Case Title: Graham v. Drydock Coal Co.

Citation: 1996-Ohio-393

Docket Number: 19950313

State: ohio

Court: Ohio Supreme Court

Date: 1996-08-14T00:00:00Z

Document:
GRAHAM, APPELLANT, V. DRYDOCK COAL COMPANY, 
 APPELLEE;  HOLMES  ET. AL., APPELLANTS. 
[Cite as Graham v. Drydock Coal Co. (1996), ___ Ohio St.3d. ___.] 
Mining -- Deed severing mineral estate from surface estate, and 
reserving right to use surface incident to mining coal, does not 
reserve right to strip-mine to mineral owner, when. 
A deed which severs a mineral estate from a surface estate, and 
which grants or reserves the right to use the surface 
incident to mining coal, in language peculiarly 
applicable to deep-mining techniques, whether drafted 
before or after the advent of strip mining, does not 
grant or reserve to the mineral owner the right to 
remove coal by strip-mining methods.  (Skivolocki v. E. 
Ohio Gas Co. (1974), 38 Ohio St.2d 244, 67 O.O.2d 
321, 313 N.E.2d 374, expanded and clarified.) 
(No. 95-313 -- Submitted March 6, 1996 -- Decided August 14, 
1996.) 
 
2
 
APPEAL from the  Court of Appeals for Athens County, No. 93CA1599. 
 
The tract at issue in this case consists of approximately 300 acres 
of farmland in Athens County.  The fee simple owner of the entire tract 
in 1955 was Cambria Mining Company (“Cambria”), which deeded the 
surface rights to approximately 234 acres of the land to Helen Holmes 
for farming purposes, but retained the rights to all of the minerals in the 
land for itself.  In 1962, Cambria deeded the surface of the rest of the 
tract to Holmes with a similar reservation clause.  The Holmes family 
rented the land as a farm prior to its purchase of the surface rights and 
has continued farming it to the present.  
 
The reservation clauses in the deeds, which were both drafted by 
Cambria, are substantially the same.  They each clearly provide for the 
ownership of all the coal and all the other minerals in Cambria and for 
Cambria’s right to remove those minerals.  They further provide for 
Cambria’s use of some portion of the surface in the process of the 
 
3
removal of its minerals.  Ownership of the surface, however, is granted 
entirely to Helen Holmes. 
 
Such deeds have long been common in the mineral-rich areas of 
the state.  See, e.g., Gill v. Fletcher (1906), 74 Ohio St. 295, 78 N.E. 
433, construing an 1838 deed with a similar severance of interests.  
These deeds serve a particularly valuable purpose in maximizing the 
utility and productivity of the land by allowing simultaneous use by those 
who extract minerals and  those who till the surface.  The clauses in the 
deeds, however, have produced a dispute between the successors in 
interest of Cambria and Helen Holmes. 
 
The deeds at issue expressly recognize the agricultural intentions 
of the Holmes family but do not mention strip mining.  Cambria’s 
successor, Drydock Coal Company (“Drydock”), possessed of 
technology that did not exist at the time the subject deeds were drawn, 
desires to extract coal, which is not removable by deep mining, using 
modern strip-mining methods.  Helen Holmes’ successors in interest, 
 
4
however,  Everett Holmes, Jr. and Joan Holmes (“the Holmeses, 
executed a contract with appellant James F. Graham in 1990, entitled 
“Surface Lease for Coal,” which conveys to Graham the right to strip-
mine coal from the property.  The coal does not belong to the 
Holmeses, and therefore has not been transferred to Graham. 
 
In July 1992, Graham filed a complaint in the Athens County Court 
of Common Pleas seeking a declaratory judgment stating that, although 
Drydock owned the coal, it did not have the right to strip-mine the 
surface.  Drydock filed a counterclaim and a third-party complaint 
against the Holmeses alleging that the surface lease between the 
Holmeses and Graham was void on the grounds that Drydock owned all 
the minerals and the right to extract them.  The trial court granted partial 
summary judgment to Drydock, but specifically stated that the issue of 
whether Drydock owned the right to strip-mine the land was not properly 
before the court at that time.  On appeal, the Court of Appeals for 
Athens County reversed the judgment and instructed the trial court to 
 
5
determine  whether Drydock owned the right to strip-mine or whether 
the Holmeses had retained an interest that could be transferred to 
Graham and could effectively prevent Drydock from strip mining. 
 
