On December 2, 2020, in the case of West v. Bode, the Supreme Court of Ohio clarified that the Ohio Marketable Title Act (“MTA”) and the Ohio Dormant Mineral Act (“DMA”) are, “independent, alternative statutory mechanisms that may be used to reunite severed mineral interests with the surface property subject to those interests.” This is good news for surface owners seeking extinguishment of prior mineral severances that may be unable to satisfy the stricter requirements set out under the Ohio Dormant Mineral Act.
The MTA provides that a person who has an unbroken chain of title to any interest in land for at least 40 years has a marketable record title to the interest. The MTA “operates to extinguish” all interests and claims that existed prior to the effective date of the “Root of Title,” and those preexisting interests are “declared to be null and void.” The “Root of Title” means a title transaction in the chain of title creating the interest claimed, upon which forms the basis for the marketability of his title, and which was the most recent to be recorded as of a date forty years prior to the time when marketability is being determined. The DMA operates differently than the Marketable Title Act by providing an evidentiary device that a surface owner may use in a quiet-title action to eliminate a dormant mineral interest.
The dispute in West v. Bode concerned a 1902 severance of one-half of the royalty interest attributable to a 66-acre tract. The Root of Title relied on by the surface owners was a 1959 certificate of transfer which confirmed that the property was the same as that conveyed in an earlier deed, but it did not specifically mention the severed royalty interest. The surface owners sought a declaratory judgment that the MTA had extinguished the severed royalty interest in the 66-acre tract and vested it in prior surface owners.
The Supreme Court of Ohio specifically addressed the issue of whether the MTA is inapplicable to severed interests in oil and gas because the more specific DMA supersedes it or, in statutory construction terms, whether there is an irreconcilable conflict between the MTA and the DMA. The Supreme Court of Ohio affirmed the decision of the Seventh District Court of Appeals and held that there is no irreconcilable conflict between the MTA and DMA. The Court noted the differences between the two statutes but acknowledged those differences as reasonable and reconcilable, stating that the acts ask different questions and provide for different results. The court also rejected the legislative purpose argument that application of the MTA would frustrate the intent of the DMA, stating that, “simplifying and facilitating land title transactions by allowing persons to rely on a record chain of title”—is central to both the MTA and the DMA. As a result, they remanded the matter to the trial court for consideration of the Wests’ claim under the Marketable Title Act.
The court briefly addressed the issue of whether an owner of a severed mineral interest is entitled to due process of law before the owner can be deprived of that interest but declined to consider whether the MTA violates due process. The decision in this case brings long needed clarity to application of the MTA and will be important in determining mineral ownership disputes between surface owners and mineral interest owners going forward.
To view the Court’s opinion, click here.