International Salt Co. v. Geostow

• Decision Date: 16 June 1989
• Docket Number: Nos. 848,s. 848
• Citation: 878 F.2d 570
• Parties: INTERNATIONAL SALT COMPANY, Appellee, Cross-Appellant, v. GEOSTOW, A Limited Partnership, Geostock New York Holdings, Inc., Northeastern Waste Services, Inc., Bear Development Company, Inc., James Hagan, William Selden, Cynthia Selden, and William Austin Wadsworth, Appellants, Cross-Appellees. to 850 and 952, Dockets 88-7959, 88-7961, 88-7963 and 88-9013.
• Court: U.S. Court of Appeals — Second Circuit

Page 570

878 F.2d 570

INTERNATIONAL SALT COMPANY, Appellee, Cross-Appellant, v. GEOSTOW, A Limited Partnership, Geostock New York Holdings Inc., Northeastern Waste Services, Inc., Bear Development Company, Inc., James Hagan, William Selden, Cynthia Selden and William Austin Wadsworth, Appellants, Cross-Appellees.

Nos. 848 to 850 and 952, Dockets 88-7959, 88-7961, 88-7963

and 88-9013.

United States Court of Appeals Second Circuit.

Argued March 15, 1989.

Decided June 16, 1989.

Kenneth A. Payment, Rochester, N.Y. (A. Paul Britton and Harter, Secrest & Emery, Rochester, N.Y., on the brief) for appellee, cross-appellant Intern. Salt Co.

Gregory P. Photiadis, Buffalo, N.Y. (Duke, Holzman, Yaeger & Radlin, Buffalo, N.Y., on the brief) for appellants, cross-appellees Geostow, Geostock New York Holdings, Inc., Northeastern Waste Services, Inc. and Bear Development Co., Inc.

Alan J. Knauf, Pittsford, N.Y., submitted a brief, for amicus curiae Protect a Clean Environment, Inc. (PACE).

Before TIMBERS, MESKILL and NEWMAN, Circuit Judges.

TIMBERS, Circuit Judge:

This is an appeal and cross-appeal from an order and judgment entered November 10, 1988 in the Western District of New York, David G. Larimer, District Judge, which granted partial summary judgment in favor of appellee, cross-appellant International Salt Company (International Salt) ¹ on Count I of its complaint and declared the rights of the parties in this diversity action to quiet title pursuant to Article 15 of the New York Real Property Actions and Proceedings Law (McKinney 1979). The opinion of the district court dated October 12, 1988 is reported at 697 F.Supp. 1258 (W.D.N.Y.1988).

In Count I of the complaint, International Salt sought a declaratory judgment pursuant to 28 U.S.C. Sec. 2201 (1982) with respect to its rights under certain deeds to the use and ownership of the containing chamber created by its underground salt mining operation at Retsof, New York (Retsof Mine). Appellants, cross-appellees Geostow, Geostock New York Holdings, Inc., Northeastern Waste Services, Inc., and Bear Development Co., Inc. (Geostow appellants) had proposed a plan to store incinerator ash in the containing chamber found in sections of the Retsof Mine that they contend are mined-out. They also sought to acquire from certain surface owners their purported ownership interests in the containing chamber.

On its motion for summary judgment, the district court held that International Salt is the owner in fee simple of all salt in the mine and that it presently has the exclusive right to use and enjoy the chamber created by its mining operations. The court further held, however, that International Salt does not have a fee simple absolute estate in the containing chamber created by the extraction of salt.

Appellants appeal from that part of the judgment which declares that International Salt presently has the exclusive right to use and enjoy the containing chamber in the mine. They assert that summary judgment was improper since there remain genuine issues of material fact regarding primarily whether International Salt has exhausted the commercially mineable salt in certain sections of the mine and thereby has terminated its right to use and enjoy the chamber located in the mine. International Salt asserts, for a number of reasons, that it retains the exclusive right to use and enjoy the chamber and that any factual dispute regarding the exhaustion or abandonment of the mine is not material. International Salt also cross-appeals, asserting that the district court improperly construed the relevant deeds in holding that it does not have a fee simple interest in the containing chamber created by the extraction of salt.

For the reasons which follow, we affirm the district court's judgment in all respects.

I.

We shall summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal. We assume familiarity with the district court's published opinion referred to above.

International Salt and its immediate predecessor in interest, Retsof Mining Company, for more than 100 years have conducted underground mining of salt at the Retsof Mine. This is said to be the world's largest salt mine. The present mining operation is conducted in one horizontal seam approximately 1,060 feet below ground level. The single mining chamber extends for miles in all directions. The mining activities of International Salt and its predecessor historically included only "first" or "pillar and room" mining, by which salt was extracted horizontally, but large pillars of salt were left behind for structural support. It is undisputed that in the sections that were "first mined" about one third of the original salt deposits remain in the pillars, floor, and ceiling of the containing chamber.