The trial court found that Drydock’s mineral rights did not include 
the right to strip-mine the property.  Drydock appealed, and the court of 
appeals reversed the trial court again, this time holding that, as a matter 
of law, Drydock did have the right to strip-mine the property.  It is from 
that decision that the current appeal is taken.  
 
The cause is now before this court upon the allowance of a 
discretionary joint appeal by Graham and the Holmeses. 
------------------------- 
 
Vorys, Sater, Seymour & Pease, John C. Elam and Michael G. Long, 
for appellant Graham. 
 
John P. Lavelle and Jack V. Oakley, for appellee. 
 
Donald Wirtshafter, for appellants Everett and Joan Holmes. 
 
6
 
Neal S. Tostenson, urging reversal for amicus curiae, Ohio Mining 
and Reclamation Association. 
 
Larry R. Gearhardt, urging reversal for amicus curiae, Ohio Farm 
Bureau Federation. 
------------------------- 
 
MOYER, C.J. 
The issue before the court is whether a deed which 
severs a mineral estate from a surface estate, which is drafted after the 
advent of strip mining in the region, and which grants the right to use the 
surface incident to mining coal, in language peculiarly applicable to deep-
mining techniques, reserves the right to remove coal by strip-mining 
methods.  
 
The parties agree that each possesses precisely the same 
property rights as their predecessors in interest, the signatories to the 
original deeds.  Their respective rights, therefore, are determined by our 
construction of the 1955 and 1962 deeds between Cambria and Helen 
Holmes.  The issue raised in the construction of the deeds is whether 
 
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the drafting of the subject deeds after the advent of strip mining in Ohio 
dictates a result different from that prescribed by our most recent case 
on the subject, Skivolocki v. E. Ohio Gas Co. (1974), 38 Ohio St.2d 244, 
67 O.O.2d 321, 313 N.E.2d 374.  For the reasons that follow, we hold 
that it does not, and we therefore reverse the judgment of the court of 
appeals. 
 
“The construction of written contracts and instruments of 
conveyance is a matter of law.”  Alexander v. Buckeye Pipe Line Co. 
(1978), 53 Ohio St.2d 241, 7 O.O.3d 403, 374 N.E.2d 146, paragraph 
one of the syllabus.  "Unlike determinations of fact which are given great 
deference, questions of law are reviewed by a court de novo."  
Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 73 Ohio St.3d 
107, 108, 652 N.E.2d 684, 686;  Ohio Bell Tel. Co. v. Pub. Util. Com. 
(1992), 64 Ohio St.3d 145, 147, 593 N.E.2d 286, 287. 
 
The purpose of contract construction is to discover and effectuate 
the intent of the parties.  Skivolocki, at paragraph one of the syllabus.  
 
8
The intent of the parties is presumed to reside in the language they chose 
to use in their agreement.  Kelly v. Med. Life Ins. Co. (1987), 31 Ohio 
St.3d 130, 31 OBR 289, 509 N.E.2d 411, paragraph one of the syllabus.  
Extrinsic evidence is admissible to ascertain the intent of the parties when 
the contract is unclear or ambiguous, or when circumstances surrounding 
the agreement give the plain language special meaning.  Shifrin v. Forest 
City Ent., Inc. (1992), 64 Ohio St.3d 635, 638, 597 N.E.2d 499, 501.  
Finally, a contract is to be construed against the party who drew it.  Cent. 
Realty Co. v. Clutter (1980), 62 Ohio St.2d 411, 16 O.O.3d 441, 406 
N.E.2d 515.   
 
