Title Washing declared unconstitutional by PA court

I saw this over on another forum.  Here is the link:

Link to title washing discussion

On chance this will hold up after scrutiny in higher courts, our own "Amy with the 10,000 acres" in Tioga County, PA, is going to have a huge, watermelon smile on her face this morning.

But, sadly, many others of us could be badly hurt.  We might not own what we today believe we own.

Anyway FWIW, after reading the 14th Amendment to the Constitution of the United States of America, I have to agree with the trial court Judge.  

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Permalink Reply by Frank Walker on April 28, 2013 at 12:48am

Carp

Not at all.  In fact, if this is upheld, it will be the people who leased already who will be best off.  Those people have already collected bonus and (possibly even) royalty money and banked (or spent) it.

Those who have not yet leased could end up losing their O&G rights entirely (to folks like Amy, BTW) and end up with nothing whatsoever.

I had believed Amy would be virtually wiped out because of title washing that happened a long time ago.  If this is upheld, my belief will be revealed erroneous and Amy, along with many other "pre-washing" rights owners, will emerge with the O&G rights to a LOT of land.  But landowners who today think they own those same rights will be blanked.

Permalink Reply by Frank Walker on April 28, 2013 at 1:18am

Carp

Not sure at all a warranty could be enforced in a situation like this.  Grantor's recourse would be warranty was offered in good faith beneath, and relying upon, (then) existing law.  But a later finding of unconstitutionality of that same law would exempt Grantor from jeopardy and/or liability.

Loss would be borne by current property owner, assuming that person remains unleased.  Otherwise, loss would be borne by the gas company.

Permalink Reply by aktony on April 28, 2013 at 5:00am

I saw this posted on the board last night without a link.  Today, the post has been modified and a link cited to naturalgasforums.com as the source of the material where it was also posted without a link to the original source.  In addition, the original post on this board had more information than is present now and I was unable to verify any of the information through Google. 

At present, one must question the information in this post.

Permalink Reply by Frank Walker on April 28, 2013 at 5:44am

First of all, I did not post last evening.  My first OP was done this morning.

But I did find, on Google, a link to the post you are mentioning, done by another person on this forum.  That Google link is now dead.

Looking at recent posts on the other forum, though, there are now two Landex references confirming existence of Sullivan County landowners having the names supposedly the subject of this legal action.

Still, I agree with you something this big needs further substantiation.  Unless this is some kind of elaborate hoax, it is a really big development that could impact many PA landowners.

If it is a hoax, and let's face it internet hoaxes are legion, but if it is a hoax it's been pretty well done.

Permalink Reply by aktony on April 28, 2013 at 5:51am

Frank Walker, thanks for your post.  I just Googled the title of the post and see the original post on this board was by Fang F Fang and is now missing.  Hmmmm...is there any way to retrieve old posts?

Permalink Reply by wyalusing jim on April 28, 2013 at 6:27am

hey tony!

how's it going?

comin' to the m.a. again this year?

wj

Permalink Reply by Frank Walker on April 28, 2013 at 6:32am

Dunno.  The administrator over there has dived in and is attempting to obtain confirmation from one of his lawyer buds.

I agree with you it would be interesting to know about Fang's post here, to know what it said,  and to know why it was withdrawn!

Permalink Reply by aktony on April 28, 2013 at 8:06am

Hi ya wj!

How ya doing?  Will definitely be at the m.a.!   What do you think of this topic being originally posted on April 21 by Fang R Fang, then disappearing from the board and being posted today under the same heading except with the admonition to Amy?

   

Permalink Reply by wyalusing jim on April 28, 2013 at 8:26am

http://hoytroyalty.com/2013/04/27/sullivan-county-court-strikes-dow...

dunno what to make of it tony.

interesting topic, though it doesnt affect me at all.

and you know how it goes, there's lotsa stuff on these discussion forums, some good, some not so good. best use of anything we read is as a reference for our own research.

can't wait to seeya again!

wj

Permalink Reply by Kevin Senich on April 28, 2013 at 11:41am

Great topic!  Thanks to all for the posts and links. 

