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Whitney Holding Corporation v. Clarence William Terry and Peggy Ann Terry

February 14, 2012

WHITNEY HOLDING CORPORATION, APPELLANT (DEFENDANT),
v.
CLARENCE WILLIAM TERRY AND PEGGY ANN TERRY, TRUSTEES OF THE DECLARATION OF TRUST DATED FEBRUARY 27, 1990, APPELLEES (PLAINTIFFS).



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

The opinion of the court was delivered by: Burke, Justice.

Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.

BURKE, J., delivers the opinion of the Court; HILL, J., files a dissenting opinion, in which KITE, C.J., joins.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.

[¶1] Appellant, Whitney Holding Corporation, challenges a decision of the district court quieting title in a certain mineral estate in favor of Appellees, Clarence and Peggy Terry. Whitney claims it reserved the mineral interest in a Limited Warranty Deed conveying the property from Whitney to the Terrys.*fn1 Whitney contends the deed is unambiguous and that the district court erred in considering extrinsic evidence to interpret the deed. Whitney also asserts that the Terrys' claim is barred by the ten year statute of limitations applicable to actions for reformation. We find no error and affirm.

ISSUES

[¶2] Whitney presents five issues:

1. Did the District Court err in holding that the Limited Warranty Deed was ambiguous?

2. Did the District Court err by denying Whitney's motion in limine and by overruling Whitney's objections to the admissibility of extrinsic evidence?

3. Did the District Court err by considering extrinsic evidence regarding the intent of the parties in entering into the Limited Warranty Deed?

4. Did the District Court err by finding that Whitney does not own a mineral interest in the subject property and that Terrys own one-half of the mineral rights in the subject property?

5. Did the District Court err by failing to determine that the Terrys' action was barred by the statute of limitations because they were seeking to reform the February 25, 1980 Deed (the "Limited Warranty Deed"), rather than quiet title?

The Terrys rephrase the issues:

1. Whether the District Court was correct in its 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 correctly concluded that the language of the Limited Warranty Deed was unclear and ambiguous.

3. Whether the District Court was correct in its determination that the Terrys were not barred by the statute of limitations for a reformation action because they were pursuing a quiet title action.

FACTS

[¶3] The Terrys owned property located on the lower Tongue River in Sheridan County, Wyoming. They owned the property for many years prior to entering into an agreement to sell the property to Whitney. Whitney wanted the property in order to expand its coal mining operation in the area, and initially contacted the Terrys in the early 1970's about purchasing the property. Whitney maintained its interest and ultimately the Terrys agreed to sell. On December 17, 1979, Whitney and the Terrys entered into a Contract for Deed.

[¶4] In the Contract for Deed, the Terrys are identified as "Seller" and Whitney is identified as "Buyer." The purchase price for the Tongue River property was $614,750. In the contract, the Terrys were provided the option of receiving the purchase price in cash, in installments, or by making a "like-kind" exchange.

[¶5] The Terrys chose the "like-kind" exchange option and informed Whitney they had selected the "Ranchester property" for the exchange. The property was owned by the Kaufmanns.*fn2 Prior to selecting the Ranchester property, the Terrys looked at several other properties but eventually settled on the Ranchester property for several reasons, as explained by Mrs. Terry:

A. To begin with, it had to be a like-kind exchange because of the taxes and because we still wanted to ranch, and of course everyone talked about minerals on the lower Tongue River, so that was number one. We needed a place with minerals.

Q. All right. And any other criteria that you relayed to Mr. Taylor?

A. We wanted some irrigated land, and so that's why we were interested.

Before making the selection, they inquired about the mineral interest in the Ranchester property. According to Mrs. Terry:

Q. And were you aware of the ownership in that property, who owned the minerals in that property?

A. Well, we had to be explained to about the lifetime estate, and Mr. Zimmerman was still alive at that time, and so he owned half of the minerals, the Kaufmanns owned half of the minerals. When Mr. Zimmerman died then they explained to us that we would receive the other half.

[¶6] After settling on the Ranchester property, the Terrys notified Whitney. Whitney entered into an agreement with the Kaufmanns to purchase the property. In the agreement, the Kaufmanns are identified as "Sellers." Whitney is identified as "Buyer." The Kaufmann/Whitney agreement referenced a life estate in one-half of the minerals in favor of Clyde Zimmerman and Gladys Glasby that burdened the Ranchester property. In the agreement, the Kaufmanns expressly represented that Gladys Glasby was deceased and that the life estate would terminate upon the death of Mr. Zimmerman.

[¶7] Closing of the transactions occurred on February 25, 1980. At the closing, the Kaufmanns executed a Warranty Deed conveying the Ranchester property to Whitney. Whitney, in turn, executed a Limited Warranty Deed conveying the Ranchester property to the Terrys. The Terrys signed a Warranty Deed conveying the Tongue River property to Whitney. At closing, the Kaufmanns received the balance of the $575,000 purchase price and the Terrys were paid, as "boot," the sum of $39,750, representing the difference in price between the Ranchester property they were receiving and the Tongue River property they were selling to Whitney.

[¶8] The Kaufmann Warranty Deed identified the Kaufmanns 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 and stated the reservation as follows:

EXCEPTING AND RESERVING, HOWEVER, to the Grantors and to their heirs and assigns, one-half of all coal, sub-bituminous coal, lignite, oil, gas, uranium, fissionable materials, and all other minerals of every kind and character, contained in or underlying said lands, together with the right to enter thereon for the purpose of drilling for or mining the said coal, oil, gas, uranium, fissionable materials and other minerals, and the right to use so much of the surface as may be necessary for such purposes, provided the owner of the surface is reasonably compensated for any damage done thereto.

