Title: JACOBS RANCH COAL COMPANY, a Delaware corporation V. THUNDER BASIN COAL COMPANY, LLC, a Delaware Limited Liability Company, and CONSOLENERGY, INC., f/k/a CONSOLIDATION COAL COMPANY, a Delaware corporation

State: wyoming

Issuer: Wyoming Supreme Court

Document:

JACOBS RANCH COAL COMPANY, a Delaware corporation V. THUNDER BASIN COAL COMPANY, LLC, a Delaware Limited Liability Company, and CONSOLENERGY, INC., f/k/a CONSOLIDATION COAL COMPANY, a Delaware corporation2008 WY 101191 P.3d 125Case Number: S-07-0280Decided: 08/28/2008
APRIL 
TERM, A.D. 2008

 
 
JACOBS RANCH COAL 
COMPANY, a Delaware corporation,

 
 
Appellant

(Plaintiff),

 
 
v.

 
 
THUNDER BASIN COAL 
COMPANY, LLC, a Delaware Limited Liability Company, and CONSOLENERGY, INC., 
f/k/a CONSOLIDATION COAL COMPANY, a Delaware corporation,

 
 
Appellees

(Defendants).

 
 
Appeal 
from the DistrictCourtofCampbellCounty

The 
Honorable John R. Perry, Judge

 
 
Representing 
Appellant:

Thomas P. Johnson and 
Andrea Wang, Davis Graham & Stubbs, LLP, Denver, Colorado; Amy Jo Stefonick, 
Rio Tinto Energy America, Gillette, Wyoming.  Argument by Mr. 
Johnson.

 
 
Representing 
Appellee, Thunder Basin Coal Company, LLC:

Stephen D. Bell, 
Dorsey & Whitney, LLP, Denver, Colorado; Randall T. Cox, Randall T. Cox, PC, Gillette, Wyoming.  
Argument by Mr. Bell.

 
 
Representing 
Appellee, Consolenergy, Inc.:

No 
appearance.

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

 
 
BURKE, 
Justice.

 
 

[¶1]           
Jacobs Ranch Coal 
Company ("Jacobs Ranch") appeals the district court's summary judgment decision 
that Thunder Basin Coal Company ("ThunderBasin") is not liable for surface royalty 
payments in this case because the surface royalty at issue is not a covenant 
running with the land.  The district 
court also denied Jacobs Ranch's claims that it was entitled to indemnity from 
ThunderBasin.  We will affirm the district court's 
decision.

 
 
ISSUES

 
 

[¶2]           
Jacobs Ranch presents 
these issues:

 
 
1.         
Whether a surface royalty created when a coal company purchases the 
surface estate overlying federal coal is a covenant that runs with the land and 
binds successor coal companies.

 
 
2.         
Whether a surface royalty that runs with the land obligates the lessee of 
that land to pay the royalty when the lessee can more reasonably perform the 
obligation.

 
 
3.         
Whether, for purposes of a lessee's indemnity obligation, a lawsuit 
seeking unpaid royalties on the mining of coal "arises" from the lessee's mining 
of that coal.

 
 

Thunder Basin rewords the issues in 
this fashion: 

 
 
A.        
Whether the district court correctly determined that Consol's promise to 
pay additional consideration for the purchase of property was personal to Consol 
and did not run with the land.

 
 
B.        
Whether the district court correctly determined that a landlord's promise 
to pay purchase money for real property does not bind a subsequent 
lessee.

 
 
C.        
Whether the district court correctly determined that [ThunderBasin] was not required to indemnify 
Jacobs Ranch for its contractual obligation to pay Consol's purchase money 
consideration for the property.

 
 
FACTS

 
 

[¶3]           
In 1974, by a contract 
for deed, Stuart Brothers agreed to convey the surface estate of certain 
property in Campbell County, 
Wyoming, to Consolidation Coal 
Company ("Consol"1).  In 1977, Stuart Brothers completed the 
conveyance to Consol by two separate warranty deeds, one for the parcel referred 
to as Section 17, and one for the parcel referred to as Section 18.2  The two deeds contain identical 
provisions by which Consol agreed to pay a "surface royalty" to Stuart 
Brothers:

 
 
As further 
consideration for the sale and conveyance of said lands by Grantor to Grantee, 
Grantee shall pay to Grantor a surface royalty for all coal mined, removed and 
sold by Grantee, its heirs, successors in interest and assigns from said lands 
of two cents (2) 
per ton of 2,000 pounds, or one-half of one percent (½ %) F.O.B. the mine, 
whichever is the greater.

