Case Title: CABALLO COAL CO. v. FEDELITY EXPLORATION & PRODUCTION

Citation: 

Docket Number: 03-91

State: wyoming

Court: Wyoming Supreme Court

Date: 2004-02-10T00:00:00Z

Document:
CABALLO COAL CO. v. FEDELITY EXPLORATION & PRODUCTION2004 WY 684 P.3d 311Case Number: 03-91Decided: 02/10/2004
October 
Term, A.D. 2003

 
 

 

CABALLO 
COAL COMPANY, a Delaware

Corporation,

 

Appellant(Defendant),

 

v.

 

FIDELITY 
EXPLORATION  & 
PRODUCTION

COMPANY, 
a Delaware Corporation,

 

Appellee(Plaintiff),

 

and

                                                                                                

MARION 
JANKOWSKI; THE CATHERINE L.

DEMCHOCK 
FAMILY MINERAL TRUST

DATED 
9-25-01; CHARLES IRWIN JENKINS;

PATRICIA 
MARIE STRICKER; DONALD RAY

JENKINS,

 

Appellees(Defendants).

 

 

 

Appeal 
from the District Court of Sheridan County

The 
Honorable John C. Brackley, Judge

 

Representing 
Appellant:

Dan 
B. Riggs and Michael C. Steel of Lonabaugh and Riggs, Sheridan, WY.  Argument by Mr. 
Steel.

 

Representing 
Appellee Fidelity Exploration:

S. 
Thomas Throne of Throne & Hurst, Sheridan, WY.

 

Lynn 
M. Smith of Hart & Beisher, Sheridan, WY

 

Representing 
Appellees Jenkinses and Stricker:

Clay 
B. Jenkins, Sheridan, WY.  Argument 
by Mr. Jenkins.

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

 

LEHMAN, 
Justice.

 

[¶1]      This 
is an appeal from summary judgment entered in favor of appellees Marion 
Jankowski, the Catherine L. Demchock Family Mineral Trust dated 9/25/01, Charles 
Irwin Jenkins, Patricia Maria Stricker, and Donald Ray Jenkins (collectively 
appellees) and against appellant Caballo Coal Company (CCC).  In granting summary judgment, the 
district court ruled that appellees' predecessors had not conveyed the rights to 
coalbed methane gas (CBM) when they transferred certain rights in real property 
to CCC's predecessors.  We reverse. 

 

[¶2]      Appellant sets 
forth the following issue:

 

Do 
warranty deeds that grant "all minerals contained in or associated with" coal, 
without any reservation, convey the Grantors' interest in coalbed 
methane?

 

Appellees 
style the issue on appeal as:

 

Do 
1975 deeds that grant coal "[t]ogether with all of grantors' undivided interests 
in and to all other minerals, metallic or nonmetallic contained in or associated 
with the deposits of coal conveyed hereby or which may be mined and produced 
with said coal, subject to the reserved royalty hereinafter provided" convey gas 
as well, simply because the gas reservoir is in the coal 
formation?

 

Appellee, 
Fidelity Exploration & Production Company (FEPC), who initiated this action 
as an interpleader pursuant to W.R.C.P. 22 does not set forth an issue on 
appeal. 

 

 

[¶3]      On January 8, 
1975, Theresa Scullen and Annie Jenkins issued a warranty deed to the Carter Oil 
Company conveying specific interests in land located near Sheridan, Wyoming 
(Scullen deed).  Three days later, 
Elizabeth C. Lynch also issued a warranty deed to the Carter Oil Company 
conveying specific interests in land located near Sheridan, Wyoming (Lynch 
deed). 

 

[¶4]      Both the Scullen 
and Lynch deeds set forth, in applicable part:

 

            
GRANTOR . . . CONVEYS AND WARRANTS to THE CARTER OIL COMPANY, 
GRANTEE, . . . all of GRANTOR'S undivided interest in and to the coal 
upon and within and underlying the following described lands situate in the 
County of Sheridan, State of Wyoming . . . . 
 

