IN THE SUPREME COURT
STATE OF NORTH DAKOTA
|Roger J. Melchior, aka Melchoir, and|
|Barbara J. Melchior, aka Melchoir,||SUPREME COURT NO. 20100045|
|Plaintiffs and Appellants,||Mountrail County No. 09-C-121|
|Kenneth O. Lystad, Hope Elaine Lystad,|
|Brent K. Rodenhizer, Naomi J. Rodenhizer,|
|and American Trust Center, as Trustee of|
|the Lystad Family Irrevocable Mineral Trust,|
|Defendants and Appellees.|
ORDER GRANTING SUMMARY JUDGMENT
DATED OCTOBER 27, 2009
MOUNTRAIL COUNTY DISTRICT COURT
NORTHWEST JUDICIAL DISTRICT
THE HONORABLE DOUGLAS L. MATTSON
|Michael J. Maus (I.D. #03499)|
|HARDY, MAUS & NORDSVEN, P.C.|
|137 First Avenue West|
|P.O. Box 570|
|Dickinson, ND 58602-0570|
|Telephone: (701) 483-4500|
|Attorneys for Defendants and Appellees|
|TABLE OF CONTENTS|
|TABLE OF AUTHORITIES||ii|
|I.||STATEMENT OF FACTS||1|
|II.||LAW AND ARGUMENT||2|
|A.||The District Court Correctly Granted Summary Judgment and|
|Declined to Reform the Contract for Deed||2|
|IV.||CERTIFICATE OF SERVICE||7|
|TABLE OF AUTHORITIES|
|Bedford v. Kravis, 622 So.2d 291 (Miss. 1993)||5|
|City of Fargo v. D.T.L. Properties, Inc., 1997 ND 109, 564 N.W.2d 274||3|
|Ell v. Ell, 295 N.W.2d 143 (N.D. 1980)||3|
|Heart River Partners v. Goetzfried, 2005 ND 149, 703 N.W.2d 300||3|
|Mau v. Schwan, 460 N.W.2d 131 (N.D. 1990)||2|
|Ritter, Laber, and Assoc., Inc. v. Koch Oil, Inc., 2007 ND 163, 740 N.W.2d 67||2, 3|
|Spitzer v. Bartelson, 2009 ND 179, 773 N.W.2d 798||3|
|N.D.C.C. § 32-04-17||3|
I. STATEMENT OF FACTS
¶  On December 28, 1973, Walter and Edith Halvorson (Halvorsons) executed a Contract for Deed conveying the East ½ of Section 9, Township 156 North, Range 90 West, Mountrail County, North Dakota (the property), to Kenneth and Hope Lystad (Lystads). This Contract for Deed reserved 50% of the rights to the oil, gas, and gravel on the property. (Appellant's Appendix at 20). According to the Lystads, this was a standard provision in many land deals in the area at the time. (Appellant's Appendix at 45). All the papers for the transfer were prepared by the Halvorsons' attorney. (Appellant's Appendix at 45).
¶  On March 17, 1977, the Halvorsons signed an Oil and Gas Lease to Gulf Oil Corporation. (Appellant's Appendix at 22). This lease was recorded in Book 434 at Page 609. On the same day, the Lystads and Halvorsons signed a Ratification and Rental Division Order pertaining to the lease. This Ratification provided that the Halvorsons be paid $80 and the Lystads $0. (Appellant's Appendix at 24). The Ratification and Rental Division Order was recorded in Book 434 at Page 611 on May 3, 1977.
¶  Also on March 17, 1977, the Lystads signed an identical Oil and Gas Lease and Ratification and Rental Division Order as the Halvorsons, also to Gulf Oil Corporation. (Appellant's Appendix at 26-29). The only difference is that under the Ratification and Rental Division Order, the Lystads were to receive $80 and the Halvorsons $0. (Appellant's Appendix at 28). By the Lystads' admission, they were unsure of what the agreement actually entailed and simply did as they were requested. (Appellant's Appendix at 45). The Lease and Ratification were recorded in Book 435, at Pages 397 and 399, respectively. They were both recorded on May 23, 1977.