 
 
Soon thereafter, 
Consol conveyed the Section 17 surface estate to Atlantic Richfield Company, 
which later conveyed it to a subsidiary, ThunderBasin.  Consol conveyed the Section 18 surface 
estate to Kerr-McGee Corporation.  
The surface estate of Section 18 was eventually conveyed to Jacobs 
Ranch.  At present, ThunderBasin owns the Section 17 surface 
estate, and Jacobs Ranch owns the Section 18 surface estate. 

 
 

[¶4]           
The coal underlying 
Sections 17 and 18 was, and is, owned by the federal government.  In 1992, the federal government leased 
the coal to ThunderBasin.  To help define its rights to access the 
surface of Section 18, ThunderBasin in 1993 entered into a "Consent to 
Mine Agreement" with the predecessor to Jacobs Ranch.  In 1999, ThunderBasin also entered into a "Surface Use and 
Lease Agreement" with Jacobs Ranch, which applies to approximately half of the 
surface of the Section 18 property.  
ThunderBasin began coal mining 
operations on the property in 2001.

 
 

[¶5]           
In the meantime, 
Stuart Brothers had been dissolved as a corporation, and its surface royalty 
interest was conveyed to the Stuart Family Mineral Limited Partnership ("Stuart 
Family").3  In 2003, the Stuart Family made demand 
on ThunderBasin and Jacobs Ranch to 
pay the surface royalties it claimed were due.  ThunderBasin and Jacobs Ranch jointly made one 
substantial payment, but thereafter, were unable to agree on which company, if 
either, was liable for the surface royalty payments.  The Stuart family subsequently filed 
suit against ThunderBasin, Jacobs Ranch, and 
Consol.

 
 

[¶6]           
In the course of the 
litigation, Jacobs Ranch entered into a settlement agreement with the Stuart 
Family.  Their agreement included, 
among other provisions, a conveyance of the Stuart Family's surface royalty 
interest to Jacobs Ranch.  Jacobs 
Ranch was then substituted as the plaintiff in this case.  Jacobs Ranch dismissed all claims 
against itself, and all claims against Consol.  It also dismissed its claims against 
ThunderBasin relating to Section 
18, and those for past payments relating to Section 17.  Jacobs Ranch maintained its claim 
against ThunderBasin for future surface 
royalty payments relating to Section 17.  The district court ruled that ThunderBasin was not liable for the surface 
royalty payments, and granted summary judgment against Jacobs Ranch.  Jacobs Ranch has appealed that 
decision.

 
 

[¶7]           
When the Stuart Family 
filed this suit, Jacobs Ranch claimed indemnity pursuant to the Surface Use and 
Lease Agreement, and tendered its defense to ThunderBasin.  ThunderBasin rejected the tender, and refused to 
defend or indemnify Jacobs Ranch.  
In response, Jacobs Ranch filed claims against ThunderBasin based on theories of express, 
implied, and equitable indemnity.  
The district court denied Jacobs Ranch's indemnity claims, and Jacobs 
Ranch has appealed that ruling as well.

 
 
STANDARD OF 
REVIEW

 
 

[¶8]           
Summary 
judgment is appropriate when there are no genuine issues of material fact and 
the moving party is entitled to judgment as a matter of law.  W.R.C.P. 56(c); Metz Beverage Co. v. Wyoming Beverages, 
Inc., 2002 WY 21, ¶ 9, 39 P.3d 1051, 1055 (Wyo. 2002).  "A genuine issue of material fact exists 
when a disputed fact, if it were proven, would establish or refute an essential 
element of a cause of action or a defense that the parties have asserted."  Id.  Because summary judgment involves a 
purely legal determination, we undertake de novo review of a trial court's 
summary judgment decision.  Glenn v. Union Pacific R.R. Co., 2008 WY 
16, ¶ 6, 176 P.3d 640, 642 (Wyo. 2008).

