Helping Clients With Their Energy and Environmental Needs


White v. Kemp:    When does a Lease or Release of a Lease Qualify as a “Title Transaction” under Ohio’s Marketable Title Act?

By Casey Valentine

Ohio’s Seventh District Court of Appeals recently clarified when an oil and gas lease and a release of an oil and gas lease constitute “title transactions” under Ohio’s Marketable Title Act (MTA). See White v. Kemp, 2023-Ohio-4513. The court’s analysis centered on (1) whether the lessor owned an interest in the oil and gas estate and (2) the language used in the oil and gas lease and release.

In 1930, James Shultz reserved the oil and gas underlying the subject property. Two years later, he passed away and his last will and testament devised all of his property to his wife, Estella Shultz, until her death or remarriage. And upon her death or remarriage, all of James Shultz’s property was to pass to their three children. Following James Shultz’s passing, Estella Shultz reacquired the property and immediately conveyed it to Harvey Calvert, reserving 1/2 of the oil and gas royalties. Thus, Harvey Calvert acquired the surface of the property and Estella Shultz’s life estate in the oil and gas rights, less and except 1/2 of the oil and gas royalties.

In 1950, Estella Shultz married Harvey Calvert, effectively terminating (1) her life estate in 1/2 of the oil and gas royalties she reserved and (2) Harvey Calvert’s life estate pur autre vie in the other 1/2 of the oil and gas royalties as well as the remaining oil and gas rights. However, no one recorded any evidence of her remarriage until 2014. In 1968, Stanley Moore, successor-in-interest to Harvey Calvert, entered into an oil and gas lease covering the subject property. By a separate instrument recorded in 1978, the 1968 lease was cancelled and surrendered. In 2019, the Appellants, successors to Stanley Moore, filed a quiet title action claiming that the MTA extinguished the Appellees’ oil and gas rights, who claimed title through James Schultz’s children. The parties agreed that a deed recorded in 1970 was the root of title. Among other holdings, the trial court held that the 1978 release constituted a “title transaction” under the MTA that preserved James Shultz’s heirs’ oil and gas rights pursuant to R.C. 5301.49(D).

On appeal, Ohio’s Seventh District Court of Appeals reversed the trial court’s ruling and held that the 1978 release did not constitute a “title transaction” under the MTA because the original 1968 lease itself was not a valid title transaction. Citing its previous holding in Pernick v. Dallas, 2021-Ohio-4635, the Court held that, in order for a lease (and thus, a subsequent release of the lease) to “rise to the level of a ‘title transaction’ under the MTA, the lease: 1) must involve a legal interest rather than a fictitious or nonexistent one; and 2) must refer to the party who is attempting to establish its interests under the MTA.” The Court found that the 1968 lease and 1978 release did not involve a legal interest because Stanley Moore, the lessor, did not own any interest in the oil and gas at the time of the 1968 lease due to Estella Shultz’s remarriage to Harvey Calvert in 1950.

The Appellees argued that the Court should not consider Estella Shultz’s remarriage in its MTA analysis because no evidence of her remarriage was of record until 2014, being more than 40 years after the recording of the root of title in 1970. The Court disagreed, declaring that the Appellees cannot rely on documents recorded outside of the Appellants’ 40-year chain of record title (i.e., the severance deed and James Shultz’s last will and testament), while at the same time arguing that the Appellants cannot rely on the 2014 affidavit to evidence the remarriage of Estella Shultz. Nevertheless, the Court held that, even if it did not consider Estella Shultz’s remarriage in its MTA analysis, the Appellees’ oil and gas rights were still extinguished under the MTA because (1) there is no language in the 1968 lease or the 1978 release to suggest that anyone other than Stanley Moore owned the oil and gas rights to the property and (2) there is no record of the reserved oil and gas rights in the 1968 lease, 1970 root of title, 1978 release, or any subsequent title documents.

Tags: Ohio Marketable Title Act, MTA, "Oil and Gas Lease", Release, title transaction

Helping clients with their energy and environmental needs

You can expect to find news and breaking legal developments involving the crude oil and natural gas industries, alternative and renewable energy resources, and the latest environmental issues.