Premier Oil & Gas v. Welch

Office of the Director
10:14:28 2023.08.23 New Mexico
Compilation
'00'06- Commission
2020.005.30514
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO

Opinion Number: 2023-NMSC-017

Filing Date: July 13, 2023

No. S-1-SC-38601

IN THE MATTER OF THE LAST WILL
AND TESTAMENT OF MARIE G.
WELCH, Deceased,

PREMIER OIL & GAS, INC.
and RALPH S. GRIFFIN,

Intervenors-Plaintiffs/Respondents,

v.

JAMES WESLEY WELCH; JOE
MICHAEL WELCH; and BARBARA
GRACE PARKER,

Intervenors-Defendants/Petitioners,

and

SAMUEL G. ALDERMAN, a/k/a SAMUEL G.
ALDERMAN, JR.; RALPH S. GRIFFIN;
UNKNOWN HEIRS OF JOE H. WELCH,
Deceased; BARBARA S. WELCH; N.
STEWART WELCH; UNKNOWN HEIRS OF
GRACE WELCH PHELAN, Deceased;
ESTATE OF DAVID PAUL RAETHER; FRED
WALTER RAETHER; STEVEN LEE RAETHER;
AMANDA MARIE WALKER; WAYLON RAETHER;
UNKNOWN HEIRS OF JUDGE H.D. GRIFFIN,
Deceased; BLAIR SEATON CROOKE; LISA DALE
CROOKE LAMPEL; FOREST ASHLEY CROOKE;
UNKNOWN HEIRS OF MARIE G. WELCH, Deceased;
and UNKNOWN CLAIMANTS OF INTEREST IN THE PREMISES,

Intervenors-Defendants.

ORIGINAL PROCEEDING ON CERTIORARI
William G.W. Shoobridge, District Judge
Montgomery & Andrews, P.A.
Sharon T. Shaheen
Kari E. Olson
Kaleb W. Brooks
Santa Fe, NM

Kelly Hart & Hallman, LLP
Harold L. Hensley, Jr.
Derek L. Montgomery
Jeff D. Kuhnhenn
Midland, TX

David E. Keltner
Marianne M. Auld
Ft. Worth, TX

for Petitioners

Rodey, Dickason, Sloan, Akin & Robb, P.A.
Jocelyn C. Drennan
Edward R. Ricco
Albuquerque, NM

Thompson & Knight, LLP
Gregory D. Binns
Dallas, TX

for Respondents

OPINION

THOMSON, Justice.

{1} In this bona fide purchaser case, we analyze the status of a purchaser of mineral
rights that were entangled in a lengthy and complicated dispute between heirs. Our
analysis comes after the Court of Appeals held that an heirship judgment that conveyed
mineral rights to a good faith buyer’s predecessor in interest is void for lack of
jurisdiction. We consider whether the buyer is entitled to rely on the void judgment in its
claim of bona fide purchaser status. In accordance with this Court’s decision in
Archuleta v. Landers, 1960-NMSC-117, ¶ 28, 67 N.M. 422, 356 P.2d 443, we conclude
that a party who purchases property sold under a judgment that is not void on its face is
entitled to bona fide purchaser status. We further clarify that extrinsic evidence of lack of
jurisdiction is not permitted to overcome the rights of a purchaser who properly relied
upon the order of the court as “an authority emanating from a competent source.” Id. ¶
29 (internal quotation marks and citation omitted). We therefore hold that Respondent
Premier Oil & Gas, Inc. (Premier) is a bona fide purchaser, and we affirm the Court of
Appeals.
I. BACKGROUND

{2} Title to the property in question, mineral rights in Eddy County (the Minerals), is
complicated by the decades-old probate of the estate of previous owners of the land.
The estate dispute was litigated in the district court and the Court of Appeals, but that
dispute is not before this Court. This case is about what notice of adverse title claims, if
any, Premier had when it purchased the Minerals. For context, we provide a brief
synopsis of the estate issues that bear on the title to the Minerals, then move to the title
history, and finally address the procedural posture of the dispute at hand.

