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Ohio Supreme Court Interprets the Marketable Title Act

By January 14, 2019Oil and Gas

By: J. Richard Emens & Cody Smith

Oil and gas litigation continues in Ohio. Title issues are one of the hot litigation topics. We’ve previously reported on the Ohio Dormant Mineral Act. Another statute that is at issue with title disputes is the Ohio Marketable Title Act and the Ohio Supreme Court recently issued a ruling interpreting provisions of this act in Blackstone v. Moore, Slip Opinion No. 2018-Ohio-4959.

In 1915 Nick and Flora Kuhn conveyed 60 acres (the “Property”) to W.D. Brown and his wife while reserving a one-half royalty interest thereunder. Each subsequent conveyance of the Property stated “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” (the “Exception”). Id. at ¶ 3 In 1969 David Blackstone was conveyed the Property by an instrument which also included the Exception. Nine or ten years later, Blackstone attempted to purchase the reserved royalty interest from the Kuhns’ heirs but was unsuccessful.

In 2012, Blackstone and his wife filed a lawsuit against the Kuhn heirs claiming that the reserved royalty interest was abandoned under the Dormant Mineral Act, but later amended their Complaint to also seek a declaration that the reserved royalty interest was extinguished under the Marketable Title Act. The trial court granted summary judgment under both claims to Blackstone, but the appellate court reversed as to both. Blackstone only appealed the decision as to the Marketable Title Act claim, which was accepted by the Supreme Court of Ohio.

The Marketable Title Act was enacted by the General Assembly to “simplify[] and facilitat[e] land title transactions by allowing persons to rely on a record chain of title.” Ohio Revised Code § 5301.55. Thus, any person “who has an unbroken chain of title of record to any interest in land for forty years or more, has marketable record title” to the interest claimed according to Ohio Revised Code § 5301.48. The Marketable Title Act appears to have the effect of extinguishing all interests and claims in property prior to the claimant’s “root of title” which is “that conveyance or other title transaction in the chain of title of a person . . . which was the most recent to be recorded as of a date forty years prior to the time when marketability is being determined.” Ohio Revised Code § 5301.47(E) and 5301.47(A). The Marketable Title Act, however, provides certain enumerated exceptions which will preserve any interest or claim in property. One such exemption is when the record chain of title for the property contains a reference to the interest claimed. The statute states that “provided that a general reference . . . to . . . interests created prior to the root of title shall not be sufficient to preserve them, unless specific identification be made therein of a recorded title transaction which creates such . . . interest.” Ohio Revised Code § 5301.49(A). This exception was the issue in Blackstone (i.e. whether the Exception was a general reference or specific enough to preserve the reserve royalty reservation).

While the Marketable Title Act does not define what a “general reference” is, the Supreme Court of Ohio stated that its ordinary meaning is “marked by broad overall character without being limited, modified, or checked by narrow precise considerations: concerned with main elements, major matters rather than limited details, or universals rather than particulars: approximate rather than strictly accurate.” Blackstone at ¶ 13. A “specific reference” is a reference which is not general. In Blackstone the Supreme Court of Ohio held that the Exception was a specific reference because “there is no question which interest is referenced in the 1969 deed” – the reserved royalty interest – and it “specifies by whom the interest was originally reserved.” Id. at ¶ 15. Thus, the Exception (which was included in Blackstone’s root of title) was sufficient to preserve the reserved royalty interest.