FOR PUBLICATION
ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEE: Attorney for Carolyn Sue Stinson STEPHEN T. LINK MARC E. HAWLEY Evansville, Indiana Mount Vernon, Indiana
Attorney for Proposed Amicus Curiae Indiana Coal Council, Inc. JOHN E. RHINE Rhine Ernest LLP Evansville, Indiana Aug 11 2014, 10:37 am
Attorneys for Amicus Curiae Indiana Oil and Gas Association WILLIAM C. ILLINGWORTH CHAD J. SULLIVAN MATTHEW J. LATOWSKI Jackson Kelly PLLC Evansville, Indiana
IN THE COURT OF APPEALS OF INDIANA L.C. WESTERVELT, MARGARET FOX, JOE ) DAN TRIGG, Attorney-in-Fact and Trustee for ) Lillian Guild, Marilyn Guild, Ramah Lee Jones, ) Janice Trigg, and Guild Family Trust, BARBARA ) KILLEN, PATRICIA KUNC, JACQUELINE ) MEDLEY, PAUL FENNESSEY, CAROLYN ) SUE STINSON, R.D. JONES, INC., and their ) unknown spouses, grantees, representatives, ) successors, heirs, and devisees, ) ) Appellants-Respondents, ) ) vs. ) No. 65A01-1311-PL-501 ) GEORGE WOODCOCK III, d/b/a West ) Drilling Company, ) ) Appellee-Petitioner. ) APPEAL FROM THE POSEY CIRCUIT COURT The Honorable James M. Redwine, Judge Cause No. 65C01-0908-PL-236
August 11, 2014
OPINION - FOR PUBLICATION
MAY, Judge
Carolyn Sue Stinson appeals a summary judgment that determined her mineral interest
had lapsed. As she paid taxes on it, there was no lapse. We therefore reverse and remand.1
FACTS AND PROCEDURAL HISTORY
In August 2009, the Kathleen A. Briggs Trust filed a quiet title action to a mineral
interest in Posey County. The Trust already owned the surface and seven-eighths of the
minerals. Stinson was the only remaining defendant after the others settled or were
defaulted. In 2010, the Trust and Stinson both moved for summary judgment. George
Woodcock III was substituted for the Trust as plaintiff while those motions were pending.
1 In his Appellee’s Brief, Woodcock asserts we need not reach the question whether Stinson’s mineral interest lapsed because the correction deed under which she claims an interest is not valid and the mineral interest provided in the original deed therefore terminated in 1970. As Woodcock has provided no legal authority to support that allegation of error, we do not address it. An appellate argument must contain the contentions on the issues presented, supported by cogent reasoning, and each contention must be supported by citations to the authorities, statutes, and the appendix or parts of the record relied on. Ind. Appellate Rule 46(A)(8)(a), 46(B); Watson v. Auto Advisors, Inc., 822 N.E.2d 1017, 1027 (Ind. Ct. App. 2005), trans. denied. A party waives any issue for which it fails to provide argument and authority. Watson, 822 N.E.2d at 1027. Because Woodcock’s assertion is not supported by citation to authority, we decline to address it on appeal. See, e.g., Masonic Temple Ass’n of Crawfordsville v. Indiana Farmers Mut. Ins. Co., 837 N.E.2d 1032, 1037 (Ind. Ct. App. 2005), reh’g denied. 2 A 1958 deed conveyed to Stinson’s predecessor mineral rights for a term of thirty
years from the date of a 1940 deed “and as long thereafter as oil and/or gas is produced from
these premises or the property is being developed or operated therefor.” (Appellee’s App. at
2.) The deed noted it did not convey any additional interest, but “corrects said former deed
as to the term.” (Id.)
There has been continuous production of oil from the land covered by Stinson’s
mineral deed, and Stinson has paid all real estate taxes that have been assessed. Exhibits
before the trial court included copies of Posey County tax statements captioned “Real Estate
Tax Statement,” (Appellant’s App. at 58), and “Oil Property Tax Statement.” (Id. at 60.)
The latter statements indicated they were “Approved by the State Board of Accounts for
Posey County.” (Id.)
