January 24, 2014
Title Litigation: Centenarian Deed Decides Methane Royalty Rights
On January 10, 2014, the Supreme Court of Virginia decided CNX Gas Company, LLC v. Rasnake, interpreting disputed language in a 95-year-old deed. The Court determined who owned the mineral rights in a parcel of land in Russell County in Southwest Virginia. The contested deed contained both (a) words conveying a parcel and (b) limiting language that excepted certain property from the transaction. Ultimately, the words of conveyance prevailed over the words of limitation! The opinion is a useful collection of some of the rules about how to prepare, interpret or litigate a deed.
In 1887, Jacob & Mary Fuller conveyed the coal in a 414 acre tract in Russell County to Joseph Doran and W.A. Dick. In 1918, W.T. Fuller conveyed to Unice Nuckles a 75 acre portion of the Fuller family tract except that, “[t]his sale is not ment (sic) to convey any coals or minerals. The same being sold and deeded to other parties heretofore.”
Over 90 years later, CNX Gas Company holds a lease from the successor to Ms. Nuckles for the mineral rights (excluding coal) in the 75 acre tract. CNX produces coalbed methane from the parcel. Coalbed methane is a natural gas extracted from coal mines and sold as energy. The opinion does not discuss how methane is a “mineral.” The parties likely stipulated to that based on authorities not mentioned. The successors to W.T. Fuller sue CNX over the non-coal mineral rights. To resolve the dispute, the Court has to decide what the above-quoted language meant. Have the non-coal mineral rights been legally conveyed or not? Royalties to the coalbed methane hang in the balance.
When I initially read these facts, I wondered if perhaps I was missing something. Did the 1887 deed say something about non-coal minerals? Was there some other deed prior to 1918 conveying the minerals? Perhaps there was an unrecorded deed known to the parties in 1918. Since the opinion states the parties stipulated to the facts, the title examination must have revealed the answer to both questions to be “no.”
The Supreme Court of Virginia applied the following legal rules to resolve the title dispute:
- Is the language capable of being understood by reasonable persons in more than one way? One could assume the answer to be “yes,” since the issue found its way to the highest court in the Commonwealth. But lawyers have a reputation for torturing unambiguous language, so the question is appropriate. The Supreme Court found the deed ambiguous.
- Which interpretation favors the grantee (recipient)? Since the Grantors (usually sellers) are the ones who sign the deed conveying the property, it is only fair to assume that they chose their language carefully.
- Can the language of the deed be considered holistically? Since W.T. Fuller included all of those phrases in the deed, it is reasonable to harmonize them rather than pick and choose certain sections that favor one side over the other.
- Is the limiting language clear and unequivocal? A deed must have, among other things, words of conveyance, which generally describe the lot or parcel of land transferred. A deed may also include other language limiting or reserving certain interests excepted from the transfer, such as certain mineral rights. Unless the limiting language contrary to the general grant is expressed clearly and unequivocally, it will not be upheld in court.
The Supreme Court of Virginia applied these rules to find that the only “coals or minerals” not included in CNX’s leasehold interest are the coal rights conveyed to Joseph Doran and W.A. Dick in 1887. The Court entered judgment upholding CNX’s rights to extract the coalbed methane from the 75 acre tract. Words of conveyance prevailed.
P.S. – There is one other principle that the Court could have mentioned: when interpreting legal documents, the specific prevails over the general. Since the 1914 deed made reference to previous conveyances of natural resource rights, the plaintiffs’ stipulation to the absence of any other deeds locked them in.