The Pennsylvania Supreme Court unanimously ruled in favor of the Thomas E. Proctor Heirs Trust in Commonwealth of Pennsylvania v. Thomas E. Proctor Heirs Trust, affirming that a 1908 tax sale did not strip the Trust’s subsurface rights to natural gas and coal resources across a significant amount of property in central Pennsylvania. The decision, issued in response to a certified question from the U.S. Court of Appeals for the Third Circuit, resolved a question of first impression under a legal regime that has not existed since the 1940s and was governed by statutes enacted in 1804, 1806 and 1815.
The case required the justices to examine whether the 1908 tax sale constituted a “title wash” that would have extinguished the Trust’s mineral interests. The Pennsylvania Game Commission, the successor in interest to the purchaser at the tax sale, argued that it had received those rights nearly 100 years ago in connection with various land transactions.
The Game Commission relied on the Pennsylvania Supreme Court’s 2016 decision in Herder Spring Hunting Club v. Keller. There, as in the Proctor Heirs Trust case, the Court examined the effect of a tax sale on title to subsurface rights that had been severed from the surface estate and were separately owned. The Herder Spring Court held that the tax sale had resulted in a “title wash” that divested both the surface and subsurface owners of their titles, reuniting and conveying them to the tax-sale purchaser.
The Trust argued that an important exception to the Herder Spring rule applies where the tax-sale purchaser is not a bona fide third party but rather the surface owner whose failure to pay the assessed taxes induced the tax sale. The Supreme Court agreed. After a thorough review of the record and the relevant statutes and caselaw, Justice Mundy, who authored the unanimous 27-page opinion, concluded that the 1908 tax sale served as a mere redemption of the surface owner’s interest and did not divest the subsurface owners, the Trust’s predecessors, of their separate interest. The ruling provided important clarification for similar disputes involving severed surface and subsurface estates under Pennsylvania law.
Shareholders Mark Aronchick and Robert Wiygul represented the Thomas E. Proctor Heirs Trust in the dispute.
