In Walker, the Seventh District Court of Appeals was faced with interpreting multiple provisions of the previous version of Ohio R.C. § 5301.56.
• Whether deeds that transferred the surface rights of real property affected by a severed mineral interest but specifically reference the severed mineral interest, including volume and page, constitute title transactions within the meaning of R.C. § 5301.56?
• Whether the former version of R.C. § 5301.56 was self-executing, i.e. contained an automatic abandonment and vesting mechanism?
• Whether the former version of R.C. § 5301.56 violates the Ohio Constitution’s ban on retroactive legislation?
In addressing the above issues, the Court of Appeals held the trial court had correctly determined the mineral interest was not the subject of a title transaction within the meaning of R.C. § 5301.56 under the deeds which transferred the surface, but made specific reference to the severed mineral interest. The Court of Appeals also held that the trial court correctly held that the former version of R.C. 5301.56 was self-executing, meaning severed mineral interests were deemed abandoned automatically and title to the same vested with the surface owners unless the severed mineral interests were subjected to a preserving event under the statute. The Court of Appeals declined to analyze whether the former version of R.C. 5301.56 was unconstitutional because the appellant failed to raise the issue at the trial court.
“Subject of” a Title Transaction
The trial court held that three deeds, two of which were recorded in 1970 and one in 1977, transferring the surface estate, but which repeated a prior mineral reservation, were not title transactions for purposes of R.C. § 5301.56(B)(3)(a). That section provides that abandonment is not available if within the preceding twenty years the severed mineral interest was subjected to a title transaction which is filed and recorded with the County Recorder’s Office for the county in which the real property is located.
The Court of Appeals 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 of Appeals noted that the definition of “title transaction” had not changed between the two versions of Ohio’s Dormant Mineral Act, and therefore applied its decision in Dodd v. Croskey (analyzing the current version of R.C. § 5301.56) with regard to the definition of “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 interest was not the “subject of” the 1970 and 1977 title transactions – 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.” The Court of Appeals found that applying that definition to the facts of this case, the only reasonable conclusion is that “the mere mention of the mineral reservation in the 1970 and 1977 deed did not make the mineral interest ‘the subject of’ the title transactions.”
Which Version of the Statute Should Apply: Is the Former Version of R.C. § 5301.56 Self-Executing?
The appellant argued the former version of R.C. § 5301.56 (“1989 DMA”), which was in effect between 1989 and 2006, should not have been applied by the trial court because (1) the statute had been amended prior to lawsuit, (2) the appellee surface owner had not purchased the property until 2009, three years after the 2006 version of the statute took effect, and (3) appellant filed a preservation of mineral interest in 2012 in response to a notice under the 2006 version of the statute, preventing the interest from being divested.
The Court of Appeals held the 2006 version of the statute contains no language “to suggest that it is to be applied retroactively.” Thus, the 2006 version of the statute would only apply prospectively. Under the terms of the 1989 DMA, the Court of Appeals held the mineral interest was “deemed abandoned and vested” in the surface owner on March 22, 1992. The Court noted that when the 2006 version of the statute was enacted, the mineral interest had already been abandoned and vested with the surface owner for 14 years. The Court of Appeals found the 1989 DMA operated automatically to vest title to those mineral interests with the surface owners.
In its holding, the Court specifically rejected the trial court decision in Dahlgren v. Brown Farm, Carroll County 2013 CVH 274455, which had not applied the 1989 DMA automatically by classifying the mineral rights as “inchoate” rights. The Court of Appeals stated this characterization was directly contrary to the statute itself, which states the mineral interests are “vested.”
Therefore, the Court of Appeals held the additional notice provisions in the 2006 version of the statute did not affect the rights previously acquired under the 1989 DMA, which was in effect at the relevant time to render the mineral interest vested in the surface owner and controls.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice. If you have any questions concerning this client alert, please contact Attorney Gregory W. Watts or Attorney Matthew Onest at 330-497-0700.