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Seventh District Court of Appeals Finds Severed Royalty Interest Is Personal Property & Subject to Ohio's Marketable Title Act

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

In Pollock v. Mooney, the Seventh District Court of Appeals found a severed royalty interest was personal property, but nevertheless was subject to Ohio’s Marketable Title Act, as found in O.R.C. §§ 5301.47 - 5301.56 (“MTA”).  The case involved a reservation of “the one half part of [grantor’s] royalty of all the oil and gas” contained within a deed recorded in 1902.  Judge Donofrio, writing for the majority, held “[t]he MTA does not differentiate between different types of interest.  It applies to all interests.” Pollock at ¶21. 

In analyzing the nature of a severed royalty interest, the Court looked to its prior decision in Traicoff v. Christman, which interpreted the Ohio Supreme Court’s decision in Pure Oil Co. as controlling the nature of a severed royalty interest in Ohio as one of personal property, not real property.  The Court further looked to its past decision in Buegel v. Amos as supporting classification of severed royalty interests as personal property.  It is notable that at issue in both Traicoff and Buegel was whether a severed royalty interest was an interest in real estate in order to create a right to partition the interest pursuant to O.R.C. § 5307.01; neither decision involved any claim of abandonment or extinguishment. 

The parties in Pollock agreed the root of title under the MTA was a deed recorded in 1951; however, the parties disagreed about whether any qualifying title transactions existed to avoid the severed mineral interest reuniting with the surface owner’s estate.  The defendant alleged multiple title transactions exist by virtue of probate records through which the severed royalty interest passed to heirs of the original reserving parties.  The Court agreed such filings evidencing the interest passing through probate court would satisfy an exception to extinguishment as set forth in O.R.C. §§ 5301.49(D).  However, the Court found the defendant failed to present any evidence to support his claim evidencing the transfer of the royalty interest and therefore affirmed the award of summary judgment in favor of the surface owner.  Finally, the Court addressed the trial court’s order to assess costs against the defendant and whether that included the publication fees incurred by plaintiffs in perfecting service on all 11 defendants, 10 of which failed to answer and defend.  The Seventh District remanded to the trial court to determine which costs defendant was responsible for, noting that if defendant was responsible for a portion of the publication fee of it should not exceed his proportional share of the publication (i.e., 1/11th of the total publication cost). 

Pollock v. Mooney, 7th Dist. Monroe No. 13 MO 9, 2014-Ohio-4435 (Sep. 30, 2014)

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  at 330-497-0700.

 
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