IN THE SUPREME COURT OF MISSISSIPPI

NO. 93-CT-00829-SCT

VULCAN MATERIALS COMPANY

v.

EDWARD E. MILLER

ON PETITION FOR WRIT OF CERTIORARI

DATE OF JUDGMENT: 08/09/93

TRIAL JUDGE: HON. CHARLES D. THOMAS

COURT FROM WHICH APPEALED: TISHOMINGO COUNTY CHANCERY COURT

ATTORNEY FOR APPELLANT: A.M. EDWARDS, III

ATTORNEY FOR APPELLEE: JAMES E. PRICE, JR.

NATURE OF THE CASE: CIVIL - CONTRACT

DISPOSITION: AFFIRMED - 1/30/97

MOTION FOR REHEARING FILED: 2/13/97

MANDATE ISSUED: 4/10/97

EN BANC.

PRATHER, PRESIDING JUSTICE, FOR THE COURT:

¶1. Edward E. Miller brought suit in the Chancery Court of Tishomingo County against Vulcan

Materials Company to enforce a royalty agreement entered into between Miller and Glen and George

Lambert. The chancellor found that Vulcan was obligated to pay Miller the royalty provided in the

royalty agreement and Vulcan appealed. On November 28, 1995, the Court of Appeals affirmed the

chancellor's decision.

¶2. On December 12, 1995, Vulcan filed a petition for rehearing which was denied by order entered

on January 30, 1996. Vulcan obtained an extension of time to file a petition for writ of certiorari until

March 2, 1996. On February 26, 1996, Vulcan filed its petition for writ of certiorari. Miller filed a

response to the petition on March 1, 1996. The petition was granted on April 25, 1996. Both parties

filed supplemental briefs pursuant to M.R.A.P. 17(h).

STATEMENT OF FACTS

¶3. In 1967, M.C. West, Inc., employed Edward E. Miller to explore for a deposit of limestone in

Mississippi that could be developed commercially. Miller concluded that there was such a limestone

deposit in Tishomingo County. Miller negotiated with the owners of three properties: the Sanders,
Gant, and Hiawassee properties. Miller obtained a mineral lease on the Sanders property and was

negotiating with the others when West decided not to proceed further. West agreed to transfer unto

Miller all the rights which the corporation had obtained for $10,000 and an option was drawn to that

effect to be exercised within sixty days.

¶4. Miller entered into an agreement with Glen and George Lambert whereby Miller's option from

West would be exercised by the Lamberts. Miller would receive a royalty of five cents per ton of

limestone produced and $7,500 per year as an advance against the royalty. The agreement with the

Lamberts provided in part the following:

In the event Lambert should purchase any of the said pieces of land, the royalty to Miller shall

continue as hereinabove provided.

If Lambert should sell, assign or trade their rights under this agreement, it is understood that the

obligations and responsibilities set forth herein shall be imposed upon the assignee or buyer.

Lambert acknowledges that Miller discovered this mineral deposit and has made it possible for

Lambert to do business in this regard. If Lambert should open any other business related to this

industry, Lambert agrees to pay a royalty of five cents per ton on minerals produced from such

other source.

¶5. The Lamberts transferred their interests to Magnolia Limestone Products, Inc. "[P]ursuant to

formal action by its Board of Directors, Magnolia specifically ratified and adopted the Royalty

Agreement and assumed all of the duties obligations and liabilities of the Lamberts under the terms

and provisions of that Royalty Agreement." Magnolia later acquired fee simple title to mine all

limestone on the Sanders property and the Gant property which were both specifically referred to by

name and deed book in the Royalty Agreement. Magnolia also acquired fee simple title to the

Hiawassee tract which was not specifically referred to in the Royalty Agreement. These three tracts

were ultimately transferred to Real Estate Leasing Company [hereinafter Leasing].(1)

¶6. Leasing subsequently acquired fee simple title to the Reid property which was not specifically

referred to in the Royalty Agreement. Leasing later conveyed fee simple title to the Sanders property,

the Hiawassee property, and the Reid property, and the mineral interest in the Gant property to

Mississippi Stone Company.

