Rubel v. Johnson , 101 N.E.3d 1092 ( 2017 )

[Cite as Rubel v. Johnson, 2017-Ohio-9221.]
STATE OF OHIO, MONROE COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
GARY A. RUBEL, et al., ) CASE NO. 17 MO 0009
)
PLAINTIFFS-APPELLANTS, )
)
VS. ) OPINION
)
JOHN RICHARD JOHNSON, et al., )
)
DEFENDANTS-APPELLEES. )
)
)
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Monroe County, Ohio.
Case No. 2013-271
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiffs-Appellants: Atty. Richard A. Yoss
Atty. Ryan M. Regel
Atty. Jordan C. Croucher
Yoss Law Office
122 North Main Street
Woodsfield, Ohio 43793
For Defendants-Appellees: Atty. Eric C. Johnson
Johnson & Johnson Law Offices
12. W. Main St.
Canfield, Ohio 44406
JUDGES:
Hon. Carol Ann Robb
Hon. Gene Donofrio
Hon. Cheryl L. Waite
Dated: December 18, 2017
[Cite as Rubel v. Johnson, 2017-Ohio-9221.]
ROBB, P.J.
{¶1} Plaintiffs-Appellants Gary and Nancy Rubel appeal the decision of the
Monroe County Common Pleas Court finding Defendant-Appellee Sheila Johnson
owned 1/3 of the mineral interest underlying Appellant’s property. The sole issue is
whether a 1966 deed transferring property to Appellants contained a mineral
reservation where it stated: “Subject, however, to all right, title and interest of the
grantor herein in the above three tracts in all minerals rights thereunder including
coal, gas and oil.” Appellants argued this clause merely conditioned the transfer on
what the grantor had the ability to grant and limited the warranty in the deed.
Appellee argued the clause constituted a mineral reservation, and the trial court
agreed. For the following reasons, the trial court’s judgment is affirmed.
STATEMENT OF THE CASE
{¶2} In 1912, Luella Roe and her husband, Francis, conveyed sixty acres in
Monroe County “excepting and reserving from the same the undivided one half oil
royalty, being the one sixteenth of the oil produced from said premises * * *.” In
1948, an estate was opened in the Guernsey County Probate Court for Paul Johnson
who died owning four tracts of land including the sixty-acre tract (called tract III). In
1949, the probate court’s certificate of transfer was recorded showing ownership of
the real estate transferred to three devisees: Ethel Johnson (the decedent’s wife),
James W. Johnson, and John R. Johnson (the decedent’s two children). The
description of tract III recited: “EXCEPTING AND RESERVING from the same the
undivided one-half oil royalty, being the 1/16th of the oil produced from said
premises.”
{¶3} In 1966, John and James Johnson sold the 2/3 interest they inherited in
tracts I, II, and III to Appellant Gary Rubel. As Appellee Sheila Johnson was married
to James Johnson, she was listed in the deed as his wife and a grantor. After the
description for tract III, the deed contained a paragraph with the aforementioned
“EXCEPTING AND RESERVING” clause concerning the oil royalty. In a separate
paragraph was the disputed clause: “Subject, however, to all right, title and interest
of the grantor herein in the above three tracts in all minerals rights thereunder
-2-
including coal, gas and oil.” The deed then noted the property was part of the
premises transferred from the estate of Paul Johnson with reference to the
recordation of the prior deed.
{¶4} Recorded on the same day was an executor’s deed wherein Gary
Rubel purchased the remaining 1/3 interest in these tracts (plus three other tracts)
from the executor of Jennie Johnson’s estate. Pertinent to the sixty-acre tract
transferred in the 1912 deed and the 1949 certificate of title, the 1966 executor’s
deed contained the same “EXCEPTING AND RESERVING” and “Subject, however,
to” clauses as the 1966 general warranty deed executed by John, James, and Sheila
Johnson (for their 2/3 interest). Jennie Johnson had obtained her 1/3 interest via a
quitclaim deed recorded in 1949, wherein Ethel Johnson (her daughter-in-law)
transferred the 1/3 share in the three tracts Ethel had just inherited from her husband.
The 1949 deed repeated the “EXCEPTING AND RESERVING” clause describing the
oil royalty, and this deed is said to be the first time the “Subject, however, to” clause
was used in Appellants’ chain of title. However, this 1949 quitclaim deed and the
subsequent 1966 executor’s deed is not part of Appellee’s chain of title. It is the
1966 general warranty deed from John and James Johnson to Gary Rubel on which
Appellee’s claim is based.