A. Estate History

{3} The Minerals were owned by Herbert and Marie Welch in the 1970s. Herbert and
Marie executed a joint will in 1974 (the 1974 Will), which listed each other and their
family members as heirs. When Herbert died in 1975 and his estate was probated, the
Minerals were transferred in their entirety to Marie. After wrapping up Herbert’s estate,
Marie moved to Florida, where she executed a will in 1980 (the 1980 Will). She gave the
1980 Will to her cousin, Samuel Alderman. Marie’s nephew, Ralph Griffin, knew that
Marie had executed several wills, but he did not have possession of them. When Marie
died in 1988, Alderman did not come forward with the 1980 Will. Griffin attempted to
contact Alderman in the months after Marie’s death with no success. In the years
following her death, no one came forward with the 1980 Will, and Marie’s estate
remained unprobated for nearly twenty years, until Griffin filed a petition in 2007 to
determine heirship for Marie’s estate (2007 Heirship Proceeding).

{4} Griffin’s petition declared that Marie died intestate and that he was Marie’s sole
heir. He gave notice of the 2007 Heirship Proceeding by newspaper publication alone,
addressing the notice “to the unknown heirs of Marie Griffin Welch” without naming any
specific individuals. The district court issued a final judgment (2007 Judgment) finding
that Marie died intestate and that Griffin was her sole heir, and awarding title to the
Minerals to Griffin “as his sole and separate property.”

B. Title History

{5} Shortly after obtaining title to the Minerals pursuant to the 2007 Judgment, Griffin
transferred the Minerals to Griffin Minerals, LLC. The LLC leased the Minerals to Sam L.
Shackelford in January 2010. Later in 2010, Premier became interested in purchasing
Shackelford’s leasehold. Before purchasing the lease, Premier hired a title attorney to
conduct a title inquiry. The attorney examined copies of “instruments purporting to be all
instruments affecting [the leasehold] as found in the records of Eddy County and the
District Clerk of Eddy County,” including the 1974 Will and the 2007 Judgment. In March
2010, the title attorney provided an opinion letter to Premier, stating:

Our review indicates that the title of the lessor, Griffin Minerals, LLC, is
derived pursuant to a judicial determination of heirship . . . . The Court
found that Ralph S. Griffin . . . was the only heir at law of Marie Griffin
Welch, who died intestate on December 27, 1988. The chain of title for the
Griffin family over three generations indicated that Ralph S. Griffin is the
only heir at law of the Griffin family. The finding appears to be somewhat
cursory as to Ralph S. Griffin’s great-grandparents to the generational
level of Marie Griffin Welch. However, notices of the proceedings were
published pursuant to New Mexico law, and no other parties filed claims or
appeared to object to the proposed findings of the Court. Barring a
showing of fraud or a violation of procedural due process, the
determination as tendered by the Court will prevail.

Premier purchased the leasehold from Shackelford in March 2010.

C. Procedural History

{6} In 2012, Alderman appeared and filed the initiating action in the case presently
before this Court: a petition for formal probate of the 1980 Will and appointment of
himself as personal representative. Griffin joined the proceeding in opposition, and
ultimately the district court admitted the 1980 Will and appointed Alderman as personal
representative of Marie’s estate. Lengthy litigation followed, eventually Premier
intervened seeking to quiet its title, and Herbert’s heirs⸺Petitioners James Wesley
Welch, Joe Michael Welch, and Barbara Grace Parker (the
Welches)⸺counterclaimed. Therein, the Welches claimed an interest in the Minerals
through Herbert’s estate, and Premier claimed its ownership of the Minerals was
protected under the doctrine of bona fide purchaser, while Alderman sought to assert
his title to the Minerals by seeking to set aside the 2007 Judgment and attacking
Premier’s claim to title.