¶7. Mississippi Stone did not pay any royalties to Miller and Miller filed suit in the Chancery Court of

Tishomingo County. The chancellor determined that Miller was entitled to royalties from the Sanders

property, but not from the Gant and Hiawassee properties. Miller appealed to this Court and this

Court found that Miller was entitled to receive royalties from the Sanders, Gant, and Hiawassee

properties. Miller v. Mississippi Stone Co., 379 So. 2d 919 (Miss. 1980).

¶8. Mississippi Stone subsequently conveyed fee simple title to the Hiawassee property, the Reid

property, and the Sanders property, and the mineral interest in the Gant property to Granite

Construction Company.(2) In accordance with this Court's decision, Granite paid Miller the royalty

only on the Gant property, as no limestone had been quarried from the Sanders, Reid, or Hiawassee

properties.
¶9. Later, Granite began mining operations of the Reid property and initially paid the royalty to

Miller. Granite, however, determined that these payments were in error and declined to pay a royalty

to Miller on the Reid property. Miller filed suit against Granite in the Chancery Court of Tishomingo

County. Leasing was later added as a defendant. The chancellor determined that Leasing was the

alter ego of Magnolia and, as a result, assumed all of Magnolia's obligations. Thus, Leasing was

deemed to have assumed the future royalty obligation on limestone taken from any additional

property Leasing acquired. This Court affirmed the chancellor's decision that Miller was entitled to

the royalty on the Reid property without a written opinion. Real Estate Leasing Co. v. Miller, 435

So. 2d 688 (Miss. 1983).

¶10. Granite subsequently purchased the Tennessee River property which is the tract at issue in this

case. This tract was purchased from the Tennessee River Pulp and Paper Company. Neither Miller,

the Lamberts, Magnolia, nor Leasing ever owned or had any interest in this tract. In 1988, Granite

conveyed its interest in all of its properties - Sanders, Gant, Hiawassee, Reid, and Tennessee River -

to Vulcan Materials Company.(3)

¶11. Vulcan began mining operations on the Tennessee River property and declined to pay Miller any

royalties for the limestone mined from this tract. Vulcan based its decision not to pay the royalty on

the fact that neither Granite nor Vulcan, the only parties with any connection to Miller who have ever

owned the Tennessee River property, assumed the future business obligation which the Lamberts had

agreed to pay.

¶12. Miller filed suit against Vulcan in the Chancery Court of Tishomingo County and the chancellor

ruled in Miller's favor. On appeal, the Court of Appeals affirmed the chancellor's decision. Vulcan

filed a petition for writ of certiorari to which Miller filed a response. This Court granted the petition

and the matter is now before this Court on the merits.

STATEMENT OF ISSUES

I. Did the Chancellor err in ruling that the written agreement of September 27, 1968 between

Edward E. Miller and George and Glen Lambert (herein referred to as the "Royalty

Agreement") created real covenants which are valid and binding on any owner or subsequent

owner of the fee simple title to, or the mineral interest in, the Tennessee River Pulp & Paper

Company Property?

II. Did the Chancellor err in ruling that by its acceptance of the deed dated June 3, 1988, from

Granite Construction Company, Vulcan Materials Company expressly assumed the obligation to

pay Miller royalties on all limestone extracted and removed from the Tennessee River Pulp &

Paper Company Property?

III. Did the Chancellor err in failing to rule that the royalty obligations to Edward E. Miller did

not extend to a tract a property acquired by Vulcan Materials Company where Vulcan did not

specifically assume the obligations under the Royalty Agreement and where the specific tract of

property in question was never owned by Miller, the Lamberts, or any other party which had

specifically assumed the obligation to pay royalties on Limestone extracted from the property?
IV. Did the Chancellor err in granting Miller's Motion for Summary Judgment and in denying

Vulcan's Cross Motion for Summary judgment?

LAW

A. Analysis of this Court's previous holdings regarding the Royalty Agreement.

¶13. Vulcan claims that the provision in the royalty agreement that grants Miller an interest in any

future acquired property was a personal covenant between the Lamberts and Miller. Since it was a

personal covenant, Vulcan contends that the provision is not enforceable to other parties unless

ratified. Miller asserts that the provision is a real covenant that runs with the land.