DISCUSSION AND DECISION
When a grant or denial of summary judgment is challenged on appeal, the procedure
and standard under Indiana law is clear. Our standard of review is the same as it is for the
trial court. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). The moving party bears the
initial burden to make a prima facie showing that there are no genuine issues of material fact
and that it is entitled to judgment as a matter of law. Id. Summary judgment is improper if
the moving party fails to carry its burden, but if it succeeds, then the non-moving party must
come forward with evidence establishing there is a genuine issue of material fact. Id. We
construe all factual inferences in favor of the non-moving party and resolve all doubts as to
the existence of a material issue against the moving party. Id. An appellate court reviewing
3 a challenged summary judgment ruling is limited to the designated evidence before the trial
court, see Ind. Trial Rule 56(H), but is constrained to neither the claims and arguments
presented at trial nor the rationale of the trial court ruling. Id. We reverse if the law has been
incorrectly applied to the facts; otherwise, we may affirm a summary judgment on any theory
supported by evidence in the record. Id. We are not limited to reviewing the trial court’s
reasons for granting or denying summary judgment, but rather we may affirm a grant of
summary judgment on any theory supported by the evidence. Id.
At common law, an owner of a mineral interest did not lose it by nonuse,
abandonment, or cessation in working the mine. Consolidation Coal Co. v. Mutchman, 565
N.E.2d 1074, 1080 (Ind. Ct. App. 1990), trans. denied. The legislature altered that rule by
enactment of the Dormant Mineral Act, which extinguishes mineral rights that have not been
“used” for the statutory period.
An interest in coal, oil and gas, and other minerals, if unused for a period of twenty (20) years, is extinguished and the ownership reverts to the owner of the interest out of which the interest in coal, oil and gas, and other minerals was carved. However, if a statement of claim is filed in accordance with this chapter, the reversion does not occur.
Ind. Code § 32-23-10-2. A mineral interest is “used” for purpose of that statue when “taxes
are paid on the mineral interest by the owner of the mineral interest.” Ind. Code § 32-23-10-
3(a)(6).2
2 As the concurring opinion correctly notes, a mineral interest may also be used when “minerals are produced under the mineral interest.” Ind. Code § 32-23-10-3(a)(1). As explained below, Stinson’s mineral interest was “used” by virtue of her payment of taxes on it. We therefore need not address whether the production of minerals amounted to use.
4 Stinson’s mineral interest did not lapse, because she paid taxes on it, and summary
judgment for Woodcock was therefore error.3 It is not disputed that Stinson paid taxes on her
mineral interest, and the trial court so noted: “Stinson was assessed and has paid oil taxes on
[the mineral interest] each and every year she has owned such minerals.” (Appellant’s App.
at 13.) It further found she paid “ad valorem4 oil taxes on the royalties she received but no
real estate taxes on the ownership of the mineral interest. (Id. at 12) (footnote added). The
trial court went on to find, however, that “any taxes paid by Carolyn Stinson on the royalties
received have never appeared in any public record and could not be found by a title search.”
(Id. at 15.) Under the facts before us, we hold Stinson’s payment of taxes prevented the lapse
of her mineral interest.
We note initially that the term “oil or gas interest” includes royalties. Ind. Code § 6-
1.1-4-12.4(a). An oil or gas interest is subject to assessment and taxation as real property,
and each oil or gas interest “shall be assessed annually by the assessor of the township in
which the oil or gas is located, or the county assessor if there is no township assessor for the
township.” Ind. Code § 6-1.1-4-12.4(b).
The parties direct us to no Indiana decisions that address whether payment of ad
valorem oil taxes prevents lapse of a mineral interest. But the Georgia Supreme Court
recently held in Cartersville Ranch, LLC v. Dellinger, 2014 WL 2022240 (Ga. 2014), that a
3 Because we so hold, we need not address whether, as Woodcock contends, use by a lessee cannot prevent lapse of the lessor’s mineral interest. 4 An ad valorem tax is a tax levied on property or an article of commerce in proportion to its value as determined by assessment or appraisal. Airlines Parking, Inc. v. Wayne Cnty., 550 N.W.2d 490, 494 (Mich. 1996). 5 mineral rights owner could not be divested of his ownership pursuant to Georgia’s mineral
lapse statute when he, like Stinson in the case before us, had paid the ad valorem taxes
assessed on his mineral rights. Cartersville Ranch admitted that Dellinger had for many years
personally paid the ad valorem taxes on the mineral rights at issue, but it asserted it was
entitled to gain title to these rights via the mineral lapse statute because Dellinger did not file
a tax return on these rights and did not correct errors in the county’s tax records. The Court
held because Dellinger actually paid ad valorem taxes on all the mineral rights in question, he
was entitled to summary judgment. Id. at *5.