{7} The Welches, Premier, and Griffin filed cross-motions for summary judgment.
The district court granted summary judgment in favor of Griffin and Premier, “finding that
Griffin was the sole heir of Marie, that Marie died intestate, that Premier [was] a bona
fide purchaser of the Minerals, and that the Welches[’] claims [were] barred by the
provisions of the probate code, by statutes of limitation, and by various equitable
doctrines.” Premier Oil & Gas, Inc. v. Welch (In re Last Will & Testament of Marie G.
Welch), 2021-NMCA-028, ¶ 15, 493 P.3d 400. The Welches appealed.

{8} The Court of Appeals reversed the district court’s summary judgment in favor of
Griffin and granted summary judgment in favor of the Welches. Id. ¶ 54. The Welches
proved they were “interested persons” for purposes of the probate code because they
could claim an interest in Marie’s estate through the 1980 Will and therefore Griffin had
an obligation to exercise reasonable diligence to ascertain the Welches’ identities. Id. ¶¶
33, 35. Because Griffin served the Welches only by publication without first exercising
reasonable diligence to ascertain their identities for proper service of process, the Court
of Appeals held that the 2007 Heirship Proceeding was subject to collateral attack and
declared the 2007 Judgment “void as to the Welches.” Id. ¶¶ 39, 43.

{9} The Court of Appeals’ voiding of the 2007 Judgment might have defeated
Premier’s clear title to the Minerals. Instead, however, the Court of Appeals granted
summary judgment in favor of Premier on its bona fide purchaser claim, reasoning that
[t]he existence of the 1974 Will and the cautionary language in the title
opinion do not put Premier on actual or constructive notice of title
defects. . . . Premier could have reasonably relied upon the 1975
Proceeding’s findings that Marie was the sole beneficiary, heir, devisee,
legatee, and interested party with respect to Herbert’s estate, [thus] ordering
all of Herbert’s property distributed to Marie. . . . Similarly, Premier justifiably
relied upon the findings of the 2007 Heirship Proceeding concluding that
Marie died intestate, that Griffin was her sole heir, and [thus] awarding title
to the Minerals to Griffin as his sole and separate property.

Id. ¶ 52. The Welches petitioned for certiorari, arguing that Premier had actual notice of
adverse title claims to the Minerals and was therefore not a bona fide purchaser. We
granted certiorari and conclude that Premier is entitled to bona fide purchaser status.
Accordingly, we affirm the Court of Appeals.

II. DISCUSSION

A. Standard of Review

{10} The Court of Appeals effectively granted summary judgment in favor of the
Welches’ jurisdictional challenge to the 2007 Heirship Proceeding and affirmed the
district court’s summary judgment in favor of Premier based on the legal conclusion that
Premier was a bona fide purchaser. Premier Oil, 2021-NMCA-028, ¶¶ 1, 43 n.5, 54.
Whether Premier is entitled to bona fide purchaser status is a question of law that we
review de novo. City of Albuquerque v. BPLW Architects & Eng’rs, Inc., 2009-NMCA-
081, ¶ 7, 146 N.M. 717, 213 P.3d 1146 (“[I]f no material issues of fact are in dispute and
an appeal presents only a question of law, we apply de novo review and are not
required to view the appeal in the light most favorable to the party opposing summary
judgment.”).

B. Premier Is Entitled to Bona Fide Purchaser Protection

{11} A bona fide (good faith) purchaser is a party that has acquired property for
valuable consideration in good faith without notice of defects in the chain of title to the
property, including adverse rights or claims of other parties. See Jeffers v. Doel, 1982-
NMSC-116, ¶ 7, 99 N.M. 351, 658 P.2d 426; see also City of Rio Rancho v. Amrep Sw.
Inc., 2011-NMSC-037, ¶ 26, 150 N.M. 428, 260 P.3d 414.