¶14. Applying this Court's rulings in Miller v. Mississippi Stone Co., 379 So. 2d 919 (Miss. 1980)

[hereinafter Miller I], and Real Estate Leasing Co. v. Miller, 435 So. 2d 688 (Miss. 1983)

[hereinafter Miller II], the Court of Appeals determined that the royalty agreement was a real

covenant running with the land.

¶15. In Miller I, Miller brought suit against Mississippi Stone for failure to pay royalties. The

chancellor determined that Miller was entitled to royalties from the Sanders property, but not from

the Gant and Hiawassee properties. This Court found that the agreement between the Lamberts and

Miller did include the Gant and Hiawassee properties and required Mississippi Stone to pay royalties

on these tracts as well as the Sanders property. In its opinion, however, the Court made no references

to real or personal covenants. In coming to its conclusion, the Court noted that all parties had actual

and constructive knowledge of the royalty agreement and that the royalty contracts between the

Lamberts and Magnolia(4) specifically provided that Miller was to receive royalties on the Gant and

Hiawassee tracts. The Court relied on the following language regarding the interpretations of

contracts:

In Roberts v. Corum, 236 Miss. 809, 112 So. 2d 550 (1959), the Court said:

"Contracts are solemn obligations and it is not the function of the courts to make contracts for

parties, but rather to give effect to them as written.

. . . We think, however, that it is the sounder policy to adhere to the principle so deeply

embedded in our jurisprudence that the plain and unambiguous language of a contract should be

construed as written." 236 Miss. at 822, 112 So. 2d at 554, 555.

Miller I, 379 So. 2d at 921.

¶16. The Court of Appeals notes that this Court did not expressly find that the royalty agreement was

a real covenant that runs with the land, but that its holding in Miller I implies such. Otherwise, since

Mississippi Stone never ratified the agreement, "it could not logically be bound by the personal

covenant as one generally has to specifically assume and ratify a personal covenant in order to be

bound by it." See Coggins v. Joseph, 504 So. 2d 211, 214 (Miss. 1987). Likewise, the Court of

Appeals reasons that Granite in Miller II did not ratify the royalty agreement and that this Court

affirmed, without a written opinion, the chancellor's determination that Granite must pay Miller a

royalty for limestone mined from the Reid property.
¶17. The chancellor in Miller II, however, did not find that the royalty agreement was a real

covenant, but went to great lengths to find that Leasing was the alter ego of Magnolia who expressly

ratified the royalty agreement.

¶18. In Hood Industries v. King, 255 So. 2d 912 (Miss. 1971), H.A. King and L.S. Kiser discovered

a clay deposit. They entered into an agreement with Paul L. James and Herbert Dickson [hereinafter

King agreement]. The King agreement provided that:

King and Kiser had located certain strata of clay deposits in Kemper and Noxubee counties; that

James and Dickson were interested in purchasing and manufacturing said clay; and that in

consideration for showing said clay deposits to James and Dickson, and in the event James and

Dickson desired to lease said clay for the purpose of manufacturing the same, King and Kiser

would have the exclusive right to handle the leasing of clay in order that they might make a

profit out of it.

Hood, 255 So. 2d at 913. James and Dickson organized a corporation by the name of Superior Clay

and Products Corporation.

¶19. Superior secured ten leases pursuant to the agreement, but was unable to finance construction of

a brick plant, and Atlas Tile and Brick Company, Inc., was organized with essentially the same

management as Superior. Atlas changed its name and later merged into Mississippi Industries, Inc.,

which later changed its name to Hood Industries, Inc. Mississippi Industries entered into an oral

agreement to mine clay from a tract adjoining the lands embraced in the original ten leases. This

Court found that Hood was liable for the royalty on the adjoining lands since Atlas's board of

directors assumed the King agreement in its entirety and Hood assumed Atlas's liabilities through the

corporate merger. Hood, 255 So. 2d at 916.