 
 
DISCUSSION

 
 
I.          
Is this surface royalty provision a covenant that runs with the 
land?

 
 

[¶9]           
Less than a year ago, 
we decided a similar case that raised the question of whether a surface royalty 
was a covenant running with the land.  
Mathisen v. Thunder Basin Coal 
Co., 2007 WY 161, 169 P.3d 61 (Wyo. 2007).  In that case, we repeated this familiar 
standard for interpreting a deed as a type of contract:

 
 
"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).

 
 

Mathisen, ¶ 12, 169 P.3d  
at 64-65, quoting Hickman v. Groves, 
2003 WY 76, ¶ 6, 71 P.3d 256, 258 (Wyo. 2003).  We then stated that the "party 
seeking 
to establish that a covenant runs with the land must demonstrate:  1) the original covenant is enforceable; 
2) the parties to the original covenant intended that the covenant run with 
the land; 3) the covenant touches and concerns the land; and 4) there is privity 
of estate between the parties to the dispute."  Mathisen, ¶ 14, 169 P.3d  at 65-66, 
citing Jackson Hole Racquet Club Resort 
v. Teton Pines Ltd. Partnership, 839 P.2d 951, 956 (Wyo. 
1992).

 
 

[¶10]       
The surface royalty 
provision at issue in Mathisen reads 
as follows:  

 
 
As further 
consideration for the sale and conveyance of said lands by Owner to Consol, 
Consol shall pay to Owner a surface royalty for all coal mined, removed and sold 
by Consol from said lands for two cents (2) 
per ton of 2,000 pounds or one half of one percent (½ of 1%) F.O.B. the mine, 
whichever is the greater[.]

 
 
¶ 11, 169 P.3d  at 
64.  We first focused on the 
language obligating Consol to pay "a surface royalty for all coal mined, removed 
and sold by Consol."  We concluded 
that the "obligation to pay the royalty is limited, by its plain language, to 
coal mined, removed and sold by Consol."  
Although ThunderBasin had mined, removed, and sold coal 
from the property, Consol had never done so.  Thus, "because Consol did not mine any 
coal, it was not obligated to pay the Mathisens a surface royalty."  Id., ¶ 13, 
169 P.3d  at 65.  

 
 

[¶11]       
Next in Mathisen, we focused on the language 
specifying that "Consol shall pay" the surface royalty.  We observed that this "obligation 
belonged to Consol specifically and did not refer to Consol's successors or 
assigns."  Id., ¶ 15, 
169 P.3d  at 66.  We concluded that 
this language failed to express the intent that the surface royalty provision 
was a covenant running with the land, and so did not satisfy the second 
requirement of a covenant running with the land.  We 
therefore held that the surface 
royalty was a personal obligation between Consol and the Mathisens, and not a 
covenant running with the land.

 
 

[¶12]       
We apply the same 
analysis in interpreting the surface royalty language from the warranty deeds 
between Stuart Brothers and Consol.  
The language is slightly different, and the key difference is highlighted 
here:

 
 
As further 
consideration for the sale and conveyance of said lands by Grantor to Grantee, 
Grantee shall pay to Grantor a surface royalty for all coal mined, removed and 
sold by Grantee, its heirs, successors in interest and 
assigns from said lands of two cents (2) 
per ton of 2,000 pounds, or one-half of one percent (½ %) F.O.B. the mine, 
whichever is the greater.

 
 
(Emphasis added.)  This language provides that the 
obligation to pay surface royalties arises when Consol or "its heirs, successors 
in interest and assigns" mines, removes and sells coal from the property.  Coal is being mined by ThunderBasin, Consol's successor in interest, 
giving rise to an obligation to pay surface royalties to the Stuart Family.  The question, of course, is whether 
ThunderBasin, as Consol's 
successor in interest, is the one obligated to make those payments.4

 
 

[¶13]       
This surface royalty 
provision, like the one in Mathisen, 
specifies that Consol as "Grantee shall pay" the surface royalty.  As in Mathisen, there is no language 
indicating that Consol's successors in interest or assigns would be bound by 
this provision.  There is no 
language expressing the parties' intent that the obligation was a covenant 
running with the land.  We therefore 
hold, as we did in Mathisen, that 
this surface royalty provision creates an obligation personal to Consol, and not 
a covenant running with the land. 

