Opinion
1995–0150/D
12-18-2017
In the MATTER OF the ESTATE OF Laurence R. GOODYEAR, Deceased.
HODGSON RUSS LLP, Attorneys for Daniel Goodyear and Wendy Griswold, James M. Wadsworth, Esq., and Kevin M. Kearney, Esq., of Counsel MEYER, UNKOVIC & SCOTT LLP, Co-counsel for Frederick Young, Beverly H. Young, John F. Young, James R. Young, Jeffrey K. Young, F.J. Young Company and JKLM Energy, LLC, David G. Oberdick, Esq., of Counsel WOODS OVIATT GILMAN LLP, Co-counsel for Frederick Young, Beverly H. Young, John F. Young, James R. Young, Jeffrey K. Young, F.J. Young Company and JKLM Energy, LLC, Lorisa D. LaRocca, Esq. and Brian D. Gwitt, Esq., of Counsel LeClairRyan, A Professional Corporation, Attorneys for SWEPI, LP, Andrew P. Zappia, Esq., of Counsel
HODGSON RUSS LLP, Attorneys for Daniel Goodyear and Wendy Griswold, James M. Wadsworth, Esq., and Kevin M. Kearney, Esq., of Counsel
MEYER, UNKOVIC & SCOTT LLP, Co-counsel for Frederick Young, Beverly H. Young, John F. Young, James R. Young, Jeffrey K. Young, F.J. Young Company and JKLM Energy, LLC, David G. Oberdick, Esq., of Counsel
WOODS OVIATT GILMAN LLP, Co-counsel for Frederick Young, Beverly H. Young, John F. Young, James R. Young, Jeffrey K. Young, F.J. Young Company and JKLM Energy, LLC, Lorisa D. LaRocca, Esq. and Brian D. Gwitt, Esq., of Counsel
LeClairRyan, A Professional Corporation, Attorneys for SWEPI, LP, Andrew P. Zappia, Esq., of Counsel
Barbara Howe, J.
In this proceeding for construction of Article SECOND(B) of decedent's will, the principal question before me is whether the phrase "any mineral rights" was intended by decedent to include all subsurface rights, including oil and gas rights, in his bequest under that article.
Laurence R. Goodyear [hereafter, decedent] died on January 5, 1995. He was survived by his wife, Judith [hereafter, Judith], and his three children, Laurence R. Goodyear, Jr. [hereafter, Laurence], Wendy Griswold [hereafter, Wendy], and Daniel M. Goodyear [hereafter, Daniel]. Decedent's Will, dated December 10, 1994, was admitted to probate and letters testamentary were issued to Judith and Laurence. Laurence died in 2001, survived by his wife, Lorraine Gallard [hereafter, Lorraine], who became executor of his estate. On December 1, 2001, an informal closing statement, with releases, for this estate was filed by Judith and by Lorraine (as the fiduciary of Laurence, the deceased fiduciary).
In 2015, letters of administration CTA were issued on consent in this estate to Daniel and Wendy [collectively, petitioners], for the limited purpose of "commenc[ing] a construction proceeding with respect to decedent's Last Will & Testament and to determine the rights of parties as they relate to real property interests." Thereafter, on November 10, 2015, petitioners filed a petition for construction and advice and direction seeking a determination of decedent's intent under Article SECOND (B) of his Will, which states, in pertinent part, that "I give ... all of my interests in any mineral rights in Pennsylvania or elsewhere to the KING PARTNERSHIP formed by the Agreement dated March 11, 1991, among my three children" (emphasis added).
(A)
During his lifetime, decedent owned real property and subsurface property interests in several counties in Pennsylvania. Prior to his death, certain properties and subsurface interests owned by decedent were acquired by Dr. Frederick J. Young [hereafter, Young] at a 1994 Pennsylvania tax sale [hereafter, the tax sale] for failure to pay property taxes assessed to those properties and subsurface interests.
Following decedent's death, Young sent a letter to the estate on August 18, 1995, which stated as follows:
"Almost one year ago I purchased at the McKean and Potter County tax sales all the properties assessed to Lawrence [sic] Goodyear. According to the clerk, at the Potter County Tax Claims Bureau, Mr. Goodyear had called earlier in 1994 and told her that he was no longer interested in keeping those properties.
