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Rubel v. Johnson

Court of Appeals of Ohio, Seventh District, Monroe

December 18, 2017


         Civil Appeal from the Court of Common Pleas of Monroe County, Ohio. Case No. 2013-271

          For Plaintiffs-Appellants: Atty. Richard A. Yoss Atty. Ryan M. Regel Atty. Jordan C. Croucher

          For Defendants-Appellees: Atty. Eric C. Johnson Johnson & Johnson Law Offices

          Hon. Carol Ann Robb Hon. Gene Donofrio Hon. Cheryl L. Waite


          ROBB, P.J.

         {¶1} Plaintiffs-Appellants Gary and Nancy Rubel appeal the decision of the Monroe County Common Pleas Court finding Defendant-Appellee Sheila Johnson owned 1/3 of the mineral interest underlying Appellant's property. The sole issue is whether a 1966 deed transferring property to Appellants contained a mineral reservation where it stated: "Subject, however, to all right, title and interest of the grantor herein in the above three tracts in all minerals rights thereunder including coal, gas and oil." Appellants argued this clause merely conditioned the transfer on what the grantor had the ability to grant and limited the warranty in the deed. Appellee argued the clause constituted a mineral reservation, and the trial court agreed. For the following reasons, the trial court's judgment is affirmed.


         {¶2} In 1912, Luella Roe and her husband, Francis, conveyed sixty acres in Monroe County "excepting and reserving from the same the undivided one half oil royalty, being the one sixteenth of the oil produced from said premises * * *." In 1948, an estate was opened in the Guernsey County Probate Court for Paul Johnson who died owning four tracts of land including the sixty-acre tract (called tract III). In 1949, the probate court's certificate of transfer was recorded showing ownership of the real estate transferred to three devisees: Ethel Johnson (the decedent's wife), James W. Johnson, and John R. Johnson (the decedent's two children). The description of tract III recited: "EXCEPTING AND RESERVING from the same the undivided one-half oil royalty, being the 1/16th of the oil produced from said premises."

         {¶3} In 1966, John and James Johnson sold the 2/3 interest they inherited in tracts I, II, and III to Appellant Gary Rubel. As Appellee Sheila Johnson was married to James Johnson, she was listed in the deed as his wife and a grantor. After the description for tract III, the deed contained a paragraph with the aforementioned "EXCEPTING AND RESERVING" clause concerning the oil royalty. In a separate paragraph was the disputed clause: "Subject, however, to all right, title and interest of the grantor herein in the above three tracts in all minerals rights thereunder including coal, gas and oil." The deed then noted the property was part of the premises transferred from the estate of Paul Johnson with reference to the recordation of the prior deed.

         {¶4} Recorded on the same day was an executor's deed wherein Gary Rubel purchased the remaining 1/3 interest in these tracts (plus three other tracts) from the executor of Jennie Johnson's estate. Pertinent to the sixty-acre tract transferred in the 1912 deed and the 1949 certificate of title, the 1966 executor's deed contained the same "EXCEPTING AND RESERVING" and "Subject, however, to" clauses as the 1966 general warranty deed executed by John, James, and Sheila Johnson (for their 2/3 interest). Jennie Johnson had obtained her 1/3 interest via a quitclaim deed recorded in 1949, wherein Ethel Johnson (her daughter-in-law) transferred the 1/3 share in the three tracts Ethel had just inherited from her husband. The 1949 deed repeated the "EXCEPTING AND RESERVING" clause describing the oil royalty, and this deed is said to be the first time the "Subject, however, to" clause was used in Appellants' chain of title. However, this 1949 quitclaim deed and the subsequent 1966 executor's deed is not part of Appellee's chain of title. It is the 1966 general warranty deed from John and James Johnson to Gary Rubel on which Appellee's claim is based.

         {¶5} James Johnson died in 1985. The parties agreed Appellee would have inherited her husband's 1/3 mineral interest if it was reserved by James in the 1966 deed transferring his 1/3 share in the property to Gary Rubel. John Johnson created a trust naming Ohio University Foundation as a beneficiary. In 2011, John filed a claim to preserve the minerals underlying the three tracts transferred to himself, his mother (Ethel), and his brother (James) by Paul Johnson's estate. His incorporated affidavit stated he inherited his mother's 1/3 mineral interest when she died in 2004.

         {¶6} In 2006, Gary Rubel executed a deed transferring his property to himself and his wife, Nancy Rubel, joint and survivor. The deed did not contain either the "excepting and reserving" or the "subject, however, to" clause. In 2013, the Rubels caused to be recorded an "affidavit on facts relating to title" under R.C. 5301.252 and then filed a complaint against Sheila Johnson and John R. Johnson, individually and as trustee. The complaint sought a declaratory judgment that the clause beginning with "subject, however, to" was not a reservation and did not create a new severed mineral interest. (The complaint also sought a declaration that any mineral interests were abandoned under the 1989 version of the Dormant Mineral Act. After the Supreme Court's decision in Corban was released, this count was withdrawn.)

