Opinion ID: 1827008
Heading Depth: 1
Heading Rank: 3

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

Text: 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 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. 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 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. 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 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). 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.