Opinion
Nos. 22-0139 22-0140
06-15-2023
COLLINGWOOD APPALACHIAN MINERALS III, LLC, Oxy USA, Inc., Collingwood Appalachian Minerals I, LLC, and Waco Oil & Gas Co., Inc., Defendants Below, Petitioners v. Richard L. ERLEWINE, Plaintiff Below, Respondent
Michael C. Cardi, Esq., Jordan C. Maddy, Esq., Bowles Rice LLP, Morgantown, West Virginia, Counsel for Petitioners Collingwood Appalachian Minerals I, LLC and Collingwood Appalachian III, LLC W. Taylor Frankovitch, Esq., Bowles Rice LLP, Canonsburg, Pennsylvania, Counsel for Petitioner Oxy USA, Inc. Richard W. Gallagher, Esq., Stephen F. Gandee, Esq., Robinson & McElwee PLLC, Charleston, West Virginia, Counsel for Petitioner Waco Oil & Gas Co., Inc. Andrew R. Cutright, Esq., Roger L. Cutright, Esq., Cutright Law PLLC, Morgantown, West Virginia, Counsel for Respondent
Michael C. Cardi, Esq., Jordan C. Maddy, Esq., Bowles Rice LLP, Morgantown, West Virginia, Counsel for Petitioners Collingwood Appalachian Minerals I, LLC and Collingwood Appalachian III, LLC
W. Taylor Frankovitch, Esq., Bowles Rice LLP, Canonsburg, Pennsylvania, Counsel for Petitioner Oxy USA, Inc.
Richard W. Gallagher, Esq., Stephen F. Gandee, Esq., Robinson & McElwee PLLC, Charleston, West Virginia, Counsel for Petitioner Waco Oil & Gas Co., Inc.
Andrew R. Cutright, Esq., Roger L. Cutright, Esq., Cutright Law PLLC, Morgantown, West Virginia, Counsel for Respondent
WALKER, Chief Justice:
Petitioners and Respondent each participated in a tax sale in 1989 after a delinquent taxpayer failed to pay taxes on 135 acres of property and twenty-five percent of its subjacent oil and gas estate. Respondent bought the 135-acre property, and, on the same day, Petitioners bought the twenty-five percent interest in the oil and gas estate. In 1993, Petitioners bought another twenty-five percent interest in the same oil and gas estate after a tax sale resulting from a different taxpayer's tax delinquency. Then, almost three decades later, despite purchasing only the 135-acre property in the 1989 tax sale, Respondent sued Petitioners and claimed he owned the fifty percent interest in the oil and gas estate Petitioners purchased at the prior tax sales. Respondent argued that he owned the oil and gas interest Petitioners purchased at the 1989 tax sale because the tax assessor assessed the former, delinquent taxpayer inappropriately. And Respondent contended that he owned the other twenty-five percent interest in the oil and gas estate purchased by Petitioners in 1993 because the delinquent taxpayer had conveyed all of his oil and gas interest years earlier and did not own the oil and gas interest for which his taxes were delinquent. The circuit court granted summary judgment for Respondent.
As used in this Opinion, "135 acres of property" or "135-acre property" means the property less its oil and gas estate.
The parties maintain, and the circuit court found, that all of the interests at stake in this appeal are total of a fifty percent interest in the oil and gas. But, as noted in the facts below, the deeds in the record prior to the 1991 and 1995 tax deeds refer to these interests as interests in the "oil and gas royalty." To avoid confusion, we will refer to these interests as the parties did, rather than as the deeds provided.
These respective interests were conveyed to the parties by tax deeds issued in 1991.
This interest was conveyed to Petitioners by tax deed issued in 1995.
On appeal, we reverse the circuit court as to Petitioners’ 1991 deed because Respondent, a fellow tax-sale purchaser, lacks grounds under the relevant statute to challenge how the assessor assessed the delinquent taxpayer or the procedure by which the sheriff sold the delinquent tax payer's property interests. And we reverse the circuit court as to Petitioners’ 1995 deed because the delinquent taxpayer clearly owned the twenty-five percent interest in the oil and gas estate for which his taxes were delinquent. We remand with directions that the circuit court enter summary judgment for Petitioners and to restore the parties’ ownership interests to what they bargained for at the tax sales.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 1909, J.E. Huff conveyed a 135-acre tract known as Huff Ridge to James W. Sivert. The deed reserved "one-half of all the oil and gas royalty" to Mr. Huff. So, Mr. Sivert owned the 135-acre property and fifty percent of the oil and gas royalty underlying it. Starting in 1930, the Wetzel County Assessor taxed Mr. Sivert's unsevered oil and gas interests separately from the remaining value of the 135-acre property.
Next, Mr. Sivert conveyed the 135-acre property and twenty-five percent of the oil and gas estate to Joseph and Myrtle Rogers by deed dated September 13, 1944; the deed reserved to Mr. Sivert "one fourth of all the oil and gas royalty." Then the Rogerses conveyed to Osburn Dunham, by deed dated September 8, 1945, the 135-acre property and their twenty-five percent interest in the oil and gas royalty. Mr. Sivert later conveyed "one-fourth of all the oil and gas royalty" to Joseph Palmer by deed dated November 1, 1945. And Mr. Palmer, by deed dated November 4, 1945, conveyed "the undivided 1/4 interest of all the oil and gas royalty" to Mr. Dunham. So, as of November 1945, Mr. Dunham owned the 135-acre property and fifty percent of the oil and gas royalty. He continued paying separate tax assessments for the 135-acre property and subjacent oil and gas interest.