 
 

[¶14]       
It is instructive to 
consider, as an illustration, the language of a surface royalty provision that 
was determined to be a covenant running with the land.  In Flying 
Diamond Oil Corp. v. Newton Sheep Co., 
776 P.2d 618 (Utah 1989), Newton owned the surface 
estate, and Champlin Petroleum Company owned the mineral estate.  Newton and Champlin had a "Surface Owner's 
Agreement," in which Champlin agreed:

 
 

to 
pay or cause to be paid to the Land Owner in cash the value on the premises of 
two and one-half percent (2½%) of all the oil and 
gas and associated liquid hydrocarbons hereafter produced, saved, and marketed 
therefrom or allocated thereto.

 
 
. . 
.

 
 
The covenants to pay 
the sums provided . . . shall be covenants running with the surface ownership of 
the described premises and shall not be held or transferred separately 
therefrom, and any sums payable under this agreement shall be paid to the person 
or persons owning the surface of the described premises as of the date the oil 
or gas or associated liquid hydrocarbon production is 
marketed.

 
 
. . 
.

 
 
The easements, rights, 
and uses herein shall be binding upon the described premises and each and every 
part thereof, and the present and future owners thereof, and shall continue for 
the benefit of the present or future owners of the oil and/or gas and/or 
associated liquid hydrocarbon rights in the described premises and each and 
every part thereof and their agents, lessees, licensees, successors, and 
assigns, including any operator or unit operator, and for the benefit of other 
lands within any unit area within which the described premises, or any portion 
thereof may be included, and each and every part thereof.

 
 

Flying 
Diamond, 776 P.2d  at 
621.  This language unequivocally, 
even repeatedly, expressed the parties' intent that the covenant would run with 
the land.  The language used by the 
Stuart Brothers and Consol, in stark contrast, does not.5  

 
 

[¶15]       
Although Mathisen seems to compel the conclusion 
that this surface royalty is not a covenant running with the land, Jacobs Ranch 
raises two main arguments to the contrary.  
First, Jacobs Ranch asserts that it has presented undisputed evidence 
that when the Stuart Brothers conveyed the property to Consol, both parties 
intended that the surface royalty would run with the land.  That evidence includes the deposition 
testimony of Mr. Stuart, and that of a current Consol employee as to his 
understanding of what Consol intended when the deeds were executed.  Jacobs Ranch maintains that we should 
give effect to that intent.  We 
decline to do so.  We cannot 
disregard the specific language of the deeds because the parties now assert, 
more than thirty years after the deeds were executed, that they intended 
something not expressed in the deeds.  
We instead rely on the plain and unambiguous language of the deeds, as 
other parties may have done in the years since the deeds were 
executed.

 
 

[¶16]       
To determine the 
intent of the parties, we must first look to the language of the written 
instrument, and turn to extrinsic evidence only when the terms "are ambiguous or 
are used in some special or technical sense not apparent from the contractual 
document itself."  Hickman, 
¶ 11, 71 P.3d  at 259, quoting KN Energy, Inc. v. 
Great Western Sugar Co., 698 P.2d 769, 776 
(Colo. 
1985).  See also Boley v. 
Greenough, 2001 WY 47, 22 P.3d 854 (Wyo. 2001); Mullinnix 
LLC v. HKB Royalty Trust, 
2006 WY 14, 126 P.3d 909 (Wyo. 2006).  
The language by which the 
Stuart Brothers and Consol created this surface royalty is not ambiguous, and 
Jacobs Ranch does not contend that the language 
of succession (i.e., "heirs, successors in 
interest and assigns") is used in some special or technical sense not apparent 
from the contractual document itself.

 
 

[¶17]       
Moreover, "[i]n 
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."  Mathisen, ¶ 12, 169 P.3d  at 
65, 
quoting Boley, ¶ 11, 22 P.3d  at 
858.  We have just as consistently 
limited our consideration to the sort of extrinsic evidence listed there.  We have explicitly said that 
"the 
parties' statements of what they intended the contract to mean are not 
admissible."  Mullinnix, ¶ 13, 126 P.3d  at 
916-17.  The evidence offered by Jacobs Ranch is 
inadmissible, as it constitutes only "the parties' own extrinsic expressions of 
intent."  Hickman, ¶ 11, 71 P.3d  at 260, 
quoting KN 
Energy, 698 P.2d  at 
777.  

