Ohio Appellate Court Affirms Automatic Vesting of Severed Minerals Under Ohio’s Dormant Mineral Act – 1989 Version
On April 3, 2014, the Court of Appeals of Ohio, Seventh Appellate District issued its decision in Walker v. Noon, 2014-Ohio-1499; 2014 Ohio App. LEXIS 1443 confirming that the 1989 version of Ohio’s Dormant Mineral Act requires automatic vesting of severed minerals after the statutory period outlined in O.R.C. § 5301.56. This decision is consistent with Kiefaber & Oliva LLP’s interpretation of the 1989 version of the Dormant Mineral Act. The Walker decision, in the absence of a decision from the Ohio Supreme Court, is binding authority on Common Pleas Courts in Belmont, Carroll, Columbiana, Harrison, Jefferson, Mahoning, Monroe and Noble counties.
In 1964, John Noon purchased the Subject Land, located in Enoch Township, Noble County, Ohio. On July 26, 1965, Noon conveyed the surface of the land, reserving the mineral rights. In 1970, there were two conveyances of the surface, in which the mineral reservation was referenced. A 1977 conveyance also referenced the mineral reservation. Jon Walker, Jr. purchased the Subject Land in 2009. On December 2, 2011, Walker sent a notice of abandonment of mineral interest to Noon, and in response, on January 10, 2013, Noon filed an affidavit and claim to preserve the mineral interest.
Litigation over the mineral rights ensued. On April 27, 2012, Walker filed a complaint for declaratory judgment and to quiet title, asserting that the mineral rights merged with the surface estate no later than March 22, 1992 under the 1989 version of the Dormant Mineral Act (“1989 DMA”), which was in effect from March 1989 until June 30, 2006. Walker also claimed that Noon abandoned any interest in the mineral rights when he failed to preserve them from expiring. Noon filed a motion for summary judgment, alleging that the filing of a mineral preservation notice preserved the severed mineral interest indefinitely. Walker asserted that the 1970 and 1977 conveyances were not “title transactions” involving the mineral estate and did not preserve Noon’s mineral interest.
The trial court determined that although the 1970 and 1977 conveyances referenced the mineral severance and were within the 20-year period prior to March 22, 1989, they did not affect an interest in land as required by Ohio Rev. Code § 5301.56(F). The court concluded that any discussion of the 2006 version of the Dormant Mineral Act (“2006 DMA”) was moot because as of June 30, 2006, the effect date of the 2006 DMA, any interest Noon had in the mineral rights had already been abandoned. The trial court concluded that Walker owned the mineral estate as Noon’s mineral interest was abandoned under the 1989 DMA.
Noon appealed the decision presented two issues for review to the Seventh District Court of Appeals:
1. A conveyance that transfers the ownership of the surface rights and clearly references the reserved mineral interest is a title transaction and preserves the severed mineral interest under R.C. 5301.56(C).
The Noon contended that the severed mineral estate was the subject of a title transaction during the applicable 20-year look-back period. Specifically, the 1970 and 1977 conveyances, which referenced the mineral interest and included recording information for the severed mineral interest, constituted title transactions, which operated as savings events under the 1989 DMA. The Court, applying the reasoning of Dodd v. Croskey, 7th Dist. No. 12 HA 6, 2013-Ohio-4257, held that in order for a mineral interest to be the “subject of” the title transaction, the grantor must be conveying or retaining that interest. Merely referencing the mineral reservation in the 1970 and 1977 deeds did not make the mineral interest “the subject of” the title transactions. Rather, the surface estate was the “subject of” those transactions. Walker, 2014-Ohio-1499, ¶27.
[Note: We have previously written about the Dodd case here].
2. The trial court erred in applying the 1989 DMA and not the current 2006 DMA.
First, Noon argued that the trial court should have applied the 2006 DMA because it was the law in effect at that time of the dispute between the parties. Noon relied on the general rule that a court should apply the law in effect at the time it renders a its decision, even when that law was enacted after the events that gave rise to the lawsuit. Landgraf v. USI Film Products, 511 U.S. 244, 273, 114 S.Ct. 1483, 128 L. Ed. 2d 229 (1994). Second, Noon also asserted that the trial court should have applied the 2006 DMA because it was the law in effect during the events that gave rise to this suit, and that Walker did not purchase the disputed property until 2009, three years after the 2006 DMA became effective. Third, Noon argued that Noon’s notice of preservation of a mineral interest filed pursuant to the 2006 DMA preserved Noon’s mineral interest.
Finding no Ohio appellate court or Ohio Supreme Court decisions on when to apply the 1989 DMA or the 2006 DMA, the Court reviewed the basic principles of retroactivity in the Ohio Revised Code. “A statute is presumed to be prospective in its operation unless expressly made retroactive.” Ohio Rev. Code § 1.48. The Court explained that that there is no language in the 2006 DMA to suggest that it is to be applied retroactively and that the 2006 DMA must only apply prospectively. Walker, 2014-Ohio-1499, ¶50.
Under the 1989 DMA, effective March 22, 1989, any mineral interest held by anyone other than the surface owner “shall be deemed abandoned and vested” in the surface owner if none of the savings events apply. The 1989 DMA provided a three-year grace period until March 22, 1992. The Court concluded that Noon’s mineral interest was “deemed abandoned and vested” in the surface owner on March 22, 1992. And, as if to resolve all doubt, the Court explained:
“When the 2006 version of R.C. 5301.56 was enacted, Noon’s mineral interest had already been abandoned and the mineral interest had been vested with the surface owner for 14 years. Once the mineral interest vested in the surface owner, it was reunited with the surface estate. Noon did not have any mineral interest in the subject property after March 22, 1992, because on that date the interest automatically vested in the surface owner by operation of the statute. And once the mineral interest vested in the surface owner, it “completely and definitely” belonged to the surface owner.”
Walker, 2014-Ohio-1499, ¶41. The Court noted that numerous trial courts in the Seventh Appellate District have found that the 1989 DMA applied to similar actions, concluding that “…in the present case, the 2006 version of R.C. 5301.56 does not specifically provide for retroactive application. Thus, the 1989 version, which was in effect at the relevant time to render the mineral interest vested in the surface owner, controls here.” Id., ¶51. Additionally, the Court specifically rejected the Dahlgren v. Brown Farm, 2013 CVH 274455, decision as contrary to the plain language of the statute. Id, ¶44.
Walker v. Noon decided three important issues surrounding Ohio’s Dormant Mineral Act. First, a mineral interest must be the “subject of” a title transaction under the DMA in order to trigger the savings event provided for in the statute. Second, the DMA version in effect at the relevant time to render the mineral interest vested in the surface owner is the correct version to apply. Third, the 1989 DMA automatically vests severed mineral interests with the surface estate on March 22, 1992, if no savings events occur by that date. Third, the 2006 DMA and its notice provisions are not retroactive.