Opinion ID: 2635152
Heading Depth: 1
Heading Rank: 8

Heading: application of r.s.1923, 67-202

Text: Central also contends that the provisions of R.S.1923, 67-202, the predecessor to K.S.A. 58-2202, control the extent of the property transferred by the coal deeds, notwithstanding any problem ascertaining the parties' intent. As noted above, that statute provided, in relevant part, that every conveyance of real estate shall pass all the estate of the grantor therein, unless the intent to pass a less estate shall expressly appear or be necessarily implied in the terms of the grant. R.S.1923, 67-202. Our interpretation of that statute is a question of law, subject to unlimited review, and unconstrained by the district court's interpretation. LSF Franchise REO I v. Emporia Restaurants, Inc., 283 Kan. 13, 19, 152 P.3d 34 (2007). Central argues that the statute provides a presumption that the transfer of the coal estate, together with the right to mine and remove the coal, transfers all of the grantors' interest in that estate, in the absence of an express reservation. Then, to make the argument work, Central declares that CBM is a part of the coal estate because it is a byproduct of the coalification process, it exists as part of the coal seam, and it is released as part of the coal mining process. We find the argument unavailing on more than one level. The purpose of the statutory provision at issue is to clarify that a real estate conveyance passes all of the grantor's interest in the land, unless an intent to pass a lesser interest is manifested in the terms of the grant. See Platt v. Woodland, 121 Kan. 291, 298, 246 Pac. 1017 (1926). For instance, in the cases relied upon by Central, Fast v. Fast, 209 Kan. 24, 29, 496 P.2d 171 (1972), and Brungardt v. Smith, 178 Kan. 629, 637-38, 290 P.2d 1039 (1955), the provision was applied to clarify that the grantors conveyed all the interest they owned in the subject real estate, because the deeds did not express an intent to retain any interest. In this case, the grantors owned the entire fee simple absolute in the subject real estate. Obviously, the coal deeds did not pass all of that interest to Central's predecessors. By the express terms of the coal deeds, each grantor stated an intent to pass a lesser estate, i.e., only the coal. Given that the deeds expressly tell us that not all of the grantors' estates passed to the grantees, we need not resort to the statutory presumption. Even if the statute could be construed as meaning that a conveyance of a lesser estate passes all of the grantor's interest in that lesser estate, it would not help in this instance. No one disputes that the deeds conveyed all of the grantors' interests in the coal. The disconnect in Central's argument is its declaration that CBM is part of the coal estate. Central does not dispute that coal, CBM, and oil are separate minerals which have different chemical compositions and which exist in different states, i.e., solid, gas, and liquid. However, it points out that CBM is produced by the coalification process, implying that the common origin makes the gas part of the coal estate. At oral argument, Central acknowledged that the gas which has escaped from the coalbed is not part of the coal estate, but rather it is part of a gas estate which defendants have a right to produce. Of course, the escaped gas was formed in exactly the same manner as the gas which is currently held captive by the pressure on the coalbed. Thus, the genesis of CBM is not determinative. Likewise, the argument that CBM is contained within the coalbed is not compelling. Gas is stored in all rock formations in the same three states or conditions as it is found in the coalbed: as free gas, dissolved in the water in the coal, and adsorbed on the solid surface of the coal. See Amoco, 526 U.S. at 873, 119 S.Ct. 1719. Granted, the large surface area of coal pores results in a higher proportion of the gas being adsorbed in a coal formation. Nevertheless, the physical description of a mineral should not turn on the quantity that is present in a particular source rock or formation. Further, the fact that CBM escapes during the traditional coal mining operation does not persuade us that gas is coal. Today, it is apparently possible to drill from the surface and relieve the pressure, allowing the CBM to desorb and be collected, while leaving the coal rock in place. While Central complains that such a process invades and damages the coalbed, the issue of whether the gas producer must compensate the coal owner for damages resulting from the process of liberating the gas is not before us. The point is that CBM is a gas that can be produced without mining the coal rock, contradicting the assertion that the CBM is part and parcel of the coal estate. In short, we reject the notion that all coal should be read as meaning a coal estate that includes such of the natural gas which may be currently held captive within the coal formation. Therefore, CBM is not statutorily presumed to be conveyed by a grant of all coal.