The fifty percent interest in the oil and gas estate Mr. Huff reserved in the 1909 deed is not at issue in this case.
Then by deed dated April 22, 1968, Mr. Dunham conveyed to Russell F. Stiles "the same land" the Rogerses conveyed to Mr. Dunham "by deed bearing the date the 8 th day of September, 1945 ... [,]" and the deed states, "There is reserved and excepted from this conveyance all exceptions and reservations contained in all prior deeds." The September 8, 1945 deed, which the 1968 deed cross-references states, "This deed is executed subject to the reservation made by James W. [S]ivert and wife, which reads as follows: the said parties of the first part in this deed reserves [sic] one fourth (1/4) of all the oil and gas royalty." After executing the 1968 deed, Mr. Dunham continued paying taxes on his twenty-five percent interest in the oil gas estate, Mr. Stiles paid taxes on the 135-acre property and his twenty-five percent interest in the oil and gas estate, and Mr. Stiles collected royalties on only a twenty-five percent interest in the oil and gas estate. Also reflecting the twenty-five percent interest Mr. Dunham retained after the 1968 deed, the 1968 land book contains a handwritten notation replacing Mr. Dunham's "1/2" oil and gas interest with a "1/4" interest.
As noted above, the parties and the circuit court refer to these royalty interests as ownership of a percentage of the oil and gas. And for purposes of our analysis, we refer to these interests using the parties’ and circuit court's terminology.
So, by 1988, Mr. Stiles owned the 135-acre property and twenty-five percent of the subjacent oil and gas estate, and Mr. Dunham owned the other twenty-five percent interest in the oil and gas estate at issue in this case. But that year, Mr. Stiles paid neither the tax on the 135-acre property nor the tax on his twenty-five percent interest in the oil and gas estate, which were separately assessed. So, upon Mr. Stiles's tax delinquency, the sheriff exercised his enforceable lien and sold the 135-acre property and the twenty-five percent interest in the subjacent oil and gas rights separately at a tax sale in 1989. Respondent Richard Erlewine bought the 135-acre property, and Petitioners Trio Petroleum Corporation and Waco Oil & Gas Company bought Mr. Stiles's twenty-five percent interest in the oil and gas estate. The Clerk of the Wetzel County Commission conveyed the 135-acre property to Respondent by deed dated April 1, 1991. By separate deed dated April 1, 1991, the same Clerk of the Wetzel County Commission conveyed Mr. Stiles's twenty-five percent interest in the oil and gas estate to Petitioners Trio Petroleum Corporation and Waco Oil & Gas Company. Then in 1992, Mr. Dunham, the owner of the other disputed twenty-five percent interest in the oil and gas estate, failed to pay taxes on his interest. So, the sheriff sold it to Petitioners at a tax sale as well. The Clerk of the Wetzel County Commission conveyed this twenty-five percent interest to them by deed dated April 1, 1995. After the tax sales, Respondent owned the 135-acre property and Petitioners owned fifty percent of the oil and gas estate.
Petitioners Collingwood Appalachian Minerals I, LLC, Collingwood Appalachian Minerals III, LLC, and Oxy USA Inc. are successors in interest to Trio Petroleum Corporation and Waco Oil & Gas Company. As used in this Opinion, "Petitioners" includes the current petitioners and their predecessors.
For decades following the tax sales, Respondent paid taxes on the 135-acre property and Petitioners paid taxes on their fifty percent interest in the oil and gas estate underlying it. Even so, on December 17, 2020, Respondent filed a complaint seeking a declaratory judgment that he owned Petitioners’ fifty percent of the oil and gas estate. He alleged that the 1991 Tax Deed that purportedly conveyed the twenty-five percent oil and gas estate to Petitioners was void ab initio because the assessor lacked the authority to separately assess the delinquent taxpayer for the 135-acre property and the unsevered twenty-five percent interest in the oil and gas estate. And Respondent alleged that the 1995 Tax Deed was also void ab initio because Mr. Dunham transferred his full fifty percent interest in the oil and gas estate when he executed the 1968 deed to Mr. Stiles. So, Respondent alleged, the Clerk of the Wetzel County Commission possessed no interest to transfer in the 1995 Tax Deed.
The parties filed cross-motions for summary judgment. After a hearing on the motions, the circuit court found the 1991 and 1995 Tax Deeds void ab initio and granted summary judgment for Respondent. Petitioners raise two assignments of error on appeal, contending: (1) The 1991 Tax Deed conveyed to Petitioners a twenty-five percent interest in the oil and gas estate because the delinquent property owner subjected his entire ownership interest to a tax sale when he paid the taxes on neither the 135-acre property nor the oil and gas estate, and (2) the 1995 Tax Deed conveyed to Petitioners a twenty-five percent interest in the oil and gas estate because Mr. Dunham's 1968 deed to Mr. Stiles conveyed only the twenty-five percent interest in the oil and gas estate that the Rogerses conveyed in the 1945 deed.
