Graham v. Drydock Coal Co.

• Decision Date: 14 August 1996
• Docket Number: No. 95-313,95-313
• Citation: 667 N.E.2d 949,76 Ohio St.3d 311
• Parties: GRAHAM, Appellant, v. DRYDOCK COAL COMPANY, Appellee; Holmes et al., Appellants.
• Court: Ohio Supreme Court

Page 311

76 Ohio St.3d 311

667 N.E.2d 949

GRAHAM, Appellant, v. DRYDOCK COAL COMPANY, Appellee; Holmes et al., Appellants.

No. 95-313.

Supreme Court of Ohio.

Submitted March 6, 1996.

Decided Aug. 14, 1996.

SYLLABUS BY THE COURT

A deed which severs a mineral estate from a surface estate, and which grants or reserves the right to use the surface incident to mining coal, in language peculiarly applicable to deep-mining techniques, whether drafted before or after the advent of strip mining, does not grant or reserve to the mineral owner the right to remove coal by strip-mining methods. (Skivolocki v. E. Ohio Gas Co. (1974), 38 Ohio St.2d 244, 67 O.O.2d 321, 313 N.E.2d 374, expanded and clarified.)

The tract at issue in this case consists of approximately 300 acres of farmland in Athens County. The fee simple owner of the entire tract in 1955 was Cambria Mining Company ("Cambria"), which deeded the surface rights to approximately 234 acres of the land to Helen Holmes for farming purposes, but retained the rights to all of the minerals in the land for itself. In 1962, Cambria deeded the surface of the rest of the tract to Holmes with a similar reservation clause. The Holmes family rented the land as a farm prior to its purchase of the surface rights and has continued farming it to the present.

The reservation clauses in the deeds, which were both drafted by Cambria, are substantially the same. They each clearly provide for the ownership of all the coal and all the other minerals in Cambria and for Cambria's right to remove those minerals. They further provide for Cambria's use of some portion of the surface in the process of the removal of its minerals. Ownership of the surface, however, is granted entirely to Helen Holmes.

Such deeds have long been common in the mineral-rich areas of the state. See, e.g., Gill v. Fletcher (1906), 74 Ohio St. 295, 78 N.E. 433, construing an 1838 deed with a similar severance of interests. These deeds serve a particularly valuable purpose in maximizing the utility and productivity of the land by allowing simultaneous use by those who extract minerals and those who till the surface. The clauses in the deeds, however, have produced a dispute between the successors in interest of Cambria and Helen Holmes.

The deeds at issue expressly recognize the agricultural intentions of the Holmes family but do not mention strip mining. Cambria's successor, Drydock Coal Company ("Drydock"), possessed of technology that did not exist at the time the subject deeds were drawn, desires to extract coal, which is not removable by deep mining, using modern strip-mining methods. Helen Holmes' successors in interest, however, Everett Holmes, Jr. and Joan Holmes ("the Holmeses"), executed a contract with appellant James F. Graham in 1990, entitled "Surface Lease for Coal," which conveys to Graham the right to strip-mine coal from the property. The coal does not belong to the Holmeses, and therefore has not been transferred to Graham.

In July 1992, Graham filed a complaint in the Athens County Court of Common Pleas seeking a declaratory judgment stating that, although Drydock owned the coal, it did not have the right to strip-mine the surface. Drydock filed a counterclaim and a third-party complaint against the Holmeses alleging that the surface lease between the Holmeses and Graham was void on the grounds that Drydock owned all the minerals and the right to extract them. The trial court granted partial summary judgment to Drydock, but specifically stated that the issue of whether Drydock owned the right to strip-mine the land was not properly before the court at that time. On appeal, the Court of Appeals for Athens County reversed the judgment and instructed the trial court to determine whether Drydock owned the right to strip-mine or whether the Holmeses had retained an interest that could be transferred to Graham and could effectively prevent Drydock from strip mining.

The trial court found that Drydock's mineral rights did not include the right to strip-mine the property. Drydock appealed, and the court of appeals reversed the trial court again, this time holding that, as a matter of law, Drydock did have the right to strip-mine the property. It is from that decision that the current appeal is taken.

The cause is now before this court upon the allowance of a discretionary joint appeal by Graham and the Holmeses.

Vorys, Sater, Seymour & Pease, John C. Elam and Michael G. Long, Columbus, for appellant Graham.

John P. Lavelle, Athens, and Jack V. Oakley, Buchtel, for appellee.

Donald Wirtshafter, Guysville, for appellants Everett and Joan Holmes.

Neal S. Tostenson, Cambridge, urging reversal for amicus curiae, Ohio Mining and Reclamation Association.