TOGETHER WITH all of GRANTOR'S UNDIVIDED interest in and to all other 
minerals, metallic or nonmetallic, contained in or associated with the deposits 
of coal conveyed hereby or which may be mined and produced with said coal, 
subject to the reserved royalty hereinafter provided.
 

The warranty 
deeds both also provided that the grantors would be paid certain royalties with 
respect to the coal mined from the property.  However, the grantors did not reserve 
any other interests in the subject land in either of the 
deeds.

 

[¶5]      Appellees are the 
successors in interest to Theresa Scullen, Annie Jenkins, and Elizabeth C. Lynch 
under the Scullen and Lynch deeds.  
CCC is the successor in interest of Carter Oil Company under the Scullen 
and Lynch deeds.  FEPC acquired oil 
and gas leases from CCC and appellees, which cover lands including those which 
are specified in the Scullen and Lynch deeds, and currently produce CBM from 
coal seams located on the land. 

 

[¶6]      On May 22, 2002, 
FEPC filed a complaint for interpleader asking the district court to determine 
who was entitled to receive royalty payments on the production of CBM.  Upon cross-motions, the district court 
entered summary judgment in favor of appellees and against CCC.  This appeal followed. 

 

 

 

[¶7]      We have often 
stated our well-established standard of review for summary judgments.  In McGee v. Caballo Coal Co., 
2003 WY 68, ¶6, 69 P.3d 908, ¶6 (Wyo. 2003) (quoting Garnett v. Coyle, 2001 WY 94, ¶¶3-5, 33 P.3d 114, ¶¶3-5 (Wyo. 2001)), we stated:  

 

            
Summary judgment motions are determined under the fol­lowing language 
from W.R.C.P. 56(c):

 

The judgment sought shall be rendered forthwith if the pleadings, 
depositions, answers to interrogatories, and admissions on file, together with 
the affidavits, if any, show that there is no genuine issue as to any material 
fact and that the moving party is entitled to a judgment as a matter of 
law.
 

            
The purpose of summary judgment is to dispose of suits before trial that 
present no genuine issue of material fact.  
Moore v. Kiljander, 604 P.2d 204, 207 (Wyo. 1979).  Summary judgment is a drastic remedy 
designed to pierce the formal alle­gations and reach the merits of the 
controversy, but only where no genuine issue of material fact is present.  Weaver v. Blue Cross Blue Shield of 
Wyoming, 609 P.2d 984, 986 (Wyo. 1980).  A fact is material if proof of that fact 
would have the effect of establishing or refuting one of the essential elements 
of a cause of action or defense asserted by the parties.  Schuler v. Commu­nity First Nat. 
Bank, 999 P.2d 1303, 1304 (Wyo. 2000).  
The summary judgment movant has the initial burden of establishing by 
admissible evidence a prima facie case; once this is accom­plished, the 
burden shifts and the opposing party must present specific facts showing that 
there is a genuine issue of material fact.  
Boehm v. Cody Country Chamber of Commerce, 748 P.2d 704, 710 (Wyo. 
1987); Gennings v. First Nat. Bank of Thermopolis, 654 P.2d 154, 156 
(Wyo. 1982).

 

            
This Court reviews a summary judgment in the same light as the district 
court, using the same materials and following the same standards.  Unicorn Drilling, Inc. v. Heart 
Mountain Irr. Dist., 3 P.3d 857, 860 (Wyo. 2000) (quoting Gray v. Norwest 
Bank Wyoming, N.A., 984 P.2d 1088, 1091 (Wyo. 1999)).  The record is reviewed, however, from 
the vantage point most favorable to the party who opposed the motion, and this 
Court will give that party the benefit of all favorable infer­ences that may 
fairly be drawn from the record.  
Garcia v. Lawson, 928 P.2d 1164, 1166 (Wyo. 1996). 

 

See 
also Hickman v. Groves, 
2003 WY 76, ¶5, 71 P.3d 256, ¶5 (Wyo. 2003). 

