Deltic Timber Corp. v. Newland

Citations: 374 S.W.3d 261; 2010 Ark. App. 276; 178 Oil & Gas Rep. 91; 2010 Ark. App. LEXIS 275Docket: No. CA 09-810

Court: Court of Appeals of Arkansas; March 31, 2010; Arkansas; State Appellate Court

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Deltic Timber Corporation is appealing a circuit court summary judgment that favored the appellees, who claim an interest in mineral rights in Conway County. The case centers on a warranty deed executed in December 1983 by David L. Baker and Carolyn M. Baker, which conveyed the surface and a five-eighths interest in minerals to William P. Batson and Garna Sue Batson, reserving a three-eighths interest for the Bakers that would revert to the Batsons after twenty years. In April 1984, the Batsons transferred the property to Deltic Farm Timber Company, which included a clause excluding prior mineral reservations. The critical question is whether this deed transferred all of the Batsons' interests or excluded the three-eighths mineral interest claimed by the appellees, who are the Batsons' daughters. They assert ownership based on a warranty mineral deed from the Batsons dated October 30, 1984. The appellant contends that the mineral deed was ineffective as the three-eighths interest had already been conveyed to it through the Batson-Deltic deed. The appellees filed for a declaratory judgment in 2008, leading to cross-motions for summary judgment. The circuit court ruled in favor of the appellees, declaring them the owners of the mineral interest. Deltic's motions for reconsideration and a new trial were deemed effective after the judgment was entered, and the appeal notice filed on April 29, 2009, was timely. The appellate court found summary judgment inappropriate and reversed the decision, remanding the case to the circuit court for further proceedings.

Summary judgment is granted by a trial court only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Cross-motions for summary judgment suggest an agreement on material facts, making summary judgment appropriate if both parties operate under the same legal theory. In this case, ambiguity in the Batson-Deltic deed prevents a determination that either party is entitled to judgment as a matter of law, necessitating further factual development. 

The appellant argues that the mineral interest was divided into a twenty-year term and a reversionary interest, contending that the Batson-Deltic deed does not unequivocally reserve a present reversionary right. The appellant also critiques the trial court's reliance on the Bodcaw Lumber Co. v. Goode case, stating it is not relevant to the current matter. While the Baker-Batson deed reserved three-eighths of the mineral interest for twenty years, defining this as a term interest, the appellant asserts this does not imply a reversionary interest for the Batsons after the term ends. The summary concludes that the Batsons’ interest is not classified as reversionary.

In Wilson v. Pharris, the court differentiates between a remainder and a reversion. A remainder is an estate that takes effect immediately after a prior estate ends, whereas a reversion is the remaining interest in the grantor that begins after a specific estate concludes. Importantly, a remainder must be created through a deed or will, while a reversion arises by law. The court clarifies that the Batsons' interest in three-eighths of mineral rights, stated to 'revert' after twenty years in the Baker-Batson deed, is actually a vested remainder, not a contingent remainder, as there were no conditions affecting its vesting. After twenty years, the Batsons’ interest would not be subject to the Bakers’ possessory rights. The Batsons owned the surface and five-eighths of the mineral interests and would gain possessory rights to the three-eighths remainder in 2008.

The court then addresses the interpretation of the Batson-Deltic deed, emphasizing the need to ascertain the grantor's intent by examining the deed's language. If the deed is clear, no construction rules apply; ambiguity allows for the use of parol evidence and requires judicial interpretation based on surrounding circumstances. The court concludes that the Batson-Deltic deed contains ambiguities.

The 'excepting' clause in the Batson-Deltic deed is ambiguous, failing to clearly delineate the mineral interests the Batsons intended to retain. The inclusion of terms like 'and/or' introduces confusion regarding the specific interests excluded from the conveyance, leaving doubts about whether the five-eighths mineral interest, three-eighths mineral interest, or surface rights were intended to be excepted. The court rejects both the appellant's and appellees' interpretations of the exception's clarity, highlighting the need for extrinsic evidence to ascertain the parties' intentions. The ambiguity necessitates that the factual dispute regarding intent be resolved upon remand, with the potential for the deed to be construed against the party who drafted it if clarity is not achieved. The trial court previously lacked sufficient evidence to determine the preparation of the deed, making the introduction of parol or extrinsic evidence essential for determining the intentions of both the grantors and grantees.

The circuit court's order granting summary judgment is reversed, and the case is remanded for further proceedings. Griffith Land Services, Inc. is a defendant but did not file an appeal. The terms 'exception' and 'reservation' have distinct meanings; however, they may be used interchangeably and must be interpreted based on the manifest intent of the parties involved, as established in Nature Conservancy v. Kolb. The Duhig rule, adopted in Peterson v. Simpson, prohibits subjective interpretations of deeds but does not apply here, as the dispute involves the original grantee (Deltic) and the children of the original grantors (Newslands and Dillard) regarding the Batson-Deltic deed. The ruling reiterates that subjective considerations can be relevant in reformation cases involving original grantors and their immediate grantees, as noted in Mason v. Buckman.