Anadarko Land Corp. v. Family Tree Corp.

         Appeal from the District Court of Laramie County The Honorable Thomas T.C. Campbell, Judge

          Representing Appellants: Patrick R. Day, P.C.; Walter F. Eggers III, P.C.; and JoAnna S. DeWald of Holland & Hart LLP, Cheyenne, WY for Appellant Anadarko Land Corporation. Henry F. Bailey Jr. and Douglas W. Bailey of Bailey, Stock & Harmon, P.C., Cheyenne, WY for Appellant Three Sisters, LLC. Argument by Mr. Day.

          Representing Appellee: Lucas Buckley of Hathaway & Kunz, P.C., Cheyenne, WY.

          Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.

          HILL, Justice.

         [¶1] Anadarko Land Corporation (Anadarko) appeals a district court decision upholding the validity of a 1911 Laramie County tax assessment against minerals owned by Anadarko's predecessor, as well as the tax sale and tax deed that eventually emanated from the failure to pay those taxes. We affirm.

         ISSUE

         [¶2] Anadarko presents a single issue on appeal:

Whether the district court erred in quieting title to Appellee Family Tree based upon a 1912 tax sale that was void ab initio.

         FACTS

         [¶3] This case presents a dispute over title to certain mineral interests underlying Section 7, Township 14 North, Range 65 West, 6th P.M., in Laramie County (hereinafter Section 7). Section 7, both its mineral and surface estates, was among lands that the United States, in 1901, granted by patent and deed to Union Pacific Railroad Company (Union Pacific). The present title dispute arises out of a 1911 Laramie County tax assessment against Union Pacific's Section 7 mineral interests and the county's subsequent tax sale and issuance of a tax deed for the property.

         A. Tax Assessment and Sale

         [¶4] In 1911, Laramie County assessed taxes on the unproduced minerals underlying Section 7. Union Pacific did not pay the assessed taxes, and in 1912, Laramie County placed the Section 7 minerals up for bid at a tax sale. No one bid on the Section 7 minerals, so Laramie County bid on and acquired the Section 7 minerals. Union Pacific did not exercise its right to redeem the Section 7 minerals or otherwise seek to recover the property following the 1912 tax sale.

         [¶5] In 1919, Laramie County sold the Section 7 minerals to Iowa Land & Livestock Company. The tax deed for the Section 7 minerals was not, however, issued until March 1949. The record contains no explanation for the delay in issuing the tax deed, but the parties do not dispute that the deed resulted from the 1912 tax sale and Laramie County's subsequent sale of the Section 7 minerals in 1919.

         B. Diverging Chains of Title

         [¶6] Although Union Pacific did not exercise its right to redeem the Section 7 minerals or otherwise seek to recover the property following the 1912 tax sale, it thereafter conducted itself as if it still owned the Section 7 minerals. In September 1914, Union Pacific conveyed Section 7 to Iowa Land & Livestock Company by warranty deed, and through that deed Union Pacific purported to reserve for itself, its successors and assigns, all oil, coal, and other minerals underlying Section 7. Two claimed chains of title thus emerged following the 1912 tax sale, one stemming from Union Pacific's purported ownership of the Section 7 minerals, and one stemming from Laramie County's tax sale of the minerals and issuance of a tax deed.

         1. Appellant Anadarko's Title Claim

         [¶7] Appellant Anadarko Land Corporation (Anadarko) claims title to the Section 7 minerals by a direct conveyance from Union Pacific, several years after the tax sale. Specifically, in April 1971, Union Pacific conveyed, by quitclaim deed, its rights, title and interest in Section 7 to Union Pacific Land Resources Corporation, Anadarko's predecessor in interest. Effective December 1, 2000, Union Pacific Land Resources Corporation changed its name to RME Land Corporation. Effective October 1, 2002, RME Land Corporation changed its name to Anadarko Land Corporation (Anadarko). Anadarko's claim of title therefore originated with Union Pacific's original 1901 patent and its purported reservation of the Section 7 minerals in the 1914 conveyance from Union Pacific to Iowa Land and Livestock Company, and it concluded with the April 1971 conveyance.^[1]