Woodcock argues Stinson’s mineral interest lapsed because her tax payments were for
ad valorem taxes assessed on royalties, and they do not appear in the public record. We
decline in this case to read that restriction into the statute, which says only that a mineral
interest is used, and lapse is therefore prevented, when “taxes are paid on the mineral interest
by the owner of the mineral interest.” Ind. Code § 32-23-10-3(a)(6).
Woodcock relies on Miller v. Weber, 839 N.E.2d 204 (Ind. Ct. App. 2005), trans
denied, where Weber contended her payment of capital gains taxes satisfied section 3(a)(6).
We noted the purposes of the Dormant Mineral Act are to remedy uncertainties in titles and
to facilitate the exploitation of valuable mineral resources. Id. at 209. Weber maintained the
payment of capital gains taxes furthered a purpose of the mineral lapse statute by promoting
the exploitation of mineral interests. We agreed the royalties paid under the lease facilitated
the exploitation of the mineral interests, “but that is not enough. A public record is required
to ensure that interest is advanced. Without a public record of an owner’s tax payments on a
6 mineral interest, there is no way to track whether that interest is, in fact, active or dormant as
contemplated under the Act.” Id. at 211.
In Miller, the payment of capital gains taxes did not create a public record of
ownership of the mineral interest because capital gains taxes are not recorded in any public
document; instead, capital gains tax payments are found on the recipient’s income tax
returns, which are not public records. Id. The payment of capital gains taxes on royalties
thus does not appear in the chain of title and does nothing to remedy uncertainties in titles to
mineral interests. Id. Therefore, payment of capital gains taxes on royalties paid under a
mineral lease was not a “use” under Section 3(a)(6) of the Act. Id.
The ad valorem taxes Stinson paid, by contrast, were, or should have been, recorded
in public documents.5 An ad valorem tax is a property tax that taxes the value of the mineral
produced. Wyoming State Tax Comm'n v. BHP Petroleum Co. Inc., 856 P.2d 428, 434 (Wyo.
1993). In an affidavit, the Posey County Assessor stated her office determines the assessed
valuation of each oil or gas interest for each owner, and “[t]he assessed valuation of each
5 The Miller court reviewed the relevant statutes applicable to the mineral interest before it: When Laros’ mineral interest was created, the Indiana Code provided that a severed mineral interest was “real property,” see Ind. Code § 6-1-20-4 (repealed 1975), and that “real property” was “tangible property,” Ind. Code § 6-1-20-6 (repealed 1975). The code further provided that “all tangible property within the jurisdiction of this state on the assessment date shall be subject to assessment and taxation,” Ind. Code § 6-1-21-1 (repealed 1975), and directed the county auditor to keep a transfer book, arranged by townships, cities and towns, in which he was to enter a description, for the purpose of taxation, of all lands that had been conveyed by deed or partition, which record was to include the names of the parties to the conveyance, Ind. Code § 6-1-27-8 (repealed 1975). Thus, in 1974, the Indiana Code defined mineral interests as real property subject to taxation and required that the county auditor keep a record of such interests. Miller v. Weber, 839 N.E.2d 204, 210-11 (Ind. Ct. App. 2005). The Miller court noted these statutory provisions were recodified but they “remain substantially unchanged today.” Id. at 211 n.6.
7 owners’ oil or gas interest is not confidential, but is a public record.”6 (Appellant’s App. at
67.)
Woodcock asserts, without citation to authority, the tax statutes “authorize” counties
to “keep track of and tax mineral interests in the same way that other real estate is tracked
and taxed,” (Appellee’s Br. at 8), but then he says “[a] county could do this but Posey County
does not do this (except for separate coal interests). Posey County does not keep track of
mineral ownership. . . . There is no chain of title information.” (Id. at 9.) (Emphasis in
original.)