{¶5} James Johnson died in 1985. The parties agreed Appellee would have
inherited her husband’s 1/3 mineral interest if it was reserved by James in the 1966
deed transferring his 1/3 share in the property to Gary Rubel. John Johnson created
a trust naming Ohio University Foundation as a beneficiary. In 2011, John filed a
claim to preserve the minerals underlying the three tracts transferred to himself, his
mother (Ethel), and his brother (James) by Paul Johnson’s estate. His incorporated
affidavit stated he inherited his mother’s 1/3 mineral interest when she died in 2004.
{¶6} In 2006, Gary Rubel executed a deed transferring his property to
himself and his wife, Nancy Rubel, joint and survivor. The deed did not contain either
the “excepting and reserving” or the “subject, however, to” clause. In 2013, the
Rubels caused to be recorded an “affidavit on facts relating to title” under R.C.
5301.252 and then filed a complaint against Sheila Johnson and John R. Johnson,
-3-
individually and as trustee. The complaint sought a declaratory judgment that the
clause beginning with “subject, however, to” was not a reservation and did not create
a new severed mineral interest. (The complaint also sought a declaration that any
mineral interests were abandoned under the 1989 version of the Dormant Mineral
Act. After the Supreme Court’s decision in Corban was released, this count was
withdrawn.)
{¶7} A successor trustee and then Ohio University Foundation were
substituted as parties in place of John Johnson, who had died in 2012. On October
15, 2015, a settlement was entered regarding any mineral interest claimed to be
derived from John Johnson (which included the 1/3 he claimed he reserved in the
1966 deed and the 1/3 he said he inherited from Ethel who was said to have
reserved her mineral interest in the 1949 deed). Under the confidential settlement
agreement, Ohio University Foundation quitclaimed whatever interest John had in the
minerals under the three tracts to Appellants. This left in dispute the 1/3 mineral
interest claimed by Appellee as having been reserved by her husband (James) in the
1966 deed.
{¶8} On December 8, 2016, the parties filed agreed stipulations “so as to
avoid the necessity of any trial in the matter and to permit the Court to decide the
matter upon the submission of written briefs to be submitted by the parties * * *.” The
agreement set deadlines for the briefs and for any responding briefs. The parties
stipulated to various facts and to the admissibility of exhibits attached to the agreed
stipulations. They agreed the sole issue was whether the “subject to” language in the
1966 warranty deed was effective as a reservation of mineral rights. If so, then
Appellee was the owner of a 1/3 mineral interest under the three tracts; if not, then
Appellants owned this 1/3 (and already owned the other 2/3).1
1 There was no dispute between these parties regarding the 1912 oil royalty, and their stipulations
claimed it expired upon the death of the 1912 grantor under the law as it existed at that time (because
it did not contain a reference to “heirs and assigns”), citing Holdren v. Mann, 7th Dist. No. 592, 1985
WL 10385 (Feb. 13, 1985) (“Prior to the enactment of G.C. 8510-1, now R.C. 5301.02, in 1925, if a
reservation in a deed was to be anything other than a life estate in the grantor, the deed must have
contained words of inheritance.”).
-4-
{¶9} Appellants filed a brief arguing the phrase “subject to” is used in order
to refer to what has already transpired, which in this case would simply be a
reference to the 1912 oil royalty and any other overlooked events. Appellants
emphasized how the deed used “excepting and reserving” (and capitalized it) when
describing the prior oil royalty and suggested the grantors would have used this type
of language again if they intended to create affirmative rights and reserve a mineral
interest. It was claimed the “subject, however, to” clause merely represented the
grantors’ intent to condition the transfer on what they had the ability to give and was
common language used to protect the grantor against a breach of warranty claim.
They cited a Texas appellate court case for the proposition that the phrase “subject
to” in a conveyance does not create affirmative rights. Appellants concluded the
language clearly and unambiguously did not create a new mineral reservation and
alternatively argued any ambiguity should be construed in their favor as the grantee.
{¶10} Appellee filed what was labeled a motion for summary judgment.2
Appellee urged that although a “subject to” clause is sometimes used to avoid liability
on a breach of warranty claim, the use of the phrase does not preclude the
reservation of an interest. She insisted the only logical reading of the disputed clause
is that the “grantor herein” was reserving “all mineral rights” in the “three tracts.”
Appellee pointed out that the disputed clause only referred to mineral interests and
suggests a typical limiting clause would provide the transfer is “subject to restrictions,
covenants, conditions, reservations, etc. existing of record.” Appellee posited the
grantors had no need to warn the grantee about the prior oil royalty issue via the
“subject to” clause because the prior clause had just disclosed the oil royalty by
quoting it.
{¶11} Emphasis was also placed on the deed’s concluding paragraph which
stated: “title so conveyed is Clear, Free and Unencumbered; And Further, That they
do Warrant and will Defend the same against all claim or claims, of all persons
2The trial court thereafter issued an entry stating the parties agreed this motion for summary judgment
would serve as the brief the parties agreed to submit in the stipulations. The entry also said the
parties agreed the brief filed by Appellant as contemplated by the parties’ stipulations may be viewed
by the court as a summary judgment motion.