¶  On February 8, 1996, the Halvorsons conveyed all of their mineral interests in the property to Roger and Barbara Melchior (Appellants) via a Mineral Deed. (Appellant's Appendix at 32). The deed was recorded in Book 632 at Page 72 on February 22, 1996.
¶  On July 14, 2008, the Lystads conveyed, via Warranty Deed, all of their mineral rights in the property to the American Trust Center, as the Trustee of the Lystad Family Irrevocable Mineral Trust. (Appellant's Appendix at 37). The agreement was signed on July 14, 2008 and recorded in Book 625 at Page 640 on July 17, 2008.
II. LAW AND ARGUMENT
A. THE DISTRICT COURT CORRECTLY GRANTED SUMMARY JUDGMENT AND DECLINED TO REFORM THE CONTRACT FOR DEED.
[¶ 6] This dispute can essentially be reduced to whether the Duhig Doctrine should control the transfer of mineral rights in this particular case or whether the instrument should be reformed for mutual mistake. Put simply, the Duhig Doctrine provides that where land is transferred and the grantor over conveys minerals, the grant of minerals to the grantee is fulfilled out of any minerals owned by the grantor. Mau v. Schwan, 460 N.W.2d 131 (N.D. 1990). Under this rule, the Lystads, under the Contract for Deed, are entitled to 50% of the mineral rights and the Halvorsons would have reserved no rights, thus leaving them nothing to convey to the Melchiors. The analysis in this case is not as simple as this, because the Appellants assert that the mineral reservation in the original Contract for Deed contained a mutual mistake, and is therefore open to reformation by the court.
[¶ 7] Mutual mistake is a basis for reformation of a contract, provided the agreement is reformed to reflect the original intent of the parties. Ritter, Laber, and Assoc., Inc. v. Koch Oil, Inc., 2007 ND 163, ¶ 12, 740 N.W.2d 67. Additionally, parol evidence, such as the Ratification and Rental Division Order in the case of the Lystad lease, may be used to help prove a mutual mistake. Ell v. Ell, 295 N.W.2d 143, 149 (N.D. 1980). This is irrelevant, however, if the mutual mistake never existed in the first place. That is the case here.
[¶ 8] The existence of mutual mistake is an issue of fact which means it is to be reviewed for clear error. Heart River Partners v. Goetzfried, 2005 ND 149, ¶ 12, 703 N.W.2d 330. A finding is only to be found clearly erroneous if it is "induced by an erroneous view of the law, if there is no evidence to support it, or if an appellate court is left with a definite and firm conviction a mistake has been made." City of Fargo v. D.T.L. Properties, Inc., 1997 ND 109, ¶ 16, 564 N.W.2d 274. Indeed, in situations such as these, courts presume that the written agreement accurately reflects the intentions of the parties. Ell, 295 N.W.2d, at 150. We are then left with a rather high standard for the Appellants to meet in order to overturn the district court's decision, a standard they do not meet.
[¶ 9] The part of the doctrine of mutual mistake to be considered in this instance is that the mistake has to reflect the intent of both parties, or the intent of one party which could be known or suspected by the other. N.D.C.C. § 32-04-17. The most important consideration is what the parties intended when the original agreement, in this case, the Contract for Deed, was signed. Intent at a later point in time does not change the intent of the parties at the time of the original agreement, meaning the District Court properly focused on what the parties intended when the Contract for Deed was signed. Spitzer v. Bartelson, 2009 ND 179, ¶ 26, 773 N.W.2d 798.
[¶ 10] According to the affidavit of the Lystads, they do not recall any discussion of the mineral rights and they were not aware of what the Halvorsons owned under the property at the time of the transfer. (Appellant's Appendix at 44). Thus, the Lystads, at the time the agreement was drafted, did not intend that Halvorsons reserve half the minerals on the land. There is no other evidence of intent at the time when the contract was signed. The mineral rights were not even part of the discussion regarding the land sale. The Lystads said that at the time of the sale, many buyers were receiving 50% of the mineral rights as a standard term of the sale agreement. (Appellant's Appendix at 45). Additionally, the deal was completed very quickly, with the Halvorsons' attorney completing all of the necessary paperwork, which would have included the clause regarding the mineral rights. (Appellant's Appendix at 45). Mineral rights were never discussed, thus the only actual intent of both parties to which there is evidence in this case, was to exchange properties. (Appellant's Appendix at 45). There was nothing involving the mineral rights and the mistake regarding the reservation of those rights was completely on the part of the Halvorsons' attorney, which does not make this a mutual mistake, but a unilateral one.
