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Venable Royalty, Ltd., et alv. EQT Production Company, et al.
Date: 10-08-2024
Case Number: CC-52-2021-C-19
Judge: Ronald E. Wilson
Court: Circuit Court, Wetzel County, West Virginia
Plaintiff's Attorney:
Click Here For The Best New Martinsville Real Estate Lawyer Directory
Defendant's Attorney:
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Description:
New Martinsville, West Virginia oil and gas quiet title real property lawyers represented the Plaintiffs and Defendants.
In 1884, William McGary acquired 201 acres of land in fee simple ("parent tract"), with no oil and/or gas or other reservations included within the conveyance. In 1907, Mr. McGary and his wife conveyed the parent tract to Joseph Carpenter; however, this conveyance contained a reservation by the McGarys, wherein "one sixteenth of all the oil and one half the royalty of gas produced from the [. . .] premises[,]" were reserved "from the operation of" the deed. The parties herein agree that this reservation then vested the McGarys with a ½ or 50% NPRI in the oil and gas produced from the parent track ("McGary Interest").
In 1907, Joseph Carpenter conveyed his interest in the parent tract to brothers A.E. Riggenbach and J.W. Riggenbach, which vested the Riggenbachs with 100% of the surface and oil and gas in place. However, the Riggenbachs received only 50% of the royalty from oil and gas produced from the parent tract due to the McGary Interest.[2] Ad valorem taxes were collected by the Sheriff of Wetzel County on the McGary Interest from 1907 until 1962 (55 years). At this point, the tax payments for assessments on the McGary Interest ceased and the property taxes became delinquent. The McGary Interest was sold by the Sheriff of Wetzel County on October 21, 1963, and conveyed to J. H. Riggenbach in a tax deed dated April 1, 1965.
On July 13, 2021, Petitioners filed the underlying complaint seeking to quiet title and a declaratory judgment relating to the ownership of the oil and gas underlying the subject tract, naming all known heirs to William McGary and his wife ("McGarys"), and all other existing parties and entities believed to have a potential interest in the land. Respondent AMP filed its answer, counterclaim and crossclaim on October 15, 2021. In its counterclaim, AMP acknowledged that the McGary Interest reserved to the McGarys a 50% interest in the royalties generated by oil and gas produced from the subject tract. However, AMP asserted that this was an interest in personal property, not real property, and could not be subject to land book tax assessments or tax sales. AMP argued that the 1965 tax sale was invalid and the interest remained vested in the McGarys and their heirs, which was eventually conveyed, in part, to AMP. The McGary heirs answered Petitioners' complaint and denied that the 1965 tax sale transferred the McGary Interest. The Additional McGary heirs answered Petitioners' complaint, and also denied Petitioners' claim to the McGary Interest.
After the close of discovery, AMP filed its motion for summary judgment asserting that NPRIs are personal property and therefore the 1965 tax sale of the McGary Interest was void. The McGary heirs also moved for summary judgment arguing that the McGary Interest, as personal property, was not divested via tax sale. The Additional McGary heirs filed a separate motion for summary judgment, making similar arguments. Conversely, Petitioners moved for summary judgment arguing that the NPRI carved out in 1907 was properly assessed and taxed as an interest in real property, and thus the 1965 tax sale was valid.
On July 5, 2023, the circuit court entered its order finding in favor of AMP, the McGary heirs, and the Additional McGary heirs. The court's order noted a lack of guidance from the Supreme Court of Appeals of West Virginia ("SCAWV") as to whether an NPRI in oil and gas could be assessed as real property for ad valorem tax purposes. The court decided that it could not find in favor of Petitioners, "based upon the law this court feels is the most applicable to the facts." The court explained that there are two types of assessments with respect to oil and gas, one which is real property and one which is personal property. The value of the oil and gas in place is assessed as real property. The value of the royalty received from the production of oil and gas once it is produced is personal property. The court reasoned that the value of the McGary Interest fell into the latter category and thus was improperly assessed as real property and could not serve as the basis of a sale for delinquent taxes. Accordingly, the court voided the 1965 tax deed. This appeal followed.[3]...
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As we have determined that NPRIs are real property, we must briefly address AMP's argument that treating NPRIs as real property violates West Virginia's state tax laws. We find this argument unavailing. "[T]axation shall be equal and uniform throughout the state, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law." W.Va. Const. Art. 10, § 1.; see also In re Northview Services, Inc., 183 W.Va. 683, 398 S.E.2d 165 (1990) (Under State Constitution, all property, real and personal, must be taxed equally according to its value, unless property falls within tax exemption.). Thus, West Virginia requires taxation of both real and personal property unless said property falls under an enumerated exception.[15]...
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Venable Royalty, Ltd. v. EQT Prod. Co., 23-ICA-351 (W. Va. ICA Oct 08, 2024)
In 1884, William McGary acquired 201 acres of land in fee simple ("parent tract"), with no oil and/or gas or other reservations included within the conveyance. In 1907, Mr. McGary and his wife conveyed the parent tract to Joseph Carpenter; however, this conveyance contained a reservation by the McGarys, wherein "one sixteenth of all the oil and one half the royalty of gas produced from the [. . .] premises[,]" were reserved "from the operation of" the deed. The parties herein agree that this reservation then vested the McGarys with a ½ or 50% NPRI in the oil and gas produced from the parent track ("McGary Interest").