-5-
whomsoever; Excepting all taxes and assessments due and payable after the
December 1965 tax installment, which taxes and assessments after said installment,
the Grantee herein assumes and agrees to pay.” Appellee reasoned if the disputed
clause was meant to protect the grantors from a warranty claim, it would have
appeared at this location, rather than after the property description. Appellee also
noted the use of the word “excepting” (with regards to taxes) in order to make the
point that words must be read in context as this use of “excepting” was not a
retention by the grantor.
{¶12} Appellee cited Ohio cases involving deeds which used the phrase
“subject to” when creating an interest. She emphasized the law does not require the
“magic” words “excepting” or “reserving” in order for a grantor to retain their mineral
interest during a property transfer. Appellee stated the capitalization of the words
“excepting and reserving” was not significant as this was copied from the last
document in the chain of title (the certificate of title issued by the probate court).
Appellee explained that the 1966 deed’s use of the “subject, however, to” clause
would not have been a mere reference to Ethel’s prior use of the term in 1949
because the 1949 deed is not in her chain of title. Although the 1949 deed (from
Ethel to Jennie Johnson) lies outside of Appellee’s chain of title and the pertinent
1966 transaction involved a warranty deed, Appellee noted the 1949 deed contained
the same clause even though it was a quitclaim deed with no need to limit liability.
{¶13} Appellants replied by pointing out this was extrinsic evidence; they also
asserted quitclaim deeds have been known to contain “subject to” clauses (with
general references to prior transactions) even though such deeds contain no
warranty. Appellants acknowledged “subject to” can preface the creation of a
reservation if the grantor has a pre-existing document which is referred to or if the
clause contains additional language such as a form of the word “reserve.” They also
pointed to distinguishing aspects of the case law cited by Appellee.
{¶14} On April 12, 2017, the trial court issued judgment in favor Appellee
declaring she was the owner of the disputed 1/3 mineral interest under the three
tracts. The court found the relevant language in the 1966 deed clearly and
-6-
unambiguously created a reservation of the mineral interest. The court concluded
there was no other logical interpretation. The within appeal followed.
GENERAL LAW
{¶15} Appellants begin by setting forth the standard of review for summary
judgment. For instance, summary judgment can be granted where there remain no
genuine issues of material fact for trial and where, after construing the evidence most
strongly in favor of the non-movant, reasonable minds can only conclude that the
moving party is entitled to judgment as a matter of law. Byrd v. Smith, 110 Ohio
St.3d 24, 2006-Ohio-3455, 850 N.E.2d 47, ¶ 10, citing Civ.R. 56(C). The appellate
court reviews the trial court's application of the summary judgment standard de novo.
Doe v. Shaffer, 90 Ohio St. 3d 388, 390, 738 N.E.2d 1243 (2000). While arguing
summary judgment was improperly granted in favor of Appellee, Appellants also ask
for summary judgment in their favor (which would make them the movants for this
argument).
{¶16} Appellee points out the parties’ stipulations agreed to submit the matter
to the trial court on the stipulated facts, exhibits, and briefs in lieu of trial. As
aforementioned, the stipulations specified they were submitted “so as to avoid the
necessity of any trial in the matter and to permit the Court to decide the matter upon
the submission of written briefs to be submitted by the parties * * *.” Appellee
therefore concludes our review does not require reference to summary judgment
standards, while noting there would still be a de novo review on legal issues involving
construction of the deed. An appellate court’s review is more limited if the trial court
had to make factual determinations.
{¶17} “Unlike determinations of fact which are given great deference,
questions of law are reviewed by a court de novo.” Nationwide Mut. Fire Ins. Co. v.
Guman Bros. Farm, 73 Ohio St. 3d 107, 108, 652 N.E.2d 684 (1995). “If a contract is
clear and unambiguous, then its interpretation is a matter of law and there is no issue
of fact to be determined.” Id., quoting Inland Refuse Transfer Co. v. Browning-Ferris
Industries of Ohio, Inc., 15 Ohio St. 3d 321, 322, 474 N.E.2d 271 (1984). “However, if
a term cannot be determined from the four corners of a contract, factual
-7-
determination of intent or reasonableness may be necessary to supply the missing
term.” Inland Refuse, 15 Ohio St. 3d at 322. These principles apply even in a case
involving an agreement to submit stipulations and briefs in lieu of an evidentiary
hearing. See, e.g., Taylor v. Kemp, 7th Dist. No. 05 BE 13, 2005-Ohio-6787, ¶ 24-
27.
