of the grantor ” (emphasis added). Indeed, the Montana Supreme Court has even gone so far as to declare “[t]he court must liberally construe express reservations in grants of real property in favor of the grantor.” Ash v. Merlette , 2017 MT 305, 407 P.3d 304, 310 (emphasis added). However, it must be emphasized that this statute does not expressly preempt, repeal, or abrogate other statutory rights and remedies. The second statute passes after-acquired title by operation of law as a remedy for a breach of title warranty in a grant deed. Section 70-20-302, MCA. The after-acquired title statute (based on estoppel by deed) applies where the grantor’s title at the time of the conveyance is defective or lacking, and the grantor later obtains title or a portion thereof. Rowell v. Rowell , 174 P2d 223, 226 (Mont. 1946). The doctrine of after-acquired title helps to give certainty to the enforcement of title covenants and greatly simplifies title examinations—since a title examiner who encounters this situation can simply assume that a grantee got the after-acquired title without being concerned with whether any judicial action was taken to obtain it ( i . e ., title passes automatically by operation of law). Intertwined with after-acquired title are other legal concepts, which taken together, form the framework for the legal principle that a title warranty is a distinct and separate contract from the conveyance itself. Therefore, a determination that a reservation is to be interpreted in favor of the grantor should not operate to limit the scope and enforcement of a separate contractual warranty where such title warranties are required by law to be construed against the grantor. However, the court’s ruling in Dellit relied upon a legal fiction to literally turn a general warranty deed into a quitclaim deed—all for sake of maintaining an inexplicable allegiance to one statute.
Thereafter, by a Warranty Deed dated March 10, 1950 (herein: “ Warranty Deed ” or “ Deed ”) Leonard conveyed to his sister Irene all the Property subject to the following reservation:
Excepting and reserving unto the party of the first part, himself, his heirs, and assigns, an undivided two thirds [2/3] of all oil, gas and minerals in, upon or under said lands. . . . (brackets added)
Dellit, 518 P.3d 830 at 833. [2] The Deed also included a warranty clause. Id .
Through a series of conveyances Dellit later became successor to Irene. Leonard sought a decree stating that he reserved all his mineral interest in the Property under the Warranty Deed. Dellit defended, contending that the Warranty Deed transferred to Irene an undivided 1/3 mineral interest in the Property ( i . e ., all the minerals less 2/3 = 1/3 of the minerals conveyed). The equities in the case are as follows: (1) Leonard and Irene derived their interest in the Property from their parents ( i.e ., they were co- tenants.); (2) through a series of conveyances Dellit (a family member) succeeded to Irene’s interest; (3) the parties agreed the Warranty Deed is unambiguous ( i . e ., it grants the Property and then reserves a 2/3 mineral interest); and, (4) at the time of the Warranty Deed Irene knew what Leonard owned because she owned the other outstanding interest not encompassed by Warranty Deed. The court found in favor of Leonard because Irene, as a co-owner with Leonard in the surface and minerals in the Property, was not misled by the Warranty Deed’s reservation clause ( i . e ., equitable estoppel). Dellit , 518 P.3d 830 at 839.
Facts of the Case
Discussion:
Now, before going any further let us be very clear—there are to two completely different and distinct affirmative defenses at play in this case: Estoppel by Deed (the focus of this article) and Equitable Estoppel (which was ultimately used to decide the case based on the “equities” cited in the
For purposes of this discussion, the abbreviated facts in Dellit are as follows: Leonard (2/3) and his sister Irene (1/3) were the record owners of a certain tract of land inherited from their parents (the “ Property ”).
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N at i onal A ssociation of D i v i s i on O rder A nalys t s
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