The active mining extraction operations are conducted along the eastern and southeastern sides of the mine. The principal entrance to the mine is through the Fuller Shaft, located in the northwestern region of the mine. There are other shafts which are used for ventilation and escape. An extensive series of conveyor belts, roadways, pipes, and electrical cables course through the miles of passageways. International Salt maintains a ventilation system which it asserts uses all parts of the mine for airflow.

In 1987, the Geostow appellants announced a plan to store incinerator ash in certain sections of the Retsof Mine which they claimed were mined-out. To implement this underground waste disposal plan, they sought to acquire from the surface owners their property interests in the containing chamber created by the extraction of salt by International Salt and its predecessor. A number of surface owners purported to transfer their interests to the Geostow appellants, subject to the rights of International Salt, "if any". Although the property interests of only a few surface owners are involved in this action, ² the waste disposal plan encompasses virtually the entire mine.

In December 1987, International Salt commenced the instant action chiefly to obtain a declaration of its rights under certain deeds to the use and ownership of the containing chamber at the Retsof Mine. On April 7, 1988, International Salt moved for summary judgment and for a stay of discovery. In a carefully reasoned opinion dated October 12, 1988, as stated above, the district court granted summary judgment in favor of International Salt on Count I; declared the rights of the respective parties; and dismissed all affirmative defenses and counterclaims. ³ The parties stipulated pursuant to Fed.R.Civ.P. 41(a)(1)(ii) to a dismissal without prejudice to the remaining claims. Pursuant to this opinion, an order and judgment was entered November 10, 1988, from which the instant appeal was taken. Appellate jurisdiction was properly invoked. See Frankfort Oil Co. v. Snakard, 279 F.2d 436, 438 (10 Cir.), cert. denied, 364 U.S. 920 (1960); 6 Moore, Taggart & Wicker, Moore's Federal Practice p 54.34, at 54-206 & n. 18 (1988).

II.

We turn first in this case of first impression to the question of whether the original grantors intended to convey to International Salt and its predecessor a fee simple interest in the containing chamber of the mine.

We focus on those portions of the original deeds that conveyed to International Salt or its predecessor "all mines, veins, seams and beds of salt" beneath the respective surface estates. ⁴ The question here presented turns in particular on the meaning of the word "mines". International Salt asserts that the word means a cavity or space which contains minerals and that therefore a fee simple interest in the cavity was conveyed. Appellants assert that no such interest in the cavity was conveyed, since "mines" is synonymous with "veins, seams and beds" and therefore refers only to the mode or manner in which the salt deposits occur.

In this diversity action, New York law controls. Instruments creating or transferring an interest in real property must be construed according to the intent of the parties so far as such intent can be gathered from the instrument read as a whole and is consistent with the applicable rules of law. N.Y. Real Prop. Law Sec. 240(3) (McKinney 1989); Matzell v. Distaola, 105 A.D.2d 500, 501-02, 481 N.Y.S.2d 453, 455 (3d Dep't 1984), leave to appeal denied, 64 N.Y.2d 608, 489 N.Y.S.2d 1025, 478 N.E.2d 209 (1985); Allen v. Cross, 64 A.D.2d 288, 291-92, 409 N.Y.S.2d 865, 868 (4th Dep't 1978). Where the language of the conveyance is unclear, the court should look to the surrounding circumstances and situation of the original parties to the conveyance. Loch Sheldrake Assocs., Inc. v. Evans, 306 N.Y. 297, 304, 118 N.E.2d 444, 447 (1954); Distaola, supra, 105 A.D.2d at 501-02, 481 N.Y.S.2d at 455; see also Brady v. Smith, 181 N.Y. 178, 185, 73 N.E. 963, 965 (1905) ("[E]ach case must be decided upon the language of the grant or reservation, the surrounding circumstances and the intention of the grantor if it can be ascertained".).

In applying these principles to the instant case, the district court carefully examined the various deeds involved and concluded that no fee simple interest in the cavity was conveyed by the use of the term "mines". The court began with an examination of the 1952 conveyance to International Salt under part of the "Selden tract". It concluded that the language which stated that it was the intent of that instrument to grant "mineral rights" clearly indicated that a fee simple interest in the salt only and not in the containing chamber was conveyed. The court then turned to the remaining deeds and found that in light of the principle of noscitur a sociis, and in light of other language in the deeds, use therein of the term "mines" also was intended to convey a fee simple interest in the salt only.

The court found that the term "mines" has more than one meaning. In one sense the term is used to describe an underground...