{¶18} The purpose of contract or deed construction is to ascertain the intent
of the parties which is presumed to reside in the language they chose to use in their
agreement. Graham v. Drydock Coal Co., 76 Ohio St. 3d 311, 313, 667 N.E.2d 949
(1996). In determining the intent of the parties to the deed, extrinsic evidence is
admissible if the contract is unclear or ambiguous or if circumstances surrounding the
agreement give the plain language special meaning. Id. at 313-314, citing Shifrin v.
Forest City Ent., Inc., 64 Ohio St. 3d 635, 638, 597 N.E.2d 499, (1992). “If we are
able to determine the intent of the parties from the plain language of the agreement,
then there is no need to interpret the contract.” Saunders v. Mortensen, 101 Ohio
St.3d 86, 2004-Ohio-24, 801 N.E.2d 452, ¶ 9.
{¶19} “[C]ommon words appearing in a written instrument are to be given their
plain and ordinary meaning unless manifest absurdity results or unless some other
meaning is clearly intended from the face or overall contents of the instrument.”
Alexander v. Buckeye Pipe Line Co., 53 Ohio St. 2d 241, 245-46, 374 N.E.2d 146
(1978). “Even though most words in the English language have multiple meanings,
ambiguity should not be created where it does not exist.” Dominish v. Nationwide
Ins. Co., 129 Ohio St. 3d 466, 2011-Ohio-4102, 953 N.E.2d 820, ¶ 7. Words or
phrases should not be read in isolation. Id. at ¶ 8. If intent cannot be determined
from the contract or if a provision is “reasonably susceptible of more than one
meaning,” then it is ambiguous. Lightning Rod Mut. Ins. Co. v. Southworth, __ Ohio
St.3d __, 2017-Ohio-7438, __ N.E.2d __, ¶ 12. If parol evidence is then employed
and it fails to clarify the meaning of the contract, then the contract is strictly construed
against the drafter; interpreting the written instrument against the drafter is a
secondary rule of contract construction. Cadle v. D'Amico, 2016-Ohio-4747, 66
N.E.3d 1184, ¶ 33 (7th Dist.) (“Construing a contract against the drafter is a
-8-
secondary rule of contract construction, and is applicable when the primary rules of
contract construction * * * fail to clarify the meaning of the contract.”); Envision Waste
Services, LLC v. County of Medina, 9th Dist. Nos. 15CA0104-M and 15CA0105-M,
2017-Ohio-351, ¶ 15. “In case of doubt, it is said, the conveyance is to be construed
most strongly as against the grantor, or in favor of the grantee on the theory, it
seems, that the words used are to be regarded as the words of the grantor rather
than of the grantee.” Pure Oil Co. v. Kindall, 116 Ohio St. 188, 202-203, 156 N.E.
119 (1927) (in cases where the contractual language is ambiguous and the drafter is
unknown).
{¶20} The sole issue is whether any mineral interest was conveyed to the
grantee in the 1966 general warranty deed. The parties agreed the mineral interest
was not conveyed to the grantee if the following clause constitutes an exception or a
reservation of the grantor’s mineral interest: “Subject, however, to all right, title and
interest of the grantor herein in the above three tracts in all minerals rights thereunder
including coal, gas and oil.” We stop to point out that the parties note the difference
between an exception and a reservation, but they then proceed under the premise
that the use of either word would have precluded the mineral interest from being
conveyed. An exception exists when the grantor retains a part of the estate that can
be enjoyed separate from the estate conveyed to the grantee; the grantor retains title
to the excepted part of the realty. Clark v. Guest, 54 Ohio St. 298, 303, 43 N.E. 862
(1896). A reservation is said to be the mere right or privilege, reserved by the
grantor, to use the estate which is not part of the realty itself but issues out of it (such
as rent or the right to timber as it is cut); the title to the whole estate passes to the
grantee, but it is burdened by the right reserved. Id. at 303-304.3 Even though the
terms mean different things, excepting and reserving are often used interchangeably
or at the same time. See, e.g., American Energy Corp. v. Datkuliak, 174 Ohio
App.3d 398, 2007-Ohio-7199, 882 N.E.2d 463, ¶ 75 (7th Dist.).
3 In the past, an exception did not require words of inheritance to survive the grantor’s death, but a
reservation expired with the grantor unless there were words of inheritance. The requirement of words
of inheritance was eliminated by a 1925 statute as set forth in a prior footnote.
-9-
{¶21} The particular term used will not necessarily establish whether an
exception or a reservation has been created. Id. “Whether the language used in a
deed creates a reservation or exception from the grant depends upon the intention of
the parties as evinced by a construction of the whole instrument in the light of the
circumstances of each case.” Gill v. Fletcher, 74 Ohio St. 295, 78 N.E. 433 (1906),
syllabus. See also Sloan v. Lawrence Furnace Co., 29 Ohio St. 568 (1876), syllabus
(“The words ‘reserving all the minerals underlying the soil,’ in the granting clause of a
deed for the conveyance of real estate, constitute, prima facie, an exception of the
minerals from the operation of the grant.”)