...
My son, John F. Young, Esq. told me that in cases like this it is common practice in McKean and Potter County to have a quiet title action against the former owners and any other involved to perfect the tax titles. However, he also mentioned that it would be preferable to get a quitclaim deed from the Lawrence [sic] Goodyear Estate covering all oil, gas and mineral properties belonging to the Estate."
Young enclosed with this letter a quitclaim deed prepared by his son and requested that the estate fill in the names of the fiduciaries. The fiduciaries executed the quitclaim deed, which Young recorded in Pennsylvania. Petitioners contend, and respondents do not deny, that the language in the quitclaim deed prepared by Young transferred interests not only in the properties Young had acquired at the 1994 tax sale but also in other properties owned by decedent in Pennsylvania which were not part of the tax sale.
Issues related to the scope of the quitclaim deed and the parties' competing interests in the property affected by the quitclaim deed are the subject of several actions to quiet title currently pending in Potter County and McKean County, Pennsylvania.
Petitioners commenced this proceeding for construction of Article SECOND (B) of decedent's Will seeking a determination that decedent's intent "was to devise all subsurface property rights, including oil and gas rights in Pennsylvania and elsewhere, to the King Partnership." Specifically, petitioners contend that the phrase used in the Will—"any mineral rights in Pennsylvania or elsewhere"—includes oil and gas rights. Petitioners urge that, so understood, all subsurface rights, including oil and gas rights , in any Pennsylvania real property owned by decedent at his death were devised to the King Partnership under Article SECOND (B) of decedent's Will. That being so, petitioners say, no subsurface rights passed pursuant to decedent's residuary estate; and, therefore, no subsurface rights (including oil and gas rights) could have passed by the 1995 quitclaim deed from the estate to Young.
The petition was amended twice to include, in addition to Young, Beverly H. Young, John F. Young, James R. Young, Jeffrey K. Young, F.J. Young Company, JKLM Energy, LLC and SWEPI, LP as necessary parties (collectively, respondents). Respondents answered the petition and interposed various affirmative defenses. Respondents also challenged the petition on the grounds that this Court lacked both personal and subject matter jurisdiction. This Court's decision finding that it had subject matter jurisdiction and personal jurisdiction was affirmed by our Appellate Division (see Matter of Goodyear , 149 AD3d 1601, 1602 [2017], rehearing denied 151 AD3d 1970 [2017] ).
Substantively, respondents argue that, under Pennsylvania law, which they contend is controlling, the term "mineral rights" does not include oil and gas interests. Therefore, they urge that the use of the term "mineral rights" in the Will did not convey any oil and gas rights.
Because I previously found that the phrase "any mineral rights" as used in the Will was ambiguous, I directed that an evidentiary hearing be held in order to ascertain decedent's intent. On consent of all parties, that hearing took place before the Chief Attorney of this Court, and the parties also waived a referee report, agreeing to submit this matter to me for decision upon the evidence submitted at the hearing.
All post-hearing briefing has been submitted, and I now find and decide as follows.
(B)
(i)
This is a Will construction proceeding. The principal objective in such a proceeding is to discern and implement the intention of the testator (Matter of Thall , 18 NY2d 186, 192 [1966] ; Matter of Kosek , 31 NY2d 475, 484 [1973] ; Matter of Phillips , 101 AD3d 1706 [2012] ).