 
 

[¶18]       
Jacobs Ranch next 
maintains that "[n]o coal company would intentionally obligate itself to pay a 
royalty for coal mined by its competitors."  It cites cases such as Schaffer v. Standard Timber Co., 331 P.2d 611, 616 (Wyo. 1958), for the proposition that a 
contract should not be interpreted to impose an absurd result.  Jacobs Ranch asserts that the language 
of the surface royalty provision leads to an absurd result, creating an 
ambiguity sufficient to justify the use of extrinsic evidence to interpret the 
surface royalty provision.  See Busch Dev., Inc., v. City of Cheyenne, 645 P.2d 65, 68 (Wyo. 
1982).

 
 

[¶19]       
To counter this 
argument, ThunderBasin asserts that Consol 
was free to agree upon the purchase price it paid for the property, and even if 
that purchase price appears unwise or unusual in hindsight, the agreement should 
be enforced as written.  The 
district court accepted ThunderBasin's argument:

 
 
The court finds that 
this provision of the 1977 deed is unambiguous:  the parties intended that there be a 
long-term payment of the purchase price of the land conveyed, and that [the] 
purchase price was to relate to the amount of coal removed from the land.  There is no genuine issue that an 
agreement to pay purchase money cannot be accomplished in the way it was 
here.

 
 
An example provided by 
a fellow jurist illustrates:  Party 
A agrees to purchase a parcel of land from Party B.  Party B demands and Party A agrees that, 
in addition to a nominal initial payment, Party A will pay Party B $1 for each 
car that goes by on a nearby highway.  
There is no reason parties to a contract cannot make such an 
agreement.  It may appear unusual, 
arbitrary, or even unwise, but it is not a nullity.

 
 
(Footnotes omitted.) 
 We agree with the district court's 
explanation.

 
 

[¶20]       
Consol expressly 
agreed to pay the surface royalty as "further consideration for the sale and 
conveyance of said lands."  It has 
long been recognized that "the promise of a purchaser of land to pay the 
purchase money cannot . . . be enforced against his assignee, unless there is an 
agreement to that effect on the latter's part."  Lingle 
Water Users' Ass'n, 
297 P.  at 389.  There is no 
agreement on ThunderBasin's part to assume the surface royalty obligation, 
and so Consol's promise to pay a surface royalty as part of the purchase price 
cannot be enforced against ThunderBasin.  Further, just as 
Consol was free to agree to an unusual purchase price when it acquired the 
property, so also was it free to seek a correspondingly unusual selling price 
when it conveyed the property.  As 
noted above, the district court ruled that when Atlantic Richfield Company 
acquired Section 17, it expressly agreed to assume Consol's surface royalty 
obligations.  This demonstrates that 
Consol had ways to avoid the "absurd" result of paying surface royalties on coal 
mined by another company.  

 
 

[¶21]       
In 
sum, we reject Jacobs Ranch's contentions that the language of the surface 
royalty provisions is ambiguous.  We 
conclude that it is plain and unambiguous, and does not create a covenant that 
runs with the land.  We affirm the 
district court's decision that ThunderBasin is not liable for the surface 
royalty payments.

 
 
II.         
Is ThunderBasin obligated to 
indemnify Jacobs Ranch?

 
 
            
A.        
Express Indemnity

 
 

[¶22]       
Jacobs Ranch currently 
owns the surface estate of Section 18.  
ThunderBasin has access to the 
surface of about half of the Section 18 property pursuant to a 1999 "Surface Use 
and Lease Agreement" with Jacobs Ranch.  
This Agreement includes the following provision:

 
 
[ThunderBasin] agrees that it will conduct all 
operations hereunder in full compliance with all applicable state and federal 
laws, rules and regulations, including but not limited to, those pertaining to 
zoning, environmental protection and land reclamation.  [Thunder Basin] covenants and agrees to 
indemnify, save harmless and defend [Jacobs Ranch] from and against all suits, 
actions, claims and demands in any manner arising from, incident to or growing 
out of [Thunder Basin's] operations hereunder and the use and occupancy of the 
Leased Premises.

