Preston court sides with grantee in oil and gas case

By Jessica M. Karmasek | Dec 8, 2011


KINGWOOD - The Preston Circuit Court, charged with determining the ownership of a one-seventh interest in a 225-acre oil and gas tract, last month ruled that the oil and gas passed onto the grantee.

The deed, which was executed in 1907, did not contain an express reservation of oil and gas under the property.

In its Nov. 9 order, the court said grantor Florence Forman's intent could not be discerned within the four corners of the deed and that the conveyance language was "ambiguous."

Therefore, the court concluded, it was permitted to consider "extrinsic evidence" of the grantor's intent.

"Failure to convey, devise, lease, mortgage or recognize a separate mineral estate in estate records is evidence that a grantor did not intend to retain or reserve any interest in the oil and gas," Judge Lawrance S. Miller Jr. wrote in the court's 12-page order.

"There is no evidence that Florence Forman and her successors conveyed, devised, leased, mortgaged or recognized any interest in the oil and gas."

Based on the evidence, Miller said it is "clear" that no action was taken by Forman or her heirs to try to retain an ownership interest in the tract.

And because the deed is considered ambiguous, it should be construed against Forman and in favor of Walter Forman, the grantee, the judge said.

Walter Forman later became the sole owner of the tract, which was conveyed several more times before vesting in the plaintiff, Marvin Morgan, in 1969.

Morgan asserted that Florence Forman's intent was to vest all right, title and interest in the property, including oil and gas, in Walter Forman in title.

The defendants -- Florence Forman's successors in interest -- contended the conveyance was "of the surface only," with Florence Forman reserving the one-seventh interest in the oil and gas underlying the tract.

Marsha K. Hudkins, an attorney at Steptoe & Johnson's Bridgeport office, said Monday the Preston court ruling is worth noting, given the growing oil and gas industry in West Virginia.

"With the current oil and gas boom, there is a high degree of interest in who is the owner of oil and gas," she said, adding that her law firm was not involved in the case.

Hudkins, herself, practices energy and mineral law and handles commercial and real estate transactions.

"The real value of this case is that people need to be careful how they draft deeds and documents," she said.

She said lawyers, in particular, need to be very specific, even meticulous, in document drafting.

"In this case, there's nothing you can do about correcting the language (in the deed). All you can do is ask a judge to tell you what it means," Hudkins said.

"But the value to us in oil and gas land in all of this is that we need to be really careful when drafting conveyances, leases, deeds, even wills."

Bill Smith, another energy attorney at Steptoe & Johnson's Bridgeport location, agreed.

"Marsha and I deal with regularly -- probably daily -- issues that arise out of deeds that have been drafted over 100 years ago," he said.

"In this case, you're going back over 100 years and looking at the language of the deed and trying to decide the intent of the grantor."

Back then, oil and gas was not of any importance in Preston County.

"Coal was king at the time," Smith said.

"So this grantor, when she was thinking about minerals, was thinking coal and not giving any thought to oil and gas."

Years later, things have changed.

"The lesson here for us, as lawyers, is that when we're drafting a deed, we need to be absolutely specific and unambiguous as possible," Smith said.

And though the Preston court ruled in favor of the grantee in this case, Smith and Hudkins noted that another circuit court might not do the same.

"You can't look at this case and determine what a court in Monongalia County might think," Smith said.

"I'm sure if it becomes an issue, it's something the state Supreme Court will have to address in the future."

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