¶20. Vulcan contends that if the Court of Appeals is correct in that the royalty agreement is a real

covenant that runs with the land, it was unnecessary for the chancellor in Miller II to determine that

Leasing was the alter ego of Magnolia. Furthermore, it was unnecessary for this Court in Hood to

determine that Atlas assumed the King agreement and that Hood assumed Atlas's liabilities through a

corporate merger.

¶21. Judge Southwick's dissent claims that the majority has turned the covenant into a "virus running

with the land, not just burdening the original land but infecting every other parcel to which an owner

of one of the original parcels comes into contact." The dissent focuses on the requirements necessary

for a covenant that runs with the land. "Both parties agree that such a covenant must satisfy three

conditions: it must 'touch and concern' the land; the covenant must have been intended by the parties

to bind successors; and there must be privity between the original parties and successors, or at least

notice to those successors. Mendrop v. Harrell, 233 Miss. 679, 103 So. 2d 418, 422-23 (1958);

Black's Law Dictionary 365 (6th ed. 1991)." See also 20 Am. Jur. 2d Covenants, Conditions, and

Restrictions § 13 (1995).

¶22. The dissent contends that the royalty agreement fails to "touch and concern" any land. The

burden is not on the lands originally owned by the parties, but on the lands purchased later by other

parties. "[I]n essence . . . Miller's interest leaps out from the original parcels and attaches to a new

parcel."
¶23. Finally, the dissent claims that Miller I "does no more than hold that the first assignee from

Lambert, who affirmatively assumed the obligations Lambert had, was bound by the terms."

Furthermore, Miller II has no precedential value because there was no written opinion. M.R.A.P. 35-

A(d).

¶24. Judge Southwick is correct in his assessment of Miller I and Miller II. The majority implied too

much from this Court's previous holdings regarding the royalty agreement. This Court must now

address the situation at hand.

B. The merits of the case at hand.

Did the chancellor err in determining that Miller was entitled to a royalty from Vulcan on the

Tennessee River property?(5)

¶25. The question before this Court is whether the chancellor erred in determining that the provision

in the royalty agreement is a real covenant running with the land and whether Vulcan expressly

assumed the obligation to pay Miller the royalty on the Tennessee River property by accepting the

deed from Granite. In the Opinion and Judgement of the Court, the chancellor made the following

conclusions of law:

(a) The provisions in the written agreement between Miller and George and Glen Lambert dated

September 27, 1968, (the "Royalty Agreement") that "Lambert agrees to pay a royalty of five

cents per ton on materials produced from such other source," and that "the obligations and

responsibilities set forth herein shall be imposed on the assignee or buyer" if the Lamberts were

to sell or assign their rights under the Royalty Agreement, were and are real covenants running

with the land, and are valid and binding on any owner or subsequent owner of the fee simple

title to, or the mineral interest in, the Sanders Property, the Gant Property, the Hiawassee

Property, the Reid Property, and the Tennessee River Pulp & Paper Company Property;

(b) By accepting the deed dated June 3, 1988, from Granite Construction Company, Vulcan

expressly assumed the obligation to pay Miller royalty on all limestone extracted and removed

from all eight tracts described therein, including the Tennessee River Pulp & Paper Company

Property . . . .

¶26. The Court of Appeals affirmed the chancellor finding that "all subsequent assignees or buyers

are bound by the terms of the agreement between Miller and Lambert." As a result, the Court of

Appeals determined that the royalty agreement was a real covenant and not merely a personal

covenant.

All covenants having to do with realty or the use thereof are either real or personal. The main

distinction between the two lies in the nature of the rights they create. Generally speaking, a

personal covenant creates a personal obligation or right enforceable at law only between the

original covenanting parties, whereas a real covenant creates a servitude upon the realty (the

servient estate) for the benefit of another parcel of land (the dominant estate). A real covenant

binds the heirs and assigns of the original covenantor, while a personal covenant does not,

except in certain circumstances where those who take land have notice of restrictive covenants

pertaining to it. Put another way, a covenant may "run with the land," or may simply be a matter
between the grantor and the purchaser. The distinction between covenants which run with land

and covenants which are personal depends upon the purpose and effect of the covenant

substantially to alter the legal rights which otherwise would flow from ownership of land and

which are connected with the land.

