Co-author Max Brown
Commonwealth of Pennsylvania v. International Development Corporation resolved the question, In a 100 year old Pennsylvania deed is a “subject to” provision an exception to a grant or a warranty disclaimer?
- 1894: 2,094 acres are sold by deed from Proctor and Hill to Union Trading Company; Proctor and Hill reserve all minerals. This reservation is not reported to the taxing authority, and the property is assessed and taxed as a whole following the sale.
- 1903: Union deeds the surface to CPLC.
- 1908: Property is sold in a tax sale to McCauley. This effectively “washes” the title and reunifies the two estates; McCauley owns the surface and the minerals.
- 1910: McCauley conveys the property back to CPLC.
- 1920: CPLC sells the property and other land to the Commonwealth of Pennsylvania. The deed had two key clauses.
The “First Clause”: The conveyance was “subject to” the mineral interests “as fully as said minerals and mineral rights were excepted and reserved in [the 1894 deed].”
The “Second Clause”: The conveyance was “also subject to all the reservations, exceptions, covenants, and stipulations contained in [the 1894 deed] … and in the [1903 deed].”
CPLC quitclaims the mineral rights, the minerals were resold multiple times, in 2000 International Development Corporation (IDC) purchases the property.
Who owns the mineral rights, IDC or Commonwealth?
According to the Commonwealth, the First Clause was a warranty disclaimer, not a reservation of the mineral rights for CPLC, and therefore the Commonwealth owns the minerals.
The Court disagreed. The First Clause excepted the mineral interests and did not operate as a warranty disclaimer. It was a reservation of CPLC’s ownership in the minerals. “Subject to” certain conditions has a specific meaning when used in property deeds. Making a conveyance “subject to” restrictions set forth in some other deed referred to does not, without more, make the restrictions applicable to the property conveyed if the restrictions do not otherwise apply thereto. In other words, if the “subject to” language refers to restrictions which do not exist, those restrictions are not imposed on the granted land. But when property is conveyed by warranty deed, it is in the grantor’s interest that the conveyance be subject to every restriction or encumbrance which does or may apply to the property. The Court stated that it would be “foolhardy” for a grantor delivering a warranty deed to fail to refer to a restriction which may at some time in the future be held to apply to his property, merely to avoid the criticism of excess wordiness.
The use of “subject to” can show the grantor’s intent regarding the scope of the warranty, but cannot create new restrictions or expand existing restrictions.
Thus, in the First Clause, the phrase “as fully as” was key; it transformed the entire clause from one which would operate as a warranty disclaimer to one which limited the scope of the property memorialized by the 1920 deed. Just as Proctor and Hill reserved for themselves “all” of the mineral rights, so too did CPLC reserve for itself ownership of all of the mineral rights.
The Second Clause reinforced the conclusion that the First Clause was not a warranty disclaimer. In light of the Second Clause’s use of “subject to” in conjunction with the absence of verbiage restricting the Commonwealth’s ownership rights, the First Clause cannot also act as a warranty provision, because interpreting it thusly would render it redundant.
Result: CPLC retained the minerals in the 1920 deed and those minerals are now owned by IDC.