New York courts have consistently held that, in a Will construction proceeding, "[t]he law of the domicile controls the interpretation of the decedent's language" (see Matter of Gernon , 35 Misc 2d 12, 13 [1962] ; see also Matter of Haldeman , 208 Misc 419 [1955] ). This is because the question of a testator's intent with respect to the language used in a Will is one of fact, not of law (see Matter of Quin , 77 Misc 2d 1077, 1078 [1974] ). In Quin , the Court explained that, when dealing with dispositions of real property, although the legal effect of language used in a Will must be determined by the law of the jurisdiction in which the land is situated, the interpretation of that language is a different matter:
"The interpretation of a will on the other hand, even though mentioned in EPTL 3–5.1 as controlled by the law of State in which the land is situated, is a different matter. The question here is one of fact and not of law and thus the laws of the other jurisdiction would not necessarily be decisive. As stated by Professor Scott, ‘[I]n interpreting an instrument, the court is attempting to determine as to the particular matter in issue what the particular settlor or testator intended or probably intended or would probably have intended if he had thought about the matter. The question here is one of fact and not of law. Where a testator dies domiciled in one state disposing of land in another state, the court, in ascertaining the intention of the testator, is likely to lay weight on the usage at the domicil of the testator, particularly his domicil at the time of the execution of the will, or on the usage at the place of execution of the will. But it will consider not only the language used in the trust instrument but also all the circumstances which bear on the ascertainment of the intention of the testator or settlor. (5 Scott, Trusts [3d ed.], § 648, p. 4091.) (See, also, Restatement 2d, Conflict of Laws, § 277 comment (a); Matter of Gernon, 35 Misc 2d 12 ; Matter of Knickel, 89 Ohio L. Abs. 135.) If it is impossible to ascertain the testator's actual intention from the writing or from other admissible evidence, then something in the nature of presumption or a rule of construction must be indulged in to fill out what would otherwise be a gap in the instrument. This is the process of construction (Restatement 2d, Conflict of Laws, supra ). There is some authority that where the testator designates the law of a State as applicable law in matters of construction, it is to be inferred that he intends the local law in that State to govern and that this designation is effective (5 Scott, Trusts [3d ed.], § 648, p. 4092)" ( id. , at 1078–1079, emphasis added).
Significantly, the Court in Quin also said:
"Any understanding of the language of the decedent must, of necessity, be predicated upon an understanding of what the words or phrase meant to her and on the usage at the place of her domicile or at the place of execution" (id. at 1080, citing Matter of Ransome , 37 Misc 2d 375, emphasis added).
Here, because decedent was domiciled, and the Will was executed, in New York State, the law of New York applies, to the extent appropriate, in determining decedent's intent with respect to article SECOND (B) of his Will.
Thus, I reject respondents argument that Pennsylvania law applies in determining what decedent meant by the phrase "any mineral rights". See infra , at pp. 17–18.
(ii)
It is well-settled that it is the intent of the testator, rather than that of the draftsperson, which is to be ascertained (see Matter of Cord , 58 NY2d 539, 544 [1983] ). Where, as here, the instrument contains an ambiguity, extrinsic evidence is admissible to bring to light the true intention of the testator (see Matter of Schermerhorn , 31 NY2d 739, 741 [1972] ; see also Matter of Phillips supra , at 1706, Matter of Goldstein , 46 AD2d 449 [1975], and Matter of McCabe , 269 AD2d 727 [2000] ). Any ambiguity in a Will must be resolved "in accordance with criteria indicative of probability" ( Matter of Furry , 196 Misc 763, 768 [1949] ), and a Court may consider the facts and circumstances under which the Will was made ( Matter of Levine , 136 AD3d 920, 921 [2016] )..
