen's addresses. Service was by publication in the Bowman County Pioneer on December 29, 1995, January 5, 1996, and January 12, 1996.

On May 28, 1996, the trial court issued its findings of fact, conclusions of law, and an order for default judgment. The court concluded Spring Creek "made a diligent, but unsuccessful effort to locate" the addresses of the mineral interest owners. Title to the mineral interests originally reserved by Svenberg and Lundeen was quieted in Spring Creek.

On May 20, 1997, Gideon E. Swedberg, Stephen E. Swedberg, and Terry Richardson (successors) ... filed a motion ... to vacate the judgment. Gideon and Stephen are the sole heirs of Svenberg's estate ...  They asked the trial court to declare them owners in fee simple of an undivided one-half interest in the mineral rights.

The judgment was vacated in August 1997 ... In March 1998, the trial court granted the successors' motion to intervene as parties to the quiet title action.

On March 23, 1998, Spring Creek moved for summary judgment. The successors answered the motion arguing summary judgment should be granted in their favor. A hearing was held in May 1998, and on August 27, 1998, the trial court held "as a matter of law that [Spring Creek] made reasonable inquiry to ascertain the mineral interest owners, and that [chapter 38-18.1] was complied with strictly." The court granted Spring Creek's motion for summary judgment, denied the successors' motion, and quieted title to the mineral interest in Spring Creek. The successors appealed on October 8, 1998.

II.

In 1983, the North Dakota Legislature enacted a statute declaring any mineral interest unused for twenty or more years preceding the first publication of a notice of lapse under N.D.C.C. § 38-18.1-06 is deemed to be abandoned unless the mineral owner files a statement of claim in the register of deeds office under N.D.C.C. § 38-18.1-04. See N.D.C.C. § 38-18.1-02. "Title to the abandoned mineral interest vests in the owner or owners of the surface estate in the land in or under which the mineral interest is located on the date of abandonment." Id.

At common law, mineral interests were not extinguished by lapse of time... Chapter 38-18.1 was a legislative change to the common law rule. Statutes created in derogation of the common law which create a forfeiture are strictly construed... Therefore, trial courts and this court must review for strict construction and application of statutory requirements.

Whether the successors' interest was unused for the statutorily mandated twenty years is not in dispute in this case. However, whether Spring Creek complied with the statutory notice requirements under N.D.C.C. § 38-18.1-06 is at issue. N.D.C.C. § 38-18.1-06 requires:

1. Any person intending to succeed to the ownership of a mineral interest upon its lapse, shall give notice of the lapse of the mineral interest by publication.

2. The publication provided for in subsection 1 must be made once each week for three weeks in the official county newspaper of the county in which the mineral interest is located; however, if the address of the mineral interest owner is shown of record or can be determined upon reasonable inquiry, notice must also be made by mailing a copy of the notice to the owner of the mineral interest within ten days after the last publication is made.

3. The notice must state:

a. The name of the record owner of the mineral interests;
b. A description of the land on which the mineral interest involved is located; and
c. The name of the person giving the notice.

4. A copy of the notice and an affidavit of service of the notice must be recorded in the office of the register of deeds of the county in which the mineral interest is located and constitutes prima facie evidence in any legal proceedings that such notice has been given.

... The successors argued Spring Creek failed to make a "reasonable inquiry" to ascertain the addresses of the mineral interest owners under N.D.C.C. § 38-18.1-06(2)...

Spring Creek asserts a search of the records in the Bowman County Register of Deeds office was the only search necessary to satisfy the statutory "reasonable inquiry" requirement as a matter of law ...

The successors contend a "reasonable inquiry" requires more than a search of the register of deeds office as a matter of law...

After considering the evidence presented by the parties, the trial court ruled "as a matter of law that [Spring Creek] made reasonable inquiry to ascertain the mineral interest owners, and that the statute was complied with strictly." ...

III.

...

Whether Spring Creek made a reasonable inquiry to ascertain the addresses of the mineral interest owners is a material fact necessary to the ultimate decision whether Spring Creek strictly complied with N.D.C.C. chapter 38-18.1. Based on the record, reasonable minds could differ when deciding whether Spring Creek's inquiry was reasonable. Because reasonable minds could reach more than one conclusion from the facts, we conclude the trial court erred when deciding Spring Creek made a reasonable inquiry as a matter of law. Summary judgment was therefore inappropriate.

IV.

The successors also argue declaring a forfeiture of the mineral interest constitutes an unconstitutional application of N.D.C.C. chapter 38-18.1. The trial court concluded "[c]ounsel has failed to provide persuasive authority that forfeiture in favor of [Spring Creek] constitutes an unconstitutional application of 38-18.1." A party challenging the constitutionality of a statute must bring up the "heavy artillery." ... The "heavy artillery" is necessary to overcome a strong presumption of the statute's constitutionality.  The successors failed to bring up the "heavy artillery" to the trial court, or to this court, and we therefore decline to address the constitutional issue.

...

VI.

Whether Spring Creek made a reasonable inquiry to ascertain the addresses of the mineral interest owners is a question of fact and inappropriate for summary judgment. The judgment is reversed and the matter is remanded ...

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