Takeaway
In short, this case holds that Montana permits a conservation servitude to be reserved in the deed transferring the land, and clear reservation language in an incorporated covenant document avoids extinguishment by merger.
The Nature Conservancy received the Shining Mountain Ranch by gift in 1981. In 1982, it conveyed the ranch to Baker Boone Ranch by warranty deed. The deed stated that the conveyance was “subject to” covenants and servitudes attached as Exhibit A and incorporated into the deed. Those provisions identified conservation-related rights “retained by the Grantor” and gave the Conservancy continuing enforcement rights after the land was conveyed to third parties.
The property later passed through several owners before George and Jean Madden acquired it. The Maddens sought a declaratory judgment that the covenants and servitudes were invalid. The Conservancy counterclaimed for a declaration that its restrictions were enforceable. On cross-motions for judgment on the pleadings, the court considered only the legality and enforceability of the restrictions.
Issue #1
Whether Montana law permits a conservation servitude in gross to be created by reservation in a deed, rather than only by an express grant from the grantee to the holder.
Holding
Yes. Under Montana law, a servitude in gross, including a conservation servitude, may be created by reservation in a deed.
Reasoning
The Maddens argued that the statutory language providing that servitudes in gross “may be granted and held” required an express grant. On that view, the Conservancy would have attempted to grant an interest to itself while it still owned the fee estate, causing the interest to be extinguished by merger.
The court held that the Montana Supreme Court’s decision in Lindley v. Maggert foreclosed that narrow reading. Lindley enforced a right-of-way easement created by deed reservation under the same servitude statute and recognized that an owner may use an easement right retained in a conveyance.
Because Montana recognizes creation by reservation as well as by grant, the Conservancy could reserve a conservation servitude when it conveyed the ranch to Baker Boone Ranch. The validity of the interest therefore turned on the language and timing of the reservation, not on the absence of a separate grant from Baker Boone.
Issue #2
Whether the Conservancy’s 1982 deed and incorporated covenants clearly reserved a conservation servitude in the Shining Mountain Ranch.
Holding
Yes. Read as a whole, the deed and incorporated covenants manifested a clear intent to reserve conservation rights to the Conservancy.
Reasoning
The Maddens relied on Wild River Adventures, which held that the phrase “subject to and together with” a road easement, standing alone, did not reserve an easement to the grantor. The court found that case distinguishable because the Conservancy did not rely solely on the deed’s introductory “subject to” language.
The attached covenants and servitudes were expressly incorporated into the deed. They stated that the Conservancy retained specified rights under the covenants and, after conveyance of the surface to a third party, would retain the same enforcement rights, privileges, and discretions.
Montana’s modern approach to deed construction requires the court to determine the grantor’s intent from the entire instrument rather than attach controlling significance to the placement of particular clauses. Under that approach, the word “retain” reasonably meant “reserve” and plainly expressed the Conservancy’s intent to keep the conservation rights when it conveyed the fee estate.
The Maddens’ argument that the repeated use of “retain” was internally inconsistent depended on an overly technical reading. The court concluded that the provisions consistently expressed the Conservancy’s intent to reserve the rights at the initial transfer and preserve those same rights through later transfers.
Issue #3
Whether the doctrine of merger extinguished the Conservancy’s claimed conservation servitude.
Holding
No. The fee estate and the conservation servitude were not merged because the Conservancy reserved the servitude contemporaneously with its conveyance of the fee estate.
Reasoning
A servitude is extinguished by merger when the same person holds both the servient estate and the servitude. The Maddens contended that the Conservancy had created the restrictions before the Baker Boone conveyance, while it still owned the ranch, and thus that merger had eliminated them.
The court rejected that premise. The reservation language was part of the covenants and servitudes incorporated into the very deed by which the Conservancy transferred title to Baker Boone Ranch.
Considering the deed as a unified instrument, the court held that the reservation occurred at the same time the fee passed to Baker Boone. Thus, the Conservancy never held both the fee estate and the reserved conservation interest in a way that triggered merger. Its conservation servitude remained valid and enforceable against the Maddens.