  

 

 

 

[¶8]      The underlying 
facts and the main issue presented in this case are very similar to those that 
existed in the cases of Newman v. RAG 
Wyoming Land Co., 2002 WY 132, 53 P.3d 540 (Wyo. 2002) and McGee, previously determined by this 
court.  In both Newman and McGee we considered whether CBM had been 
conveyed by 1970 deeds conveying the surface of certain property and "coal and 
minerals commingled with [the] coal" and reserving all "oil, gas, and other 
minerals" not otherwise conveyed.  
Newman, at ¶¶1 and 3-5, and McGee, 
at ¶¶3-5.  Recently, in Hickman, we considered whether CBM had been 
reserved by landowners who in 1944 conveyed rights in land but reserved 
"one-half of all oil and commercial gravel rights" and, in doing so, clarified 
the principles we employ when interpreting such conveyances. 

 

[¶9]      Our analysis in 
Newman and McGee began by setting forth the 
historical background of CBM.  This 
court recognized that for over a century CBM had been well known and had long 
been considered a dangerous waste product of coal mining.  However, in the 1970s the value of CBM 
was realized resulting in concerted research and development in the area.  In the early 1990s techniques were 
perfected for the efficient development of CBM.  Prior to this time, CBM was simply 
allowed to escape from the coal in the course of open pit surface mining, and no 
attempt was made to capture it as a valuable resource.  Newman, at ¶¶6-8, and McGee, at 
¶8.

 

[¶10] 
  Further in Newman and McGee, we noted the chemistry and 
composition of CBM.  CBM is 
chemically identical (CH4) to gas produced through conventional 
methods, and both CBM and gas produced from conventional methods are known as 
"natural gas." Natural gas emanates from the decay of organic material over time 
under great pressure and temperature.  
CBM gas exists in coal in three basic states:  as free gas, as gas dissolved in the 
water in coal, and as gas "absorbed" on the solid surface of the coal.  Newman, at ¶¶9-10, and McGee, at 
¶9.1  

 

[¶11]   Finally, this 
court concluded that the ultimate issue to be resolved in Newman and 
McGee was whether the parties to the deeds in question intended CBM to be 
conveyed along with the coal estate or reserved to the grantor as part of the 
oil and gas estate.  Newman, 
at ¶¶11 and 14; McGee, at ¶10.  
As explained in Hickman, in making our determinations in these 
cases, we apply the following standards:
 

"According 
to our established standards for interpreta­tion of contracts, the words 
used in the contract are afforded the plain meaning that a reasonable person 
would give to them.  When the 
provisions in the contract are clear and unambiguous, the court looks only to 
the four corners' of the document in arriving at the intent of the 
parties.  In the absence of any 
ambiguity, the contract will be enforced according to its terms because no 
con­struction is appropriate."  
Amoco Production Company v. EM Nominee Partnership Company, 2 P.3d 534, 539-40 (Wyo. 2000) (citations omitted).

 

            
Assignments are contracts and are construed according to the rules of 
contract interpretation.  The 
determination of the parties' intent is our prime focus in interpreting or 
construing a contract.  If an 
agreement is in writing and its language is clear and unambiguous, the parties' 
intention is to be secured from the words of the agreement.  When the agreement's language is clear 
and unambiguous, we consider the writing as a whole, taking into account 
relationships between various parts. In interpreting unambiguous contracts 
involving mineral interests, we have consistently looked to surrounding 
circumstances, facts showing the relations of the parties, the subject matter of 
the contract, and the apparent purpose of making the 
contract.

 

Boley 
v. Greenough, 
2001 WY 47, ¶¶10-11, 22 P.3d 854, ¶¶10-11 (2001) (some citations omitted).  Although substantial dis­agreement 
exists over the meaning of the deed, neither party suggests the language of the 
deed is ambiguous.  Differing 
interpretations of contracts alone do not constitute ambiguity requiring 
extrinsic evidence.  Moncrief v. 
Louisiana Land and Exploration Company, 861 P.2d 516, 524 (Wyo. 
1993).