 
 
Pursuant to this 
provision, Jacobs Ranch asserts an express indemnity claim against ThunderBasin.  

 
 

[¶23]       
On summary judgment, 
the district court ruled against Jacobs Ranch, providing this 
explanation:

 
 
The clause requires 
ThunderBasin to indemnify Jacobs 
Ranch "against all suits, actions, claims and demands in any manner arising from, incident to or 
growing out of Lessee's operations hereunder and the use and occupancy of the 
Leased Premises."  (Emphasis 
added.)  The claims against Jacobs 
Ranch for the payment of purchase money relative to the 1997 conveyance has no 
more than a tangential relationship to the coal mined on the property.  The court finds that the payment of 
purchase money owed the plaintiffs (now Jacobs Ranch) by Jacobs Ranch was not 
arising from, incident to or growing out of ThunderBasin's operations, use or occupancy of 
the property.  Indeed, the amount to 
be paid would depend upon the amount of coal mined, but the mining activities 
did not create the obligation, they merely produced the gauge for the payment 
amount.

 

[¶24]       
We interpret an 
indemnity provision as we do any other contract, affording the language its 
plain meaning.  If the provision is 
unambiguous, we look only to the "four corners" of the document to determine the 
intent of the parties.  Amoco, 2 P.3d  at 540.  "Where there is an express indemnity 
provision, its parameters are derived from the specific language of [the] 
contract."  Diamond Surface, Inc. v. Cleveland, 963 P.2d 996, 1002 (Wyo. 1998).  In addition, ThunderBasin has pointed us to this language from 
42 C.J.S. § 15:

 
 
A contract of 
indemnity should be construed so as to cover all losses, damages, or liabilities 
to which it reasonably appears to have been the intention of the parties that it 
should apply, but not to extend to losses, damages, or liabilities which are 
neither expressly within its terms nor of such character that it can reasonably 
be inferred that they were intended to be within the 
contract.

 
 
(Footnotes 
omitted.)  Applying these standards, 
we agree with the district court that the claims in this case are not of such 
character as to be included within this indemnity provision.  The Stuart Family, the original 
plaintiff in this case, brought suit against Jacobs Ranch, asserting that Jacobs 
Ranch had assumed Consol's obligation to pay the surface royalties relating to 
the Section 18 property.  The claims 
arose from Jacobs Ranch's own contractual obligations.  They are not arising from, incident to, 
or growing out of ThunderBasin's operations on or use of the 
land.  

 
 

[¶25]       
Other language in this 
indemnity provision supports the conclusion that it is limited in scope.  The Stuart Family did not bring claims 
against Jacobs Ranch because ThunderBasin breached its promise to "conduct all 
operations hereunder in full compliance with all applicable state and federal 
laws, rules and regulations."  It 
did not bring claims "pertaining to zoning, environmental protection and land 
reclamation," and while the indemnity provision is expressly not limited to 
those topics, the presence of such a list does suggest the character of claims 
to which the indemnity provision was intended to apply.  The claims brought are of a different 
character.  We conclude from the 
language of this indemnity provision that it does not require ThunderBasin to indemnify Jacobs Ranch for claims 
relating to surface royalty payments.

 
 
B.        
Implied Indemnity

 
 

[¶26]       
As noted above, the 
1999 Surface Use and Lease Agreement applies only to about half of the surface 
of the Section 18 property.  
ThunderBasin's access to the 
remainder is governed by a 1993 "Consent to Mine Agreement."  That document contains no express 
indemnity provision, but Jacobs Ranch asserts that it "clearly implies an 
obligation for ThunderBasin to pay for any costs and damages 
that arise from its coal mining activities on the land."  However, Jacobs Ranch's claim for 
implied indemnity suffers the same flaw as its claim for express indemnity:  these claims do not arise from 
ThunderBasin's coal mining 
activities on the land, but rather, from Jacobs Ranch's own contractual 
obligations.  The district court 
correctly ruled against Jacobs Ranch on this theory of implied indemnity as 
well.

