## Facts

- John Townsend signed and delivered an instrument captioned “Warranty Timber and Mineral Deed” naming Claude Miller as grantee.
- The deed was not recorded while Miller was alive.
- After Miller died, the instrument was found among his papers.
- First National Bank of Oregon, acting as personal representative of Miller’s estate, recorded the deed and claimed the property as part of the estate.
- The State of Oregon asserted the deed conveyed only timber and mineral rights (not the fee), leaving fee simple title in Townsend.
- Townsend later died intestate with no heirs; if Townsend retained the fee, the land would pass to the State by escheat.
- The Bank filed a declaratory judgment action to determine what estate the deed conveyed; the State appeared as defendant to represent Townsend’s position as grantor.
- The instrument contained conflicting signals: references consistent with a timber/mineral transaction (including payment tied to trees and minerals removed and a right to enter to cut/mine), but also clauses typical of a general warranty deed, including grant language to the grantee “his heirs and assigns,” an obligation on the grantee to pay taxes levied after the deed date, and a covenant of “quiet, peaceable, and exclusive possession” with a promise to “warrant and defend” against claims to “the whole or any part” of the property.
- Because both Townsend and Miller were deceased, there was no meaningful extrinsic evidence of their intent beyond the writing.

## Issues

1. Whether the “Warranty Timber and Mineral Deed,” read as a whole, conveyed fee simple title to Miller or only a limited timber and mineral interest.
2. If the deed remained uncertain after examining the text and any available circumstances, whether Oregon rules of construction require resolving the doubt in favor of the grantee and the greater estate, thereby defeating escheat.

## Decision

- The Oregon Court of Appeals affirmed the declaratory judgment for First National Bank of Oregon.
- The court held the instrument conveyed fee simple title to Miller.
- Because the fee passed to Miller, no fee interest remained in Townsend to pass to the State by escheat.

## Legal Principles

- Deed interpretation begins with the instrument’s language, read as a whole, and may consider surrounding circumstances when available to identify the parties’ intent.
- When a deed is ambiguous as to whether it conveys a fee simple or a lesser estate, and the ambiguity cannot be resolved from the text and admissible circumstances, Oregon applies a rule of construction that favors the grantee and the greater estate.
- Features commonly associated with a fee conveyance—grant to “heirs and assigns,” transfer of responsibility for future taxes, and a broad covenant of quiet possession with a warranty to defend claims to “the whole or any part” of the property—support construing the deed as passing the fee, even if the caption and some provisions focus on timber and minerals.
- A deed’s caption or label is not controlling; operative clauses and the overall instrument govern the estate conveyed.

## Conclusion

Because the deed’s provisions pointed in different directions and there was no extrinsic evidence available to clarify intent, the court applied Oregon’s rule that unresolved doubt about the size of the estate conveyed is decided in favor of the grantee and the larger estate, construing the “Warranty Timber and Mineral Deed” as a fee-simple conveyance to Miller’s estate and rejecting the State’s escheat claim.


First National Bank of Oregon v. Townsend, 555 P.2d 477 (1976)