In Gibbs Cattle Co. v. Bixler, the Nebraska Supreme Court considered whether Nebraska oil, gas, and mineral interests had been abandoned or become dormant. In Nebraska you generally must transfer mineral interests, or take some action to develop the property, within twenty-three years, or risk losing the interest.
The Nebraska Supreme Court gave some guidance in the Gibbs Cattle Co. case indicating that a transfer even through the probate transfer can be a transfer to preserve Nebraska mineral interests.
Gibbs Cattle Co. is the surface owner of various tracts of land in Sioux County, Nebraska. Gibbs sued the owners of severed mineral interests in those tracts under Nebraska’s dormant mineral statutes (See Neb. Rev. Stat. §§ 57-228 to 57-231 (Reissue 2010)) to reacquire their allegedly abandoned interests. Mineral interests are deemed abandoned unless the “record owner” has taken certain steps to publicly exercise his or her ownership rights during the 23 years preceding the surface owner’s suit. See § 57-229.
This case primarily involved two issues:
(1) whether the “record owner” may be determined only from the register of deeds in the county where the interests are located or also from other public records, such as probate records in the county; and (2) whether an amended complaint adding, rather than changing (i.e., substituting), a new party defendant may relate back to the original complaint.
In interpreting the relevant statutes, the Nebraska Supreme Court concluded that the “record owner” of mineral interests, as used in § 57-229, includes an individual identified by probate records in the county where the interests are located. The Court also concluded that Neb. Rev. Stat. § 25-201.02(2) applies only to an amendment that “changes the party or the name of the party” and that refers to a substitution, rather than to an addition, of parties. The Supreme Court reversed the district court’s contrary rulings.
Both Gibbs and Margaret moved for summary judgment. Gibbs argued that John, the record owner, had not publicly exercised his ownership rights in the mineral interests in the 23 years prior to Gibbs’ complaint. As such, Gibbs argued that John had abandoned those rights and that the mineral interests should vest with Gibbs, the surface owner. Margaret argued that John’s conveyance of the mineral interests to her through
his will was a public exercise of ownership. Margaret also argued that based on the probate records, she was the “record owner” of the mineral interests, and that her 23 years had not yet elapsed.The court found for Gibbs. The court reasoned that John was the record owner of the mineral interests because he was the person listed in the register of deeds. And the court determined that although John’s mineral interests transferred through his will,3 this was not a public exercise of ownership because that occurred by operation of law rather than by John’s action. Margaret does not challenge this latter determination on appeal
Record Owner
Section 57-229 sets forth various ways that the “record owner” of mineral interests may exercise his or her ownership rights and thereby avoid abandonment of his or her interests:
A severed mineral interest shall be abandoned unless the record owner of such mineral interest has within the
twenty-three years immediately prior to the filing of the action provided for in sections 57-228 to 57-231, exercised publicly the right of ownership by
(1) acquiring, selling, leasing, pooling, utilizing, mortgaging, encumbering, or transferring such interest or any part thereof by an instrument which is properly recorded in the county where the land from which such interest was severed is located; or
(2) drilling or mining for, removing, producing, or withdrawing minerals from under the lands or using the geological formations, or spaces or cavities below the surface of the lands for any purpose consistent with the rights conveyed or reserved in the deed or other instrument which creates the severed mineral interest; or
(3) recording a verified claim of interest in the county where the lands from which such interest is severed are
located. . . . The interest of any such owner shall be extended for a period of twenty-three years from the date of any such acts[.]
The answer is not obvious. But the Court concluded that “record
owner” should be construed to include an owner identified through the probate records of the county in which the mineral interests are located. We reach this conclusion for several reasons. Most notably, the Legislature narrowly defined the term “record owner” in § 19-4017.01 as “the fee owner of real property as shown in the records of the register of deeds office in the county in which the business area is located.”
While that definition does not control here, it does shed light on the issue—the intent of the Legislature may be derived from both the words that it used in a statute and those that it did not.17
That the Legislature narrowly defined “record owner” in § 19-4017.01 indicates that it is not the ordinary meaning of the term. And because the Legislature did not similarly define the term in the dormant mineral statutes, it seems likely that the Legislature intended a different and broader meaning for the term in § 57-229. Though Nebraska case law had not specifically addressed this issue, State v. $1,94718 provided some support for the Court's conclusion. In that case, the statute included the phrase “owner of record,” which we equated to “record owner.” Applying Black’s Law Dictionary definition, we stated that “the second paragraph of [the statute] would apply only to persons whose ownership of seized property is a matter of public record.”19
Margaret was identified as an owner through probate records in the county where the interests were located. Those qualify as public records, and so $1,947 supports the conclusion that Margaret was a “record owner.” Moreover, unlike the district court, the Nebraska Supreme Court believed that this construction was consistent with the language and purpose of the dormant mineral statutes. It is consistent with the statutes’ language because the Legislature did not see fit to narrowly define the term as it had in § 19-4017.01. As to being consistent with the statutes’ purpose, the Court acknowledged that the purpose of the dormant mineral statutes was “to address title problems that developed after mineral estates were fractured.”20 But the text of the dormant mineral statutes also demonstrates that the Legislature balanced this purpose with protecting owners’ property rights. This balancing is evident from the statutes themselves.
Abandonment does not automatically occur after a set time, but only if and when a surface owner files suit; it is relatively easy for a record owner to publicly exercise his or her ownership rights; and the statutes provide for a fairly lengthy 23-year period of nonuse before a record owner’s rights may be deemed abandoned.21 Construing “record owner” to include an owner identified through probate records in the county where
the interests are located is consistent with the dormant mineral statutes’ purpose—it still allows for clearing title records. But that construction also protects identifiable property rights. In other words, much like the statutes themselves, this construction of “record owner” balances the desire to clear title records with protecting identifiable property rights.
But the dormant mineral statutes result in a forfeiture of property, and “‘equity abhors forfeitures.’”24 As this is an equitable case,25 if any doubt remains as to the meaning of “record owner,” it should be construed against forfeiture.26
The Nebraska Supreme Court held that the “record owner” of mineral interests, as used in § 57-229, may be determined not only from the register of deeds, but also from probate records in the county where the interests are located. Margaret therefore qualified as a “record owner” within the meaning of § 57-229.
And because she acquired her interest in 1996, her 23-year statutory period has not elapsed and her property cannot be deemed abandoned.
If you have been served a Complaint regarding mineral interests under land in Nebraska, you should contact an attorney and determine if any probate transfers have been made. As in the case above, those owners indicated in probate records have preserved rights. Contact Madathil Law Office, a Nebraska oil and gas attorney, for a free consultation regarding your Nebraska mineral interests.
Angela Y. Madathil
Madathil Law Office, LLC
Nebraska Oil and Gas Attorney
Serving clients throughout Nebraska.
In Omaha In Lincoln
1625 Farnam Street #830 285 South 68th Street Place, Suite 322
Omaha, NE 68102 Lincoln, NE 68510
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