September 15, 1989

Karen A. Johnson
Custer County State's Attorney
P.O. Box 749
Custer, South Dakota 57730

OFFICIAL OPINION NO. 89-29

Register of Deeds recording fee (mortgage-mining claims)

Dear Ms. Johnson:

You have requested an official opinion of the Attorney General relating to the following factual situation:

FACTS:

Your county Register of Deeds received a COLLATERAL REAL ESTATE MORTGAGE (CREM) for recording. The mortgagor's interest in numerous mining claims (interests in real estate) was described therein as collateral and security for the payment of certain promissory notes. 161 pages of mining claims were attached to the two (2) page CREM for a total of 163 pages. The parties agreed that the instrument constituted a Collateral Real Estate Mortgage pursuant to SDCL 44-8-26. The CREM contained several covenants: mortgage on mining claims was collateral and security for present notes and future advances; due on sale clause; default and breach of agreement provisions; acceleration of payment on default; foreclosure by action or advertisement; and power of sale in mortgagee.

SDCL 7-9-15-(1) provides that the recording fee for a mortgage is $3.00 for the first page and $2.00 for each additional page or fraction thereof. If applicable, the recording fee would be computed as follows:

First page of CREM(1) $ 3.00
Acknowledgement and 161 page attachment (162) 324.00
TOTAL $327.00

SDCL 7-9-15(4) provides that the recording fee for an oil, gas and mineral lease and other documents relating to mineral or oil and gas lease exploration and development is $6.00 for each page. If applicable, the recording fee would be computed as follows:

CREM and 161 page attachment (163) TOTAL $978.00

Based upon this factual situation, you have asked the following question:

QUESTION:

What is the correct recording fee for the above referenced document consisting of 163 pages, which includes the exhibits describing the many mining claims as collateral and security for such loans?

IN RE QUESTION:

In addressing your question, it is important that certain terms and words contained in SDCL 7-9-15(1) and (4) be defined by reference to statutes and South Dakota Supreme Court decisions. Subsection (1) refers to "mortgage." Subsection (4) refers to "mineral lease" and other documents relating to mineral "exploration" and development.

Regarding "mortgages," SDCL 44-8-11 provides:

Every grant of real property, or of any estate therein, which appears, by any other writing, to be intended as a mortgage, must be recorded as a mortgage; . . .

The South Dakota Supreme Court in the 1894 decision of Walter A. Wood Mowing & Reaping Machine Co. v. Lee, 57 N.W. 238 held:

If the instrument is sufficient to show that the mortgagor intended to create a lien upon the property in favor of another, it is sufficient as a mortgage between the parties.

While there is no specific statutory definition of "mortgage" contained in SDCL ch. 44-8, the chapter relating to real estate mortgages, there is a definition of mortgages contained at SDCL 54-15-1 relating to the mortgage lending business which provides that a mortgage is:

Any interest in land created by a written instrument providing security for the performance of a duty or the payment of a debt; . . .

A "lease" or "leasing" is defined at SDCL 43-32-1 as:

Leasing is a contract by which one (the lessor or landlord) gives to another (the lessee or tenant) temporary possession and use of real property for reward and the lessee agrees to return such property to the lessor at a future time.

Mineral "exploration" is defined at SDCL 45-6C-3(6) as:

The act of searching for or investigating a mineral deposit, including, but not limited to, sinking shafts, tunneling, drilling test holes, digging pits or cuts or other works for the purpose of extracting samples, including bulk samples, prior to commencement of development or extraction operations, and test facilities to prove the commercial grade of a mineralized deposit.

In arriving at an answer to your question, I will apply the principle of the process of elimination. Is the referenced document (CREM) a "mineral lease?" No. The document does not constitute a contract whereby the mining claim owner gives to the lending institution temporary possession and use of the real property described in the claims for reward.

Is the referenced document (CREM) an "other document relating to mineral exploration and development?" No. The document does not relate to the acts of searching for or investigating a mineral deposit nor the commencement of development or extraction of a mineral operation.

Is the referenced document (CREM) a "mortgage?" Yes. The document has all of the attributes and characteristics, as well as statutory requirements, of a mortgage. It appears by such written document that it is intended to be a mortgage. The instrument sufficiently shows that the mining claim owner intended to create a lien upon his interest in such property in favor of the lending institution by the granting of an interest in the lending institution which provides security for the payment of a debt. As stated above, the document provides for security in the mining claims for payment of present notes and future advances, default and breach of agreement provisions, acceleration of payment on default, methods of foreclosure, and power of sale in the mortgagee.

I also refer you to SDCL 45-4-7 relating to the requirement of recording mining claim location certificates with the Register of Deeds upon discovery of a vein or lode. Such statute provides that the Register of Deeds shall receive the fee as established by SDCL 7-9-15(1) relating to the recording of a mortgage or "other instruments not specifically provided for in this section or this code,. . ."

In construing SDCL 7-9-15(1) and (4), I am mindful of the statutory imposition of a lesser recording fee on the initial recording of the mining claim location certificate and have determined that the same fee applies for the recording of the imposition of a mortgage or lien on such mining claims.

Therefore, I conclude that the correct recoding fee for the document is $327.00.

Respectfully submitted,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

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