I just read the opinion.  The facts were undisputed -- all a question of title record -- so that made the issue amenable to summary judgment.

This case, as the judge characterized it, was a matter of statutory construction.  A 1947 Act codified as 72 P.S. Section 5860.609 stated:

Every such sale shall discharge the lien of every obligation, claim, lien or estate with which said property may have or shall become charged, or for which it may be liable, except that no such sale shall discharge the lien of any ground rent or mortgage which shall have been recorded before such taxes become liens, and which is or shall be prior to all other liens, except other mortgages and ground rents.

Judge Shurtleff effectively skirted the issue of whether ownership of the subsurface rights was an "estate with which said property (became) charged" by declaring "said property" to be only the surface owner's estate.  In the case of the outright ownership of subsurface rights, the estate is not what is called a subservient or lesser estate carved out of the fee simple -- it is a separate estate entirely. 

While the judge could have said the estates the statute intended to discharge were only  subservient estates, he would have had to add that qualifying language to the statute where it did not exist.   That he did not shows he is a solid jurist.  His other alternative may have been to declare 72 P.S. Section 5860.609 unconstitutional on its face.  That he did not do that again shows he is a solid jurist, because such a declaration might resolve this issue, but cause countless problems where the statute can otherwise operate without constitutional violation. 

The difficulty with the Decision is this:  It presupposes that the surface owners were charged a disproportionate (and likely unconstitutional) share of the real property taxes that resulted in the tax lien and foreclosure.  Clearly if the "real property subject to a tax lien" was only the surface estate, to an undeniable degree that surface estate was overtaxed if based on a value that did not contemplate the exclusion of the value of the subsurface estate.  In plain terms, under Judge Shurtleff's reasoning, the government ripped off the surface owner by charging him too much in taxes and then took his property when he could not pay it!  This is not good.

The fact is, whether right or wrong, the surface owner was undoubtedly paying taxes (until he stopped) for a property valued for tax purposes as including the entire, unified estate.  Does that render the entire property "real property subject to a tax lien"?  Having had a free ride for tax purposes, can the subsurface owner argue that his is not a subservient estate?

Will this Decision, as has been suggested before in this thread, require all subsurface owners claiming separate estates to report to their respective county auditors for assessment?

You will note that the two cases Judge Shurtleff relied on, Wagner and Mennonite Board are cases much more recent than the 1968 sheriff's sale. The super notice required by Mennonite Board is a relatively recent phenomenon.  Prior to that time the public notice of tax sale was sufficient notice for all, regardless of whether a person had a title interest of record or was a stranger to the property.

This is great stuff!  A real Rubic's Cube of interrelating legal issues and rules of law that may or may not fit together in anything we might call a just result.    As good as Judge Shurtleff' is as a jurist, I don't think he has the puzzle quite put together yet.  Surely there will be issues on appeal.  Ultimately, it may take legislative action to resolve.

Once again, thanks for this topic.  I am sure this is not the last we will hear of it.

 

 

 

 

e government gave title in error or by mistake.  There is no question that the title purchased in 1968 was in fee simple -- a title for both surface and subsurface.

Permalink Reply by Bonefish on April 28, 2013 at 8:08am
The decision is posted on the Hoyt Royalty website.
Permalink Reply by Jack Young on April 28, 2013 at 12:17pm

This isn't actually a case on "wash sales" as they're known to oil and gas attorneys. The tax sale law did indeed change in the late 1940s, and no surface tax sales after that date impact severed and unassesed oil and gas rights. Indeed the one true wash sale mentioned in this case (1910) is acknowledged by the court! So I think what we're seeing here is someone who wants to have true wash sales eliminated portraying this case as something that it isn't.

A true wash sale involves an unseated treasurer's sale of vacant and unimproved lands where the oil and gas had previously been severed and were unassessed, and those are not impacted by this opinion. So there's nothing really new here - the decision is as I would have expected it to be. Wishful thinking by the Hoyt Royalty group, I'm afraid.

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