{¶22} Similarly, Appellants seem to acknowledge the use of a certain word or
phrase (such as “subject to”) does not per se establish there was no exception or
reservation. Although Appellants point out the deed did not use the term “excepting”
and/or the term “reserving” when referring to the grantor’s minerals, Appellant
acknowledges there is no magic language required to create an exception or a
reservation. Again, the parties are not asking us to differentiate between an
exception or a reservation. Rather, both sides agree that if the language is an
exception or a reservation, then Appellant was not granted the mineral interest when
the property was conveyed in the 1966 deed. In other words, Appellant admits that
either an exception or a reservation would have precluded the minerals from being
conveyed in the 1966 deed. Finally, we note the term mineral “reservation” is used
by the parties to cover either an exception or a reservation. See generally
Chesapeake Expl., L.L.C. v. Buell, 144 Ohio St. 3d 490, 2015-Ohio-4551, 45 N.E.3d
185, ¶ 23 (“The owner who conveys the surface estate may retain an interest in the
mineral estate by reservation”; upon such severance, neither the surface nor the
minerals actually has full ownership as each has rights subject to the other). With
these standards and agreements in mind, we proceed to the disputed points.
ASSIGNMENTS OF ERROR
{¶23} Appellants set forth the following three assignments:
-10-
“The Trial Court erred in interpreting the contract language used in the 1966
Deed between John Richard Johnson, James Johnson, Sheila Johnson, and Gary &
Nancy Rubel and misapplied contract law as a result.”
“The Trial Court erred in granting Appellee’s Motion for Summary Judgment,
finding that ‘subject to’ language used in a Warranty Deed created a reservation of a
mineral interest.”
“The Trial Court erred in finding the contract language unambiguous in favor of
Appellee.”
{¶24} As touched on above, Appellants note the deed’s use of “excepting”
and “reserving” when referring to a prior oil royalty reservation on track III and the
lack of such words when referring to the entire mineral interest. Appellants insist the
“subject to” clause does not plainly show the grantor’s intent to except or reserve the
mineral interest. They say their argument does not ask for the clause to be ignored
but asks for the clause to be interpreted as merely conditioning the transfer on what
the grantor had the ability to give (at least when it came to the minerals). Appellants
note the clause was placed after the recitation of the prior oil royalty reservation.
They conclude the clause is a reference to any events that may have already
transpired.
{¶25} Appellants say the “subject to” clause was a mere limitation on the
warranty granted in the deed (i.e., a fail-safe) in case there were other mineral
reservations besides the oil royalty on tract III, stating this is a common use of the
clause. Appellants state Appellee cited no case where the phrase “subject to”
created a mineral reservation on its own (without other words of import). Appellants
define “subject to” as meaning conditional or dependent upon something, concluding
its use requires the thing referred to in the clause to already exist and insisting the
bare phrase does not affirmatively create a right. They rely on Walker from a Texas
appellate court. Although they insist the disputed clause is clearly and
unambiguously not an exception or reservation of the grantor’s mineral interest, they
alternatively posit the clause must be construed against the grantor (and now
Appellee) if we conclude it is ambiguous.
-11-
ANALYSIS
{¶26} A “subject to” clause can be used as a precaution to limit a grantor’s
liability under the deed’s warranty in order to avoid a future breach of warranty claim.
The parties refer to the following example: “subject to restrictions, covenants,
conditions, limitations, easements, rights of way, and reservations existing of record *
* *.” See generally Miller Lakes Community Servs. Assn., Inc. v. Schmitt, 9th Dist.
No. 15AP0010, 2016-Ohio-339, ¶ 6. See also Edwards v. Ohio State Students'
Trailer Park Co-operative, 84 Ohio App. 518, 519, 88 N.E.2d 187 (2d Dist.1949)
(“This deed is executed and delivered by the grantor herein and accepted by the
grantee herein subject to all easements, exceptions and conditions of record in any
manner affecting the use of said premises.”). When used in this manner, the clause
is considered “a type of savings clause limiting the general warranty,” and if there
were no such restrictions previously created, the sentence has no meaning except as
a “precautionary measure.” Wilson v. Tuttle & Son Construction, Inc., 3d Dist. No. 2-
81-14 (Feb. 18, 1982) (“Said premises are conveyed subject to the restrictions and
conditions contained in former deeds for this lot and effective at this date.”).
{¶27} In urging a “subject to” clause is a reference to any events that may
have already transpired, Appellants distinguish cases cited by Appellee where courts
found a reservation in the “subject to” clause. Appellants state the “subject to” clause
in some cases was referring to or incorporating an easement, dedicated road, or
document that was pre-existing rather than creating a new right. See, e.g., Miller v.
