Opinion ID: 2635152
Heading Depth: 1
Heading Rank: 6

Heading: proposed legal theory

Text: Central's first tack is to propose that we adopt a first severance/container theory rule of law. Under that rule, if a coal deed is the first conveyance which severs any mineral interest from the fee simple absolute estate, the grantee acquires ownership of everything that is contained within the coal formation, unless the deed contains a specific reservation of other minerals. Here, the only deed to contain a specific reservation was the coal deed conveying tract 12. However, Central does not provide a separate argument about that distinctive conveyance. Accordingly, we will not separately analyze the effect of that reservation. See Titterington v. Brooke Insurance, 277 Kan. 888, Syl. ¶ 3, 89 P.3d 643 (2004) (point incidentally raised but not argued is deemed abandoned). Central relies on case law from Alabama, Illinois, and Pennsylvania, contending that those states have adopted the container theory. See Vines v. McKenzie Methane Corp., 619 So.2d 1305 (Ala.1993); Continental Resources v. Illinois Methane, 364 Ill. App.3d 691, 301 Ill.Dec. 887, 847 N.E.2d 897 (2006); United States Steel Corp. v. Hoge, 503 Pa. 140, 468 A.2d 1380 (1983). However, other jurisdictions have held that the ownership of coal does not include the ownership of CBM. See Michael F. Geiger, LLC v. United States, 456 F.Supp.2d 885, 886 (W.D.Ky. 2006); Carbon County v. Union Reserve Coal Co., 271 Mont. 459, 898 P.2d 680 (1995); Harrison-Wyatt, LLC v. Ratliff, 267 Va. 549, 593 S.E.2d 234 (2004). Decisions in Wyoming have gone both ways, focusing on the facts and circumstances of each particular deed. See Mullinnix LLC v. HKB Royalty Trust, 126 P.3d 909 (Wyo.2006); Caballo Coal v. Fidelity Exploration, 84 P.3d 311 (Wyo.2004); Hickman v. Groves, 71 P.3d 256 (Wyo.2003); McGee v. Caballo Coal Co., 69 P.3d 908 (Wyo.2003); Newman v. RAG Wyoming Land Co., 53 P.3d 540 (Wyo.2002). Given the unique facts of each case, together with differing state laws, the cases from other states are not easily synthesized or particularly persuasive. In this state, all minerals belong to the landowner and are considered part of the realty so long as they reside on, in, or under the land. However, [w]hen they escape and go into other lands, or come under another's control, the title of the former owner is gone. Lanyon Zinc Co. v. Freeman, 68 Kan. 691, 696, 75 Pac. 995 (1904). A severance of the surface and mineral rights is accomplished by either a conveyance of the land with an express reservation of the minerals, or by a conveyance of the mineral or mining rights. After the severance, two separate estates exist, each being a distinct freehold estate of inheritance. The surface and the mineral rights are held by separate titles in severalty. J. R. Crowe Coal & Mining Co. v. Atkinson, 85 Kan. 357, 360, 116 P. 499 (1911); Moore v. Griffin, 72 Kan. 164, 167-68, 83 Pac. 395 (1905); see also Rathbun v. Williams, 154 Kan. 601, 604, 121 P.2d 243 (1942) ([W]henever the mineral interest in land is owned separately from the surface rights, each interest is regarded as real estate and taxed separately to the respective owners thereof.). Central's argument recognizes that the mineral interest in land can be further divided by severing a particular mineral. Cf. Shaffer v. Kansas Farmers Union Royalty Co., 146 Kan. 84, 89, 69 P.2d 4 (1937) (owner of land can convey all of it or a part of it; can divide property vertically or horizontally). In other words, only one mineral, such as coal, can be conveyed, resulting in different entities owning different minerals. Indeed, at oral argument, Central acknowledged that the coal deeds did not give it ownership of the gas which had escaped from the coalbed, i.e., it does not claim to own all of the gas under the subject real estate. Thus, Central's theory would effect a split ownership of all the remaining minerals, with the landowner still owning all noncoal minerals except those that may be located within a seam of coal, even though the deeds did not explicitly convey any mineral other than coal. Pointedly, the coal deeds did not purport to convey any particular stratum or horizon, e.g., the Pittsburg-Weir formation. They conveyed all the coal, wherever situated, presumably because there might be several seams of coal underlying the property. Nevertheless, Central claims that the coal deeds must, by necessity, convey the entire stratum because the mining of the coal consumes all of the structure and destroys all of the minerals within the stratum. Granted, each deed specifically grants the right to mine and remove the coal, which would permit the removal of the entire stratum, plus such of the surrounding strata as may be necessary to effect the coal removal. However, that right does not convey ownership of the entire stratum, any more than it conveys ownership of the dirt and rock outside the coalbed which might be removed to allow for a safe mining operation. Moreover, Central offers nothing persuasive to recommend the adoption of its proffered temporal rule, which gives the grantee of the first mineral interest to be severed superior rights in and to the other minerals conveyed to another grantee (or still held by the landowner) simply based on the timing of the deed. While a first-in-time, first-in-right rule is a logical manner in which to deal with competing claims to the same property, it makes scant sense as a rule to enlarge or expand the property conveyed beyond that which was described in the deed. In short, we decline to adopt an artificial rule of law mandating that a conveyance of all coal, with the right to remove and mine the same, always effects a transfer of everything that may be contained within the strata where coal may be found. Rather, if a coal deed is to include the CBM, that inclusion must emanate from the parties' intent.