         {¶7} A successor trustee and then Ohio University Foundation were substituted as parties in place of John Johnson, who had died in 2012. On October 15, 2015, a settlement was entered regarding any mineral interest claimed to be derived from John Johnson (which included the 1/3 he claimed he reserved in the 1966 deed and the 1/3 he said he inherited from Ethel who was said to have reserved her mineral interest in the 1949 deed). Under the confidential settlement agreement, Ohio University Foundation quitclaimed whatever interest John had in the minerals under the three tracts to Appellants. This left in dispute the 1/3 mineral interest claimed by Appellee as having been reserved by her husband (James) in the 1966 deed.

         {¶8} On December 8, 2016, the parties filed agreed stipulations "so as to avoid the necessity of any trial in the matter and to permit the Court to decide the matter upon the submission of written briefs to be submitted by the parties * * *." The agreement set deadlines for the briefs and for any responding briefs. The parties stipulated to various facts and to the admissibility of exhibits attached to the agreed stipulations. They agreed the sole issue was whether the "subject to" language in the 1966 warranty deed was effective as a reservation of mineral rights. If so, then Appellee was the owner of a 1/3 mineral interest under the three tracts; if not, then Appellants owned this 1/3 (and already owned the other 2/3).[1]

          {¶9} Appellants filed a brief arguing the phrase "subject to" is used in order to refer to what has already transpired, which in this case would simply be a reference to the 1912 oil royalty and any other overlooked events. Appellants emphasized how the deed used "excepting and reserving" (and capitalized it) when describing the prior oil royalty and suggested the grantors would have used this type of language again if they intended to create affirmative rights and reserve a mineral interest. It was claimed the "subject, however, to" clause merely represented the grantors' intent to condition the transfer on what they had the ability to give and was common language used to protect the grantor against a breach of warranty claim. They cited a Texas appellate court case for the proposition that the phrase "subject to" in a conveyance does not create affirmative rights. Appellants concluded the language clearly and unambiguously did not create a new mineral reservation and alternatively argued any ambiguity should be construed in their favor as the grantee.

         {¶10} Appellee filed what was labeled a motion for summary judgment.[2] Appellee urged that although a "subject to" clause is sometimes used to avoid liability on a breach of warranty claim, the use of the phrase does not preclude the reservation of an interest. She insisted the only logical reading of the disputed clause is that the "grantor herein" was reserving "all mineral rights" in the "three tracts." Appellee pointed out that the disputed clause only referred to mineral interests and suggests a typical limiting clause would provide the transfer is "subject to restrictions, covenants, conditions, reservations, etc. existing of record." Appellee posited the grantors had no need to warn the grantee about the prior oil royalty issue via the "subject to" clause because the prior clause had just disclosed the oil royalty by quoting it.

         {¶11} Emphasis was also placed on the deed's concluding paragraph which stated: "title so conveyed is Clear, Free and Unencumbered; And Further, That they do Warrant and will Defend the same against all claim or claims, of all persons whomsoever; Excepting all taxes and assessments due and payable after the December 1965 tax installment, which taxes and assessments after said installment, the Grantee herein assumes and agrees to pay." Appellee reasoned if the disputed clause was meant to protect the grantors from a warranty claim, it would have appeared at this location, rather than after the property description. Appellee also noted the use of the word "excepting" (with regards to taxes) in order to make the point that words must be read in context as this use of "excepting" was not a retention by the grantor.

         {¶12} Appellee cited Ohio cases involving deeds which used the phrase "subject to" when creating an interest. She emphasized the law does not require the "magic" words "excepting" or "reserving" in order for a grantor to retain their mineral interest during a property transfer. Appellee stated the capitalization of the words "excepting and reserving" was not significant as this was copied from the last document in the chain of title (the certificate of title issued by the probate court). Appellee explained that the 1966 deed's use of the "subject, however, to" clause would not have been a mere reference to Ethel's prior use of the term in 1949 because the 1949 deed is not in her chain of title. Although the 1949 deed (from Ethel to Jennie Johnson) lies outside of Appellee's chain of title and the pertinent 1966 transaction involved a warranty deed, Appellee noted the 1949 deed contained the same clause even though it was a quitclaim deed with no need to limit liability.

         {¶13} Appellants replied by pointing out this was extrinsic evidence; they also asserted quitclaim deeds have been known to contain "subject to" clauses (with general references to prior transactions) even though such deeds contain no warranty. Appellants acknowledged "subject to" can preface the creation of a reservation if the grantor has a pre-existing document which is referred to or if the clause contains additional language such as a form of ...

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