McKenzie County Farmer - Archive

MCF Newsroom Reports

The North Dakota Supreme Court has reversed a lower court’s dismissal of a royalty dispute involving state-owned riverbed acreage and sent the case back for further proceedings.

In Garaas Family Trusts v. Continental Resources, Inc., the court held that a 1951 deed granting a 2 percent nonparticipating royalty interest in a 40-acre tract in McKenzie County unambiguously entitled the plaintiffs to a share in production from the entire described land, even where some of that land was later found to be owned by the State of North Dakota beneath the Missouri River.

The dispute arose when Continental, the lessee, withheld royalty payments tied to roughly 0.93 acres located below the ordinary high-water mark. The district court had excluded this acreage from the royalty calculation and used an adjusted formula to account for only private lands. But the high court disagreed.

“We conclude the 1951 Deed unambiguously provides for a 2 percent royalty interest in all production from the described tract, without regard to current surface or mineral ownership,” Justice Bahr wrote for the unanimous court. “There is no ambiguity merely because part of the tract now includes land beneath the Missouri River owned by the state.”

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