As noted, it is apparent from Stinson’s tax statements that the County did, at least to
some extent, “keep track of mineral ownership” – it assessed taxes on Stinson’s interest and
generated tax statements7 that it sent to her, which statements included legal descriptions and
well numbers. That would presumably serve as the type of “chain of title information”
6 In an affidavit dated July 25, 2013, the Assessor stated her office administers the ad valorem oil tax in Posey County and the dollar amount on which the tax is imposed is reported to her office. But she went on to say the only mineral interests that are assessed and for which ownership records are kept for the purpose of real estate taxation are separate coal interests. In a subsequent affidavit dated October 29, 2013, the Auditor said “I have prepared this affidavit to clarify my earlier affidavit dated July 25, 2013 regarding the distinction between what information is confidential and what is a public record. The records of the assessed valuation of an oil or gas interest are a public record.” (Appellant’s App. at 67.) The Auditor’s clarifying affidavit was submitted to the trial court after the September 23, 2013, entry of summary judgment for Woodcock, as part of Stinson’s October 31, 2013, Motion to Reconsider and for Relief from Judgment. The Chronological Case Summary reflects the motion was denied. Neither party on appeal addresses the significance vel non of that clarifying affidavit or its submission after entry of the summary judgment. In fact, neither party even acknowledges there was a motion to reconsider and for relief from judgment.
7 As noted above, evidence before the trial court included copies of Posey County tax statements captioned “Real Estate Tax Statement.” (Appellant’s App. at 58.) The “Real Estate Tax” statements do not explicitly refer to “ad valorem oil taxes” – they instead list parcel numbers and include references to well numbers, i.e., “well #568” and “well #610.” (Id.)
8 Woodcock asserts does not exist in Posey County.8 As the Miller court explained, the county
was obliged to generate and keep such information, because the legislature defined mineral
interests as real property subject to taxation and required that the county auditor keep a
record of such interests. 839 N.E.2d at 210-211. The tax statements indicate the County
complied with those mandates. But even if Woodcock is correct that the County’s records do
not include all the information they should, we decline to hold Stinson may be divested of her
mineral rights solely by virtue of the Posey County Auditor’s recordkeeping procedures.
CONCLUSION
Stinson’s mineral interest did not lapse, because she paid taxes on it. We accordingly
reverse summary judgment for Woodcock and remand so the trial court may enter summary
judgment for Stinson.
Reversed and remanded.
KIRSCH, J., concurs.
BAILEY, J., concurs in result with separate opinion.
8 A complete title search is not confined to the records of the county recorder. Although actual practice may vary from county to county, an abstractor or title insurance agent will routinely examine records affecting title to real estate in the offices of the recorder, auditor, assessor, treasurer, sheriff and clerk of the courts in the county where the real estate is located. WorldCom Network Servs., Inc. v. Thompson, 698 N.E.2d 1233, 1241 (Ind. Ct. App. 1998), trans. denied. 9 __________________________________________________
IN THE COURT OF APPEALS OF INDIANA ________________________________________________________________________
L.C. WESTERVELT, MARGARET FOX, JOE ) DAN TRIGG, Attorney-in-Fact and Trustee for ) Lillian Guild, Marilyn Guild, Ramah Lee Jones, ) Janice Trigg, and Guild Family Trust, BARBARA ) KILLEN, PATRICA KUNC, JACQUELINE ) MEDLEY, PAUL FENNESSEY, CAROLYN ) SUE STINSON, R.D. JONES, INC., and their ) unknown spouses, grantees, representatives, ) successors, heirs and devisees, ) ) Appellants-Respondents, ) ) vs. ) No. 65A01-1311-PL-501 ) GEORGE WOODCOCK III, d/b/a/ West ) Drilling Company, ) ) Appellee-Petitioner. )
BAILEY, Judge, concurring in result.
The majority in this case concludes that Stinson paid ad valorem taxes on royalties she
received from her mineral interest in land, and the payment of these taxes had the effect of
tolling the Dormant Mineral Act’s (“the Act”) twenty-year period requiring reversion of an
unused mineral interest. The majority accordingly reverses the trial court’s decision finding
10 that Stinson’s interest had reverted to Woodcock. While I agree with the majority’s result, I
disagree with the majority’s construction and application of the Act. I write separately to
explain my disagreement with the majority’s rationale.
The majority observes that the Dormant Mineral Act extinguishes “[a]n interest in
coal, oil and gas, and other minerals, if unused for a period of twenty (20) years,” with the
effect that the interest “reverts to the owner of the interest out of which the interest in coal,
oil and gas, and other minerals was carved.” Ind. Code § 32-23-10-2 (emphasis added). The
reversion does not occur if a statement of claim, the requirements for which are set forth in
the Act, is filed. Id.
Further, the twenty-year period set forth in the Act may be tolled through use.