II. STANDARD OF REVIEW
Petitioners appeal an order granting declaratory relief to Respondent. We apply a de novo standard of review to declaratory judgment appeals: "A circuit court's entry of a declaratory judgment is reviewed de novo. " A de novo review is anew and unqualified.
Syl. Pt. 1, City of Martinsburg v. Berkeley Cnty. Counc. , 241 W. Va. 385, 825 S.E.2d 332 (2019) (quoting Syl. Pt. 3, Cox v. Amick , 195 W. Va. 608, 466 S.E.2d 459 (1995) ).
See Gastar Expl. Inc. v. Rine , 239 W. Va. 792, 798, 806 S.E.2d 448, 454 (2017).
III. ANALYSIS
A. 1991 Tax Deed
The circuit court opined that "[t]he threshold issue underlying [the validity of the 1991 Tax Deed] is whether an assessor is permitted to separately assess a sole owner of both the surface estate and the unsevered mineral estate associated with that parcel." But this is not the dispositive issue as to the validity of the 1991 Tax Deed. We have held that an assessor may not separately tax unsevered mineral estates: "In case of two assessments of the same land, under the same claim of title, for any year, one payment of taxes, under either assessment, is all the State can require." We have also explained that "[a] deed made pursuant to a tax sale under a void assessment is void." Following this rationale, we have voided tax deeds where the property owner paid one of two separate assessments on his property and unsevered mineral estate. But we have not voided a tax deed where the delinquent property owner paid neither the tax on his property nor the tax on his unsevered mineral estate. So, the threshold issue here is whether the separate, unauthorized taxation of a mineral estate invalidates a tax deed conveying it when the owner became delinquent on it and the tax assessed for the rest of his property interest.
Syl. Pt. 2, Orville Young, LLC v. Bonacci , 246 W. Va. 26, 866 S.E.2d 91 (2021) (quoting Syl. Pt. 2 State v. Allen , 65 W. Va. 335, 64 S.E. 140 (1909) ).
Syl. Pt. 3, Id. at 26, 866 S.E.2d at 91 (quoting Syllabus point 4, Blair v. Freeburn Coal Corp. , 163 W. Va. 23, 253 S.E.2d 547 (1979) ).
Bonacci , 246 W. Va. at 35, 866 S.E.2d at 100 ("the Assessor [erred when he found] taxes to be delinquent when the erroneous, separate assessment was not timely paid.").
The circuit court relied primarily on Orville Young, LLC v. Bonacci when it decided that separate taxation automatically voids a tax deed to a mineral estate. On appeal, Petitioners argue that this case differs from Bonacci, and Respondent argues the two cases are indistinguishable. Because we agree the case turns on Bonacci , we limit our analysis to its application.
Id. at 26, 866 S.E.2d at 91.
In Bonacci , the Marshall County Assessor taxed a property owner's unsevered oil and gas estate separately from the owner's other property interests. The owner paid the separate taxes for the first year but stopped paying the separate assessments on the oil and gas estate after that, so the sheriff sold it at a tax sale. Years later, the property owner's successors in interest sued the tax-sale purchaser and claimed ownership of the oil and gas estate. The circuit court voided the tax deed and granted summary judgment for the property owner's successors. On appeal, we clarified that under West Virginia Code § 11-4-9 (1935), an assessor may not separately tax an unsevered mineral estate. We affirmed the circuit court's decision to void the tax deed "because the [successors’] predecessors in interest had paid the property taxes assessed on the subject, undivided oil and gas estate [by paying the tax on the other, unsevered interest]; the taxes thereon were not delinquent; and no tax lien attached to the mineral estate that could be sold at a tax sale." We reasoned that because the predecessors in interest paid the tax on the surface estate, "which includes all of its constituent parts[,]" the predecessors remained current on the taxes for value of the mineral estate. We considered the payment of the single tax "one full payment of taxes on the entirety of [the] property." We deemed the tax deed invalid because there was no tax delinquency, and we reiterated that "[a]ctual delinquency is a condition precedent to the right to sell land under a tax assessment. There is no such delinquency when the taxes have in fact been paid, by the owner himself or by any other person entitled to make such payment."
Id. at 30, 866 S.E.2d at 95.
Id. at 30-31, 866 S.E.2d at 95-96.
Id. at 31, 866 S.E.2d at 96.
Id.
Id. at 34, 866 S.E.2d at 99.
Id. at 29, 866 S.E.2d at 94.
Id. at 35, 866 S.E.2d at 100.
Id.
Id. (quoting State v. Allen , 65 W. Va. 335, 339, 64 S.E. 140, 142 (1909) ).
This case materially differs from Bonacci because Mr. Stiles, the former property owner, paid neither the tax on the 135-acre property nor the oil and gas estate tax before the sheriff sold both at a tax sale; the property owner did not make the "one full payment" on the entirety of the property to prevent the sheriff from possessing an enforceable tax lien. So, unlike Bonacci , the condition precedent of actual tax delinquency existed before the tax sale.
The tax on an undivided property includes "all of its constituent parts," and when the assessor assessed the 135-acre property, a lien attached to Mr. Stiles's entire property interest—including the value of the property's subjacent minerals. When Mr. Stiles became delinquent on both taxes, West Virginia Code § 11A-2-1 (1941) required the sheriff to enforce the lien, and the sheriff possessed the authority to sell the 135-acres of property and its unsevered oil and gas estate. The sheriff's separate sale of the 135-acre property and oil and gas estate and the Clerk of the Wetzel County Commission's severance of title to the two through issuance of separate tax deeds proved harmless to the former landowner who subjected the entire property to a tax sale when he paid no taxes. As it related to the tax-sale purchasers, the process represented, if anything, an "irregularity, error or mistake" in the "procedure leading up to and including delivery of the tax deed[s]" to the tax-sale purchasers.