The reservation clauses in the two deeds drafted by Cambria are 
substantially the same.  It is the language of these clauses that we must 
examine to determine the intent of the parties.  The reservation clause of 
the 1955 deed provides: 
 
“There is reserved and excepted from this conveyance all of the 
minerals of whatsoever nature and description, including oil, gas and 
 
9
salt water together with the right and privilege of entering in, on, or 
under said premises for the purpose of exploring for, testing, mining and 
removing the same, and of making, constructing, driving, opening and 
maintaining any entries, passages, airways, shafts or slopes thereon 
and thereunder, or for drilling for and producing oil, gas, or salt water or 
their constituents thereof, with the right to enter in and upon said 
premises, place and use proper equipment for drilling outlets for mine 
water, and the rights to occupy that portion of said surface necessary for 
said shafts, slopes, tanks and/or pipe lines and the right to convey 
and/or transport any or all of said minerals contained in and under said 
lands, on, in and under adjacent lands in, on or under said demised 
premises, except that any damage caused to fences and/or growing 
crops caused by such entry and transportation of said minerals shall be 
paid for by said Grantor, its successors, assigns and/or lessees. 
 
“Grantee, for herself, her heirs, successors and assigns, 
covenants and agrees that in the event it becomes advisable and/or 
 
10
necessary for Grantor, its successors or assigns, to use and occupy any 
of the surface of said demised premises, not to exceed 5 acres in 
extent,1  for the purpose of the installation of a mine plant or facilities in 
connection therewith, then and in that event said Grantee, her heirs, 
successors and assigns, will sell and convey to Grantor, its successors 
or assigns, said surface acreage for the price of fifty dollars ($50.00) per 
acre, plus the additional cost of any improvements or additions made 
and placed on said surface by Grantee, her heirs, successors or 
assigns. 
 
“Grantor, its successors and/or assigns, shall be held harmless 
and without liability for any injury or damage that may occur to the 
surface of said demised premises or to any buildings, wells, springs or 
improvements now or hereafter placed or erected thereon by reason of 
the mining, removing and/or transporting of any or all minerals in, on or 
under said demised premises, or damage resulting from drainage of 
mine water.”  (Footnote added.) 
 
11
 
The syllabus of Skivolocki reads: 
 
“1. 
Contracts are to be interpreted so as to carry out the intent 
of the parties, as that intent is evidenced by the contractual language. 
 
“2. 
The right to strip mine for coal is not implicit in the ownership 
of a severed, mineral estate. 
 
“3. 
A deed which severs a mineral estate from a surface estate, 
and which conveys the right to use the surface incident to mining coal, 
in language peculiarly applicable to deep mining techniques, does not 
grant the right to remove coal by strip mining methods.” 
 
The issue in Skivolocki was the same as that before the court 
today, though the technological context in the mining industry at the 
time of drafting of the deeds was different.  The court of appeals below 
found the difference to be critical.  We, however, do not. 
 
In Skivolocki, the successor in interest to the mineral estate 
sought the right to strip-mine the land in question over the objection of 
the surface owner.  The deed severing the estates vested the mineral 
 
12
owner with rights to all the coal on the land.  The mineral owner argued 
that the right to remove the coal included the right to remove it by strip 
mining.  We held that the right to strip-mine for coal is not implicit in the 
ownership of a severed mineral estate, and that a deed severing the 
estates, conveying the right to use the surface incident to coal mining, 
using language peculiarly applicable to deep mining, does not grant the 
right to strip-mine.  Skivolocki, at paragraphs two and three of the 
syllabus.   
 
In reaching our decision here, we rely on a long line of Ohio coal 
cases originating with Burgner v. Humphrey (1884), 41 Ohio St. 340.  
Though Burgner predated the advent of strip mining, it stated a principle 
which we have held applicable to the strip-mining issues of today.  
When the mineral and surface interests in a tract of land are severed so 
that use can be made of the same land by different parties, and the land 
is thereby rendered doubly productive, the surface owner has an 
unequivocal right to the integrity of the surface.  Burgner, supra, at 352.  
 