The general rule is that a prospective purchaser of real property is
deemed to have notice of adverse claims to that property if the purchaser
has knowledge of such facts as ought to put a prudent person upon
inquiry as to the title. Once a prospective purchaser obtains knowledge of
facts that trigger a duty to inquire about the title, that purchaser must
perform a reasonably diligent investigation⸺one that would lead to the
knowledge of the requisite facts by the exercise of ordinary diligence and
understanding.
Rio Rancho, 2011-NMSC-037, ¶ 26 (text only) 1 (citations omitted). “A person has notice
of facts of which the person has reason to know as a matter of reasonable inference, or
which the person would have discovered upon appropriate inquiry.” Restatement (Third)
of Restitution & Unjust Enrichment § 69 cmt. f (Am. L. Inst. 2011).

{12} The issue of whether Premier is entitled to bona fide purchaser status turns on
what notice, if any, Premier derived from the 2007 Judgment and on the impact of the
Court of Appeals’ voiding of the 2007 Judgment on Premier’s notice. It is undisputed
that Premier reviewed the 1974 Will and was aware of the 2007 Judgment declaring
that Marie died intestate during its title search prior to purchasing the Minerals. The
Welches make two arguments with respect to Premier’s bona fide purchaser status and
the scope of its notice. First, the Welches argue that the 1974 Will signaled to Premier
that Marie had other potential heirs. That fact, they argue, put Premier on notice that
there were due process concerns with the 2007 Judgment’s declaration that Griffin was
Marie’s only heir, a potential title defect. Second, and alternatively, the Welches argue
that the 1974 Will showed that Marie did not die intestate, which further put Premier on
notice that there was a potential title defect stemming from the 2007 Judgment. Simply
put, the Welches argue that Premier’s review of the 1974 Will signaled to Premier that
the 2007 Judgment was erroneous. The possibility that the 2007 Judgment was
erroneous constituted notice of an adverse title claim.

{13} We conclude that Premier did not have actual notice of title defects for two
independent reasons. First, as a bona fide purchaser, Premier may rely on the 2007
Judgment as a facially regular judgment. Second, a judgment that is the result of a court
improvidently exercising its jurisdiction is not to be corrected at the expense of an
innocent third party who relied on that judgment. To hold otherwise would undermine
the integrity of our courts’ final judgments by requiring a subsequent purchaser of land
that has been involved in a lawsuit to second-guess the legitimacy of the court’s facially
regular judgment to protect its interest as a bona fide purchaser.

{14} We begin by distinguishing facially regular judgments from facially void
judgments, starting with discussion of an analogous case, Archuleta, 1960-NMSC-117.
Archuleta addressed lack of notice in a quiet title suit. Id. ¶¶ 1-5. In Archuleta, it was
alleged that a plaintiff in a quiet title action knew the identity of minor heirs to the
disputed property and that the plaintiff perpetrated fraud upon the court by not properly
noticing the minor heirs in the suit. Id. ¶¶ 4-5. Unaware of the alleged notice
deficiencies, the court awarded the property to the plaintiff, who then sold it to a third
party. Id. ¶¶ 1, 6, 26-27. Archuleta, on behalf of the minor heirs, sued in a separate
action to set aside the quiet title judgment. Id. ¶¶ 3-5, 19. The third party claimed it was
a bona fide purchaser of the property and was not chargeable with knowledge of the
alleged fraud by the predecessor in title. Id. ¶ 27.