As our Court of Appeals said in Matter of Kosek, supra , at 484–485:
"The meaning of a single word may be gathered only from seeing or reading it in the context of the will as a whole and, of course, in light of the testator's intent. (See, e.g., Spencer v. Childs , 1 NY2d 103, 106 ; Towne v. Eisner , 245 US 418, 425 ; Central Hanover Bank & Trust Co. v. Commissioner , 159 F2d 167, 169 ; Cabell v. Markham , 148 F2d 737, 739.) Particularly pertinent is the court's statement in the Spencer case (1 NY2d, at pp. 106–107 ):
‘Cases such as the present ... well illustrate the aptness of Judge Learned Hand's wise and trenchant observation that courts should be wary of making "a fortress out of the dictionary", since there "is no more likely way to misapprehend the meaning of language ... than to read the words literally, forgetting the object which the document as a whole" seeks to achieve. ( Cabell v. Markham , 148 F2d 737, 739 ; Central Hanover Bank & Trust Co. v. Commissioner , 159 F2d 167, 169.) "A word ... may vary greatly in color and content’ according to the intent of its author and the circumstances under which it is used." ’ "
With respect to Will construction, our Appellate Division has held that:
"Although many rules of will construction have evolved over the years, the cardinal rule is that the intent of the testator will ‘prevail over all other canons of construction’ (Matter of Clark , 280 NY 155, 160 ; Matter of Sliter , 286 NY 117, 122 ; Matter of Flyer , 23 NY2d 579, 584 ; Matter of Thall , 18 NY2d 186, 192 ; Matter of Dammann , 12 NY2d 500, 504 ). ‘The first principle in all construction proceedings is the intention of the testator as expressed in his will, and all other rules of interpretation are subordinate to this primary one’ ( Matter of Symonds , 79 AD2d 24, 25 ; see, also, Matter of Goldstein , 46 AD2d 449, affd on opn below 38 NY2d 876 ). Although technical words will generally be given their technical meaning (Matter of Krooss , 302 NY 424, 428 ), this rule will not apply if it is shown that the testator used words in their popular sense ( Lawton v. Corlies , 127 NY 100 ; see also Doctor v. Hughes , 225 NY 305, 313 ; Bliven v. Seymour , 88 NY2d 469, 476). Technical rules of construction will not ‘be permitted to defeat the expressed intention of the testator’ ( Fell v. McCready , 236 AD 390, 395, affd 263 NY 602 ; Matter of James , 146 NY 78, 100–101 )." ( Matter of Shannon , 107 AD2d 1084, 1085 [1985] ; see also Estate of Sponholz , NYLJ, June 5, 2014 [statutory meaning overcome by evidence of testator's intent] ).
(iii)
Petitioners introduced evidence at the hearing consisting of the Will and decedent's prior wills, letters and memoranda authored by decedent, and the testimony of James Wadsworth, Esq., the attorney draftsperson of the Will. Wadsworth explained the purpose of the bequest and his understanding of decedent's intent as follows:
"Q. Mr. Wadsworth, did Mr. Goodyear ever ask you to draft a will that made a specific bequest of oil and gas interests?
A. No.
Q. And did Mr. Goodyear ever tell you he intended for oil and gas interests in Pennsylvania or elsewhere to be treated separately from mineral rights?
A. No.
Q. Did Mr. Goodyear ever tell you he intended for his oil and gas interests in Pennsylvania to go as part of his residuary estate?
A. No.
Q. Do you know what Mr. Goodyear intended when he signed his 1994 will bequeathing mineral rights to the King Partnership?
A. Yes. He wished all of his mineral rights and to my knowledge, that included oil and gas interests, that that should go outright to his children. I'm sorry. Not to the children, but to the King Partnership, for the benefit of his children so that they, as I said previously, so that those assets could be administered more easily and avoid the complications of having an interest either in the residuary or a one-third interest in the three children.
Q. And when you drafted the 1994 will, his last will, did you understand the term ‘mineral rights’ to include oil and gas rights?
A. Yes" (emphasis added).
While the understanding of the attorney draftsperson is not controlling, Mr. Wadsworth's understanding of the meaning of the term "mineral rights" is consistent with the other evidence about decedent's intent and use of that term. Decedent's own letters and memoranda spanning decades demonstrate a long-time and consistent use of the term "mineral rights" as including oil and gas interests.
For example, in a letter dated August 19, 1955, decedent wrote to Robert B. Apple, Esq., a Pennsylvania attorney, regarding the chain of title for "surface and/or mineral rights in certain properties in Potter and McKean Counties". Decedent requested an abstract of the title to certain lands "covered by the Cizek lease," and then inquired as to whether Apple "ha[d] any estimate of the sale price per cubic foot of natural gas at the well in this area?" Decedent referred to the term "mineral rights" twice in the letter, followed by an inquiry regarding the price of natural gas in the same area.