W. Va. Code § 11A-1-2 (1961) ("There shall be a lien on all real property for the taxes assessed thereon....").
W. Va. Code § 11A-2-1 ("Whenever any taxes become delinquent, it shall be the duty of the sheriff to take immediate steps to enforce payment....").
W. Va. Code § 11A-3-63 (1994).
Under West Virginia Code § 11A-3-63, no such irregularity, error, or mistake invalidates a tax-sale purchaser's tax deed unless the Legislature created a specific cause of action allowing it:
No irregularity, error or mistake in respect to any step in the procedure leading up to and including delivery of the tax deed by the deputy commissioner shall invalidate the title acquired by the purchaser unless such irregularity, error or mistake is, by the provisions of section forty-nine of this article or section two, three, four or six, article four of this chapter, expressly made ground for instituting a suit to set aside the sale or the deed. [ ]
Id.
The Legislature established grounds for a person to invalidate a tax-sale purchaser's deed for procedural errors such as, among other reasons, when (1) a prohibited purchaser bought the property at the tax sale, (2) all taxes were paid before the sale, (3) a tax-sale purchaser violated specified post-sale procedures, (4) the State Auditor failed to notify certain persons of the tax sale, or (5) a person under disability at the time of the tax sale later redeemed the property. The Legislature did not specify a cause of action that allows a third party such as Respondent, not related to the delinquent owner, to challenge a tax deed on the grounds that the delinquent owner was improperly taxed or that the tax sale severed a mineral estate. This is consistent with the Legislature's stated intent "[t]o provide for the speedy and expeditious enforcement of the tax claims of the state and its subdivisions ... [and] reduce the expense and burden on the state and its subdivisions of tax sales so that such sales may be conducted in an efficient manner while respecting the due process rights of owners of real property ...." We have effectuated the Legislature's concern with maintaining efficient tax sales and have explained the importance of their finality: "confidence in one's title to land is of paramount importance. As we have remarked previously, ‘certainty above all else is the preeminent compelling public policy to be served.’ " Indeed, "finality and predictability are of the utmost importance to the tax-sale process." And we balance our concern with finality with the due process rights of the former, delinquent owner.
See W. Va. Code §§ 11A-3-49, 11A-4-2 to 4, 6.
W. Va. Code § 11A-3-1 (2022) (emphasis added).
Mingo Cnty. Redevelopment Auth. v. Green , 207 W. Va. 486, 491, 534 S.E.2d 40, 45 (2000) (quoting Hock v. City of Morgantown , 162 W. Va. 853, 856, 253 S.E.2d 386, 388 (1979) ).
Lexington Land Co., LLC v. Howell , 211 W. Va. 644, 651, 567 S.E.2d 654, 661 (2002).
See, e.g., Lilly v. Duke , 180 W. Va. 228, 233, 376 S.E.2d 122, 127 (1988) ("If one's property has been wrongfully taken because of a constitutional due process violation, it is hardly an answer to say that such person cannot bring suit because he now lacks an interest in the property.").
We have no such due process concerns in this case where Respondent, a fellow tax-sale purchaser, seeks to set aside Petitioners’ tax-sale deed. Where no countervailing due process or statutory rights of a delinquent taxpayer exist, the finality and predictability of the tax sale are the State's primary concerns. The circuit court ignored those concerns when it disturbed Petitioners’ 1991 Tax Deed more than thirty years later and after Petitioners and Respondent paid their taxes on and exercised dominion over their respective interests for all that time.
Petitioners purchased a valid tax deed to the oil and gas estate because, unlike Bonacci , the former landowner subjected the mineral estate to tax sale when he paid no taxes on the 135-acre property or the separately assessed oil and gas estate. And § 11A-3-63 protects Petitioners’ title from a challenge by Respondent, a fellow tax-sale purchaser who lacks grounds to challenge Petitioners’ tax-sale deed.
B. 1995 Tax Deed
By its terms, Mr. Dunham's 1968 deed to Mr. Stiles conveyed the same property that the Rogerses conveyed to Mr. Dunham: the 135-acre property and a twenty-five percent unsevered interest in the oil and gas estate, and the deed contained a general exception clause that "reserved and excepted from th[e] conveyance all exceptions and reservations contained in all prior deeds." Even so, the circuit court found that in the 1968 deed, Mr. Dunham conveyed his entire fifty percent interest in the oil and gas estate to Mr. Stiles. So, the circuit court reasoned that Mr. Dunham owned no interest in the mineral estate that the 1995 Tax Deed could convey.
On appeal, Petitioners argue that the 1968 deed's plain language conveyed the same twenty-five percent interest in the oil and gas estate that the Rogerses conveyed to Mr. Dunham in the 1945 deed. They reason that the 1968 deed conveyed "the same land" as the 1945 deed between the Rogerses and Mr. Dunham which reflected Mr. Dunham's intent to replicate that conveyance and convey the same 135-acre property and twenty-five percent interest in the oil and gas estate that the Rogerses conveyed to him. In other words, they argue the 1968 deed cross-referenced the 1945 deed to explain the conveyance and to incorporate its express reservation of a twenty-five percent interest in the oil and gas estate. They also argue that Mr. Dunham's and Mr. Stiles's conduct after executing the 1968 deed reflects their intent for Mr. Dunham to convey only a twenty-five percent interest in the oil and gas estate.
