SEECO, Inc. v. Holden

2015 Ark. App. 555, 473 S.W.3d 36, 2015 Ark. App. LEXIS 629
CourtCourt of Appeals of Arkansas
DecidedOctober 7, 2015
DocketCV-15-178
StatusPublished
Cited by4 cases

This text of 2015 Ark. App. 555 (SEECO, Inc. v. Holden) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SEECO, Inc. v. Holden, 2015 Ark. App. 555, 473 S.W.3d 36, 2015 Ark. App. LEXIS 629 (Ark. Ct. App. 2015).

Opinion

DAVID M. GLOVER, Judge

hln this oil-and-gas case, appellant Joyce Walls and her lessee, SEECO, Inc., appeal from an order vesting ownership of certain minerals in appellee Carver L. Holden. We reverse and remand for further proceedings. 1

|gI. Background'

The minerals in question are subsurface to approximately 95 acres in Section 18, Township 9 North, Range 7, West in. White County. In 1912, appellant Joyce Walls’s grandfather, W.M. Howell, acquired the acreage and its minerals. Howell later sold the property to Clotene and Raymond Cox in 1948, but he retained an undivided one-half mineral interest in himself.

In 1952, Mr. and Mrs. Cox deeded the 95 acres to Ola and Carver Ray Holden, the parents of appellee Carver L. Holden. The deed granted Mr. and Mrs. Holden the entire interest in the property, save and except the undivided one-half mineral interest previously reserved by W.M. Howell.

Howell .died in 1953. His one-half mineral interest then passed to his daughter, Grace Marshall. Ms. Marshall did not pay the taxes on the minerals, and a tax-delinquency sale was conducted in 1958. At the sale, Carver Ray Holden purchased Ms. Marshall’s one-half mineral interest. This purchase, when combined with Carver Ray’s ownership of the surface and the other one-half mineral interest, appeared to unify the property’s ownership in him.

In 1983, Grace Marshall died, leaving a son, Duane Marshall, and a daughter, appellant Joyce Walls. Duane died in 2000, after which Walls considered herself the sole owner of the undivided one-half mineral interest that had been retained by her grandfather many years earlier. In November 2005, Walls executed an oil-and-gas lease of the 95 acres to the T.S. Dudley Land Company. The lease was subsequently assigned to SEECO. However, Walls conducted no,drilling on the property. .

In September 2006, Carver Ray Holden deeded the 95' acres and all of its minerals to |3his son, appellee Carver L. Holden. Thereafter, Carver L. Holden executed a mineral lease to Chesapeake Exploration Limited Partnership. Chesapeake began drilling operations on May 21, 2007, and, as' of January 2008, three wells were producing natural gas. 2

Joyce Walls, would later testify that she became aware of Holden’s wells in April 2009. On September 4, 2009, she filed a quiet-title action to protect her interest in the minerals. Her complaint alleged that the 1958 tax sale, by which Holden’s predecessor obtained a deed to her family’s one-half mineral interest, was void. She therefore claimed that she retained ownership of that half interest and that she was entitled to an accounting for the production and income from the wells. Holden responded that Walls’s suit was time-barred because it was filed more than two years after his drilling operations had begun.

A bench trial was held, and the court heard the evidence described above. In addition, Sherry Williams, an employee of the White County Tax Collector’s Office, testified that the county’s 1957 assessments, from which the 1958 tax sale arose, did not subjoin the mineral interests to surface interests. 3 Instead, she said, the mineral interests were located in a separate part of the assessment book. Another witness, Chesapeake land man Jim Kelly, acknowledged that Walls’s mineral interest in the 95 acres was listed in Chesapeake’s Declaration of Pooling in the subject area in White County. Kelly said, however, that Walls’s interest was listed out of an abundance of caution, on the chance that she did have a legitimate mineral interest.

14Following the trial, the circuit court ruled that Walls did not own the mineral rights she purported to lease; that she did not have possession of the mineral rights within two years before she commenced her lawsuit; that Holden took possession of the minerals on May 21, 2007, upon drilling the first well; and that Walls’s September 2009 suit was therefore barred by the two-year statute of limitations in Arkansas Code Annotated section 18-61-106(a) (Repl. 2003). The court quieted title to the disputed one-half mineral interest in Holden and declared that his lessees had the rights afforded them by lease or assignment. Walls filed this appeal. 4

II. Standard of Review

Quiet-title actions have traditionally been reviewed de novo as .equity actions. Sutton v. Gardner, 2011 Ark. App. 737, 387 S.W.3d 185. However, the circuit court’s findings of fact will not be reversed unless they are clearly erroneous. Id. A finding of fact is clearly erroneous when, although there is evidence to support it, the reviewing court, on the entire evidence, is left with a definite and firm conviction that a mistake has been committed. Flowers v. Amerisourcebergen Drug Corp., 2012 Ark. App. 224, 2012 WL 1021534.

III. Walls’s Ownership of. Mineral Interest

Walls first argues that the circuit court erred in declaring that she did not own the mineral interests that she leased to Dudley/SEE CO in 2005. She contends that, to the contrary, her family maintained good title to an undivided one-half mineral interest because the 1958 tax sale, by which Holden’s predecessors purported to buy her half interest, was void. [RWe agree.

The undisputed testimony of White County tax official Sherry Williams-was that, at the time the tax sale in this case took place, the severed mineral assessments in White County were located in .a separate part of the county, assessment book from surface, interests. The mineral assessments therefore were not subjoined to the surface assessments as required by the law at that time. 5 As a result, the power to sell for delinquent taxes was lacking. Sorkin v, Myers, 216 Ark. 908, 227 S.W.2d 958 (1950). Thus, the 1958 tax sale of the one-half mineral interest and the accompanying tax deed to' Holden’s predecessor were void. Gilbreath v. Union Bank, 309 Ark, 360, 830 S.W,2d 854 (1992); Garvan v. Potlatch Corp., 278 Ark. 414, 645 S.W.2d 957 (1983). The Walls family therefore maintained their ownership of an undivided one-half mineral interest and, consequehtly, Walls and Holden each now hold legal title to an undivided one-half mineral interest in the 95 acres.

Nevertheless, a defective' mineral deed such as Holden’s can ripen into good title. As explained in the'next section, for that to occur, the holder of the defective deed must disseize the legal owner by adversely possessing the minerals for two years before the legal' owner files suit. See Hurst v. Rice, 278 Ark. 94, 643 S.W.2d 563 (1982); Adams v. Bruder, 275 Ark. 19, 627 S.W.2d 12 (1982); Sage Land & Lumber Co. v. Hickey, 222 Ark. 147, 257 S.W.2d 941 (1953); Honeycutt v.

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Bluebook (online)
2015 Ark. App. 555, 473 S.W.3d 36, 2015 Ark. App. LEXIS 629, Counsel Stack Legal Research, https://law.counselstack.com/opinion/seeco-inc-v-holden-arkctapp-2015.