The Cizek lease is an oil and gas lease covering certain land in Potter County. In a letter dated April 22, 1953 from Apple to decedent's father, Charles Goodyear, Apple stated that "Mr. John Cizek, of Germania, has called upon me and proposed to lease for oil and gas production possibly 93 acres of your oil and gas rights in West Branch Township, Potter County, Pennsylvania." This makes clear that the "mineral rights" referred to by decedent in his August 19, 1955 letter to Apple encompassed oil and gas interests.
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Decedent wrote to Apple again on August 24, 1961 approving a lease Apple had arranged with respect to oil and gas rights in Portage Township, Potter County. Decedent stated as follows:
"I have your letter of August 23 concerning the mineral rights in Portage Township, Potter County . The arrangement which you have worked out with Mr. Minter appears to be satisfactory.
You will recall, however, that in January of this year, my father conveyed to me all of his interest in the Potter and McKean County properties. Accordingly, it will be necessary to rewrite the oil and gas lease which you forwarded me for signature " (emphasis added).
Decedent referred to Apple's letter dated August 23 as "concerning the mineral rights," although decedent's August 24th responding letter makes clear that the August 23 letter actually concerned an oil and gas lease. Indeed, decedent references the oil and gas lease forwarded by Apple in his August 23 letter. While decedent initially uses the term "mineral rights", his letter as a whole demonstrates that the subject of the "arrangement" was an oil and gas lease.
On October 17, 1972, decedent authored a "Memorandum to the File" regarding "Pennsylvania Leases," which memorialized the various deeds which were the basis of his "mineral rights" in Pennsylvania. Decedent wrote that the existence of these deeds "bears out what my father told me many years ago and is the basis for his deed to me of the mineral rights to the acreage which has been under lease to McKay and others " (emphasis added). The "lease to McKay" referenced by decedent is an oil and gas lease dated August 21, 1972, pursuant to which decedent and his wife granted "all the oil and gas" in 209 acres in Potter County. This establishes that the "mineral rights" decedent refers to are oil and gas interests.
Another memorandum authored by decedent, dated October 11, 1973, memorialized a conversation between himself and a representative of Anschutz Oil Company about their mutual interest in entering into an oil and gas lease. Anschutz Oil had traced "mineral rights title" to decedent's father which had not yet been leased out, and Anschutz Oil was "interested in leasing at the rate of $1.00 a year per acre and 1/8 oil and 1/8 gas royalties, lease for 10 years." Decedent was interested in this arrangement and, to demonstrate that title had vested in him, decedent provided Anschutz Oil with "copies of deeds conveying mineral rights on F. H. and C. W. Goodyear to Goodyear Lumber Company, to Norwich Lumber Company to my father."
In a letter dated April 9, 1980 to Amoco Products, Co., decedent again used the term "mineral rights" to refer to oil and gas interests. The reference line states that the letter concerns "Oil and Gas leases in Pennsylvania." Decedent inquired as to whether "drilling operations" had commenced in the areas referred to in three specific leases. Decedent went on to advise Amoco that he was "the owner of the mineral rights" in several thousand acres of land in Potter County not currently under lease and asked whether Amoco "might be interested in a lease agreement covering them." Thus, decedent's identification of himself as the owner of "mineral rights," immediately followed by an invitation to enter into an oil and gas lease, demonstrates that decedent used the term mineral rights as being inclusive of, and referring to, oil and gas rights.
Correspondence drafted by decedent to the Chief Assessor of Potter County, dated November 30, 1972 [Exhibit A annexed hereto], read in conjunction with correspondence to Hugh A. Grant, dated April 23, 1973 [Exhibit B annexed hereto], demonstrates further that decedent intended the term "mineral rights" to include oil and gas rights. Upon learning of his interest in certain lands, decedent wrote to the Potter County Assessor and advised that:
"It has recently come to my attention that I am the owner of the following property interests in Summit and Portage Townships:
1/4 Interest [sic] in oil and gas and other minerals under 9710 acres under warrants 2107, 2102, 2101, 2108, 2106, 2185, 2182, 2175, 2169 and 2152;
Full interest under 1763 acres in warrants 4011, 4012, 4013, 4014, 3910 and 3911.
It is requested that the above properties be assessed and placed on the tax rolls."
