Grynberg v. City Of Northglenn

739 P.2d 230 (1987)

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Nature of the Case

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Facts

D began a search for potential sites for a wastewater reservoir that would become part of a comprehensive wastewater treatment project. D made plans to drill test holes, including one deep hole to determine whether the site contained commercial deposits of coal. The exploration for coal deposits was to be accomplished to obtain information relevant to zoning and to secure the approval of the state engineer. D searched the County records, including the records of the county clerk and recorder. The surface estate of the site was owned by a private corporation and the severed mineral estate was owned by the State of Colorado. The State had issued a coal lease to Clayton Coal Company (Clayton Coal), recorded June 6, 1975, that had a primary term of ten years and covered the site. The State also issued a coal lease to P for a primary term of ten years. That lease had not been recorded in the County records. D had no actual knowledge of the existence of P's coal lease. P did contact Clayton Coal and learned that it had assigned its coal lease to Adolph Coors Company (Coors). D was informed that Coors had determined that any coal within the leasehold boundaries was not economically recoverable and that Coors therefore had abandoned the coal lease. D entered into an agreement to purchase the surface estate on March 3, 1978. During negotiations, D obtained the permission of the surface owner and drilled test holes on the site. D never sought permission from the State, the record owner of the mineral estate on the site, to accomplish the testing. D did not review the records pertaining to the site that were maintained in the office of the State Board of Land Commissioners. Ds drilled a number of shallow holes and one that was 600 feet deep. None of the companies had actual knowledge of the existence of P's lease. Ds’ final report stated that 'it is our opinion that the coal in Section 36 . . . . does not represent a potentially recoverable resource.' This report was filed in the state engineer's office where its contents became public information. The state engineer thereafter approved the plans and specifications for the proposed reservoir. P learned of the report and sued Ds for trespass, assumpsit, wrongful appropriation of geologic information, interference with prospective business advantage, and negligence. P claimed the loss of market value from the result of the discovery and publication of information that the coal reserves on the property have no commercial value. Ds moved for summary judgment. Ds claimed that they had no actual notice of P's lease and were not on constructive notice of that lease because it had not been recorded with the County Clerk and Recorder. The court agreed and also held that Ds had no duty to examine the records in the office of the Colorado State Board of Land Commissioners. P appealed, and the court of appeals affirmed. It held that the recording act by its own terms extends protection to 'any class of persons with any kind of rights' and does not limit the persons protected to bona fide purchasers and encumbrancers. The court of appeals rejected P's claim that D was on constructive notice of the records in the office of the Colorado State Board of Land Commissioners simply because the county records showed that the state was the record owner of the mineral estate on the site. P appealed.