## Facts

- A 160-acre tract in McKenzie County, North Dakota was originally owned in fee by H.O. Moen.
- In 1937, Moen executed three royalty conveyances that together assigned a 6.5% royalty on oil and gas produced from the tract.
- In 1944, Moen conveyed the tract to Clayton D. Wilson, Sr. by warranty deed that did not mention the outstanding royalty assignments.
- Clayton Sr. and Alma E. Wilson later held the property and related mineral interests, from whom all parties’ interests derived.
- In 1952, Clayton Sr. and Alma executed two warranty mineral deeds to Thomas W. Leach conveying undivided fractional mineral interests corresponding to 35 mineral acres and 5 mineral acres in the north half of the section; the deeds contained full warranties and did not refer to the outstanding 6.5% royalty.
- Leach obtained a title opinion noting the outstanding 6.5% royalty.
- Acoma Oil Corporation and the Clarke D. Bassett Residuary Trust later acquired interests traced to Leach’s mineral deeds.
- After Clayton Sr. and Alma died, their remaining mineral interests passed to their children (Clayton D. Wilson, Jr. and Allan LeRoy Wilson).
- Universal Resources Corporation operated a producing well on the tract, creating a dispute over whether the 6.5% royalty burden should be shared proportionately by all current mineral owners or charged first to the Wilsons’ retained mineral interests.
- The district court declared the royalty burden must be shared proportionately, held Acoma and Bassett equitably estopped from claiming their interests were unburdened, and ruled the action untimely.

## Issues

1. Whether Duhig-type estoppel required the outstanding 6.5% royalty to be charged first against the grantors’ retained mineral interests to satisfy their warranties, rather than proportionately burdening all current mineral owners.
2. Whether the grantee’s knowledge of the outstanding royalty, or equitable estoppel, prevented applying Duhig-type estoppel or shifted the royalty burden to the grantee’s successors.
3. Whether the declaratory judgment action was barred by limitations or laches.

## Decision

- The North Dakota Supreme Court reversed the district court and remanded.
- The court held that Duhig estoppel applied to the 1952 warranty mineral deeds and required the outstanding 6.5% royalty to be satisfied from the Wilsons’ retained mineral interests to the extent necessary to fulfill the warranties before burdening the mineral acres conveyed to Leach and his successors.
- The court held that Leach’s actual knowledge of the outstanding royalty and the district court’s equitable estoppel rationale did not defeat Duhig estoppel.
- The court rejected the district court’s untimeliness basis as a ground to deny the requested declaration of rights.

## Legal Principles

- Under Duhig estoppel (estoppel by deed), when a grantor gives a warranty conveyance that purports to transfer a stated mineral interest without expressly reserving or disclosing an outstanding burden, the grantor’s retained interest bears the burden first to satisfy the warranty.
- Deeds are construed in favor of the grantee and against the grantor; reservations and limitations on the grant must be expressly stated.
- A grantee’s knowledge of an outstanding royalty or other burden does not negate the grantor’s warranty-based estoppel where the deed’s language and warranties purport to convey the stated interest.
- A declaratory judgment action concerning present allocation of production-related interests is not defeated solely because the relevant instruments are old, absent a valid time-bar basis supporting judgment.

## Conclusion

The court required the outstanding 6.5% royalty to be charged first against the Wilsons’ retained mineral interests to satisfy the warranties in the mineral deeds to Leach, held that grantee knowledge and equitable estoppel did not change that allocation, and reversed and remanded for further proceedings.


Acoma Oil Corp. v. Wilson, 471 N.W.2d 476 (N.D. 1991)