1The “text only” parenthetical used herein indicates the omission of any of the following—internal
quotation marks, ellipses, and brackets—that are present in the text of the quoted source, leaving the
quoted text itself otherwise unchanged.
{15} This Court recognized “that there is a presumption that consideration was paid
and that the purchaser acted in good faith.” Id. It relied on a decision from the Supreme
Court of Oklahoma, which held, “[a] purchaser who is not a party to the proceedings is
not bound to look beyond the judgment, if the facts necessary to give the court
jurisdiction appear on the face of the proceedings.” Id. ¶ 29 (quoting Pettis v. Johnston,
190 P. 681, 692 (Okla. 1920)). The Pettis Court explained, “[a] judgment is void on its
face when it so appears by an inspection of the judgment roll.” 190 P. at 689. This Court
subsequently held that the jurisdictional deficiency caused by the service issue did not
appear on the face of the judgment. Archuleta, 1960-NMSC-117, ¶ 32 (“In the instant
case, since there is no allegation of anything appearing on the face of the judgment in
the suit to quiet title or in the proceedings in that action, what was there to call to the
attention of appellee, as a purchaser, any alleged defect in such proceedings?”). In
other words, the judgment was not facially void and therefore the subsequent third-party
purchaser was entitled to rely on the judgment and to bona fide purchaser status.

{16} The notice requirements in this case are no different from those applicable to
Archuleta or Pettis. Griffin’s failure to give notice to interested parties in the 2007
Heirship Proceeding created a jurisdictional deficiency. The Welches argue that the
deficiency constitutes facial invalidity and actual notice to Premier of adverse title
claims. We disagree. First, as we discuss subsequently herein, extrinsic evidence (that
is, the 1974 Will) is inadmissible to overcome the rights of a bona fide purchaser.
Second, and more simply, a judgment is void on its face only when there is an error on
the judgment itself that indicates infirmity within the document’s four corners. A
judgment that is void for a service issue “if valid on its face, is not legally void in the
sense that it cannot be the basis of the right and title of a bona fide purchaser of
property sold under the authority of such judgment.” Pettis, 190 P. at 691. As the United
States Supreme Court noted,

[t]he inquiry into whether an order is valid on its face is an examination of
the procedural aspects of the legal process involved, not the substantive
issues. Whether a process conforms or is regular ‘on its face’ means just
that. Facial validity of a writ need not be determined ‘upon the basis of
scrutiny by a trained legal mind,’ nor is facial validity to be judged in light
of facts outside the writ’s provisions which the person executing the writ
may know.

United States v. Morton, 467 U.S. 822, 829 n.10 (1984) (quoting In re Mathews, 61
Comp. Gen. 229, 230-31 (1982)). Judgments that are facially irregular would include, for
example, a judgment that incorrectly states the address or legal description, a judgment
where the date is incorrect, a judgment that is void for lack of in rem jurisdiction
because of the court’s location, or a judgment where the parties’ names are
misspelled. 2 See also, e.g., In re Cameron’s Estate, 236 N.E.2d 626, 628 (Ind. App.
1968) (“[I]f a will that is unsigned is admitted to probate it may later be collaterally
attacked.” (internal quotation marks and citation omitted)). The Court of Appeals
declared the 2007 Judgment void because of lack of service to interested parties that

2This list is demonstrative and nonexhaustive.
were only entitled to service because of their mention in the 1980 Will, an extrinsic
document. Therefore, there is no evidence of a jurisdictional defect without relying upon
extrinsic evidence; one is only aware of the defect in light of the 1980 Will.

{17} The Welches argue alternatively that the 1974 Will informed Premier that Marie
did not die intestate, a contention that conflicts with the 2007 Judgment. Assuming
arguendo that the Welches’ contention is correct⸺that Premier should have known
there was an inconsistency between the 1974 Will and the 2007 Judgment’s declaration
that Marie died intestate⸺the corresponding defect in the 2007 Judgment is only
visible by looking at documents outside of its four corners, including the 1974 Will itself.
While Premier may have reviewed the 1974 Will as a document in the chain of title, it
was not bound to speculate about its effect on the 2007 Judgment. See Archuleta,
1960-NMSC-117, ¶ 29. The Welches’ argument that Premier was required to view the
2007 Judgment and contemplate its validity in light of the 1974 Will fails because the
2007 Judgment was facially regular, and a bona fide purchaser is entitled to rely on it.