         2. Appellee Family Tree's Title Claim

         [¶8] Appellee Family Tree Corporation (Family Tree) claims title to portions of the Section 7 minerals. In June 2010, Family Tree obtained certain of the Section 7 mineral interests by entering into an oil and gas lease.^[2] In June 2014, additional Section 7 mineral interests were conveyed to Family Tree by a mineral grant deed.^[3] The chain of title that led to Family Tree's lease and the mineral grant deed is as follows:

September 15, 1914: Warranty Deed from Union Pacific to Iowa Land and Livestock, granting the surface of Section 7 and purporting to reserve the Section 7 minerals.

December 9, 1918: Warranty Deed from Iowa Land and Livestock to U.G. John conveying all of Section 7 with no express reservation of the Section 7 minerals.

March 5, 1919: Minutes of county commissioners meeting reflecting the acceptance of the sale of the Section 7 minerals to Iowa Land and Livestock.

September 29, 1923: Warranty Deed from U.G. John and Frances John to Bell Livestock conveying all of Section 7 with no express reservation of the Section 7 minerals.

April 28, 1934: Warranty Deed from Bell Livestock to Howard S. Christensen conveying all of Section 7 with no express reservation of the Section 7 minerals.

March 2, 1949: Laramie County Commissioner's Deed conveying to Iowa Land and Livestock all Section 7 minerals.

November 4, 1969: Warranty Deed from Howard S. and Verna M. Christensen to Ray L. Alexander and Georgia Alexander conveying a parcel of Section 7 with no express reservation of minerals.

September 5, 1976: Warranty Deed from Howard S. Christensen to Edward E. Kopsa and Phyllis E. Kopsa, and Bill McIlvain and Ila McIlvain conveying a parcel of Section 7 with no express reservation of minerals.

September 29, 1976: Warranty Deed from Howard S. Christensen to Ray L. and Georgia L. Alexander conveying to them a second parcel of Section 7 with no express reservation of minerals.

June 23, 2003: Warranty deed from the Alexanders to the Alexander Revocable Trust conveying both their Section 7 parcels with no express reservation of minerals.

June 12, 2010: Paid-Up Oil and Gas Lease between Family Tree as lessee and Raymond and Georgia Alexander, Trustees of the Alexander Revocable Trust, as lessors, leasing the Alexander Section 7 parcels to Family Tree.

June 4, 2014: Mineral Grant Deed between Family Tree, as grantee, and Bill D. McIlvain and Ila M. McIlvain, as grantors, conveying one-half of their interest in the minerals underlying their Section 7 lands.

         3. Appellant Three Sisters' Title Claim

         [¶9] Appellant Three Sisters also claims an ownership interest in the Section 7 minerals and is aligned with Anadarko. In their joint summary judgment memorandum, Anadarko and Three Sisters explained Three Sisters' interest:

[O]n April 20, 2001, RME Land Corporation entered into a Settlement Agreement with Three Sisters, LLC whereby each party quitclaimed to the other all rights, title, and interests necessary to vest in each other an undivided ½ interest in the mineral estate of the Property. The Settlement Agreement was recorded on July 17, 2001 in the office of the County Clerk of Laramie County, Wyoming at Book 1601, Page 163. * * * *

It is important to note that prior to the April 20 2001, Settlement Agreement between RME Land Corporation and Three Sisters, LLC, Three Sisters claimed it was the successor in interest to Iowa Land & Livestock Company and thus owned the mineral estate of the Property by virtue of the 1949 Commissioners' Deed. RME did not dispute that Three Sisters was the successor to Iowa Land & Livestock Company. However, it did dispute Three Sisters' claim to the mineral estate. Rather than incur the substantial cost of litigation, RME and Three Sisters came to the Settlement Agreement which was duly executed and recorded in the office of the County Clerk of Laramie County, Wyoming[.]^[4]

         [¶10] Family Tree hired a landman, Maggie Atkinson, to trace the ownership of their mineral interests. In an affidavit, Ms. Atkinson explained her findings with respect to Three Sisters' claimed interest in the Section 7 minerals:

36. At no time in all my research, aside from the 2001 Settlement Agreement, did I find any conveyance to Three Sisters. I found no quitclaim, warranty, or other deed in the chain of title for Section 7 wherein Three Sisters was a grantee of any rights, other than their inclusion on the 2001 Settlement Agreement contained at Book 1601, Page 163.