13
The actions of the mineral owner are limited by the obligation not to 
destroy or damage the surface estate unless a release from that 
obligation is expressly included in the deed or contract.  Id. at 353.  
 
In Skivolocki we stated, “Because strip mining is totally 
incompatible with the enjoyment of a surface estate, a heavy burden 
rests upon the party seeking to demonstrate that such a right exists.” 
Skivolocki, 38 Ohio St.2d at 251, 67 O.O.2d at 325, 313 N.E.2d at 378.  
One line of dictum following this quotation, however, appears to have 
generated confusion.  We added, “This is especially true when the deed 
relied upon was executed prior to the time strip mining techniques 
became widely employed.”  (Emphasis added.)  Id. at 251, 67 O.O.2d at 
325, 313 N.E.2d at 378-379.   
 
The court of appeals relied, at least in part, on this dictum for its 
conclusion that the parties intended to reserve to Cambria (and its 
successors) the right to enter and strip the surface estate purchased by 
 
14
Helen Holmes as an incident of its ownership of the mineral rights.  We 
find the appellate court’s reliance to have been misplaced.   
 
Though it may be especially true that mineral reservation clauses 
written exclusively in terms of deep mining and drafted before the 
development of strip-mining, cannot be presumed to include the right to 
strip-mine, it does not follow that the right to strip-mine must be 
presumed if the reservation clause was drafted after development of the 
technology.  Such reasoning could only be based on the untenable 
presumption that, despite the absence of explicit language, if strip 
mining was generally known at the time of drafting, it is probable that 
the parties intended the mining rights to include the right to strip-mine.  
To state the proposition, however, is to discredit it.  We find it unlikely 
that any purchaser of a surface estate would buy the surface of a tract 
subject to the right of the mineral owner to destroy the surface at its 
pleasure.  For us to impose such a presumption would truly be turning 
the proclivities of human nature on their head.   
 
15
 
“‘Where the language of a contract *** is susceptible of two 
constructions, one of which makes it fair, customary, and such as 
prudent men would naturally execute, while the other makes it 
inequitable, unusual, or such as reasonable men would not be likely to 
enter into, the interpretation which makes a rational and probable 
agreement must be preferred.’”  Stewart v. Chernicky (1970), 439 Pa. 
43, 49-50, 266 A.2d 259, 263 (finding no right to strip-mine). 
 
For the same reason, we find Drydock’s contention that “all means 
all” (i.e., ownership of all the coal along with the right to remove it gives 
the mineral owner the right to extract the coal by any convenient means, 
no matter how destructive to the surface estate) equally unpersuasive. 
 
The deeds in this case express the clear expectation by both 
parties that the surface of the land will be used for farming, as it had 
been prior to the severance of the interests and as it has continued to 
be for forty years.  Specific provision is made within the reservation 
clauses for damages payable to the surface owners for destruction of 
 
16
crops and fences by the mineral owners.  Such provisions would hardly 
be necessary if the deeds reserved to the mineral owner the right to 
remove the entire surface of the land by strip mining.  And, as we noted 
in Skivolocki, strip mining is entirely incompatible with the enjoyment of 
a surface estate.  Skivolocki at 251, 67 O.O.2d at 325, 313 N.E.2d at 
378. 
 
Further, the reservation clauses provide for the use of the surface 
for the installation of a mine plant or facilities and for roads permitting 
the transport of mining equipment and vehicles from extraction points to 
the border of the property.  Again, it would be unnecessary to make 
such a reservation if the mineral estate included the right to operate 
machinery everywhere on the property whose purpose is to scrape 
away the entire surface in pursuit of shallow veins of coal.  Examples of 
provisions in the deeds which pertain only to deep mining and make 
sense only in that context are legion.  In contrast, the deeds contain 
neither an express  provision authorizing strip mining, nor any provision 
 
17
even suggesting that strip mining was intended.  These facts in 
themselves would be sufficient to support our holding under Skivolocki. 
 
