Ambarann Corp. v. Old Ben Coal Corp.

• Decision Date: 20 November 1946
• Docket Number: No. 29528.,29528.
• Citation: 69 N.E.2d 835,395 Ill. 154
• Parties: AMBARANN CORPORATION et al. v. OLD BEN COAL CORPORATION et al.
• Court: Illinois Supreme Court

395 Ill. 154

69 N.E.2d 835

AMBARANN CORPORATION et al.

v.OLD BEN COAL CORPORATION et al.

No. 29528.

Supreme Court of Illinois.

Nov. 20, 1946.

Appeal from Circuit Court, Franklin County; Charles T. Randolph, judge.

Suit by the Ambarann Corporation and another against the Old Ben Coal Corporation and others for reformation of deed and other relief. From a decree for defendants, plaintiffs appeal.

Affirmed.

O. C. Smith and W. F. Gray, both of Springfield, Stone & Stone, of Bloomington, and George E. Arthur, of Chicago, for appellants.

Essington, McKibbin, Beebe & Pratt, of Chicago, Feirich & Feirich, of Carbondale, and Carter Harrison, of Benton, for appellees.

WILSON, Justice.

March 8, 1916, Joshua Sinks was the owner in fee simple of a tract of eighty acres of land in Franklin county described as the ‘South One-half (1/2) of the North East Quarter (1/4), Section Thirty (30), Township Seven (7), Range Three (3) East of the 3rd P.M.’ On the day named, Sinks and his wife, Margaret, executed and delivered a ‘Bond for Deed’ to the Old Ben Mining Corporation, conditioned that upon the payment of $12,000, as specified, they would execute and deliver to the corporation, ‘a good and sufficient warranty deed, conveying to it, all the coal, and other minerals or mineral substances in and underlying’ the property, together with the right to mine and remove ‘all said coal, oil and gas underlying said surface and to manufacture the same and their products without being liable for any injury or damage to the owner of the superincumbent soil * * * or for surface subsidence caused by mining out the coal, or oil, or gas.’ November 16, 1917, the Old Ben Coal Corporation, having succeeded to the rights of the Old Ben Mining Corporation in and to the bond, completed the purchase of the property, and Joshua Sinks and his wife executed a deed captioned ‘Warranty Deed to Coal, Oil and Gas,’ conveying to the Old Ben Coal Corporation ‘All the coal, oil and gas underlying the surface of the following described land, * * * together with the right to mine and remove all said coal, oil and gas underlying said surface,’ without being liable for any injury or damage caused ‘by mining out the coal, or oil or gas.’ On January 21, 1921, Sinks and his wife conveyed the property to Joseph Sharkey, ‘Saving and reserving all coal, oil and mineral rights as heretofore transferred to Old Ben Coal Corporation.’ Twelve years later, on February 3, 1933, Sharkey and his wife conveyed the premises to their daughter, Amelia K. Sharkey, ‘Saving and reserving all coal, oil and mineral rights as heretofore transferred to Old Ben Coal Corporation.’ January 10, 1944, Amelia K. Sharkey, by quitclaim deed, conveyed an undivided one-seventh interest in the land to The Ambarann Corporation of which she is president. This last deed makes no reference to coal, oil or gas rights. In the meantime, the Old Ben Coal Corporation mortgaged its property to secure an indebtedness, the coal, oil, gas and other minerals underlying the land being made subject to the lien of and the conditions in the mortgage. The City Bank Farmers Trust Company is the trustee under the mortgage executed August 1, 1924, as supplemented and modified on August 1, 1933. On September 1, 1943, the Old Ben Coal Corporation entered into an oil and gas lease with E. S. Adkins who commenced drilling operations shortly afterwards upon the property is controversy.