 

            
We must first examine the terms of the deed and give them their plain and 
ordinary meaning.  Wolter v. 
Equitable Resources Energy Company, Western Region, 979 P.2d 948, 951 (Wyo. 
1999); Pete Lien & Sons, Inc. v. Ellsworth Peck Construction Co., 896 P.2d 761, 763 (Wyo. 1995).  Plain 
meaning is that "meaning which [the] language would convey to reasonable persons 
at the time and place of its use."  
Moncrief, 861 P.2d  at 524.

 

Hickman, 
at ¶6 (quoting Newman, at ¶¶11-12 with emphasis 
added).  See also 
McGee, at ¶11 and Wadi Petroleum, Inc. v. Ultra Resources, Inc., 
2003 WY 41, ¶11, 65 P.3d 703, ¶11 (Wyo. 2003).  When faced with determining the meaning 
of the language used within deeds, we focus on the general intent of the 
parties, concentrating on the purpose of the grant in terms of the respective 
manner of enjoyment of surface and mineral estates and the exploitation of the 
mineral resources involved.  
Hickman, at ¶7 (citing both Newman, at ¶¶19 and 27, and McGee, 
at ¶11).  We additionally interpret 
the terms used within the documents at issue by giving the words used their 
plain and ordinary meaning to reasonable persons at the same time and place of 
their use.  Hickman, at 
¶¶8-9.  Thus, we have consistently 
applied a historical context analysis.  
In fact, in Hickman, at ¶¶11-13, we went even further to explain: 

 

In addition 
to the authorities cited above, we agree with the opinion issued by the Colorado 
Supreme Court in KN Energy, Inc. v. Great Western Sugar Co., 698 P.2d 769, 776-77 (Colo. 1985) (citations omitted and emphasis 
added):

 

[T]he intent 
of the parties to a written instrument must be determined primarily from the 
written terms.  "It is only where 
the terms of an agreement are ambiguous or are used in some special or technical 
sense not apparent from the contractual document itself that the court may look 
beyond the four corners of the agreement in order to determine the meaning 
intended by the parties."  Whether 
an ambiguity exists, as a matter of law, is for the court to determine.  In making this determination, the 
court may consider extrinsic evidence bearing upon the meaning of the written 
terms, such as evidence of local usage and of the circumstances surrounding the 
making of the con­tract.  
However, the court may not consider the parties' own extrinsic 
expressions of intent.  

 

            
We further find appropriate those statements found at 11 Samuel 
Williston, A Treatise on the Law of Contracts, § 32:7 (4th ed. 1999) (footnotes 
omitted):

 

            
In theory, the circumstances surrounding the execution of a contract may 
always be shown and are always relevant to a determination of what the parties 
intended by the words they chose.  
In construing a contract, a court seeks to ascertain the meaning of the 
contract at the time and place of its execution.  Thus, although the parties may not, 
because of the parol evi­dence rule, testify as to agreements they made 
before or contemporaneously with the execution of the contract, the 
cir­cumstances surrounding the execution of the contract bear upon the 
contract's meaning.  Some courts, 
not fully appreciating the distinction between the rule that permits evidence of 
the sur­rounding circumstances to be considered, and the rule which 
prohibits the introduction of evidence of collateral agreements, have held that 
the former rule runs afoul of the latter, the parol evidence rule.  Indeed, pronouncements can be found in 
numer­ous cases to the effect that evidence of the circumstances surrounding 
the execution of a contract may be admitted, like any other parol evidence, only 
where the contract's meaning is ambiguous.  
These decisions in truth, reflect a misunderstanding both of the scope 
and purpose of the parol evidence rule, and the meaning of the phrase 
"surrounding circumstances;" "sur­rounding circumstances" do not embrace 
either the prior or contemporaneous collateral agreements of the parties or 
their understanding of what particular terms in their agreement mean.  Rather, the term refers to the 
commercial or other setting in which the contract was negotiated and other 
objectively deter­minable factors that give a context to the transaction 
between the parties.  Such matters 
as, for example, whether one or both parties was new to the trade, whether 
either or both had counsel, and the nature and length of their relationship, as 
well as their age, experience, education and sophistication would all be part of 
the "surrounding circumstances," admissible, if relevant, notwithstanding the 
parol evidence rule. 