Larry R. Gearhardt, Columbus, urging reversal for amicus curiae, Ohio Farm Bureau Federation.

MOYER, Chief Justice.

The issue before the court is whether a deed which severs a mineral estate from a surface estate, which is drafted after the advent of strip mining in the region, and which grants the right to use the surface incident to mining coal, in language peculiarly applicable to deep-mining techniques, reserves the right to remove coal by strip-mining methods.

The parties agree that each possesses precisely the same property rights as their predecessors in interest, the signatories to the original deeds. Their respective rights, therefore, are determined by our construction of the 1955 and 1962 deeds between Cambria and Helen Holmes. The issue raised in the construction of the deeds is whether the drafting of the subject deeds after the advent of strip mining in Ohio dictates a result different from that prescribed by our most recent case on the subject, Skivolocki v. E. Ohio Gas Co. (1974), 38 Ohio St.2d 244, 67 O.O.2d 321, 313 N.E.2d 374. For the reasons that follow, we hold that it does not, and we therefore reverse the judgment of the court of appeals.

"The construction of written contracts and instruments of conveyance is a matter of law." Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 7 O.O.3d 403, 374 N.E.2d 146, paragraph one of the syllabus. "Unlike determinations of fact which are given great deference, questions of law are reviewed by a court de novo." Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 73 Ohio St.3d 107, 108, 652 N.E.2d 684, 686; Ohio Bell Tel. Co. v. Pub. Util. Com. (1992), 64 Ohio St.3d 145, 147, 593 N.E.2d 286, 287.

The purpose of contract construction is to discover and effectuate the intent of the parties. Skivolocki, at paragraph one of the syllabus. The intent of the parties is presumed to reside in the language they chose to use in their agreement. Kelly v. Med. Life Ins. Co. (1987), 31 Ohio St.3d 130, 31 OBR 289, 509 N.E.2d 411, paragraph one of the syllabus. Extrinsic evidence is admissible to ascertain the intent of the parties when the contract is unclear or ambiguous, or when circumstances surrounding the agreement give the plain language special meaning. Shifrin v. Forest City Ent., Inc. (1992), 64 Ohio St.3d 635, 638, 597 N.E.2d 499, 501. Finally, a contract is to be construed against the party who drew it. Cent. Realty Co. v. Clutter (1980), 62 Ohio St.2d 411, 16 O.O.3d 441, 406 N.E.2d 515.

The reservation clauses in the two deeds drafted by Cambria are substantially the same. It is the language of these clauses that we must examine to determine the intent of the parties. The reservation clause of the 1955 deed provides:

"There is reserved and excepted from this conveyance all of the minerals of whatsoever nature and description, including oil, gas and salt water together with the right and privilege of entering in, on, or under said premises for the purpose of exploring for, testing, mining and removing the same, and of making, constructing, driving, opening and maintaining any entries, passages, airways, shafts or slopes thereon and thereunder, or for drilling for and producing oil, gas, or salt water or their constituents thereof, with the right to enter in and upon said premises, place and use proper equipment for drilling outlets for mine water, and the rights to occupy that portion of said surface necessary for said shafts, slopes, tanks and/or pipe lines and the right to convey and/or transport any or all of said minerals contained in and under said lands, on, in and under adjacent lands in, on or under said demised premises, except that any damage caused to fences and/or growing crops caused by such entry and transportation of said minerals shall be paid for by said Grantor, its successors, assigns and/or lessees.

"Grantee, for herself, her heirs, successors and assigns, covenants and agrees that in the event it becomes advisable and/or necessary for Grantor, its successors or assigns, to use and occupy any of the surface of said demised premises, not to exceed 5 acres in extent, ¹ for the purpose of the installation of a mine plant or facilities in connection therewith, then and in that event said Grantee, her heirs, successors and assigns, will sell and convey to Grantor, its successors or assigns, said surface acreage for the price of fifty dollars ($50.00) per acre, plus the additional cost of any improvements or additions made and placed on said surface by Grantee, her heirs, successors or assigns.

"Grantor, its successors and/or assigns, shall be held harmless and without liability for any injury or damage that may occur to the surface of said demised premises or to any buildings, wells, springs or improvements now or hereafter placed or erected thereon by reason of the mining, removing and/or transporting of any or all minerals in, on or under said demised premises, or damage resulting from drainage of mine water." (Footnote added.)

The syllabus of Skivolocki reads:

"1. Contracts are to be interpreted so as to carry out the intent of the parties, as that intent is evidenced by the contractual language.

"2. The right to strip mine for coal is...