The Ohio Supreme Court recently settled an open question under Ohio’s Marketable Title Act (MTA), determining that a reference to the type of interest created and to whom it was granted is all that is necessary under the MTA to preserve the interest. And interestingly, despite the existence of the Dormant Mineral Act (DMA), the Supreme Court applied the MTA to an oil and gas interest.
In Blackstone v. Moore, landowners filed a lawsuit against the owners of an oil and gas royalty interest underlying the landowners’ property, seeking to extinguish the interest under the MTA (Because the appellees (Kuhn heirs) had filed an affidavit to preserve their mineral interest within sixty days of receiving the Blackstones’ notice of intent to declare the mineral interest abandoned, there was no question that they had preserved their interests under the DMA). Created in 1915, the oil and gas royalty interest arose prior to the “root of title” (the last recorded title transaction before the preceding 40 years from when marketability is being determined) and therefore was subject to extinguishment under the MTA.
The Blackstone Court recognized that the MTA extinguishes an interest (apparently including an oil and gas royalty interest) created before the effective date of the root of title, by operation of law, unless the operative chain of title contains either a “specific reference” to the interest, or a “general reference” with “specific identification of a recorded title transaction” regarding the interest.
The reference in Blackstone’s deed was: “Excepting the one-half interest in oil and gas royalty previously excepted by Nick Kuhn, their [sic] heirs and assigns in the above described sixty acres” (Kuhn royalty interest). Appellants argued that this reference was a general reference and insufficient to preserve the Kuhn royalty interest under the MTA because it did not note specifically either the volume and page number of the reserving deed or a date on which the reserved interest was recorded.
The Ohio Supreme Court disagreed, holding the Kuhn royalty interest was preserved under the MTA. The Supreme Court reasoned that a reference that includes the type of interest created and to whom the interest was granted is a specific reference under Ohio law. As specific and general references are mutually exclusive under Ohio law, and the Kuhn royalty interest reference was “specific,” the Court declined read into the MTA a requirement there be a reference to either a volume and page number or a date on which the interest was recorded. However, the Court’s decision did not answer the question of whether a “general reference” would require these same categories of information under the “specific identification of a recorded title transaction” mandate.
Significantly, the Court rejected Blackstone’s suggestion of a judicial bright line rule aligning the DMA and MTA with regard to deed reference requirements. The Court noted that the legislature knew how to include that requirement in a statute and did not do so in the DMA. Regardless of the time/cost savings in title reviews, the Court refused to rewrite the legislation and impinge upon the legislature’s province.
Notably, Justice DeGenaro authored a concurring opinion questioning the continued applicability of the MTA to oil and gas interests in light of the more specific DMA. But as that issue was not raised by the parties, Justice DeGenaro noted it remained an open issue ripe for review in the future.