¶  To prove this heretofore unseen change in the parties' intent, Appellants are relying on the Ratification and Rental Division Order, saying that they prove the initial intent of both parties to allow the Halvorsons to retain 50% of their own mineral rights, as opposed to 50% of the whole, which would lead to the reservation being void under the Duhig Doctrine. While Appellants are quite correct in that parol evidence is admissible to prove original intent, just because the parol evidence exists does not mean it actually does anything to prove that intent. That is the case with the Ratification and Rental Division Orders. While it is true Appellants received $80 (Appellant's Appendix at 28) under the Ratification Order, the same as the Lystads, there is nothing that would indicate that $80 reflected any sort of intent regarding how the mineral rights were to be divided at the time when the Contract for Deed was signed. The Lystads do not remember why they were told to sign the document or what was discussed when they signed it. They simply signed it because they were asked to do so. (Appellant's Appendix at 45). Whatever mistake was involved was on the part of the agent of Gulf Oil Corporation, who likely was unaware of the intricacies of the Duhig Doctrine and mistakenly divided the delay rental payments. Consequently, the parties were not acting to clarify some matter of their original intent but simply doing as they were asked to complete the leasing process. Their original intent did not change as a result of the agent's interpretation. The Ratification and Rental Division Order was completely disconnected with the original intent of the parties which, as discussed earlier, had nothing to do with the ownership of the mineral rights as Appellants suggest.
[¶ 12] It is worth distinguishing the Mississippi decision, Bedford v. Kravis, which features heavily in Appellants' argument to consider the Ratification and Rental Division Order as reflecting the original intent of the parties from the instant matter. While in Bedford, the Mississippi Supreme Court did hold the Ratification Agreement was admissible as parol evidence, it declined to make any actual determination regarding the existence of a mutual mistake, just that the Ratification Agreement was admissible. Bedford v. Kravis, 622 So.2d 291, 296 (Miss. 1993). Even in a decision which, on its surface, would appear to be a major victory for Appellants, the inquiry will always return to the original argument and the intent of the parties at that time and, once again, there is nothing to indicate the Lystads intended anything regarding the mineral rights.
[¶ 13] There is no denying reformation is a remedy available in situations of mutual mistake. However, that mutual mistake has to be regarding the original intent of the parties. That is not the case here. When the Contract for Deed was originally drafted by Halvorsons' attorney, the Lystads were not concerned with the mineral rights. Indeed, they were not a consideration. The parties could not have intended anything regarding mineral rights, thus there was never the possibility for mutual mistake and consequently no possibility for reformation on that ground. This was just a case of the Halvorsons, or more accurately, their attorney, preparing a mineral reservation resulting in the Lystads acquiring the mineral rights. The subsequent Ratification and Rental Division Order contained nothing evidencing the parties' original intent and certainly not enough to show clear error on the part of the district court. This was just a unilateral mistake, if it was a mistake, and, as such, the remedy of reformation is unavailable. Therefore, the district court's summary judgment should be affirmed.
[¶ 14] The complexities of mineral title examination require certainty in the law and in the interpretation of mineral title documents. Title documents clearly interpretable under the Duhig Doctrine should not be reformed unless there is clear and convincing evidence of a mutual mistake. That evidence does not exist in this case.
¶  For the foregoing reasons, as there was no mutual mistake regarding the parties' intent at the time of the execution of the original Contract for Deed, the district court's Order Granting Summary Judgment should be affirmed.
|Respectfully submitted this 12th day of May, 2010.|
|HARDY, MAUS & NORDSVEN, P.C.|
|137 First Avenue West, P.O. Box 570|
|Dickinson, ND 58602-0570|
|Telephone: (701) 483-4500|
|Michael J. Maus (I.D. #03499)|