20 Am. Jur. 2d Covenants, Conditions, and Restrictions § 12 (1995) (footnotes omitted).

¶27. As discussed above, a covenant must meet three conditions in order to run with the land:

For a covenant to be real rather than personal, it must be shown that (1) the covenanting parties

intended to create such a covenant; (2) privity of estate exists between the person claiming the

right to enforce the covenant and the person upon whom the burden of the covenant is to be

imposed; and (3) the covenant "touches and concerns" the land in question.

20 id. § 13.

¶28. Judge Southwick, in his dissent, argued that the royalty agreement did not meet all of the

conditions necessary to constitute a real covenant. According to Judge Southwick, the royalty

agreement does not "touch and concern" the Tennessee River property.

The requirement that a covenant, to be a real rather than a personal covenant, "touch and

concern" the land has been explicated in various terms. It has been said that to meet this

requirement, the covenant must be so related to the land as to enhance its value and confer a

benefit upon it, or, conversely, impose a burden on it. Other authority defines the phrase by

saying that to touch and concern the land, a covenant must bear upon the use and enjoyment of

the land, and must be of the kind that an owner of an estate or interest in land may make

because of his ownership right.

20 Am. Jur. 2d Covenants, Conditions, and Restrictions § 15 (1995) (footnotes omitted).

Furthermore:

The test whether a covenant will or will not run with the land depends not so much on whether

it is to be performed on the land itself as on whether it tends directly or necessarily to enhance

its value or render it more beneficial or convenient to those by whom it is owned or occupied.

Those covenants that are generally held to run with the land and to inure to the benefit of the

assignee are such as ordinarily affect the land itself and confer a benefit on the grantor.

A covenant that imposes a burden on real property for the benefit of the grantor personally

does not follow the land into the possession of an assignee, for such a covenant is personal to

the grantor and does not run with the land, although the deed may expressly state that the

covenant runs with the property.

20 id. § 19 (emphasis added) (footnotes omitted).

¶29. Since the burden that would be placed on the Tennessee River property by the royalty

agreement would not enhance its value or render the property more beneficial or convenient to its

owner or occupant and instead merely imposes a benefit for Miller personally, the covenant does not

run with the land. Thus, Vulcan would have had to assume the obligation to pay the royalty to Miller.
¶30. The chancellor, however, did find that Vulcan expressly assumed the obligation to pay the

royalty to Miller by accepting the deed from Granite. The deed lists all of the tracts of property and

then provides the following:

To have and to hold said property together will all appurtenances thereto to said VULCAN

MATERIALS COMPANY and its assigns forever. And, with the exceptions of (i) the claims or

rights of Edward E. Miller, his heirs, executors, administrators and assigns relating to said

real property or the products thereof, and (ii) that certain unrecorded Limestone Royalty

Agreement executed by and between Grantor and Real Estate Leasing Co., Inc., dated January

7, 1986, and referenced in that certain Warranty Deed filed for record in Book B117, pages

623-24 of the land records of Tishomingo County, Mississippi, which, in the case of (i) and (ii),

result from Grantee's ownership or use of said property, including, without limitation, Grantee's

extraction and removal of stone or other products thereof (which obligations or liabilities

Grantee hereby assumes upon acceptance of this Deed), Grantor warrants specially to Grantee

the real property conveyed hereby.

(emphasis added).

¶31. As noted by Judge Thomas in his majority, the parties are sophisticated businessmen with "a vast

amount of knowledge concerning contracts." Furthermore, "Vulcan had both actual and constructive

knowledge of Miller's rights to the limestone quarry." In the deed from Granite, the rights conveyed

to Vulcan excepted the claims or rights of Miller. Miller's interest in the property is based solely on

the royalty agreement. Vulcan reasonably should have known of the litigation which ensued from

Miller's claims pursuant to the royalty agreement, yet Vulcan made no attempt to limit Miller's

interest to any specific tracts of land or in any way limit Miller's rights as provided in the royalty

agreement. Vulcan is obligated to pay Miller the royalty pursuant to the royalty agreement not

because it is a real covenant running with the land, but because Vulcan assumed the obligation in the

deed from Granite.