In 1907, Joseph Carpenter conveyed his interest in the parent tract to brothers A.E. Riggenbach and J.W. Riggenbach, which vested the Riggenbachs with 100% of the surface and oil and gas in place. However, the Riggenbachs received only 50% of the royalty from oil and gas produced from the parent tract due to the McGary Interest.[2] Ad valorem taxes were collected by the Sheriff of Wetzel County on the McGary Interest from 1907 until 1962 (55 years). At this point, the tax payments for assessments on the McGary Interest ceased and the property taxes became delinquent. The McGary Interest was sold by the Sheriff of Wetzel County on October 21, 1963, and conveyed to J. H. Riggenbach in a tax deed dated April 1, 1965.
On July 13, 2021, Petitioners filed the underlying complaint seeking to quiet title and a declaratory judgment relating to the ownership of the oil and gas underlying the subject tract, naming all known heirs to William McGary and his wife ("McGarys"), and all other existing parties and entities believed to have a potential interest in the land. Respondent AMP filed its answer, counterclaim and crossclaim on October 15, 2021. In its counterclaim, AMP acknowledged that the McGary Interest reserved to the McGarys a 50% interest in the royalties generated by oil and gas produced from the subject tract. However, AMP asserted that this was an interest in personal property, not real property, and could not be subject to land book tax assessments or tax sales. AMP argued that the 1965 tax sale was invalid and the interest remained vested in the McGarys and their heirs, which was eventually conveyed, in part, to AMP. The McGary heirs answered Petitioners' complaint and denied that the 1965 tax sale transferred the McGary Interest. The Additional McGary heirs answered Petitioners' complaint, and also denied Petitioners' claim to the McGary Interest.
After the close of discovery, AMP filed its motion for summary judgment asserting that NPRIs are personal property and therefore the 1965 tax sale of the McGary Interest was void. The McGary heirs also moved for summary judgment arguing that the McGary Interest, as personal property, was not divested via tax sale. The Additional McGary heirs filed a separate motion for summary judgment, making similar arguments. Conversely, Petitioners moved for summary judgment arguing that the NPRI carved out in 1907 was properly assessed and taxed as an interest in real property, and thus the 1965 tax sale was valid.
On July 5, 2023, the circuit court entered its order finding in favor of AMP, the McGary heirs, and the Additional McGary heirs. The court's order noted a lack of guidance from the Supreme Court of Appeals of West Virginia ("SCAWV") as to whether an NPRI in oil and gas could be assessed as real property for ad valorem tax purposes. The court decided that it could not find in favor of Petitioners, "based upon the law this court feels is the most applicable to the facts." The court explained that there are two types of assessments with respect to oil and gas, one which is real property and one which is personal property. The value of the oil and gas in place is assessed as real property. The value of the royalty received from the production of oil and gas once it is produced is personal property. The court reasoned that the value of the McGary Interest fell into the latter category and thus was improperly assessed as real property and could not serve as the basis of a sale for delinquent taxes. Accordingly, the court voided the 1965 tax deed. This appeal followed.[3]...
* * *
As we have determined that NPRIs are real property, we must briefly address AMP's argument that treating NPRIs as real property violates West Virginia's state tax laws. We find this argument unavailing. "[T]axation shall be equal and uniform throughout the state, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law." W.Va. Const. Art. 10, § 1.; see also In re Northview Services, Inc., 183 W.Va. 683, 398 S.E.2d 165 (1990) (Under State Constitution, all property, real and personal, must be taxed equally according to its value, unless property falls within tax exemption.). Thus, West Virginia requires taxation of both real and personal property unless said property falls under an enumerated exception.[15]...
* * *
Venable Royalty, Ltd. v. EQT Prod. Co., 23-ICA-351 (W. Va. ICA Oct 08, 2024)
Outcome:
We adopt the view that NPRIs are real property subject to ad valorem taxation as such. Therefore, we reverse the Circuit Court of Wetzel County's order dated July 5, 2023, and remand the matter for further proceedings consistent with this opinion.
Plaintiff's Experts:
Defendant's Experts:
Comments:
About This Case
What was the outcome of Venable Royalty, Ltd., et alv. EQT Production Company, et...?
The outcome was: We adopt the view that NPRIs are real property subject to ad valorem taxation as such. Therefore, we reverse the Circuit Court of Wetzel County's order dated July 5, 2023, and remand the matter for further proceedings consistent with this opinion.
Which court heard Venable Royalty, Ltd., et alv. EQT Production Company, et...?
This case was heard in Circuit Court, Wetzel County, West Virginia, WV. The presiding judge was Ronald E. Wilson.
Who were the attorneys in Venable Royalty, Ltd., et alv. EQT Production Company, et...?
Plaintiff's attorney: Click Here For The Best New Martinsville Real Estate Lawyer Directory. Defendant's attorney: Click Here For The Best New Martinsville Rel Estate Lawyer Directory.
When was Venable Royalty, Ltd., et alv. EQT Production Company, et... decided?
This case was decided on October 8, 2024.