The Warranty Deed from the Kaufmanns did not mention the Zimmerman life estate.

[¶9] In the Limited Warranty Deed from Whitney to the Terrys, Whitney is identified as "Grantor." The deed also contains an Exhibit A that is identical to the Exhibit A in the Kaufmann/Whitney Deed with two exceptions: the term "Grantors" is changed to "sellers," and there is a specific reference to the Zimmerman life estate. It is this deed that is at the center of the dispute between the parties.

[¶10] Three months after the closing, the Terrys executed an oil and gas lease for their mineral interest in the Ranchester property. They also executed a Ratification of Oil and Gas Lease that had previously been signed by Mr. Zimmerman. Through the years, the Terrys executed additional mineral leases for the Ranchester property. Mrs. Terry prepared and recorded Affidavits of Survivorship reflecting the deaths of Mr. Zimmerman and Ms. Glasby and the termination of their life estate in the minerals. There is no indication in the record that Whitney ever claimed any mineral interest in the Ranchester property.

[¶11] The first inkling that the Terrys had of questions regarding their mineral interest came from a source other than Whitney. Mrs. Terry testified:

Q. Let's talk about the case that's here today. What events caused you to initiate this quiet title action?

A. All right. Mr. Munson was an agent or he sold our lease to Elk Petroleum, and Elk Petroleum did some explorations and they were going to drag -- on Friday they called and said: "We're going to drag a rig over on our six-mile area."

Q. Is the six-mile area part of the Ranchester property?

A. Yes, yes. For exploration purposes, and then their geologist called back and said: "We've hired a girl and she went deep into the records, and will you come in and talk to us about it?" So Clarence and I went in and talked to Richard Sweeney, the geologist, and his solution was: "Talk to someone from [Whitney] and they'll quiet the title."

Apparently, efforts to resolve the potential title problems were unsuccessful and the Terrys filed a "Complaint to Quiet Mineral Title" against Whitney in Sheridan County district court. Whitney denied nearly all of the allegations of the Complaint and raised several affirmative defenses including an allegation that the Terrys' claim "is barred by the applicable statute of limitations."

[¶12] 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 Whitney and the Terrys, the Agreement for Warranty Deed between the Kaufmanns and Whitney, the Kaufmann Warranty Deed to Whitney, and the Limited Warranty Deed from Whitney to the Terrys. Whitney also filed a motion in limine seeking to exclude other extrinsic evidence that the Terrys might attempt to introduce to interpret the Limited Warranty Deed. Whitney contended that the deed was unambiguous. The Terrys 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. Whitney 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 Terrys. Whitney filed a timely appeal.

STANDARD OF REVIEW

[¶13] The district court held a bench trial in this case. Consequently, we apply the following standard of review:

The factual findings of a judge are not entitled to the limited review afforded a jury verdict. While the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Due regard is given to the opportunity of the trial judge to assess the credibility of the witnesses, and our review does not entail re-weighing disputed evidence. Findings of fact will not be set aside unless they are clearly erroneous. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.

Harber v. Jensen, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004) quoting, Life Care Centers of America, Inc. v. Dexter, 2003 WY 38, ¶ 7, 65 P.3d 385, 389 (Wyo. 2003). See also Powder River Ranch, Inc. v. Michelena, 2005 WY 1, ¶ 8, 103 P.3d 876, [879] (Wyo. 2005). . . . The district court's conclusions of law are, however, subject to our de novo standard of review. Powder River Ranch, ¶ 8, 103 P.3d at [880]; Double Eagle Petroleum & Mining Corp. v. Questar Exploration & Production Co., 2003 WY 139, ¶ 6, 78 P.3d 679, [681] (Wyo. 2003).

Mullinnix LLC v. HKB Royalty Trust, 2006 WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006).

DISCUSSION

[¶14] Whitney raises five issues in this appeal. All of those issues are premised upon Whitney's contention that the Limited Warranty Deed clearly and unambiguously specifies that Whitney reserved a one-half mineral interest in the Ranchester property. Whether the deed is ambiguous presents a question of law. Treemont, Inc. v. Hawley, 886 P.2d 589, 592 (Wyo. 1994). We give no deference to a district court's decision on an issue of law. Id. We determine whether a written contract term is ambiguous "by independently reviewing the disputed term in light of the actual language of the entire contract. A term is ambiguous if, considered in light of the plain language of the entire contract, it is susceptible to more than one reasonable meaning." Smithco Eng'g v. International Fabricators, 775 P.2d 1011, 1019 (Wyo. 1989) (Golden, J., concurring) (internal citations omitted).

[¶15] The Limited Warranty Deed transferring the Ranchester property from Whitney to the Terrys states:

KNOW ALL MEN BY THESE PRESENTS:

That [Whitney], for good and valuable consideration does hereby grant, bargain, sell and convey unto CLARENCE W. TERRY and PEGGY ANN TERRY, as tenants by the entirety, of Kirby Star Route, Sheridan, Wyoming 82801, all the real property situate in Sheridan County, State of Wyoming, described in Exhibit A attached hereto and made a part hereof, SUBJECT, HOWEVER, to the exceptions, restrictions, and reservations set forth in the Warranty Deed from Carl Kaufmann and Vera L. Kaufmann, husband and wife, Clifford C. Kaufmann and Rosemarie A. Kaufmann, husband and wife, and Carl A. Church, Jr. and Charlene Ann Church, husband and wife, to the Grantor herein, the easements and ...


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