¶32. JUDGMENT IS AFFIRMED.

SULLIVAN, P.J., PITTMAN, BANKS, ROBERTS AND SMITH, JJ., CONCUR. McRAE, J.,

CONCURS IN RESULT ONLY. DAN LEE, C.J., DISSSENTS WITH SEPARATE

WRITTEN OPINION JOINED BY MILLS, J.

DAN LEE, CHIEF JUSTICE, DISSENTING:

¶33. With respect for the view of the majority, I believe they have misinterpreted this Court's prior

decisions in related cases in finding Vulcan obligated to Miller for royalty payments on the Tennessee

River property. By affirming the Court of Appeals, the majority has, as the Court of Appeals' dissent

notes, "turned the covenant into a virus running with the land, not just burdening the original land but

infecting every other parcel to which an owner of one of the original parcels comes into contact." I

fear that the result reached by today's majority will be a giant leap backward for property law in the
State of Mississippi. Therefore, I respectfully dissent.

¶34. There are two issues before this Court. The first is whether the relevant 1968 agreement was a

covenant running with the land. The second is whether the language contained in the deed from

Granite to Vulcan Materials was sufficient to impose liability on Vulcan for royalty payments on

limestone quarried from the Tennessee River property.

¶35. The majority finds correctly that the 1968 agreement does not meet muster to be considered a

real covenant running with the land. However, today's majority allows the language contained in the

deed to improperly expand the obligations Vulcan had to Miller.

¶36. The majority correctly finds that:

[s]ince the burden that would be placed on the Tennessee River property by the royalty

agreement would not enhance its value or render the property more beneficial or convenient to

its owner or occupant and instead merely imposes a benefit for Miller personally, the covenant

does not run with the land.

Maj. op. at 12.

¶37. The majority notes, "[t]hus, Vulcan would have had to assume the obligation to pay the royalty

to Miller." Id. Unfortunately, the majority then finds that "Vulcan is obligated to pay Miller the

royalty payments pursuant to the royalty agreement not because it is a real covenant running with the

land, but because Vulcan assumed the obligation in the deed from Granite." Maj. op. at 13-14. I

believe this is an incorrect and over broad reading of the deed.

¶38. Admittedly, Vulcan assumed some obligation to pay. It was not by operation of law or by

express agreement, it was through exceptions to the deed into Vulcan from Granite Construction

Company (Granite). The exceptions included the claims or rights of Edward E. Miller relating to said

property or the products thereof, and an unrecorded Limestone Royalty Agreement executed by and

between Grantor (Granite) and Real Estate Leasing Co., Inc. (Leasing), dated January 7, 1986. The

second exception is not applicable to the case sub judice and no further mention is made in the record

of the Limestone Royalty Agreement referenced in the Vulcan deed. The chancellor, the Court of

Appeals and today's majority discuss only the 1968 Miller/Lambert Royalty Agreement.

¶39. The relevant exception is a title conveyance exception which cannot expand the rights of a party

who was not a party to the Granite/Vulcan transfer. Four of the properties conveyed by the deed

were already subject to a royalty agreement, and the obligations imposed on these properties had to

be excepted from the warranty of conveyance. Vulcan took these four properties subject to the

royalty and paid the royalty on all limestone it removed from the encumbered tracts. Except for

Granite, the fifth tract, the Tennessee River property and the tract in question, was never owned by

Miller or any of the other previous owners of the four tracts subject to the royalty obligation.

Therefore, the question before the Court is what limestone mineral interest, if any, did Miller have in

the Tennessee River property. To answer this, we must look to the language of the 1968 Agreement

between Miller and the Lamberts, and its subsequent interpretation by this Court in Miller I and

Miller II.
¶40. On September 27, 1968, Miller entered into an agreement with Glen and George Lambert

whereby Miller would receive a royalty of five cents per ton of limestone produced on the Sanders

property and $7,500 per year as an advance against the royalty. The agreement with the Lamberts

provided in part the following:

In the event Lambert should purchase any of the said pieces of land, the royalty to Miller shall

continue as hereinabove provided.

If Lambert should sell, assign or trade their rights under this agreement, it is understood that the

obligations and responsibilities set forth herein shall be imposed upon the assignee or buyer.

