Case Name: VULCAN MATERIALS COMPANY v. Edward E. MILLER
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1997-01-30
Citations: 691 So. 2d 908
Docket Number: No. 93-CT-00829-SCT
Parties: VULCAN MATERIALS COMPANY v. Edward E. MILLER.
Judges: SULLIVAN, P.J., and PITTMAN, BANKS, JAMES L. ROBERTS, and SMITH, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 691
Pages: 908–918

Head Matter:
VULCAN MATERIALS COMPANY v. Edward E. MILLER.
No. 93-CT-00829-SCT.
Supreme Court of Mississippi.
Jan. 30, 1997.
A.M. Edwards, III, Wells, Moore, Simmons & Neeld, Jackson, for appellant.
James E. Price, Jr., Corinth, for appellee.

Opinion:
ON PETITION FOR WRIT OF CERTIORARI
PRATHER, Presiding Justice,
for the Court:
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.
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
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 Tish-omingo 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.
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.
The Lamberts transferred their interests to Magnolia Limestone Products, Inc. "pursuant 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].
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.
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).
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. 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.
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).
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.
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.
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 of 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.
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.
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.
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 royal ties 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 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. Comm, 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.
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.
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.
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.
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 Superi- or. 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.
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.
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).
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."
Finally, the dissent claims that Miller I "does no more than hold that the first assign-ee 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).
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?
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....
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).
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.
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).
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.
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 with 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 628-24 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).
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.
JUDGMENT IS AFFIRMED.
SULLIVAN, P.J., and PITTMAN, BANKS, JAMES L. ROBERTS, and SMITH, JJ., concur.
McRAE, J., concurs in result only.
DAN LEE, C.J., disssents with separate written opinion joined by MILLS, J.
. The owners of Magnolia and the owners of Leasing were the same individuals.
. Granite is unrelated to and is not the alter ego of the Lamberts, Magnolia, Leasing, or Mississippi Stone.
. 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.
. 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.
. The statement of issues raised by Vulcan can be summed up and addressed as one issue.