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Dodd v. Croskey - Seventh District Court of Appeals Rules on Dormant Mineral Act and Defines the "subject of" a Title Transaction

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.
In Dodd, the Seventh District Court of Appeals was faced with interpreting multiple provisions of the current version of Ohio R.C. § 5301.56.

 • Whether a 2009 deed that transferred the surface rights to appellants but also contained a repetition of a prior mineral reservation was a title transaction within the meaning of R.C. § 5301.56?
• Whether the notice requirement was met by publishing in a newspaper without attempting certified mail notice first?
• Whether a claim to preserve the mineral interest must be filed in the 20 years immediately preceding the date of notice or whether it can be filed within 60 days after notice?
• Whether appellees were required to prove that they were mineral interest holders?

In addressing the above issues, the Court of Appeals held the trial court had incorrectly determined the mineral interest was the subject of a title transaction within the meaning of R.C. § 5301.56 under the 2009 deed, but that summary judgment was appropriate for the appellees/heirs because the affidavit filed within 60 days after receiving notice preserved the mineral interests.


Acts to Preserve the Mineral Interest

The court held that R.C. § 5301.56(H)(1) provides that within 60 days of service or publication notice of the surface owner’s intent to have the mineral interests be deemed abandoned, the holder of the mineral interest can claim the mineral interest has not been abandoned by filing one of two documents – an affidavit or a claim to preserve.  


• The affidavit is governed by R.C. § 5301.56(H)(1)(b) and provides that in order to preserve the mineral interest the affidavit must identify an event listed in R.C. § 5301.56(B)(3) that has occurred “within the twenty years immediately preceding the date on which the notice was served or published.” 
• A claim to preserve the mineral interest is governed by R.C. § 5301.56(H)(1)(a) and must be filed within sixty days after the date of notice.


One of the appellees filed a document that complied with (H)(1)(a) within sixty days of appellants’ published notice.  The court rejected appellants’ argument that the claim to preserve had to be filed 20 years prior to the date of the notice.  The court concluded the statute provides two means through which a mineral interest holder can assert the mineral interest is not abandoned: subsection (H)(1)(b) deals with acts listed in subsection (B)(3) that occurred within the 20 year period; and subsection (H)(1)(a) allows for a present act by the mineral interest holder that prevents the interest from being determined to be abandoned, within 60 days after the date of notice.  The court noted that a contrary interpretation would result in a redundancy, requiring the claim to preserve to be filed within the 20 years prior, an event already covered by (H)(1)(b), and requiring the claim to preserve to be filed twice, 20 years before and 60 days after notice.


“Subject of” a Title Transaction

The trial court held that a 2009 deed of the surface which repeated a prior mineral reservation was a title transaction for purposes of R.C. § 5301.56(B)(3)(a).  That section provides that abandonment is not available if within twenty years immediately preceding the date on which notice is served or published, the mineral interest has been “the subject of a title transaction” that has been filed or recorded in the office of the county recorder of the county in which the lands are located.


The court noted that while “title transaction” is not defined in the Ohio Dormant Mineral Act, it is defined in the Marketable Title Act as “any transaction affecting title to any interest in land, including title by will or descent, title by tax deed, or by trustee’s, assignee’s, guardian’s, executor’s administrator’s, or sheriff’s deed, or decree of any court, as well as warranty deed, quit claim deed, or mortgage.”  The court noted that the 2009 deed clearly constituted a title transaction, however, subsection (B)(3)(a) also required the mineral interests to be the “subject of” a title transaction.


The court noted that the common meaning of the word “subject” is a topic of interest, primary theme or basis for action.  Under this definition the mineral interests were not the “subject of” the 2009 title transaction – the primary purpose of which was the conveyance of surface rights.  Therefore, the court held, “[i]n order for the mineral interest to be the ‘subject of’ the title transaction the grantor must be conveying that [mineral] interest or retaining that [mineral] interest.”  As a result, the court disagreed with the trial court and found the 2009 deed was not a saving event as it neither conveyed nor retained in the grantor the minerals. 


The court’s analysis of the “subject of” a title transaction is especially noteworthy as the same language is present in the original version of the Dormant Mineral Act, which was effective March 22, 1992, through June 29, 2006, and which is the subject of a number of matters currently being litigated.  The court’s analysis is also consistent with a number of recent trial court decisions, including those in Tuscarawas County, Noble County, and Monroe County. 


Notice to the Holders

The Dormant Mineral Act requires notice to be given by certified mail, return receipt requested, but if service of notice “cannot be completed to any holder,” then the surface owner shall publish notice of its intent to declare the mineral interest abandoned at least once in a newspaper of general circulation in the county where the land that is subject to the reserved interest is located.
 
In Dodd, it was undisputed the surface owner did not attempt to notify any of the appellees by certified mail.  It was also undisputed that the reserving parties were deceased.  The court agreed with the trial court that there must be an attempt to notify by certified mail, but declined to determine whether a search of the probate records, in addition to a title search, was sufficient.  While the surface owners asserted they searched the probate records, the court noted their affidavit did not indicate the search was performed.  The court acknowledged the difficulty in determining, in instances such as this where the reserving parties are deceased, the identities of the heirs and assigns, but found any failure to strictly comply with the statue to be harmless error as the published notice did in fact reach one of the parties claiming to have an interest, and that party took timely action to preserve the mineral interest.
 
In the absence of timely preservation by an heir, the court’s holding suggests that a surface owner seeking to abandoned previously severed mineral interests will need to show an attempt at certified mail, and indicates that those actions should be included in the affidavit of abandonment filed by the surface owner.



Ownership of Interest

In this case, the heirs’ affidavit/claim to preserve set forth the heirs of the reserving party and explained how the parties listed were the heirs.  The court found this met the initial burden of the heirs to show the basis for their ownership interest, and that the burden then shifted to the surface owners to set forth specific facts demonstrating there was a genuine issue of material fact with respect to the heirs’ claim.  The court found that the surface owners provided no evidence to dispute the affidavit, and therefore, failed to meet their burden.

 
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