A Really Brief Brief

Yesterday I posted the “nature of the case” paragraph of a brief I was working on. The finished brief is 25 pages. It occurred to me, however, that it might be shortened a bit. So, what follows is an “arguments and authorities” section for a truly brief brief.

In Hartford Fire Insurance Co. v. Unites States of America, 1986 U.S. Dist. LEXIS 27338, (D.C. Kansas 1986) the federal court set forth a brief summary of Kansas law on the recording of mortgages and deeds as follows: All deeds, mortgages and assignments of mortgages must be recorded to impart notice to subsequent purchasers and mortgagees. K.S.A. 58-2222. No deed, mortgage or assignment of mortgage is valid, “except between the parties thereto, and such as have actual notice thereof, until the same shall be deposited with the register of deeds for record.” Id. at 58-2223. Thus, when a subsequent purchaser buys property for value and without notice of a prior conveyance or mortgage, the subsequent purchaser has priority over the earlier purchaser or mortgagee. E.g., Edwards v. Myers, 127 Kan. 221, 273 P. 468 (1929); Penrose v. Cooper, 88 Kan. 210, 128 P. 362 (1912). The recording of deeds, mortgages and assignments of mortgages acts as constructive notice to the subsequent purchaser. See, generally, Luthi v. Evans, 223 Kan. 622, 576 P.2d 1064 (1978). If no record is made or if the record is ineffectively made, the later purchaser takes free unless he had actual knowledge of the mortgage or prior conveyance.

It is generally understood among the bar that few things in the law are black and white. Yet, some legal principles come close, and if there is any one principle that can be said to come closest to black and white, it is this: In Kansas, a bona fide purchaser takes title free of an unrecorded interest. In re: Cascade Oil Company, Inc., Debtor, et al., 65 B.R. 35; 1986 Bankr. Lexis 5730 (July 8, 1986), citing In re Southworth, 22 B.R. 376 (Bankr. D. Kan. 1982); Smith v. Worster, 59 Kan. 640, 54 P. 676 (1898); Stalcup v. Stalcup, 137 Kan. 141, 19 P.2d 447 (1933); K.S.A. 58-2223. Perhaps even more fundamental is that in a contest between two recorded instruments, the one that’s recorded first prevails.

The decision of the district court should be reversed, the court should be directed to enter judgment for the appellants as bona fide purchasers for value of the 32.7 acres, mineral interest (including gas) and fixtures thereon (gas well), free and clear of any right, title or interest of the appellee, and the matter remanded for disposition of the remaining counter-claims.

:jesors:

It’s a Gas

Here’s a case I have on appeal at present. Been working on the brief this weekend. This is the opening “Nature of the Case” paragraph of the brief.

This case is about a gas well in Douglas County, Kansas. Appellants bought a home and 32.7 acres, including the gas well, not knowing that appellee, who owned an adjoining 7.2 acres, had an underground connection to the well. The case is in the courts for determination of whether appellants’ title to their property is burdened with a covenant giving appellee an enforceable right to take gas from appellants’ well. The district court held that it is and permanently enjoined appellants from disconnecting appellee from the well. Appellants disagree.

I still can’t believe the district court ruling. Neither can any of my colleagues, other than the appellee’s lawyer. When the appellants bought the property, there was nothing on the record about the appellee having any gas rights. Her lawyer recorded an instrument two years later. If that really works, we’re all in trouble!

Making Friends With The Landowner

One of the first things I learned in oil and gas, and which I have tried to preach to my operator clients, is the importance of the relationship with the landowner. So many operators would get their lease and then basically forget that there was anything else that mattered besides their oil wells. Until a cow would end up dead in a pit, or big patch of beans died from salt water, and the landowner called up hopping mad. And, even then, dealing with the problem was considered a pain in the ass as opposed to discharging an obligation. Even without such unfortunate incidents, or perhaps because they’re virtually inevitable, I’ve told my clients to at least send the landowner a Christmas card every year, better yet a turkey or box of candy, better yet just drop by once in a while and have coffee. Very cheap insurance. Of course, better yet would be to also keep the landowner informed on a regular basis about what’s going on with lease operations; if wells are going to be drilled, why; if wells aren’t going to be drilled, why; if a road needs to be built, why; etc. When it comes to recommending that level of “cooperation” to clients I’m often met with a set of rolling eyes and a look communicating without words the message that I should stick to practicing law and leave the practical side of operating a lease to people who know better. And, so, I never run out of opportunities to practice that part of oil and gas law that has to do with who legally has the upper hand in a given set of circumstances, the landowner or the operator. It’s a question that, more often than not, could have been avoided.