Lambert acknowledges that Miller discovered this mineral deposit and has made it possible for

Lambert to do business in this regard. If Lambert should open any other business related to this

industry, Lambert agrees to pay a royalty of five cents per ton on minerals produced from such

other source.

¶41. The Lamberts subsequently transferred their interests to Magnolia Limestone Products, Inc.

Magnolia specifically ratified and adopted the royalty agreement and assumed all of the duties

obligations and liabilities of the Lamberts under the terms and provisions of that royalty agreement.

Magnolia later acquired fee simple title to mine all of the limestone on the Sanders, Gant and

Hiawassee property.

¶42. All of the mineral interests which were owned by Magnolia in these three tracts of land were

eventually transferred to Leasing, a Mississippi corporation which was owned by the same individuals

as Magnolia. During its ownership of the Sanders, Gant and Hiawasee properties, Leasing acquired

the Reid property. Leasing conveyed its interest in all four of these tracts to Mississippi Stone.

Mississippi Stone did not ratify or adopt the royalty agreement and failed to make royalty payments

to Miller. Miller filed suit and the judgment was appealed.

¶43. This Court, in Miller I, found that the agreement between the Lamberts and Miller did include

the Gant and Hiawassee properties and required Mississippi Stone to pay royalties on these tracts as

well as the Sanders property. The Court reasoned that all parties had actual and constructive

knowledge of the royalty agreement and that the royalty contracts between the Lamberts and

Magnolia specifically provided that Miller was to receive royalties on the Gant and Hiawassee tracts.

Magnolia had specifically ratified the royalty agreement, Magnolia transferred its rights to Leasing,

which was later determined to be Magnolia's alter ego, and Leasing then transferred its rights to

Mississippi Stone.

¶44. Thus, Miller was owed royalties on limestone mined from certain property because previous

owners or lessees of the property, the Lamberts, Magnolia or Leasing, had entered into or specifically

assumed the royalty agreement. Therefore, subsequent transferees of the property acquired by these

entities took the property subject to the royalties owed to Miller. However, the Tennessee River

property was never owned by any of these entities.

¶45. This Court followed this reasoning previously in Hood Industries v. King, 255 So. 2d 912

(Miss. 1971). In Hood, H.A. King and L.S. Kiser discovered a clay deposit. They entered into an

agreement (hereinafter King agreement) with Paul L. James and Herbert Dickson. The King
agreement provided that:

King and Kiser had located certain strata of clay deposits in Kemper and Noxubee counties; that

James and Dickson were interested in purchasing and manufacturing said clay; and that in

consideration for showing said clay deposits to James and Dickson, and in the event James and

Dickson desired to lease said clay for the purpose of manufacturing the same, King and Kiser

would have the exclusive right to handle the leasing of clay in order that they might make a

profit out of it.

Hood, 255 So. 2d at 913. James and Dickson organized a corporation by the name of Superior Clay

and Products Corporation (Superior). Superior secured ten leases pursuant to the agreement.

¶46. Superior was unable to finance construction of a brick plant, and Atlas Tile and Brick Company,

Inc. (Atlas), was organized with essentially the same management as Superior. Atlas changed its

name and later merged into Mississippi Industries, Inc., which later changed its name to Hood

Industries, Inc. (Hood). Mississippi Industries entered into an oral agreement to mine clay from a

tract adjoining the lands embraced in the original ten leases. This Court found that Hood was liable

for the royalty on the adjoining lands since Atlas's board of directors assumed the King agreement in

its entirety and Hood assumed Atlas's liabilities through the corporate merger. Hood, 255 So. 2d at

916.

¶47. In the present case, Mississippi Stone eventually conveyed its interest in the Gant, Sanders,

Hiawassee and Reid property to Granite. Like Mississippi Stone, the board of directors of Granite did

not ratify or adopt the royalty agreement or assume the duties, obligations, and liabilities of the

Lamberts under the terms and provisions of the royalty agreement. Although Granite originally paid

royalty payments to Miller on all limestone removed from its quarries, it later decided not to pay

royalties on limestone removed from the Reid property. Once again, Miller filed suit.