Romanauski, 8th Dist. No. 100120, 2014-Ohio-1517, ¶ 6 (“subject to all legal
highways and 25 feet off the south side thereof for Fernhall Road, proposed.”);
Parker v. Parker, 4th Dist. No. 99CA845 (Sep. 28, 2000) (“This transfer is subject to
rights as stated in the Decree of Dissolution of Marriage * * *”).4
{¶28} Nonetheless, “subject to” has been utilized in deeds for other purposes.
As the parties agree, prefacing a clause with “subject to” does not preclude the
4 On the other hand, “all right, title, and interest” to “all mineral rights” of the “grantor herein” underlying
the property represents a concrete and pre-existing item at the time of the property’s conveyance and
is further described as including coal, oil, and gas; an easement that is not pre-existing would have to
be defined in some way to create it.
-12-
clause from containing an exception or reservation. Still, Appellants suggest that in
order for the grantor to own the minerals, the clause would have to include words
akin to “subject to the grantor excepting his mineral rights” or “subject to the grantor
reserving his mineral rights” or even “subject to: the grantor is not conveying his
mineral rights in this transaction.” See, e.g., Lone Star Steakhouse & Saloon of Ohio,
Inc. v. Ryska, 11th Dist. No. 2003-L-192, 2005-Ohio-3398, ¶ 26 (“Subject to Lessor
reserving a twenty-four foot easement for the length of the property on the Westerly
side”); Slaine v. Drevon, 5th Dist. No. CA-5713 (Dec. 23, 1981) (“Subject however to
a reservation for street purposes of a strip of land twenty feet in width off the west
end of this tract.”); Bowers v. Kerman, 35 Ohio App. 44, 45, 171 N.E. 604 (9th
Dist.1930) (“This property is conveyed subject to the following restrictions and
limitations which are reserved by the said grantor * * *”).
{¶29} As aforementioned, Appellants agree magic words are not required and
a variation of “except” or “reserve” is not required. See Gill, 74 Ohio St. 295 at
syllabus (“Whether the language used in a deed creates a reservation or exception
from the grant depends upon the intention of the parties as evinced by a construction
of the whole instrument in the light of the circumstances of each case.”). For
instance, this court found coal was clearly excepted from the conveyance by the
second half of the clause, “All coal underlying said lands has been heretofore
transferred and no rights to coal are intended to be conveyed by this deed.” Stobbs
v. Johnson, 7th Dist. No. 88-B-3 (Apr. 6, 1989) (even though only one seam of coal
had been transferred previously). Appellants state the language, “no rights to coal
are intended to be conveyed” is clearer than the language in the clause at issue in
the case at bar, while Appellee points out the first part of the clause in Stobbs was
untrue and thus made the second part less clear than Appellants suggest.
{¶30} There are cases finding a clause in a deed created a new easement (as
opposed to merely referencing any prior easements) via a “subject to” clause without
the addition of the term “reservation” or “exception” or the phrase “the grantor does
not convey” or “the grantor retains.” See Clark v. Butler, 4th Dist. No. 12CA3315,
2012-Ohio-5618, ¶ 9; Dagrosa v. Calabro, 105 N.Y.S.2d 178, 181 (1951). Appellants
-13-
believe the creation of an easement is different than the creation of a mineral
reservation, and Appellee responds that Appellants’ position on this particular topic is
not explained or supported. This parallel between easements and mineral
reservations was recognized by a Kentucky appellate case which found a mineral
reservation was created by a “subject to” clause; the case is addressed further below.
Kelley v. Haas, 262 S.W.2d 687, 688-689 (Ky.App.1953), citing Dagrosa, 105
N.Y.S.2d 178. On the topic of life estates, there are cases where the courts
presuppose a phrase such as “subject to a life estate in the grantor” created a
reservation. See, e.g., Nelson v. Parker, 687 N.E.2d 187 (Ind.1997) (where the issue
before the Indiana Supreme Court was whether the state would maintain the
common law rule that a new reservation cannot be made in favor of a third party or
“stranger to the deed”).
{¶31} Appellants rely on the following statements in a Texas appellate case
regarding the phrase “subject to” as used in a deed: “The principal function of the
‘subject to’ clause in the conveyance of a mineral interest is to protect the grantor
against a claimed breach of warranty”; the ordinary meaning of the phrase is “limited
by” or “subordinate to”; and the phrase “does not have the effect of creating any
affirmative rights.” Walker v. Foss, 930 S.W.2d 701, 706 (Tex.App.1996). Before
reviewing Walker, we note the Texas Supreme Court has also made the first two
observations, agreeing the principal function of a subject to clause in a deed is to
protect a grantor against a claim for breach of warranty. Wenske v. Ealy, 60 Tex.
