Boswell Energy Corp. v. Arrowhead Homes, Inc.

2004 OK CIV APP 83, 99 P.3d 1229, 75 O.B.A.J. 3051, 160 Oil & Gas Rep. 216, 2004 Okla. Civ. App. LEXIS 65, 2004 WL 2363860
CourtCourt of Civil Appeals of Oklahoma
DecidedSeptember 3, 2004
DocketNo. 99,809
StatusPublished
Cited by1 cases

This text of 2004 OK CIV APP 83 (Boswell Energy Corp. v. Arrowhead Homes, Inc.) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Boswell Energy Corp. v. Arrowhead Homes, Inc., 2004 OK CIV APP 83, 99 P.3d 1229, 75 O.B.A.J. 3051, 160 Oil & Gas Rep. 216, 2004 Okla. Civ. App. LEXIS 65, 2004 WL 2363860 (Okla. Ct. App. 2004).

Opinion

Opinion by

CAROL M. HANSEN, Judge.

T1 Defendant/Appellants, Petrocorp, Incorporated (Petrocorp), its lessors, and others holding interests in its leases, seek review of the trial court's judgment on remand quieting title to the subject mineral interests in Plaintiff/Appellee, Boswell Energy Corporation (Boswell), and its lessors, Defendant/Appellees, Neal McCaleb and Georgann McCaleb. We affirm because the trial court properly applied the law of the case and its order is not against the clear weight of the evidence.

T2 In 1981, the MeCalebs acquired a quarter section of land in Edmond, Oklahoma, in fee simple. In 1988 and 1984, they conveyed two parcels, one consisting of 9.593 acres and the other of 21.10 acres, to Defendant/Appel-lee, Arrowhead Homes, Inc. (Arrowhead), a corporation they formed in 1961 as a real estate development company. Both deeds were on printed forms for warranty deeds. After the printed granting language, the legal description was typed in. Following the typewritten legal description was the printed language, "together with all the improvement thereon and the appurtenances thereunto belonging, and warrant the title to the same." After the printed language, the following was typed in: "Less and except all mineral interests."

T3 The McCalebs leased the minerals to Boswell's predecessor in interest, and Boswell later acquired the lease by assignment. Petrocorp acquired mineral leases from Arrowhead's successor grantees. After the minerals were developed under a pooling order by. the Oklahoma Corporation Commission, a dispute arose as to the parties' respective interests and Boswell filed the instant quiet title suit.

T4 Both Boswell and Petrocorp moved for summary judgment. Boswell asserted the deeds unambiguously reserved the minerals to the McCalebs. Petrocorp argued the placement of the language "less and except all mineral interests" in the warranty clause rather than in the granting clause served only to except the minerals from the operation of the covenant of warranty. The trial court granted summary judgment in favor of Boswell, quieting title to the minerals in the McCalebs and to the leasehold in Boswell. Petrocorp appealed in Case No. 92,017.

15 In its opinion, Boswell Energy Corp. v. Arrowhead Homes, Inc. (Boswell I), 1999 OK CIV APP 36, 976 P.2d 1113, 1116 (citations omitted), the Court of Civil Appeals discussed the development of Oklahoma law regarding the placement and effect of reservation clauses, and concluded as follows:

We adopt the modern rule. The precise location of the "exception" is not controlling. The controlling factor is the intent of the parties. Here, the phrase: "Less and except all mineral interests", could have been placed after the phrase "and warrant title to the same", because it was intended to modify it. Alternatively, it could have been inserted there because the McCalebs wanted to make clear they intended to sever the minerals from the fee simple [1231]*1231title.... The deeds, therefore, are subject to two possible interpretations, le., that the McCalebs reserved the minerals for themselves, limiting the fee simple description by express words, or that they did not warrant the title to the minerals for reasons known only to them.

Because the deed was subject to two different interpretations, it contained an ambiguity requiring consideration of extrinsic evidence to determine the intent of the parties to the deed. The intent of the parties was a disputed issue of material fact which precluded summary judgment. Therefore, the Court reversed the summary judgment and remanded the matter for further proceedings consistent with its opinion. Id., 976 P.2d at 1117.

T 6 On remand, the trial court held a bench trial on the issue of intent. The parties submitted a joint stipulation of facts, and each party put on one witness. Neal McCa-leb testified he and his wife owned all the stock in Arrowhead and were responsible for all decision-making for the company. The purpose of Arrowhead was to acquire real estate and develop subdivisions. He said his employee prepared the subject deeds based on his instructions that he wanted to retain the minerals in the property, and he provided the language, "less and except all mineral interests." McCaleb testified it was not his intent for Arrowhead to acquire any of the minerals and he intended to convey only the surface to Arrowhead. He said he did not have advice of counsel in preparing the deeds.

1 7 McCaleb conveyed other tracts to other purchasers during this time period. Those deeds unambiguously reserved the minerals to the McCalebs. McCaleb said those deeds were prepared by closers working for title insurance companies.

[ 8 McCaleb said he later sought financing from Liberty Bank to pay for subdivision improvements. As president of Arrowhead, he signed loan documents prepared by the bank. He said he made only a cursory review of the documents and did not bring an attorney to closing. As part of the transaction, the McCalebs conveyed the remaining tracts in the quarter section to Arrowhead in order to provide additional collateral. The ~deeds for those conveyances were prepared by the bank and conveyed both the surface and minerals. Arrowhead then mortgaged the combined tracts, including the ones at issue in this case, to secure the loan. It covenanted in the mortgage document that it was "seized of an indefeasible estate in fee simple in the Mortgaged Premises." McCa-leb said he was a guarantor on the note. After he and Arrowhead defaulted on the note, he reached an agreement with the bank to convey the property to the bank in lieu of foreclosure. As president of Arrowhead, McCaleb signed a warranty deed, prepared by the bank, conveying the mortgaged premises to Liberty Bank. McCaleb agreed the deed on its face conveyed and warranted title to both the surface and minerals.

T 9 Petrocorp put on the testimony of the petroleum landman who obtained its leases on the disputed property. He traced the chain of title from Petrocorp's lessors to Liberty Bank and its deed in lieu of foreclosure from Arrowhead.

1 10 The trial court ruled the placement of the language, "less and except all minerals," irnmediately after the warranty clause created an uncertainty and therefore the deeds were ambiguous. It ruled that consideration should be given to the cireumstances leading up to the execution of the deeds, including the subject matter of the deeds and the situation of the parties. The trial court found the intent of the grantor and grantee of the deeds was that the MeceCalebs would retain the minerals and only the surface would be conveyed to Arrowhead. It found the McCalebs reserved the minerals for themselves, limiting the fee simple description by express words. The trial court granted judgment in favor of Boswell, quieting title to the minerals in the MeCalebs and to the leasehold in Boswell. Petrocorp appeals from the trial court's judgment.

I

11 Petrocorp's first contention of error is the trial court failed to follow the law of the case and did not follow the instructions of the prior appellate opinion. It argues the [1232]*1232Court's opinion in Boswell I specifically refused to state whether the words "less and except all mineral interests" were "apt words of reservation," and instead found only that the placement of those words following the warranty clause would not form the basis for a finding that the McCalebs intended to reserve the minerals.

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2004 OK CIV APP 83, 99 P.3d 1229, 75 O.B.A.J. 3051, 160 Oil & Gas Rep. 216, 2004 Okla. Civ. App. LEXIS 65, 2004 WL 2363860, Counsel Stack Legal Research, https://law.counselstack.com/opinion/boswell-energy-corp-v-arrowhead-homes-inc-oklacivapp-2004.