A mineral interest is considered to be used when:
(1) minerals are produced under the mineral interest;
(2) operations are conducted on the mineral interest for injection, withdrawal, storage, or disposal of water, gas, or other fluid substances;
(3) rentals or royalties are paid by the owner of the mineral interest for the purpose of delaying or enjoying the use or exercise of the rights;
(4) a use described in subdivisions 1 through 3 is carried out on a tract with which the mineral interest may be unitized or pooled for production purposes;
(5) in the case of coal or other solid minerals, there is production from a common vein or seam by the owners of the mineral interest; or
(6) taxes are paid on the mineral interest by the owner of the mineral interest.
I.C. § 32-23-10-3(a); Miller v. Weber, 839 N.E.2d 204, 208 (Ind. Ct. App. 2005)
(characterizing the six circumstances of use as tolling the twenty-year period of I.C. § 32-23-
11 10-2), trans. denied.
Here, the majority concludes that Subsection 32-23-10-3(a)(6)—payment of taxes
upon the mineral interest by the interest’s owner—operated to put Stinson’s mineral interest
in use as that term is understood within the Act. In doing so, the majority relies heavily upon
distinguishing its reasoning from that of this Court’s prior decision in Miller, supra. Most
notably, the majority observes that in Miller the capital gains taxes paid on royalties were not
a matter of public record sufficient “to remedy uncertainties in titles to mineral interests,”
Slip. Op. at 7 (citing Miller, 839 N.E.2d at 211), whereas Stinson’s payment of ad valorem
taxes in this case “were, or should have been, recorded in public documents.” Id.
As the Miller Court observed, the payment of public-record taxes can be sufficient to
resolve uncertainties in a mineral interest. But, in my opinion, we need not reach the issue in
this case of whether payment of the ad valorem tax satisfies that requirement, because a more
important distinction exists between this case and the facts of Miller. In Miller, the mineral
rights went unused for any active exploration or recovery of minerals, oil and gas, or other
sub-surface resources covered by the mineral interest at issue. Id. at 206. In the present
matter, however, oil continued to be produced from the land associated with Stinson’s
mineral interest. That is, the mineral interest was in use in the plainest manner possible:
minerals were produced from sub-surface deposits that were the subject of Stinson’s mineral
interest. I.C. § 32-23-10-3(a)(1).
By its plain language, Subsection 3(a)(1) requires only that a mineral interest be
productive. This is unlike Subsection (a)(3), which tolls the twenty year statutory period only
12 when royalties are paid directly by the mineral interest holder to the grantor of that interest.
See Miller, 893 N.E.2d at 208-09 (rejecting a claim under I.C. § 32-23-10-3(a)(3) that the
statutory period was tolled by payment of royalties to a mineral interest holder by a third-
party grantee of the holder). In this case, then, I would construe Subsection 3(a)(1) such that
it was satisfied by the continued production of minerals—whether or not Stinson personally
conducted that activity.
This construction is clearly within the plain language of the Act, which distinguishes
between the requirements for tolling in cases of actual production or extraction of resources
(in which case the legislature’s concern for productivity is satisfied), see I.C. § 32-23-10-
3(a)(1), and cases in which there has been no production and no payment of royalties to toll
the twenty-year period as to the unproductive interest. See I.C. § 32-23-10-3(a)(3). It serves
our legislature’s purpose in derogating from the common law by limiting the duration of
economically unproductive mineral interests to a twenty-year reversion period, which helps
to ensure the marketability and productivity of land with sub-surface coal, oil and gas, and
other mineral deposits. Short v. Texaco, Inc., 273 Ind. 518, 526, 527-28, 406 N.E.2d 625,
629, 630 (1980), aff’d, Texaco, Inc. v. Short, 454 U.S. 516, 102 S.Ct. 781 (1982). This
construction also recognizes the separability and transferability of portions of a mineral
interest. See id. at 528 (observing that various interests may need to be “assemble[d]” to
“actually produce minerals”); Miller, 893 N.E.2d at 207-209 (addressing the dependence of a
third party’s interest upon that of an original grantee).
Finally, applying the plain language of Subsection (a)(1) obviates the kind of inquiry
13 otherwise required by the majority’s opinion. The focus of that inquiry is whether and how
taxes were paid and recorded with a county office—a subject that may not be appropriate for
summary judgment here, given the apparent factual dispute over the recording of Stinson’s ad
valorem tax payments. If the mineral interest is productive during the tolling period,
Subsection (a)(1) is met, the reversion period is tolled, and there is no need for further
inquiry because both the plain language and the legislative purposes of the Act have been
met. I think that is the case here.
I therefore respectfully concur in the result.