Drydock urges, however, that we adopt the other grounds relied 
upon by the court of appeals for its decision.  First, the dictionary 
definition of “mining” at the time the deeds were drafted included strip 
mining.  Second, the surface interest in this case was severed from the 
fee as opposed to the mineral interest being severed from the fee.  We 
find neither argument persuasive as to the intent of the parties. 
 
Though strip mining is undeniably a form of mining, and the deeds 
reserved to Cambria the right to mine and remove all the coal and other 
minerals, we find the dictionary definition to be far outweighed in our 
search for the intent of the parties by the weight of the deep-mining 
context and language of the reservation clauses and by the patent 
incompatibility of strip mining with separate ownership of the surface of 
the land. 
 
18
 
Neither do we agree that the determination of the intent of the 
parties should be made according to whether the surface interest or the 
mineral interest is severed from the fee.  Though the court of appeals 
described the difference as “critical,” we have not discovered any 
authority in support of that contention.  The second syllabus paragraph 
of Skivolocki does not differentiate between the two situations; rather, it 
speaks in terms applicable to both.   
 
Indeed, in Burgner, we long ago stated that the “obligation to 
protect the superincumbent soil, exists whether there is a conveyance of 
the surface reserving the minerals, or a grant of the minerals, without a 
conveyance of the surface. In either case, the presumption arises, that 
the owner of the minerals is not, by removing them wholly or in part, to 
injure the owner of the soil above.” Burgner, 41 Ohio St. at 352-353.  
The principle applies equally to the present case.  Though Drydock 
owns all the coal and minerals on the property and clearly is entitled to 
extract them, what it may not do is extract them by means of a 
 
19
technique that destroys the estate sold by its predecessor in interest to 
another. 
 
We note also that our holding in this case is consistent with the 
rules adopted in the other coal-mining jurisdictions to have considered 
the question.  Drydock points to Bellville Mining Co. v. United States 
(C.A.6, 1993), 999 F.2d 989, a federal Sixth Circuit case construing 
Ohio law, for the proposition that deeds drafted after strip mining 
became widely known and used should be interpreted to include the 
right to strip-mine along with the mineral owner’s right to deep-mine for 
coal.  Appellee mischaracterizes the court’s holding.  In fact, the court 
held that the intent of the parties is controlling, and that when deep-
mining language is used exclusively, courts must assume that strip 
mining was not intended.  Id. at 993-994. 
 
The courts of Pennsylvania, West Virginia, Virginia, Missouri, 
Colorado and Texas have all adopted the rule we state today using such 
language as:  “[W]hen a grantor, as in this case, sells the surface of the 
 
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land, he knows that the use of it for farming and other purposes is 
contemplated and assents thereto.  ***  [I]f he desires to  reserve rights 
inconsistent with the full enjoyment of the surface, it is his duty to 
reserve those rights by clear and unequivocal language.  It is hardly to 
be supposed that either the grantor or the grantee *** for a moment 
contemplated the reservation of a right which would enable the grantor 
to totally destroy the subject matter of the conveyance.***”  Stonegap 
Colliery Co. v. Hamilton (1916), 119 Va. 271, 292, 89 S.E. 305, 311.  
“‘[I]n view of the surface violence, destruction and disfiguration which 
inevitably attend strip or open mining, *** no land owner would lightly or 
casually grant strip mining rights, nor would any purchaser of land treat 
lightly any reservation of mining rights which would permit the grantor or 
his assignee to come upon his land and turn it into a battle-ground with 
strip mining’.  ***    Therefore, ‘the burden rests upon him who seeks to 
assert the right to destroy or injure the surface’ *** to show some 
positive indication that the parties to the deed agreed to authorize 
 
21
practices which may result in these consequences.” (Citations omitted.)   
Stewart v. Chernicky, 439 Pa. at 50, 266 A.2d at 263.  See, also Phipps 
Leftwich (1976), 216 Va. 706, 222 S.E.2d 536; Groves v. Terrace Mining 
Co. (Mo. 1960), 340 S.W.2d 708; Smith v. Moore (1970), 172 Colo. 440; 
474 P.2d 794; Acker v. Guinn (Tex. 1971), 464 S.W.2d 348; West 
Virginia-Pittsburgh Coal Co. v. Strong (1947), 129 W.Va. 832, 42 S.E.2d 
46. 
 