When construing a deed, our goal is to effectuate the parties’ intent whenever possible:
In construing a deed, will, or other written instrument, it is the duty of the court to construe it as a whole, taking and considering all the parts together, and giving effect to the intention of the parties wherever that is reasonably clear and free from doubt, unless to do so will violate some principle of law inconsistent therewith. [ ]
DWG Oil and Gas Acquisitions LLC, v. S. Country Farms, Inc. , 238 W. Va. 414, 418-19, 796 S.E.2d 201, 205-06 (2017) (quoting Syl. Pt. 1, Maddy v. Maddy , 87 W. Va. 581, 105 S.E. 803 (1921)) (emphasis removed).
The Legislature also directs us to look to the parties’ intent when we decide whether a grantor reserved a specific property interest in a conveyance:
When any real property is conveyed or devised to any person, and no words of limitation are used in the conveyance or devise, such conveyance or devise shall be construed to pass the fee simple, or the whole estate or interest, legal or equitable, which the testator or grantor had power to dispose of, in such real property, unless a contrary intention shall appear in the conveyance or will. [ ]
W. Va. Code § 36-1-11 (1931) (emphasis added).
When applying this statute, we have explained, "[i]n order to create an exception or reservation in a deed which would reduce a grant in a conveyance clause which is clear, correct and conventional, such exception or reservation must be expressed in certain and definite language."
Syl. Pt. 2, Hall v. Hartley , 146 W. Va. 328, 119 S.E.2d 759 (1961).
When a deed is unambiguous, we generally consider only its text to determine the grantor's intent. A deed is ambiguous when susceptible to differing or doubtful meanings: "The term ‘ambiguity’ is defined as language reasonably susceptible of two different meanings or language of such doubtful meaning that reasonable minds might be uncertain or disagree as to its meaning."
Syl. Pt. 4, Est. of Tawney v. Columbia Nat. Res. , L.L.C. , 219 W. Va. 266, 633 S.E.2d 22 (2006).
In this instance, the 1945 deed, which the 1968 deed cross-references, clarifies that the conveyance is "subject to [Mr. Sivert's] reservation" of "one fourth (1/4) of all the oil and gas royalty." Mr. Dunham later obtained the twenty-five percent interest that Mr. Sivert reserved in the 1945 deed. So, when Mr. Dunham conveyed in the 1968 deed the "same land" as the 1945 deed and subjected it to Mr. Sivert's twenty-five percent reservation, he expressly reserved that twenty-five percent interest. Mr. Dunham unambiguously expressed his intent to convey the "same land" as the 1945 deed and in the very next sentence subjected the conveyance to the same twenty-five percent reservation contained in it. So, we find the language reasonably susceptible to only one meaning: Mr. Dunham conveyed to Mr. Stiles the same property interests that the Rogerses conveyed to Mr. Dunham—not Mr. Sivert's additional twenty-five percent interest in the oil and gas estate that Mr. Dunham later obtained and which was expressly reserved. By conveying the "same land" as the Rogerses’ 1945 deed, the 1968 deed obviously did not convey Mr. Dunham's other twenty-five percent interest in the oil and gas estate because that would be more than the Rogerses ever owned. Our interpretation of the 1968 deed is consistent with § 36-1-11 because the deed demonstrates Mr. Dunham's "contrary intention" to devise less than his whole interest. We need not consider Mr. Dunham's and Mr. Stiles's course of conduct to interpret the unambiguous deed.
IV. CONCLUSION
For these reasons, we reverse the circuit court's January 21, 2022 order granting summary judgment for Respondent. As the parties understood three decades ago at the tax sales, the 1991 and 1995 Tax Deeds together conveyed a fifty percent interest in the mineral estate to Petitioners. We remand for the circuit court to enter summary judgment in their favor.
Reversed and Remanded.
JUSTICE HUTCHISON concurs, in part, and dissents, in part, and reserves the right to file a separate opinion.
Justice Hutchison, concurring, in part, and dissenting, in part:
This case involves separate tax deed conveyances in Wetzel County: the first are two 1991 tax deeds, and the second is a 1995 tax deed. As I explain herein, I concur with the majority opinion's ruling concerning the 1995 tax deed that conveyed a 25% share of the oil and gas royalties to Trio Petroleum and Waco Oil & Gas. But I dissent to the majority opinion's interpretation of Richard Erlewine's 1991 tax deed. I am firmly of the belief that Erlewine received a tax deed to the land undivided from a different 25% share of the oil and gas royalties in 1991, and thus, that the majority opinion's interpretation of the law of tax deeds is incorrect. Moreover, due to the ambiguities in the laws regarding tax deeds, particularly West Virginia Code § 11A-3-63, I call on the Legislature to clarify its statutes on this topic.