¶48. The chancellor found that the Reid property had become subject to the royalty obligation

because it was first acquired by Leasing which, as an alter ego of Magnolia, was deemed to have

assumed the royalty agreement. The chancellor clearly stated that "Miller is entitled to receive a

royalty of five cents (5¢) per ton on all limestone, sand, gravel and clay removed from the Reid

property and from any other property in which Lambert, Magnolia, or Leasing Company had, now

have, or may hereafter have any mineral interest." (emphasis added). Subsequent owners of the Reid

tract had to pay royalties to Miller on limestone taken from that property. The judgment was

appealed and this Court affirmed the chancellor per curiam.

¶49. Thus, we have held that all of the property initially acquired by Mississippi Stone from Leasing

and Granite from Mississippi Stone was already subject to the obligation to pay the royalties to

Miller. The Lamberts entered into the royalty agreement. Magnolia and Leasing affirmatively

assumed the royalty agreement, thereby agreeing to pay royalties on both presently owned and future

acquired property. Once any property was acquired by any one of these entities, the royalty

obligation such entity assumed then attached, and the duty to pay the royalties on limestone mined

from that specific tract applied regardless of the party acquiring that specific tract in the future. Each

subsequent purchaser acquired those properties subject to the existing duty to pay the royalties on

those tracts alone.
¶50. In 1986, Granite acquired fee simple title to an additional tract of land known as the Tennessee

River property from Tennessee River Pulp and Paper Company, a Delaware corporation unrelated to

Miller, the Lamberts, Magnolia, Leasing or Mississippi Stone. None of these entities had ever

owned any interest in the Tennessee River property. Two years later, Granite conveyed its interest in

the Gant, Sanders, Hiawasee, Reid and Tennessee River properties to Vulcan. Vulcan did not ratify

or adopt the royalty agreement or expressly assume the duties, obligations, and liabilities of the

Lamberts under the terms of the royalty agreement. Regardless, by taking the deed, Vulcan assumed

all of Granite's existing obligations to Miller; however, the deed cannot expand the existing

obligations assumed by Vulcan. Since Granite never assumed the future royalty obligation to Miller,

nor was it an alter ego of an entity that had assumed the obligation, the Tennessee River property,

acquired from an unrelated party, never became subject to the future royalty obligation. This is an

important distinction, and separates the Tennessee River property from all other property Vulcan

acquired by deed from Granite. The deed only encompasses obligations already owed by Granite to

Miller.

¶51. At no time has the chancellor or this Court held that any property not owned or acquired by the

Lamberts, Magnolia, or Leasing was subject to the future royalty obligation under the royalty

agreement. The Tennessee River property was never owned nor was there ever any interest held in it

by the Lamberts, Magnolia, or Leasing. As the obligation under the royalty agreement never attached

to the Tennessee River property, it could not be included in the assumed obligations of Vulcan by

deed from Granite.

¶52. Absent an express assumption of Lambert's contractual promise to pay royalty from land

subsequently purchased, Vulcan is not bound to pay anything on the lands involved in this suit. The

chancellor erred in determining that the covenant between Miller and the Lamberts was a real

covenant that runs with the land and that Vulcan expressly assumed the obligations of the royalty

agreement. Vulcan does not owe Miller any royalties for limestone removed from its quarry on the

Tennessee River property. This case should be reversed and rendered.

¶53. Therefore, I respectfully dissent.

MILLS, J., JOINS THIS OPINION.

1. The owners of Magnolia and the owners of Leasing were the same individuals.

2. Granite is unrelated to and is not the alter ego of the Lamberts, Magnolia, Leasing, or Mississippi

Stone.

3. Vulcan is not related to and is not the alter ego of Granite. Furthermore, Vulcan is not related to

and is not the alter ego of the Lamberts, Magnolia, Leasing, or Mississippi Stone.

4. Magnolia expressly ratified the royalty agreement. It transferred its rights to Leasing which was

later determined to be Magnolia's alter ego. Leasing then transferred its rights to Mississippi Stone.

5. The statement of issues raised by Vulcan can be summed up and addressed as one issue.