Thus we hold that a deed which severs a mineral estate from a 
surface estate, and which grants or reserves the right to use the surface 
incident to mining coal, in language peculiarly applicable to deep-mining 
techniques, whether drafted before or after the advent of strip mining, 
does not grant or reserve to the mineral owner the right to remove coal 
by strip-mining methods.  
 
In view of our holding it is unnecessary to determine whether the 
contract at issue is ambiguous such that consideration of extrinsic 
evidence would be appropriate.  The trial court found the extrinsic 
 
22
evidence to be cumulative, indicating that strip mining was not intended.  
The court of appeals found the contract unambiguous and did not 
consider extrinsic evidence.  As the extrinsic evidence adduced at trial 
clearly indicated absence of intent to allow strip mining, our 
consideration of the extrinsic evidence would have no bearing on our 
conclusion that the parties to the original deeds did not intend Cambria 
to have reserved strip-mining rights. 
 
Last, we agree with amici Ohio Farm Bureau Federation and Ohio 
Mining and Reclamation Association, both of whom filed briefs urging 
reversal, that our decision today will promote judicial economy and avoid 
confusion in the drafting and interpretation of deeds severing mineral and 
surface rights.  The large number of extant deeds with similar reservation 
clauses would be subject to a multitude of unnecessary litigation in order 
to clarify respective rights in the absence of the clear rule we announce 
today. 
 
23
 
Accordingly, the judgment of the court of appeals is reversed, and 
the judgment of the court of common pleas is reinstated. 
 
 
 
 
 
 
 
 
Judgment reversed. 
 
DOUGLAS, POWELL, RESNICK, F.E. SWEENEY and PFEIFER, JJ., 
concur. 
 
COOK, J., dissents. 
 
STEPHEN W. POWELL, J., of the Twelfth Appellate District, sitting for 
WRIGHT, J. 
FOOTNOTE: 
 
1  The April 2, 1962 deed does not contain this acreage limitation, 
though the discrepancy does not bear on our holding. 
 
Cook, J., dissenting.  I respectfully disagree with the decision of the majority because 
I agree with the court of appeals that Skivolocki does not dictate the result in this case. 
 
The majority cites Skivolocki language, reasoning that “‘strip mining is totally 
incompatible with the enjoyment of a surface estate,’” and thus “‘a heavy burden rests upon 
the party seeking to demonstrate that such a right exists.’”  That balancing of the agricultural 
use of property against the total destruction of such uses by strip mining played an important 
 
24
part in the Skivolocki decision.   The instant case differs in that here we have a challenge 
between the lessee of the surface estate, whose lease permits strip mining, and the owner of 
the mineral estate, which also claims the right to strip-mine.   
 
The court of appeals analyzed this case “in a manner consistent with well-established 
contract law.”  Given the plain meaning of the language of the deeds, the appeals court 
concluded, and I agree, that Drydock reserved the right to surface-mine.  The deeds provide 
that Drydock continues to own “all of the minerals of whatsoever nature and description” and 
may enter “in, on or under said premises for the purpose of *** mining and removing the 
same***.”  Moreover, as cited by the appellate court, the dictionary definition of “mining” at 
the time the deeds were executed included the method of surface mining. 
 
Although the majority seems to be persuaded by the unassailable proposition that it is 
unlikely that any purchaser of a surface estate would buy the surface of a tract subject to the 
right of the mineral owner to destroy that surface, the concurring opinion of Judge Grey of 
the court of appeals poses the equally sound question as to whether any reasonable person 
would reserve a mineral interest but not the right to recover the minerals.   Today’s decision 
results in Drydock owning the coal but with no right to mine it and Graham having the right 
to mine it but no ownership. 
 
I therefore would affirm the judgment of the court of appeals based on the language of 
the reservation clauses in the deeds.