Any tax deed lawyer looking at the chain of title recorded in Wetzel County would fairly conclude that in 1945, Osburn Dunham bought 135 acres of land on Huff Ridge with a 25% share of the subjacent oil and gas from Joseph and Myrtle Rogers. In 1949, Dunham bought another 25% share from James Sivert. Hence, in 1968, when Dunham conveyed to Russell F. Stiles "the same land conveyed to the said Osburn Dunham by Joseph E. Rogers" in 1945, it is fair to say that Stiles purchased land with only a 25% share of the oil and gas. Dunham continued to own a 25% share. And if there is any confusion or ambiguity here, after 1968, Stiles paid taxes on 25% of the oil and gas and Dunham paid taxes on another 25% share. While the majority opinion claims that the 1968 deed is unambiguous, it is actually Dunham's and Stiles subsequent conduct which clarified the intent behind the 1968 deed. Hence, when Dunham defaulted and failed to pay his taxes, and the sheriff sold Dunham's 25% share to Trio/Waco (for a mere $16.36), the 1995 tax deed to Trio/Waco was unassailable. Trio/Waco and its successors clearly own that 25% share under the 1995 tax deed.
This analysis, obviously, sets aside any questions about the effect of the 1949 merger of Osburn Dunham's oil-and-gas shares.
That said, it is the other 25% share bought by Stiles in 1968 that is at the heart of my dissent. There are several legal opinions in the record, known to every tax assessor in the State of West Virginia, which show that this case does not involve a procedural hiccup. No, the assessor's actions in this case were in clear violation of West Virginia law.
It is a long-standing problem in West Virginia deed law that tax assessors have improperly and illegally sent landowners, who own a unified estate, multiple tickets taxing the estate in pieces. Tax assessors, for a century, illegally split oil and gas, or coal, or whatever royalties or minerals from the surface estate and slapped a tax on each interest separately. The result was multiple, improper assessments that caused confusion, the duplication and overpayment of taxes, accidental defaults, and multiple overlapping and competing tax deeds following an auction of such interests.
The records of the Attorney General demonstrate that tax assessors botching the taxation of land, and illegally taxing the surface separate from the minerals, is nothing new. More importantly, those records demonstrate tax assessors knew those actions were illegal. For instance, nearly a century ago, in 1928, a landowner sold the coal underlying his tract of land in Harrison County and retained an undivided interest in the rest (the land and the non-coal minerals underlying the land). The tax assessor charged taxes to the landowner for "the surface" and the landowner paid the taxes. Then, oil and gas were discovered beneath the tract, and a prosecuting attorney questioned (on behalf of his county's tax assessor) whether the landowner had forfeited ownership of the oil and gas interest because the landowner never paid a separate tax on the oil and gas.
In a 1948 opinion, the Attorney General concluded the prosecuting attorney's question was balderdash. Specifically, the Attorney General found absolutely no authority for a tax assessor to split a landowner's undivided interest in land into pieces for tax purposes. The Attorney General said:
Until there has been a severance of an estate in minerals there is no authority for a separate assessment of the mineral interest. Conversely there is no authority to omit from assessment an unsevered estate in minerals .... There is no authority for the separate assessment of unsevered interests in land. In the instant case therefore the owner and assessor must have intended to report for taxation the entire estate remaining after the severance of
coal, including the unsevered interest in oil and gas.
Attorney General's Opinion of April 20, 1948, 42 W. Va. Op. Att'y Gen. 309 (1948) (emphasis added).
A similar question reappeared two decades later. In 1966, the Attorney General issued an opinion to Hardy County regarding land on which a well was producing natural gas. The natural gas was not severed from the land in the owner's deed, but the county assessor still issued two tax tickets to the owner: one for the land, and one for the natural gas royalties. Regarding those tax tickets, the Attorney General explained that West Virginia law – then, as now – requires an assessor to place one unified tax on "[t]he value of land, the value of buildings, and the aggregate value" of all tracts or interests. W. Va. Code § 11-4-2(5)(A). See also W. Va. Code § 11-4-9 (requiring the assessor to charge only one tax for an owner's undivided interest in any estate in land). Hence, the Attorney General concluded:
Where land is owned and there has been no severance of an estate in the gas mineral from such land, but there is known natural gas within and underlying such land (regardless of whether or not gas royalties are being paid to the owner thereof pursuant to the terms of a lease), such land should be assessed annually for ad valorem taxation purposes at its "true and actual value", taking into consideration all pertinent indications of value, including, among any others, reliable estimates, gas production reports, and royalties paid to the landowner. Until there has been a severance of an estate in the gas mineral, there is no authority for a separate assessment of the gas underlying such land. There cannot be any separate assessment of unsevered interests in land.
Attorney General's Opinion of October 27, 1966, 52 W. Va. Op. Att'y Gen. 135 (1966) (emphasis added).
Accordingly, by 1966, it should have been clearly understood by county tax assessors across the State that if an interest in natural gas has not been severed from the land in a deed or will or other written conveyance, then there is no authority for the assessor to issue a separate tax assessment for the gas underlying the land.
Now, recall that two years later, in 1968, Osburn Dunham conveyed to Russell Stiles the same thing Dunham bought in 1945: "[a] tract of land situated on the Huff Ridge" with an undivided, unsevered, one-quarter share of the oil and gas royalties. Despite the repeated admonitions of the Attorney General, the Wetzel County tax assessor mailed Stiles two separate tax tickets, one for the land, and one for the share of oil and gas. This separate assessment had no basis in the law. Nevertheless, the Wetzel County assessor sent two separate tax tickets for the next two decades.