 

            
Williston also teaches, in addressing the subject of proof of usage for 
the purpose of defining words in a contract, at Volume 12, §34:5 
that:

 

            
Historically, it has been recognized that familiar words may have 
different meanings in different places and that every contract will therefore 
have a relation to the custom of the country where it is made . . . 
.

 

. . . 
[I]n subsequent years, numerous cases were decided where words with a clear 
normal meaning were shown by usage to bear a meaning which was not suggested by 
the ordinary lan­guage used.  
This is not only true of technical terms, but of language which, at least 
on its face, has no peculiar or technical meaning or 
significance.

 

            
Therefore, evidence of usage may be admissible to give meaning to 
apparently unambiguous terms of a contract where other parol evidence would be 
inadmissible.  Thus, 
circum­stances known to the parties at the time they entered into contract, 
such as what that industry considered to be the norm, or reasonable or prudent, 
should be considered in construing a contract, while the parties' statements of 
what they intended the contract to mean are not 
admissible.

 

            
It is currently the widely-accepted rule that custom and usage may be 
proved to show the intention of parties to a writ­ten contract or other 
instrument in the use of phrases of a peculiar technical meaning which, when 
unexplained, are susceptible of two or more plain and reasonable 
constructions.  Parol evidence may 
be admitted to establish a technical meaning where certain provincialisms and 
technicalities of science and commerce have acquired a known, fixed and definite 
meaning different from their ordinary meaning by legal custom or usage.  Thus, in the interpretation of technical 
terms used in a contract, it is proper to consider the meaning given to those 
terms in the course of prior dealings between the parties, as well as by 
busi­ness or trade custom or usage. . . . 

 

. . .

 

            
It has also been said that usage is admissible to explain what is 
doubtful but never to contradict what is plain.  If this statement means that usage is 
not admitted to contradict an apparently plain meaning if proof of the usage 
were excluded (and this is what the statement seems naturally to mean), it is 
inconsistent with many decisions and incorrect on principle.  Consequently, the correct rule with 
reference to the admissibil­ity of evidence as to trade usage under the 
circumstances presented here is that while words in a contract are ordinarily to 
be construed according to their plain, ordinary, popular or legal meaning, as 
the case may be, if in reference to the subject matter of the contract, 
particular expressions have by trade usage acquired a different meaning, and 
both parties are engaged in that trade, the parties to the contract are 
considered to have used them according to their different and peculiar sense as 
shown by such trade usage.  Parol 
evidence is admissible to establish the trade usage, and that is true even 
though the words are in their ordinary or legal meaning entirely unambiguous, 
since, by rea­son of the usage, the words are used by the parties in a 
different sense.

 

As in 
Newman, McGee, and Hickman, we must also apply the 
above-cited standards in determining whether the parties to the deeds in 
question here intended CBM to be conveyed along with the coal 
estate.

 

[¶12]   CCC begins its argument by placing 
emphasis on the fact that both the Scullen deed and Lynch deed explicitly 
provide for the conveyance of the grantors' "undivided interest in 
and to all other minerals, metallic or nonmetallic, contained in or 
associated with the deposits of coal conveyed hereby or 
which may be mined and produced with said coal."  Hence, CCC argues that the language 
contained within the Scullen and Lynch deeds clearly expresses the parties' 
intent that all minerals, like CBM, be conveyed to the 
grantees.  CCC further asserts that 
under our holdings in Newman and McGee, we must conclude in this 
case that, as a matter of law, CBM is a mineral contained in or associated with 
coal, and CBM was therefore conveyed by the Scullen and Lynch 
deeds.