 
 
C.        
Equitable Indemnity

 
 

[¶27]       
Jacobs Ranch's third 
theory is equitable indemnification.  
We have previously said that "[i]mplied 
theories of indemnity are not viable in the face of an express indemnity 
agreement."  Wyoming Johnson, Inc. 
v. Stag Industries, Inc., 662 P.2d 96, 101 
(Wyo. 
1983).  As we explained, "when 
parties have entered into a written contract which includes an express 
indemnification provision, the express provision controls.  It is inappropriate to enlarge or add 
rights of indemnification to the express provision by implication."  Id. 
at 102.  The claim in Wyoming Johnson was implied indemnity 
rather than equitable indemnity, but the same principle should apply under the 
circumstances of this case.  Jacobs 
Ranch and ThunderBasin have an express 
indemnity agreement, which does not apply to claims for surface royalty 
payments.  It would be inappropriate 
to enlarge or add to Jacobs Ranch's rights of indemnification using an equitable 
indemnity theory.  We therefore 
affirm the district court's summary judgment decision denying Jacobs Ranch's 
indemnity claim under the three theories of express, implied, and equitable 
indemnity.

 
 

[¶28]       
Affirmed.

 
 
FOOTNOTES

 
 

1The 
complaint in this suit listed Consolenergy, Inc., as a defendant, indicating it 
was formerly known as Consolidation Coal Company.  The distinction between the two 
companies, if any, has no significance for purposes of this opinion, and we will 
refer to them collectively as Consol.

 
 

2By way 
of detail, the district court noted that the "parcels at issue are not actual 
full sections, but rather parts of sections.  The parcel of property at issue in 
[S]ection 17 is 160 acres and the parcel in [S]ection 18 is 480 acres." 

 
 

3The 
Stuart Family acquired only 50% of the surface royalty.  The other half was conveyed to the other 
Stuart Brother, James Stuart.  He, 
or his successor, initially intervened in this litigation, but later dismissed 
those claims.  As far as the record 
reflects, he is no longer involved in this case.

 
 

4It may 
help clarify the issue in dispute if we note an issue that is not in 
dispute.  All of the parties agree 
that the benefits and burdens of the surface royalty provision in this case may 
be conveyed by express agreement.  
Thus, Stuart Brothers' interest in the surface royalty was conveyed to 
the Stuart Family, who in turn conveyed it to Jacobs Ranch.  Conversely, when Consol conveyed the 
surface estate of Section 17 to Atlantic Richfield Company, the agreement 
expressly provided that Atlantic Richfield Company would assume Consol's 
obligation to pay the surface royalty.  
The district court ruled that this provision "is enforceable and that 
Atlantic Richfield Corporation will be required to indemnify Consol against any 
future surface royalty that becomes due on the Section 17 Land."  That ruling was not appealed, and so is 
not in dispute.

 
 
   In contrast, the documents by which 
ThunderBasin acquired the surface estate in Section 17 
contain no express agreement for ThunderBasin to assume the obligation of paying 
surface royalties.  In the absence 
of an express agreement, we must examine Stuart Brothers' warranty deeds to 
Consol to determine if the surface royalty is a covenant that runs with the 
land.  If it is, then that 
obligation passed to ThunderBasin as owner of the surface.  Lingle Water Users' Ass'n v. Occidental 
Bldg. & Loan Ass'n, 43 Wyo. 41, 49, 297 P. 385, 387 (Wyo. 1931).  (A covenant that runs with the land 
"inures to the benefit of, or must be fulfilled by, whatever party holds the 
land at the time when fulfillment is due.")  If not, then that obligation did not 
pass to ThunderBasin, and it is not liable 
for the surface royalty payments.

 
 

5Even if 
Stuart Brothers and Consol had unambiguously expressed the intent that this 
surface royalty should run with the land, that intent alone is insufficient to 
create a covenant running with the land.  
In Mathisen, we listed four 
requirements for a covenant running with the land.  One involves the parties' intent, and we 
decide the present case based on that requirement.  Another requirement is that the covenant 
must touch and concern the land.  In 
light of the Utah Court's discussion in Flying Diamond, 776 P.2d  at 625-26, it 
is unclear whether the surface royalty provision between Stuart Brothers and 
Consol was a covenant that touches and concerns the land.  We need not reach that question in this 
opinion, but we mention it to indicate that, even beyond the intent of the 
parties, there are additional legal issues raised by the surface royalty 
interests considered here and in Mathisen.