One might presume the assessor was confused, or that the likely changing of the guard caused a loss of institutional memory in Wetzel County. However, we have an opinion from the West Virginia State Tax Department that applies to this situation. In 1988, the Department wrote a letter to the assessor of Wetzel County encouraging the assessor to make "every effort" to repair his tax assessment books and to stop taxing mineral interests separately from undivided land interests. The Department pointed out that West Virginia Code § 11-4-2 prohibits a "separate assessment of unsevered interests in land." More importantly, the Department made clear to the assessor that the tax sale of a separate but unsevered mineral interest "would in all likelihood be considered invalid[.]" Letter from Robert A. Hoffman, Director, Property Tax Division, State Tax Department of West Virginia, to Ralph E. Phillips, Assessor of Wetzel County (November 7, 1988).
The letter indicates carbon copies were sent to "All County Assessors" in the State of West Virginia.
Hence, by 1988, the Wetzel County assessor's office was clearly on notice that it could not issue separate tax tickets on an unsevered, unified interest in land. Thus, the sale of an improper duplicate tax ticket, for an interest in minerals, would in all likelihood be considered invalid. Yet Russell Stiles continued to receive two tax tickets on his unified estate, and when he failed to pay those two tax tickets, Wetzel County's assessor and sheriff put both of those tickets up for sale. Plaintiff Richard Erlewine bought one ticket, and Trio/Waco bought the other, and those purchases resulted in the competing and confusing 1991 tax deeds at issue in this appeal.
Now, put yourself in Richard Erlewine's shoes in 1991 and ask, what did he think he was buying at the tax sale? The majority opinion repeatedly says he bought the "property," but the record says otherwise. If Erlewine had researched the chain of title, he would not have seen the word "property" but, rather, would have seen the repeated use of the word "land." For instance, he would have seen that, beginning in 1968, Stiles had title to "a tract of land situated on Huff Ridge" with an undivided interest in one-quarter of the oil and gas. If Erlewine saw an advertisement for the tax sale of Stiles's property and had looked in the county assessor's tax books, then he would have seen that Stiles owned 135 acres of land on Huff Ridge. When Erlewine paid the sheriff and assessor $6,000 for Stiles's unpaid taxes, the notices to redeem described the property as "Land – 135 Huff Ridge" and "135 acres of land on Huff Ridge." The 1991 tax deed to Erlewine said the same thing: he was "the purchaser of 135 acres of land on Huff Ridge."
One question that might come to mind is whether Erlewine knew or should have known that two tax sales were occurring regarding the Huff Ridge land on the same day, and therefore "knew" that he was not buying the one-quarter oil-and-gas interest. There is no proof of that in the record. We know, today, that there were two overlapping sales because of the power of hindsight. Further, there is no duty in either the common law or the West Virginia Code that requires a tax purchaser of one unpaid tax ticket to research the other tax tickets being concurrently sold, to determine if the tax assessor has erred and created any duplication or overlap.
My dissent, in part, is based on the majority opinion's avoidance of the word "land" and its clear meaning under West Virginia's tax laws, a meaning which undermines the majority opinion. The majority opinion repeatedly says that Erlewine only bought the "property," but that is incorrect. The numerous deeds and documents in the record say Erlewine bought "135 acres of land " at the tax sale. West Virginia Code § 11A-1-1 says that "[t]he words land or lands or tract or tracts of lands ... shall be deemed to include an undivided interest in any freehold estate in land." Likewise, West Virginia Code § 11-4-9 says "the words land or lands or tract or tracts of lands ... shall be read to include an undivided interest in land and an undivided interest in any estate in land[.]"
Hence, from Erlewine's perspective in 1991 when he received a tax deed to "135 acres of land ," he could fairly believe that the tax assessor and sheriff followed the law, and believe he had purchased "an undivided interest in any freehold estate in land" or an "undivided interest in any estate in land" that had been owned by Stiles, and by Dunham, and by Rogers. In other words, Erlewine could believe he bought an undivided interest in 135 acres of land and one-quarter of the oil and gas. When Erlewine brought his lawsuit, he could have fairly believed that he, and not Trio/Waco and its successors, owned at least a 25% share of the oil and gas. Therefore, the majority opinion avoided the legal definition of "land" by repeatedly invoking the term "property" to describe Erlewine's interest.
The majority opinion also makes much of the fact that Stiles failed to pay both tax tickets, and it uses that fact to differentiate this case from Orville Young, LLC v. Bonacci , 246 W. Va. 26, 866 S.E.2d 91 (2021), where one duplicate tax ticket was paid, and another was not. I do not think that fact is controlling because, as I detailed above, the law is clear that the tax assessor never should have split Stiles's undivided estate into two separate tax tickets for the two decades after 1968. However, despite the tax assessor's grievous violation of the law, the majority opinion ignores the rule applied in Orville Young that "[a] deed made pursuant to a tax sale under a void assessment is void." Syl. pt. 4, Blair v. Freeburn Coal Corp. , 163 W. Va. 23, 253 S.E.2d 547 (1979). I understand that, when Trio/Waco forked over $700 for its 1991 deed to "135A Huff Ridge OG ¼ Int." it believed it was buying a one-quarter share of the oil and gas royalties. But the fact remains that Stiles's separate oil-and-gas interest should never have been on the tax assessor's books, and any tax sale under a void assessment is itself void. That is a legal fact and is why I am convinced that Trio/Waco bought nothing in 1991.