 

[¶13]   In Newman and McGee, we recognized that 
CBM is a mineral under Wyoming law.  
Newman, at ¶13, and those cases cited 
therein, and McGee, at ¶13.  
Nonetheless, like in Newman 
and McGee, this conclusion is not determinative because "minerals" may be 
both granted and reserved.  We have 
further specifically noted that CBM is contained in or associated with coal, as 
CBM exists in coal in three basic states.  
Newman, at ¶¶9-10, and McGee, at ¶¶9 
and 13.  In accord see Amoco Prod. Co. v. Southern Ute Indian 
Tribe, 526 U.S. 865, 873, 119 S. Ct. 1719, 1724, 144 L. Ed. 2d 22 (1999); Carbon County v. Union Reserve Coal Co., 
898 P.2d 680, 683 (Mont. 1995); United 
States Steel Corp. v. Hoge, 468 A.2d 1380, 1382 (Pa. 1983).  

 

[¶14]   Furthermore, the language used in 
both the Scullen and Lynch deeds defines the additional minerals granted as 
"all other minerals, metallic or 
nonmetallic."  This choice 
of verbiage is significant and cannot be disregarded because all parts of and 
every word in a contract should, if possible, be given effect.  "We must avoid construing a contract so 
as to render one of its provisions meaningless, since each provision is presumed 
to have a purpose."  In re Estate 
of Corpening, 2001 WY 18, ¶12, 19 P.3d 514, ¶12 (Wyo. 2001); see also 
Moncrief v. Louisiana Land & Exploration Co., 861 P.2d 516, 524 (Wyo. 
1993) and Wyoming Game and Fish Comm'n v. Mills Co., 701 P.2d 819, 822 
(Wyo. 1985). Thus, it appears logical that the grantors involved in the Scullen 
and Lynch deeds may have intended to grant CBM to the grantees, as CBM is 
clearly a nonmetallic mineral. 

 

[¶15]   Importantly, in McGee the language of that deed forced us to 
determine whether CBM "may be mined and 
produced with coal."  
McGee, at ¶14.  
Similarly, it was necessary in Newman for us to determine whether 
or not CBM "may be mined or extracted in association" with coal or "in 
conjunction with coal mining operations."  
Newman, at ¶¶15-18.  
However, any such related determination is unnecessary as the grantors in 
the Scullen and Lynch deeds explicitly enumerated that the minerals granted were 
to be "all other minerals, metallic or nonmetallic, 
contained in or associated with the deposits of coal conveyed hereby 
or which may be mined and produced with said coal."  As the language used within the 
applicable deeds is stated in the disjunctive, only one of the circumstances 
need be found.  Griess v. Office 
of the Attorney Gen., Div. of Criminal Investigation, 932 P.2d 734, 738, 
(Wyo. 1997) and those cases cited therein; Olsten Staffing Services, Inc. v. 
D.A. Stinger Services, Inc., 921 P.2d 596, 600 (Wyo. 1996).  Thus, in this case, it makes no 
difference if the minerals granted "may be mined and produced with said coal," 
insofar as we have previously specifically held that CBM is contained in or 
associated with coal because CBM exists in coal in three basic states.2 Newman, at ¶¶9-10, and McGee, at ¶¶9 
and 13.

 

[¶16]   Appellees contend that CCC's 
argument is too simplistic and obsessively focuses on a single phrase found in 
the conveyance provisions of the Scullen and Lynch deeds while ignoring other 
language contained within the deeds.  
In particular, appellees point out that the phrase identified by CCC 
concludes with "subject to the reserved royalty hereinafter provided."  Therefore, appellees argue that because 
the royalty provision of each deed states "GRANTOR reserves a royalty of three 
cents (3¢) per ton on all coal mined and sold, or removed," referring only to 
coal mined and sold and not gas or its removal, the parties to the deeds must 
have intended to convey only coal and not gas, namely CBM.  Appellees further assert that the 
following language from the deeds bolsters their argument:

 

[A]ll of the 
GRANTOR'S rights, easements, powers and privileges to enter upon said land to 
explore for, extract, mine and remove said coal by any method or means, whether 
now known or unknown, and whether by surface mining activities, by underground 
mining activities, or otherwise, it being the intent and purpose of this 
conveyance to convey from GRANTOR and vest in GRANTEE all of GRANTOR'S rights 
whatsoever, whenever obtained and by whatever means obtained, which relate to 
said coal, or the mining, extracting, removal or use of the 
same.