Approximately five months later, on April 23, 1973, decedent wrote to Hugh Grant to obtain advice about how to preserve the value in his properties. Decedent informed Grant that "records show that [he] own[ed] the mineral rights in " (emphasis added) various properties throughout Potter and other counties. Decedent asked "what steps I should take to preserve any values which may exist in these properties. As I indicated to you, the interest shown by the major oil companies has blossomed within the last year and most of the leases which I have signed were executed last fall."
In decedent's 1973 letter to Grant, he expressly referenced 9,710 acres of land in Potter County under warrants 2107, 2102, 2101, 2108, 2106, 2185, 2182, 2175, 2169 and 2152, and 1,763 acres under warrants 4011, 4012, 4013, 4014, 3910 and 3911, which he had asked the Potter County Assessor to place on the tax roll in his November 30, 1972 letter. Although decedent only referred to "mineral rights" in his letter to Grant, his letter to the Potter County Assessor had stated that he had an "interest in oil and gas and other minerals" in the exact same properties. Decedent was referring to the same properties in both of these letters, as demonstrated by the exact same acreage and warrant numbers.
All of this documentary evidence establishes that decedent used the term "mineral rights" to refer to all subsurface rights, including, specifically, oil and gas interests. What becomes abundantly clear from the record as a whole is that decedent used the term "mineral rights" over a period of decades to be inclusive of oil and gas rights or interests in the properties he was referring to at the time.
Respondents urge that decedent's writings over the years do not reveal his intent under Article SECOND (B) of his Will. This is so, respondents say, because decedent executed other documents, such as a Pennsylvania deed in 1989 conveying real property but reserving "all oil, gas and mineral rights the Grantor may possess in the Premises" to himself. This argument is unavailing because such documents do not in any way contradict decedent's other routine usage of the term "mineral rights" as including oil and gas rights.
(C)
Respondents have urged that Pennsylvania law governs the construction of decedent's Will. Although I have rejected that argument, I address it in more detail to make clear that, even if respondents' position were correct, they still could not prevail on the merits of the construction issue.
Pennsylvania law holds that "if, in connection with a conveyance of land, there is a reservation or an exception of ‘minerals’ without any specific mention of natural gas or oil, a presumption, rebuttable in nature, arises that the word ‘minerals’ was not intended by the parties to include natural gas or oil" ( Highland v. Commonwealth , 400 Pa 261, 276 [1960], citing Dunham & Shortt v. Kirkpatrick , 101 Pa 36, 44 [1882] ). As Highland makes clear, however, the Dunham rule may be rebutted upon a showing of "clear and convincing evidence that the parties to the conveyance intended to include natural gas or oil within such word" (Highland v. Commonwealth , supra, at 277).
Here, petitioners have presented clear and convincing evidence that decedent intended the term "mineral rights" to include oil and gas interests. As set forth in detail above, documents authored by decedent over four decades consistently used the term "mineral rights" to describe his interests in various Pennsylvania properties in contexts where it is clear he was describing oil and gas interests. These communications authored by decedent himself provide a clear understanding as to decedent's use of the term "mineral rights." Given the frequency and consistency which he used the phrase "mineral rights" to encompass oil and gas interests in his writings, petitioners have provided clear, convincing proof that decedent intended the term "mineral rights" in his Will to include oil and gas interests.
Thus, even under Pennsylvania law—if it applied to this construction proceeding, which I have concluded it does not—respondents could not establish that the "mineral rights" disposed of by decedent in article SECOND (B) of his Will did not include oil and gas rights.
(D)
Accordingly, I find and conclude that the phrase "all mineral rights in Pennsylvania and elsewhere" in Article SECOND (B) of decedent's Will was meant and intended by him to encompass all subsurface rights, including oil and gas interests, and I so construe that testamentary provision. As so construed, I further find and conclude that Article SECOND (B) of decedent's Will devised all subsurface property rights, including oil and gas rights in Pennsylvania and elsewhere, to the King Partnership, and that no such rights passed pursuant to the residuary clause of decedent's Will.
This decision shall constitute the Order of this Court and no other or further order shall be required.