Of the many odd facts in this case, the oddest is this: Stiles was charged $700 a year in taxes for a one-quarter share of the oil and gas interest, while Dunham was charged $16.36 for an identical one-quarter share.
Clearly, Legislative action is needed because the majority opinion has overextended West Virginia Code § 11A-3-63 (1994) by interpretation. That Code section, which I call § 63, excuses any procedural "irregularity, error or mistake" in the delivery of a tax deed, and then allows the original, taxpaying estate owner to bring an action to void the tax deed in limited circumstances.
West Virginia Code § 11A-3-63 provides:
No irregularity, error or mistake in respect to any step in the procedure leading up to and including delivery of the tax deed by the deputy commissioner shall invalidate the title acquired by the purchaser unless such irregularity, error or mistake is, by the provisions of section forty-nine of this article or section two, three, four or six, article four of this chapter, expressly made ground for instituting a suit to set aside the sale or the deed.
What the majority opinion appears to miss here is that this case has nothing to do with the delivery of a tax deed; it instead involves a tax assessment that was improper and void from the get-go. This wasn't a procedural misstep; it was a violation of substantive law. For that matter, the majority opinion does not venture to guess what "procedure" means in § 63, it simply presumes that the issuance of illegal duplicate tax tickets for decades is a "step in the procedure leading up to and including delivery of the tax deed." Id. The majority opinion also misses that § 63 is designed to preserve "the due process rights of owners of real property," W.Va. Code § 11A-3-1, and it might also be designed to protect assessors and sheriffs from lawsuits by tax deed purchasers. But § 63 does not, and it cannot, limit the rights of the purchasers of conflicting tax deeds like Erlewine and Trio/Waco from suing to clarify the quality of their deeds. The assessor sold Trio/Waco something that was a legal fiction, but sold Erlewine something that had, as a matter of law, the appearance of being complete, undivided title. The majority opinion rewrites the 1991 deeds and chalks it up as nothing more than an irregularity, error, or mistake in the delivery of the two tax deeds. While the 1991 deed to Trio/Waco put a cloud on Erlewine's 1991 deed, the majority opinion interprets § 63 to say that Erlewine has no right to clear that cloud in a courtroom.
To bring my concerns full circle, let me return to the Orville Young v. Bonacci case and this Court's inconsistent interpretation of § 63. Recall that in Bonacci , the majority opinion concluded that a lawsuit could be brought to interpret the meaning of a tax deed for a simple, factual reason: one of the two duplicate tax tickets had been paid. In the case at bar, the majority opinion says a case is precluded by § 63 because neither of the two duplicate tax tickets was paid. The majority opinion fails to explain what language in § 63 would permit the action in Bonacci but preclude the action in this case.
Worse, let us take the majority opinion to its logical (but clearly wrong) conclusion. If the majority opinion is correct, Erlewine should never have filed this lawsuit. Instead, Erlewine should have put a cloud on Trio/Waco's tax deed by claiming his deed encompasses all of the oil and gas estate, and then commenced drilling on his 135 acres of land. Under the majority opinion's interpretation of § 63, Trio/Waco and its successors would have been prohibited from bringing a lawsuit to challenge Erlewine's interpretation of his tax deed.
I simply cannot believe that this is what the Legislature intended.
This case is all about public policy. The focus of any case interpreting deeds is on preserving the sanctity of titles and maintaining the stability of land transfers. The presumption should be that county tax assessors follow the law and assess a property based on its entire, undivided value. Courts should not permit assessors to violate the law, nor should courts be required to sanction those violations of law, yet that is what the majority opinion seems to suggest. I realize that it might not seem "fair" that an oil-and-gas company spent $700 for a tax deed to oil and gas that might now be worthless. But the policy question here is: who is the law going to protect? The sanctity of land titles and the notion that tax assessors comply with the law? Or, speculators who buy tax deeds to properties, sight unseen, gambling that the purchase might someday be worthwhile? Someone who buys "land" at a tax sale should be allowed to assume the law has been followed, and that the "land" encompasses the undivided estate of the prior owner who failed to pay their taxes. By permitting assessors to "get away" with double, triple, or quadruple assessments on land interests in violation of state law, the Court is encouraging gambling by tax purchasers. If the majority opinion had been decided differently and had applied the settled law that tax assessors are supposed to tax undivided interests in land only once, then buyers of tax liens would be motivated to investigate whether a purchase is void because it violates the law. Assessors would no longer be able to pawn off multiple assessments to the same property interest, generating litigation between buyers, because there would be no more buyers of worthless tax liens. That said, it is for the Legislature to establish policy in such matters.
In sum, I respectfully dissent. I believe the circuit court correctly interpreted the 1991 tax deed as giving Erlewine the same interest as his predecessor, Stiles. Erlewine's 1991 tax deed conveyed to him a 100% interest in the land and all the minerals except for an undivided one-quarter interest in the oil and gas. The majority opinion, therefore, errs in holding otherwise, and I hope that the Legislature intervenes to clarify its intent as to how duplicate, unpaid tax deeds should be handled, by courts and counties, in the future.