 

They 
additionally argue that these transactions were merely coal conveyances as 
evidenced by the title provision which states:  "This is a deed conveying fee simple 
title to the coal in place, and is not a lease."

 

[¶17]   We do not, however, find this 
argument persuasive.  If appellees' 
argument is assumed correct, this would render an absolute nullity the clear 
language used within the granting clause of the subject deeds expressly 
conveying ownership of all metallic and nonmetallic minerals 
contained in or associated with deposits of coal or which may be mined and 
produced with coal.  Indeed, the 
appellees' argument is even refuted by the testimony of their own expert, who 
opined that the deeds likely conveyed the metallic minerals of pyrite, 
marcasite, calcium carbonate, gold, and any other metallic mineral contained in 
or associated with the coal.  Yet, 
the deeds do not carve out a per ton royalty for these other individual metallic 
minerals.  Thus, the granting clause 
cannot reasonably be interpreted as conveying only those minerals upon which a 
per ton royalty is paid.  

 

[¶18]   Clearly, the words employed to 
convey ownership within the deeds serve a distinct purpose from those words 
explaining when royalties must be paid on the transferred coal.  This distinction is highlighted by the 
fact that rights and privileges and intent and purpose provisions of the deeds 
do not require the grantees to immediately mine the coal or other minerals 
granted.3  Rather, these clauses state that 
royalties become payable on the coal solely when mined and that the grantees 
have no obligation or responsibility to mine the coal or other minerals, if 
ever.  Additionally, that same 
clause explicitly states that it is the intent and purpose of the conveyance "to 
convey from GRANTOR and vest in GRANTEE all of GRANTOR'S 
rights whatsoever, whenever obtained and by whatever means obtained, which 
relate to said coal, or the mining, extracting, removal or use of the 
same."  (Emphasis 
added.)

 

[¶19]   We find that a more reasonable 
interpretation of the intent of the grantors expressed within the deeds is that 
the grantors simply intended to convey everything located within the coal 
seam.  For appellees to now argue 
that the grantors actually intended the royalty provision to limit the scope of 
the grant, once it is discovered that CBM has substantial worth, is 
disingenuous.

 

[¶20]   Moreover, in both Newman and 
McGee we interpreted the terms used within the documents at issue giving 
the words used their plain and ordinary meaning to reasonable persons at the 
same time and place of their use, namely, the early 1970s in the Fort Union 
formation of the Powder River Basin of Wyoming.  Newman, at ¶¶15-18, and 
McGee, at ¶¶15-18.  We 
recognized in Hickman, at ¶¶ 8-9:  

 

            
In Newman and McGee, we determined, after careful 
consideration of the historical development of the commercial capture of CBM, 
that those involved parties in 1973 and 1974 clearly could not have intended CBM 
to have been treated separately from oil and gas.  We reached this conclusion in part 
because the value of CBM only became known long after the conveyance through the 
discovery of new methods for its capture and changes in economics making its 
collection profitable.  Therefore, 
given the surrounding facts and circumstances which existed at the time of the 
execution of the warranty deeds in those cases, we concluded that the parties 
had no specific intent to convey rights in CBM separately from oil and gas 
because those granting parties would have been wholly unaware that CBM was of 
any value. Again, in the early 1970s, the separate production of CBM did not 
occur.  Rather, CBM was then a 
useless waste by-product and possible hazard of coal excavation.  See Newman, at ¶¶6-8; 
McGee, at ¶¶21-23.

 

            
Upon reviewing the language utilized in the conveyances made in 
McGee, this court noted the McGees expressly conveyed good and 
merchantable title to the lands involved "together with all coal and all other 
minerals, metallic or non-metallic, contained in or asso­ciated with coal 
and which may be produced with coal" owned or held by the grantors in those 
lands.  These warranty deeds also 
reserved to the grantors "all oil, gas and other miner­als in said lands" 
which the grantors then owned, "other than those included above in the 
conveyance to Grantee."  Applying 
the same reasoning as in Newman, we therefore con­cluded the parties 
generally intended the coal to be conveyed and the gas, wherever it may be 
located within the property, to be reserved to the landowners.  Coalbed methane, being a gas, remained 
the landowners' property.  As we 
expressed in Newman at ¶32 (emphasis added):

 

            
On the basis of the unambiguous language of the deed and the 
surrounding facts and circumstances, we conclude the parties generally 
intended the coal to be conveyed and the gas, wherever it may be located within 
the property, to be reserved to the landowners.  Coalbed methane, being a gas, remained 
the landowners' property.