On January 14, 1944, the plaintiffs, the Ambarann Corporation and Amelia K. Sharkey, filed their complaint in the circuit court of Franklin county against the defendants, the Old Ben Coal Corporation and Adkins. Plaintiffs alleged that, during the year 1916, prior thereto, and for many years thereafter, until 1940, the presence of oil or gas was unknown in Franklin County, and not within the contemplation or consciousness of the people of the county at the time of the execution of conveyances of the title of coal in place; that the presence, or existence, of oil or gas was not within the contemplation nor within the consciousness of either Joshua Sinks or the Old Ben Coal Corporation; that Sinks did not agree to sell, nor the corporation to buy, oil and gas, but that, by the mutual mistake of the two, the ‘Bond for Deed’ and the conveyance from Sinks to the corporation included all of the oil and gas underlying the surface of the premises instead of conveying only the coal underlying the surface, as was mutually agreed upon by the parties. Plaintiffs charged, further, that Adkins wrongfully ignored the rights of plaintiff Amelia Sharkey, and was not an innocent purchaser for value. The complaint asked that the ‘Bond for Deed’ and the warranty deed be reformed by striking out all the words having reference to oil and gas or other substances except coal and, further, that Adkins render an accounting. Thereafter, the complaint was dismissed as to Adkins. February 28, 1944, plaintiffs filed an amended complaint against the defendant Old Ben Coal Corporation, adding an alternative theory that the court should either eliminate the words ‘oil and gas' wherever they appeared or, instead, insert the words ‘in coal’ following the words ‘oil and gas' whenever such words appeared in the conveyance. Subsequently, plaintiffs filed a second amended complaint against the defendant Old Ben Coal Corporation, predicated upon the theory of a custom or usage in Franklin county to the effect that the words ‘oil and gas,’ or ‘oil, gas and other minerals,’ or ‘other minerals,’ were used and employed in documents conveying title for the purpose of transferring such oil and gas, or either of these two minerals, as formed an integral part of the coal transferred or sold; that, in the alternative, the words ‘oil and gas' should be stricken, and that, in the second alternative, the words ‘in coal’ should be added immediately following the words ‘oil and gas,’ or the words ‘other minerals' or the word ‘minerals' wherever these words appear in the instruments of conveyance. The second amended complaint was later amended by adding the City Bank Farmers Trust Company as a defendant. By its answer to the second amended complaint, the Old Ben Coal Corporation denied the material allegations of plaintiffs' pleading, and averred that plaintiffs were barred by laches; that they were estopped by virtue of the recitals in their conveyances; that Joshua Sinks, when he executed the deed to Joseph Sharkey reserving the coal, oil and gas previously transferred to the corporation, ratified and confirmed the conveyance he had hitherto made to the corporation of all of the coal, oil and gas underlying the surface of the premises, and that the words ‘coal, oil and gas,’ being plain and unambiguous, and having a settled legal connotation, were not subject to contradiction or modification by any trade expression or custom. The answer of the City Bank Farmers Trust Company is substantially the same as the answer of the Old Ben Coal Corporation except that it recites two mortgages and the assignments made to it, and averred that it was a bona fide purchaser for value without notice. Plaintiffs replied to the answers. The cause was referred to a special master in chancery who heard five witnesses. The order of reference was then set aside and the cause ordered heard by the chancellor. The evidence of the witnesses testifying before the master was certified to the court. Considerable additional evidence was heard, and a decree was entered dismissing the second amended complaint for the want of equity. After the decree was entered, plaintiffs were again permitted to amend their complaint to conform to the evidence by charging that a latent ambiguity had arisen in the deed in that the same language used to convey the oil in the coal may also be used to describe pools of petroleum which were not sold with the coal nor intended to be conveyed therewith. Defendants answered the amendments.

The record is voluminous, consisting of 1567 pages, the greater part consisting of inadmissible evidence which does not require detailed narration. Forty-one witnesses, in no way connected with the transactions involved in this litigation, testified that they understood the words ‘coal, oil and gas' in a deed to mean the coal and only the oil and gas in the coal. A consulting petroleum geologist and engineer testified that, in his opinion, the oil and gas now being produced or found in Franklin county was present in 1900. The evidence relative to the transaction in question consists of the deposition of Joshua Sinks offered by plaintiffs, and a portion of the testimony of D. W. Buchanan, president of the Old Ben Coal Corporation, whom plaintiffs called as an adverse witness under section 60 of the Civil Practice Act (Ill.Rev.Stat.1945, chap. 110, par. 184). Sinks was eighty-two years of age at the time his deposition was taken. He testified that he did not remember signing a ‘Bond for Deed,’ adding, ‘but I guess I did it.’ He did recall making a deed to the coal, saying, ‘I was selling the coal and that was what he (Buchanan) said he wanted to buy;’ that there was no conversation at the time between them about buying and selling anything other than coal, and that it was quite a while after the sale of the coal when he first learned the company was claiming ownership of the oil. On cross-examination, Sinks testified that he had lived in the community of West Frankfort practically all his life; that he had been president and a director of the Union State Bank of Frankfort Heights five or six years, operated a store, a dairy, had owned real estate, and had been president of a building and loan association for many years. Sinks was represented by counsel in his transactions with the coal company and, later, with Joseph Sharkey. He stated that when he executed the deed to Sharkey he knew it contained a clause saving and reserving coal, oil, and mineral rights therefore transferred to the coal company...