Summary
The North Dakota Supreme Court affirmed summary judgment quieting title to mineral interests in favor of the Lystad family and their trustee. The court applied the Duhig rule to conclude that the Lystads received one-half of the total mineral interests and rejected the Melchiors’ claim that the warranty deed should be reformed for mutual mistake because the evidence did not clearly establish a mutual mistake at the time of contracting.
Topics
Practice areas
Questions Presented
- Whether the district court properly applied the Duhig rule to construe the mineral reservation and grant the Lystads one-half of the total mineral interests.
- Whether the warranty deed should be reformed based on mutual mistake.
- Whether the evidence of later oil and gas leases, ratifications, and rental division orders created a genuine issue of material fact precluding summary judgment.
Holdings
- When a grantor conveys land in a manner purporting to include all minerals and reserves one-half of the minerals, but owns only one-half of the mineral interests, the reservation is ineffective and the deed is construed as transferring the one-half mineral interest owned by the grantor to the grantee.
- A party seeking reformation based on mutual mistake must prove by clear, satisfactory, specific, and convincing evidence that, at the time of execution, both parties intended the instrument to say something different from what it said.
- Summary judgment was proper because the Melchiors offered only speculation and insufficient evidence of mutual mistake, and no genuine issue of material fact would alter the result.
Key quotations
“The effect of Duhig is that a grantor cannot grant and reserve the same mineral interest, and if a grantor does not own a large enough mineral interest to satisfy both the grant and the reservation, the grant must be satisfied first because the obligation incurred by the grant is superior to the reservation.” (786 N.W.2d at 11)
“For a mutual mistake to justify reformation of a contract, “it must be shown that, at the time of the execution of the agreement ... both parties intended to say something different from what was said in the instrument.”” (786 N.W.2d at 12-13)
“Mere speculation is not enough to defeat summary judgment, and a scintilla of evidence is not sufficient to support a claim.” (786 N.W.2d at 14)
Factual background
In 1973, Walter and Edith Halvorson conveyed land to Kenneth and Hope Lystad by contract for deed, reserving an undivided one-half of the oil, gas, and gravel. The Halvorsons owned only one-half of the oil and gas and all of the gravel, and they executed a warranty deed with the same reservation language in 1983. The Halvorsons later conveyed their mineral interests to Roger and Barbara Melchior, while the Lystads conveyed their mineral interests to the American Trust Center as trustee. The Melchiors argued that the original conveyances resulted from mutual mistake and sought reformation so that the Halvorsons had reserved one-half of the mineral interests they owned rather than one-half of the total mineral interests.
Procedural history
The Melchiors filed an action seeking quiet title to one-fourth of the oil, gas, and gravel interests in land in Mountrail County. The Lystads and their trustee counterclaimed for quiet title to an undivided one-half interest. The district court granted summary judgment to the Lystads and trustee under the Duhig rule, and the North Dakota Supreme Court affirmed.