CHAPTER 4 SEVERANCE OF THE MINERALS AND THE SEVERITY OF ATTENDANT PROBLEMS
| Jurisdiction | United States |
(Mar 1973)
SEVERANCE OF THE MINERALS AND THE SEVERITY OF ATTENDANT PROBLEMS
Crowley, Kilbourne, Haughey, Hanson & Gallagher
Billings, Montana
The severance of the mineral estate from the rest of the fee is a fact of life which has confronted the mining operator from the earliest days of the mining industry in the United States. It long has caused occasional problems for the operator, but the problems were relatively few and minor until recent years. Mineral development was generally conceived to be in the common good; and the mineral interest was considered the dominant estate, and the surface estate was servient. The concept of mineral-estate dominance had its basis in the ownership of the minerals by the English sovereign, and it was reinforced by economic pressures arising from the nation's need for minerals. Today, however, we are in a new era. A new land ethic is developing which exhibits an increased concern for the rights of the surface owner and a growing animosity toward the mineral developer — now often viewed as an exploiter, a despoiler of nature, greedy for profit. This new system of values is reflected in a changing attitude of courts in cases dealing with mineral severance.
A mineral severance, in which the ownership of minerals in land is separated from the ownership of the other interests in the land, may be effected by a grant or an exception in a deed from a non-public owner or by a conveyance, usually a patent, from the United States, a state, or a local governmental unit.
[Page 4-2]
I. What Mineral or Minerals Were Severed?
In considering a mineral severance, a first problem may be to determine what minerals were severed. The question usually arises in a severance by deed, although it may be present in a patent severance.
Many of the earlier decisions dealt with the problem of whether the term "minerals" included oil and gas. The courts had considerable difficulty in answering the question, and as the cases were analyzed by Williams and Meyers four different positions were adopted.1 The majority view, however, was that while the intention of the parties as indicated by a consideration of the language of the whole instrument must control, the term "minerals" as used in real property instruments includes oil and gas, unless a contrary intention or an ambiguity is manifested by the language of the instrument as a whole.2
Our concern is with another variation of the question: Does a conveyance or exception of minerals include coal? Or more specifically, does the term "oil, gas and other minerals" include coal? The more restricted question is of special interest to us, because oil and gas exploration and development has been widespread in the West during the last half century; in consequence, grants and exceptions of oil, gas and other minerals are common in the areas
[Page 4-3]
where the new coal development will take place. Strangely, I have found no cases which directly decide our specific question.
There are, however, a number of recent decisions which may be instructive. They deal with such substances as uranium, gypsum rock, sand and gravel, clay, limestone, and iron ore, which are usually removed by methods similar to those likely to be used in mining coal in large areas of the West.
Perhaps in all of these cases the courts have endeavored to determine what was intended by the language used by the parties, but they have employed different principles and devices to ascertain the parties' intent and have reached results which cannot be reconciled. In some of the cases, the courts have limited the meaning of the word "minerals" to those similar to the specific minerals mentioned, by applying the so-called ejusdem generis rule.3 Other courts have refused to apply ejusdem generis in construing a grant or reservation of oil, gas and other minerals, one of such courts referring to it as one of the "rules resorted to by a jurist in times of confusion".4
It has been held that operative language similar to that with which we are concerned is so ambiguous that resort must be
[Page 4-4]
had to other evidence to clarify the intention of the parties,5 and some courts are said to have a tendancy to consider extrinsic evidence even though they declare that it is not admissible.6
The method of mining and extracting the mineral in question may be of great importance in resolving the question of whether it is included within the phrase "oil, gas and other minerals". Thus in Holloway Gravel Co. v. McKowen the Louisiana Supreme Court gave the potential destruction of the surface as one of the bases for its determination that sand and gravel were not included within the meaning of the word "mineral" in the deed under consideration. The court said:
"It would not be reasonable to construe the reservation of 'mineral, oil and gas rights' so as to embrace the right to exploit minerals which could not be removed from the land without destroying its surface for agricultural and grazing purposes. We do not think it can be seriously contended that it was in the contemplation of McKowen that he might at any time be deprived of the use of the land for the purposes for which he had purchased it by the mining of sand and gravel thereon largely for the benefit of his vendors."7
The most recent and perhaps the most instructive case we have found is Acker v. Guinn, 464 S.W.2d 348, 38 O.&G.R. 273, (Tex. Sup. Ct. 1971), a suit for declaratory judgment to construe a
[Page 4-5]
mineral deed. Plaintiff Acker held under the grantee of a mineral deed which conveyed "an undivided 1/2 interest in and to all of the oil, gas and other minerals in and under, and that may be produced from" a tract of land. The deed was written on a form which had been widely used in Texas and which is also commonly found in Montana mineral transactions. Following the granting clause and the description of the land it stipulates that the land is under an oil and gas lease; that the sale is made subject to the lease but covers and includes 1/2 of all the oil royalty and gas rental or royalty due and to be paid under the terms of the lease and 1/2 of the money rentals paid to extend the term within which a well may be begun; and that in the event the lease becomes canceled or forfeited, the grantee shall own one-half of all the oil, gas and other minerals in and under the land together with a like interest in all bonuses paid, and all royalties and rentals provided for in future oil, gas and mineral leases. Plaintiff claimed that the deed conveyed an interest in iron ore found in commercial quantities in the area of the land. The ore deposits were solid beds varying in thickness from a few inches to three or four feet. They outcropped on the surface at places and ranged in depth to as much as 50 feet below the surface. The ore could be mined only by open-pit or strip-mining methods. This meant that the surface owner could make practically no beneficial use of his land where mining was in progress; and that while the surface could be levelled after the completion of the operation, the surface soil
[Page 4-6]
was usually turned under in the process, so that "the utility of the land for farming, ranching and timber production is thus destroyed or diminished to a substantial degree."
The Court of Civil Appeals had concluded that the deed conveyed no interest in the iron ore, reasoning that under the Texas Supreme Court's opinion in Southland Royalty Co. v. Pan American Petroleum Corp., 378 S.W.2d 50 (Tex. Sup. Ct. 1964), "the rule of ejusdem generis is properly used as an aid in determining the sense in which the term 'other minerals' was used in the deed." The Supreme Court, however, rejected this reasoning and stated that the rule had been rejected or ignored in a number of previous cases, that it was not applied in Southland Royalty, and that it would not be used in the Acker case.
The Court noted that a number of courts had considered the question of whether a grant or reservation of "minerals" includes minerals recoverable only by open-pit mining, that various approaches and rules of construction had been used to ascertain the intention of the parties, and that the holdings are not uniform. After summarizing several decisions the Court then approved an approach by Professor Kuntz to the solution of the problem and quoted his discussion as follows:
"'The contradiction and conflict between the cases on the point arise from the very fact that the courts are seeking to give effect to an intention to include or exclude a specific substance, when, as a matter of fact, the parties had nothing specific in mind on the matter at all. It is submitted that an intention test is the
[Page 4-7]
proper one, but not as applied heretofore. The intention sought should be the general intent rather than any supposed but unexpressed specific intent, and, further, that general intent should be arrived at, not by defining and redefining the terms used, but by considering the purposes of the grant or reservation in terms of manner of enjoyment intended in the ensuing interests.
'When a general grant or reservation is made of all minerals without qualifying language, it should be reasonably assumed that the parties intended to sever the entire mineral estate from the surface estate, leaving the owner of...
To continue reading
Request your trial