North Dakota Supreme Court Issues Decision Regarding Ownership of Minerals Beneath Railroad Rights of Way
The North Dakota Supreme Court issued its decision in EOG Resources, Inc. v. Soo Line Railroad Company, 2015 ND 187 on July 15, 2015. Prior to the issuance of this decision, most attorneys examining title to lands in North Dakota took one of two contrary positions relating to the ownership of the minerals beneath railroad rights of way which were evidenced by “Right of Way Deeds” or other similar instruments conveying strips of land to a railway company. Some attorneys treated these deeds as creating easements only, following the legal theory that because the railroad could have condemned the strip of land as an easement, it could have only obtained from the fee owner by a conveyance what it would have obtained by way of a condemnation. This position followed the logic outlined in Lalim v. Williams County, 105 N.W.2d 339 (N.D. 1960). The second position taken by other attorneys was that Lalim did not apply, and that the plain language of the deeds resulted in a conveyance of full fee title. This position was often accompanied by the citation to State v. Rosenquist, 51 N.W.2d 767 (N.D. 1952).
In a three to two decision, the court adopted the second position. However, the court did not create a simple bright line rule. Rather, it found all but one of the deeds at issue in this case conveyed fee simple title as a matter of law. However, it also found the remaining deed to be ambiguous (the Faro Deed). The Faro Deed contained a legal description similar to the deed at issue in Lalim. In both cases, a strip of land was conveyed, less and except a portion thereof which had previously been obtained by the grantee in the form of an easement. In this instance, the court found the Faro Deed to be ambiguous and found that the intent of the parties was not clear as to whether the parties intended to convey fee title or only an easement.
Accordingly, for all wells where a title examiner identified a conveyance of a strip of land from the fee owner to a railroad company, the conveyance should be re-examined in light of the decision in the Soo Line case to determine whether the conveyance is unambiguous (and thus conveyed fee title to the railway company) or whether an ambiguity exists which will require a stipulation or judicial determination. Further, if you do not have a lease from the railway company (or its successor) for the strip of land, you should treat the tract as unleased.
Finally, we note that the Soo Line case related to instruments covering portions of railroad rights of way constructed pursuant to the Act of March 3, 1875, 18 Stat. 482, ch. 152. It is important to note that the Soo Line case does not apply to land grant railroad rights of way pursuant to the Act of July 2, 1864, 13 Stat. 365, ch. 216. Further, the Soo Line case does not impact what was obtained by a railway company utilizing the condemnation processes available to it at the time (whereby it obtained an easement), nor does it affect voluntary conveyances given following the issuance of a condemnation order.
If you have any questions relating to title matters as they relate to the Soo Line case, please feel free to contact Jason Cassady. If you have any questions relating to litigation matters as they relate to the Soo Line case, please feel free to contact Joseph Cassioppi.