         C. District Court Proceedings

         [¶11] On June 24, 2014, Family Tree filed in district court a Complaint for Quiet Title and Declaratory Judgment against Anadarko and Three Sisters. Through its complaint, Family Tree alleged that the recorded settlement agreement between Anadarko and Three Sisters was a cloud on its title to its Section 7 mineral interests and it requested that the court declare the settlement agreement null and void and that it quiet title to the property in Family Tree and the owners through whom Family Tree claimed its interest. After answers were filed, the parties eventually filed cross motions for summary judgment.

         [¶12] The primary dispute between the parties concerned the effect of Laramie County's 1911 tax assessment against Union Pacific's Section 7 minerals and its subsequent tax sale of the property. Anadarko and Three Sisters argued that the tax assessment against Union Pacific's minerals in place was unconstitutional and invalid and the resulting tax deed was therefore void ab initio. Family Tree argued that the tax assessment and tax deed were valid and that the attempt by Anadarko and Three Sisters to challenge the assessment and deed was barred by the six-year statute of limitations.

         [¶13] On February 11, 2016, the district court issued a decision letter announcing its ruling in favor of Family Tree. The court found that while modern law would not allow taxation of minerals in place, Laramie County's taxing authority was much broader under Wyoming law in 1911. The court thus concluded that the tax was valid and that Union Pacific forfeited its rights to the Section 7 minerals when it failed to redeem or otherwise recover the property within the time allowed by statute. The court also applied the after-acquired doctrine to unify the Section 7 mineral and surface estates, concluding:

In Wyoming, "[w]hen the surface is granted without reference to the mineral estate, it is presumed the mineral estate is included." Gilstrap v. June Eisele Warren Trust, 2006 WY 21, ¶ 15, 106 P.3d 858, 863 (Wyo. 2005). Under the doctrines of estoppel by deed and after-acquired title, which have been adopted in Wyoming, "one who acquires a title or estate which he has previously conveyed is estopped to assert his after-acquired title as against the grantee or his successor." Kennedy Oil v. Lance Oil & Gas Company, Inc., 2008 WY 9, ¶ 28, 126 P.3d 875, 884 (Wyo. 2006) (quoting 3 American Law of Property §§ 15.18, 15.19 (A. James Casner ed., 1952)); see also Town of Glenrock v. Abadie, 71 Wyo. 414, 259 P.2d 766, 769 (Wyo. 1953) (noting "the general rule is that, if a grantor of real estate having no title, a defective title, or an estate less than that which he assumed to grant subsequently acquires the title or estate which he purported to convey, or perfect his title, such after acquired or perfected title will inure to the grantee or to his benefit."). Pursuant to these doctrines, by virtue of the various warranty deeds, U.G. John's title to the minerals was superior, at the time of the Commissioners' Deed, to Iowa Land and Livestock Company's title. Similarly, Bell Livestock Company's mineral title was superior to U.G. John's, and so on until the title to the surface and minerals unified in Howard S. Christensen in 1949. Therefore, Family Tree's ultimate title to the minerals is not affected by the timing of any conveyances or by the fact that the Commissioners' Deed was not delivered and recorded until 1949.

         [¶14] Based on its analysis, the district court concluded that neither Anadarko nor Three Sisters had an interest in the Section 7 minerals and it declared their 2001 Settlement Agreement an invalid cloud on the title. The court thereafter, on March 29, 2016, entered its Order Granting Summary Judgment. On April 28, 2016, Anadarko and Three Sisters filed a timely notice of appeal to this Court.^[5]

         STANDARD ...