- “Reasonable Surface Rights” Can Include Strip-Mining
- September 23, 2014
- Law Firm: Kohrman Jackson Krantz PLL - Cleveland Office
(So WATCH YOUR LANGUAGE with deeds, contracts and leases; and “Say what you mean, precisely, or a judge will decide what you meant #6”)
Typically, courts follow a well-known principle of interpreting contract (or deed) language so as to carry out the intent of the parties, when that intent is evidenced by the contract language.
The problem, of course is that it is the “trier of fact” (judge or jury) that determines the intent of the parties within the four corners of a contract. Courts typically refuse to consider extrinsic evidence of a party’s intent (offered by such party) if the court determines the contract language is clear and unambiguous. Because of this deference to (how a judge or jury interprets) contract language, sellers, buyers, tenants and landlords are strongly advised to “say what they mean, precisely, or a judge will decide what they meant”. Unintended results are often the norm for parties to a contract, lease or deed who could have been a lot clearer with their language.
Failure of a deed to clearly specify what constitutes (or what does not constitute) “reasonable surface right privileges” in a reservation of mineral rights, for example, resulted in a dispute recently decided by the Ohio Supreme Court (in Snyder v. Ohio Dept. of Natural Resources, Slip Opinion No. 2014-Ohio-3942) that could easily have been avoided by language to the effect “excluding strip-mining.”
The basic facts of the case are as follows: The state of Ohio and the Ohio Department of Natural Resources (collectively, “ODNR”), bought a certain tract of land comprising approximately 651 acres, located in Brush Creek Township, Jefferson County, Ohio from a seller who reserved all mineral rights to the property, “including rights of ingress and egress and reasonable surface right privileges.” Ronald Snyder later acquired the mineral rights from that seller and then met with ODNR to inform them of his desire to strip-mine the coal from about 10% of the acreage. When ODNR refused to allow strip-mining on the property, Snyder filed a complaint against ODNR seeking a declaratory judgment to the effect that the “reasonable surface right privileges” language in the deed allowed them to strip-mine a reasonable portion (10%) of the property.
ODNR argued, based on prior case law that there must be a clear expression of the intent to reserve the right to strip-mine in a mineral rights reservation. It reasoned that a reasonable person could not construe the deed to allow total destruction of a considerable portion of the surface through strip-mining merely because it permits reasonable surface right privileges incident to mining. In other words, strip-mining could never be a reasonable use of the surface because by its very nature it destroys the surface.
Snyder argued that the deed’s language is ambiguous as to what activity constitutes the exercise of “reasonable” surface right, and accordingly, it should be allowed to present its own evidence beyond the contract to prove that strip-mining the coal from 60 of 650 acres is reasonable.
The trial court ruled in favor of the ODNR, Snyder appealed that decision and the Jefferson County (7th District) Court of Appeals affirmed the trial court’s ruling. The case was then appealed to the Ohio Supreme Court.
In a 6-1 decision, the Ohio Supreme Court concluded that the contract (deed) between the ODNR and the mineral rights holders did not exclude strip-mining as a method to extract coal from 10 percent of the Jefferson County property by use of the language “including...reasonable surface rights”. The case will now be sent back to the trial court to determine the extent of strip-mining that is reasonable, as required by the contract.
In support of its decision, the court explained that it did not rule in prior cases that strip-mining, as a matter of law was not a “reasonable surface right” (in spite of strong language in such prior cases concluding that strip-mining “necessarily and unavoidably causes a total destruction of the surface estate.” Rather, the court reasoned it was merely interpreting the contracts at issue in those cases that contained language “peculiarly applicable to deep-mining techniques.” Citing language from one of such cases, the court stated: “the intent of the parties is controlling, and * * * when deep-mining language is used exclusively, courts must assume that strip-mining was not intended.” While the court did admit that strip-mining is injurious to the surface of a property, it reasoned that “all mining, whether deep-mining or strip-mining, damages the surface, and strip-mining is not inherently more detrimental to the owner of the surface interest, though some of [their] cases might suggest otherwise.”
The court distinguished the contract in Snyder as containing no language that is peculiar to deep mining; therefore, the court concluded that the parties did not intend to preclude strip mining by the use of the term “reasonable surface right privileges.” Facts also important to the court were that strip-mining was well known in Jefferson County when the contract was signed, and in fact, some areas of the property at issue were strip-mined before the ODNR acquired it. Thus, according to the court “there is reason to believe that the signatories to the original contract understood that ‘reasonable surface right privileges’ included the right to strip-mine, and there is no reason to believe that the signatories intended to exclude strip-mining."
In interpreting the ODNR contract (deed), the court refused to acknowledge that the term “reasonable surface right” was ambiguous “merely because different parties interpret the clause differently.” Though the court concluded that strip-mining, in general was a reasonable surface right in this case (based on its interpretation of the contract), it did, however admit that a determination as to the extent, duration and remediation of strip-mining that was reasonable, was non-defined, and therefore the Ohio Supreme Court remanded the case to the trial court for a determination of what is reasonable strip-mining.
What is the moral to this story? Say what you mean, precisely, or a judge will decide what you meant. The Supreme Court of Ohio even agrees with our moral/philosophy. As stated by the court in Snyder: “We are not persuaded that [the parties] intended the phrase to mean nothing other than customary ingress, egress, and concomitant surface rights. If they had, they would have used contract language that was normal and customary for that purpose” In other words, if you don’t want a party you have given mineral rights to, to strip-mine, clearly state that they cannot extract any such minerals by strip-mining.