Sup. C.J. 1433, 521 S.W.3d 791, 796 (2017), relying on Smith, The “Subject To”
Clause, 30 Rocky Mtn. Min.L.Inst., Section 15.01 (1984).
{¶32} But, the Texas Supreme Court also recognized “subject-to clauses are
widely used for other purposes” and shunned the employment of “magic words” or
mechanical rules. Id. at 796-797 (in a case asking which portion of the mineral
interest was burdened by a prior royalty). Although the majority in Wenske found the
clause before the court indicated an intent to avoid a breach of warranty claim under
the facts of that case (rather than an attempt to make a reservation free of the pre-
existing oil royalty), they refused to overrule a prior case finding a “subject to” clause
-14-
limited the estate granted and did not merely protect against warranty claims. Id. at
794-795, citing Bass v. Harper, 441 S.W.3d 825 (Tex.1969) (partly relying on the
location of the subject to clause in the deed so that it was tied to the grant rather than
the warranty). An emphasized premise underlying the results of each case is
embodied in the following statement: “Given the enormous power of context to
transform the meaning of language, courts should resist rulings anchored in hyper-
technical readings of isolated words or phrases.” Wenske, 521 S.W.3d at 797.
{¶33} Returning to the cited Walker case it should be pointed out that after
finding the first two instances of “subject to” did not create an affirmative right
(because the language after the clause merely referred to a prior recorded life estate
and a prior recorded oil and gas reservation), the Texas appellate court concluded an
affirmative right was created by a third use of the clause in combination with the
subsequent wording. Walker, 930 S.W.2d at 707. That is, after finding a “subject to”
clause mentioning a prior recorded life estate and a prior recorded mineral
reservation did not create new rights, the court found a new interest was created by a
“subject to” clause followed by a “[r]eservation of a 1/16th over-riding royalty for a
period of 20 years from the date hereof unto the grantor herein.” Id. at 706-707
(emphasizing “and” after the quoted clauses to show the phrase ”subject to” applied
to each of the three disputed clauses). In support of Appellants’ argument, we
recognize the Walker deed contained the word “reservation” in the pertinent “subject
to” clause. On the other hand, we note the Walker court emphasized the reference to
“the grantor herein” in finding a new reservation was created. Id. at 707.
{¶34} Similarly, an Arkansas appellate court held the clause “[s]ubject to
reservation of all oil, gas, and other minerals” (in the granting clause immediately
following the legal description) unambiguously reserved a valid mineral interest in the
grantor. Barger v. Ferrucci, Ark. App. No. CA 10-797, 2011 Ark. App. 105. The court
emphasized the word “all” and noted the “subject to” clause did not refer to a prior
limitation or any other recordings. Id. (“Despite appellants' argument that ‘subject to’
may not create an affirmative right, our examination of this deed from its four corners
-15-
convinces us otherwise.”). Again, we recognize the deed in the Barger case
contained the word “reservation” in the “subject to” clause.
{¶35} Even if the bare phrase “subject to” does not denote the creation of
affirmative rights, affirmative rights can be created due to the words used in
conjunction with the phrase. Different “subject to” clauses in the same deed can
have different meanings depending on their context. The first paragraph of the
secondary source cited in Walker and Wenske states the use of a subject to clause
“as a mechanism for retaining an interest in the grantor” is “likely to introduce an
element of ambiguity into the deed * * *.” Smith, The “Subject To” Clause, 30 Rocky
Mtn. Min. L. Inst. Yet, the cases of Bass, Walker, and Barger did not find an
ambiguity by the use of the phrase when creating a reservation. Still more on point,
there are instances of courts around the country finding the use of the phrase
“subject to” did not make it ambiguous as to whether a reservation was created and
instead found the language in the clause unambiguously showed the grantor retained
the right listed after the clause, even where a word such as “reservation” was not
used in the clause.
{¶36} For instance, in the Nebraska Supreme Court’s Bulger case, the
granting clause of the deed contained the legal description of the property which
concluded by stating, “together with all appurtenances to the same belonging, and all
the estate, title, dower, right of homestead, claim or demand whatsoever of the said
grantors, of, in or to the same, or any part thereof; subject to ONE-HALF OF ALL OIL
AND MINERAL RIGHTS.” Bulger v. McCourt, 179 Neb. 316, 318, 138 N.W.2d 18
(1965). The grantee argued the “subject to” clause was not an exception or a
reservation of one-half of the mineral rights “but was merely a limitation on the liability
of the grantors under the warranty deed.” Id. at 319. The Nebraska Supreme Court
disagreed and upheld the entry of summary judgment in favor of the grantor’s
successors.
{¶37} The state supreme court explained the phrase “subject to” was “often
used by nonlawyers to cover exceptions, reservations, and exclusions.” Id. at 322.