 

[¶21]   We conclude 
that the circumstances and conveyances that exist in this case are different and 
distinct from those reviewed by this court in Newman and McGee.  
Namely, in this case the grantors reserved no tangible mineral 
interest and chose to convey "all of GRANTOR'S undivided interest in and to the 
coal upon and within and underlying the following described lands situate in the 
County of Sheridan, State of Wyoming . . . TOGETHER WITH all of 
GRANTOR'S UNDIVIDED interest in and to all other minerals, metallic or 
nonmetallic, contained in or associated with the deposits of coal conveyed 
hereby or which may be mined and produced with said coal, subject to the 
reserved royalty hereinafter provided."  
To the contrary in Newman, the warranty deed reserved to the 
grantor "all oil, gas and other minerals except as set forth above."  Newman, at ¶3.  Similarly, the deeds in McGee 
reserved "all oil, gas and other minerals in said lands which Grantor now owns, 
other than those included above in the conveyance to Grantee."   McGee, at ¶24.  This distinction is most critical in our 
conclusion that the predecessors of appellees did not intend to reserve an 
interest in any metallic and non-metallic minerals, including CBM, contained in 
or associated with deposits of the coal.  

 

[¶22]   Finally, we 
find that our ultimate holding in this case is directly in line with our 
statements initially made in Newman.  Specifically, our role is to give effect to 
the general intent of the parties to the conveyance with regard to the 
exploitation of the mineral resources governed by the language expressed in 
context with the specific facts and circumstances surrounding the execution of 
the transferring document on a case-by-case basis.  Newman, ¶¶18, 27 and 
32.
 

 

CONCLUSION

 

[¶23]   We hold that the district court 
improperly determined that summary judgment should be granted in favor of the 
appellees.  The record before us 
does not present issues of material fact, and the Scullen deed and Lynch deed 
are not ambiguous.  Moreover, the 
undisputed facts in this case establish that appellees' predecessors intended to 
convey CBM to CCC's predecessors.  
Thus, CCC is entitled to summary judgment as a matter of law, rather than 
appellees.

 

[¶24]   We emphasize that, in interpreting 
contracts conveying mineral interests, the actual words used in each particular 
contract must be afforded the plain meaning that a reasonable person would give 
to them considering the contract as a whole, taking into account relationships 
between the various parts, and looking to surrounding circumstances, facts 
showing the relations of the parties, the subject matter of the contract, and 
the apparent purpose of making the contract with the goal of discerning the true 
intent of the parties.  As a result, 
as the wording or underlying circumstances surrounding each mineral contract may 
vary, so may the ultimate conclusion vary on a case-by-case 
basis.

 

[¶25]   Reversed.

 

FOOTNOTES

 

1Many 
of these facts are also established in this case through the affidavit of 
Anthony W. Gorody, an earth science professional, proffered by CCC in support of 
its motion for summary judgment and the affidavit of Jimmy Goolsby, a consulting 
geologist, submitted by appellees in support of their summary judgment 
motion.  

 

2The 
grant language used in the Scullen and Lynch deeds and the grant language 
reviewed in McGee are exactly the same with the exception of the use of 
the disjunctive "or" as opposed to the conjunctive "and" respectively.  This difference is very 
compelling.

 

3The 
Scullen and Lynch deeds provide: 

 

The 
royalty reservation herein contained shall not imply any obligation upon GRANTEE 
to commence the mining of coal within a reasonable time, nor at any time or at 
all, and shall not imply any obligation on GRANTEE to mine the coal continuously 
or at any particular rate, once mining is commenced.