{18} In addition to our holding that Premier was not bound to look beyond a facially
regular judgment, we further clarify that a court’s improvident exercise of its jurisdiction
will not be corrected at the expense of a bona fide purchaser. In Archuleta, this Court
noted, “‘[i]f the [court’s] jurisdiction has been improvidently exercised, it is not to be
corrected at the expense of one who had the right to rely upon the order of the court as
an authority emanating from a competent source.’” Id. (quoting Pettis, 190 P. at 692).
This means that Premier is entitled to rely on the 2007 Judgment as the order of an
authority emanating from a competent source notwithstanding the service issues raised
in the 2007 Heirship Proceeding.

{19} “[A] judgment is the final determination of the rights of the parties upon matters
submitted to the court.” 49 C.J.S. Judgments § 1 (2021) (footnote omitted). And
subsequent purchasers of property that has been the subject of judgments at some
point in the property’s chain of title must be able to rely on those final judgments as
accurate unless invalid on their face. It is unfair to allow extrinsic evidence of lack of
jurisdiction long after a judgment has been entered to overcome the rights of a bona fide
purchaser who is entitled to rely on that judgment as final. See Martin v. Hunter’s
Lessee, 14 U.S. 304, 355 (1816) (“A final judgment of this court is supposed to be
conclusive upon the rights which it decides.”).

{20} To rule otherwise would mean that purchasers would have to delve into the
merits of the judgment to ponder its legitimacy and even speculate as to whether the
judgment would be upheld in the face of a collateral attack. This outcome is absurd. It
would not only be unfair to purchasers, but it would undermine the legitimacy of our
judgments and diminish public trust in our judicial system. This case clearly
demonstrates our concerns. This Court is being asked to untangle a forty-five-year-old
probate. In the meantime, several third parties have gained interests in the subject of
the estate through reliance on orders of our courts. A decision that disallows Premier
from relying on the 2007 Judgment would dissuade all purchasers like Premier from
buying property that had been involved in a judicial decision, completely undermining
our policy of finality of judgments. It would cause purchasers like Premier to have to
second-guess the decisions of our courts, decisions that are meant to be final and
reliable.

{21} It follows, then, that extrinsic evidence of lack of jurisdiction due to improper
service of process cannot overcome the rights of a bona fide purchaser. This Court
stated in Archuleta, “‘those courts excluding extrinsic evidence to show want of
jurisdiction for lack of service of process do so not because a judgment without service
is good, but because public policy will not permit the introduction of extrinsic evidence to
overcome that which it treats as absolute verity.’” 1960-NMSC-117, ¶ 28 (quoting Pettis,
190 P. at 692).

{22} In this case, the 1980 Will (admitted to probate in 2012) was admissible to show
that the Welches were interested persons who should have been given notice in the
2007 Heirship Proceeding. This was the Court of Appeals’ rationale for voiding the 2007
Judgment. However, that same 1980 Will is inadmissible to negate Premier’s rights as a
bona fide purchaser.

III. CONCLUSION

{23} Premier was entitled to assume that the 2007 Judgment was valid and that it
settled any adverse title claims to the Minerals. The 2007 Judgment was not facially
void, and therefore Premier was not bound to look beyond it. Extrinsic evidence of lack
of jurisdiction⸺that is, the 1974 Will and the 1980 Will⸺is inadmissible to overcome
the rights of Premier as a bona fide purchaser. For the foregoing reasons, we affirm the
Court of Appeals and hold that Premier is entitled to the Minerals as a bona fide
purchaser.

{24} IT IS SO ORDERED.

DAVID K. THOMSON, Justice

WE CONCUR:

C. SHANNON BACON, Chief Justice

MICHAEL E. VIGIL, Justice

JULIE J. VARGAS, Justice

CURTIS R. GURLEY, Judge,
Sitting by Designation