The court stated the phrase has “no well-defined meaning, although ordinarily it will
-16-
mean subordinate to, subservient to, or governed or affected by.” Id., citing Black's
Law Dictionary, 1594 (4th Ed.). The court noted its prior general definition for the
phrase as “dependent upon” or “limited by” but then announced: “the expression
‘subject to’ is a term of qualification which acquires its meaning from the context in
which it appears.” Bulger, 179 Neb. at 322. The Nebraska Supreme Court
concluded:
the ordinary person would readily interpret the conveyance as a
retention by the grantor of one-half of all oil and mineral rights. To hold
that the questioned language in the granting clause, without more
appearing, was solely a limitation on the liability of the grantors under
the warranties in the deed, would actually be a strained and unnatural
construction.
Id. at 321-322 (finding it “evident” the grantor created a mineral reservation by stating
the grant was “subject to one-half of all oil and mineral rights”).
{¶38} An aforementioned Kentucky appellate decision is another case on
point where the court ruled on the effect of a deed which stated the conveyance “is
subject to * * * all mineral rights * * *.” Kelley v. Haas, 262 S.W.2d 687, 688-689
(Ky.App.1953). The issue was “simply whether the quoted language constituted an
exception of all the mineral rights, or only of such as had previously been conveyed
to others, which happened in this case to be the coal rights only.” Id. at 688. The
successors to the grantors argued “the deed shows a clear intent to exclude ‘all’
mineral rights, and they maintain that the words ‘subject to’ are just as competent as
any other words to effectuate an exception or reservation.” Id. The grantees’
successors argued the “subject to” clause was a protective clause “inserted only for
the purpose of making clear that the grantors were not purporting to sell something
they did not own.” Id. The trial court agreed with the latter argument, but the
appellate court reversed the holding:
It is reasonably clear to us that the deed excepts or reserves all the
mineral rights, unless the words ‘subject to’ are not capable in law of
accomplishing that purpose. While we are favored with the citation of
-17-
numerous cases involving construction or application of the words,
‘subject to,’ none of the cited cases are authority for the proposition that
these words cannot ever create an exception or reservation in favor of a
grantor. * * * We have, in the deed before us, the phrase, ‘subject to *
* * all mineral rights'. To say that this was not effective to except or
reserve all mineral rights would be to attach an unwarranted importance
to the technicalities of the language of conveyancing. It is our opinion
that no mineral rights passed to the grantees under this deed.
Id. at 688-689.
{¶39} Once again, the disputed clause before us reads: “Subject, however, to
all right, title and interest of the grantor herein in the above three tracts in all minerals
rights thereunder including coal, gas and oil.” As set forth supra, the use of a
“subject to” clause is not dispositive; the clause can introduce notice of a prior
reservation or it can create a new reservation. Use of the word reservation or
exception is not an absolute requirement in order for a grantor to create a new
affirmative right during a conveyance. Context, rather than talismanic incantation, is
the consideration. In other words, magic words are not required. See Gill, 74 Ohio
St. 295 at syllabus (consider the whole instrument reading the language in its context
to ascertain if it created an exception or a reservation of minerals).
{¶40} The language before us is even more indicative of a reservation or
exception of the grantor’s mineral interests than that used in the deeds in the Kelley
and Bulger cases, which fully support Appellee’s position and are persuasive
authority. The reference to “grantor herein” after the “subject, however, to” clause is
a factor leaning toward the reservation or exception from the conveyance as opposed
to a mere limitation on the warranty. See Walker, 930 S.W.2d at 706-707. The
clause refers to the grantor’s right, title, and interest in a specific severable item. In
addition, the clause refers to “all” title of the grantor herein in “all” mineral rights. It
also provides examples such as coal, gas, and oil. The prior reservation of record
referred before this clause was merely an oil royalty. Also, the prior reservation of
the oil royalty only related to tract III but the “subject, however, to” clause relates to all
-18-
mineral rights under all “three tracts” being described. Moreover, the clause was
immediately after the legal description of the property being conveyed and is not
connected to the warranty clause.
{¶41} Contrary to Appellant’s initial contention, the “subject to” clause in the
pertinent deed does not refer to a mere limitation on the warranty. Rather, the
mineral rights were clearly and unambiguously excepted or reserved by the particular
“subject to” clause involved in the context of this case. This court comes to a
conclusion similar to the Kentucky appellate court in Kelley and the Nebraska
Supreme Court in Bulger: An “ordinary person would readily interpret the
conveyance as a retention by the grantor of * * * mineral rights” and to hold the
clause was “solely a limitation on the liability of the grantors under the warranties in
the deed, would actually be a strained and unnatural construction.” See Bulger, 179
Neb. at 321-322. In accordance, the trial court’s judgment is affirmed.
Donofrio, J., concurs.
Waite, J., concurs.