Daily Development for Monday, March 3, 2003
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
dirt@umkc.edu

EASEMENTS; CREATION; IMPLICATION; MINERAL
RIGHTS: There is no implied right of reservation to use the surface of
the land to extract oil and gas  unless there is a strict necessity,
and the grantor's ownership of adjacent property at the time of the
transfer of the alleged servient estate precludes the inference of any such
easement if the adjacent property could be used for extraction of the
minerals in question.

Calvert Joint Venture #140 v. Snider, 2003 Westlaw 301326, No. 52,
Sept. Term 2002 (Md. 2/13/03)

Developers obtained a 140 acre parcel for purposes of development of a
residential subdivision.  Owners, who sold the land to developers, agreed
to cooperate in the subdivision approval process.  Owners also reserved
the an interest in all "oil, gas and other mineral rights" in the property.
Owners retained ownership of property adjacent to the proposed
subdivision.  Later, developers tendered to owners a subdivision consent
form that included an acknowledgment that the owners had no right to
exercise their reserved rights through activities that would be
inconsistent with the residential subdivision, including surface pumping
or mining.  Owners refused to sign and ultimately Developers obtained
the subdivision approval anyway, but sued Owners for declaratory relief
because, they alleged, Owners' refusal to acknowledge that they had no
surface rights on the subdivision property clouded the title to the 140
acres and interfered with marketability.

The lower appeals court had found for Owners, but the Maryland Court
of Appeals here reversed.

In a decision of first impression in Maryland, the Court of Appeals did
acknowledge that normally when there is a reservation of mineral rights
there is reserved an easement to go onto the property transferred to
extract those minerals.  But this right exists only when both reasonable
and necessary.  The court focussed primarily on the fact that the Owners
had not shown that the mining right was necessary at the time of the
grant, since they retained adjacent property at the time of the grant and
could base any mineral extraction, such as oil drilling or mining, from
that land, and there was no necessity to go on the surface of Developers'
land.  The court further found that the grantor still owned those lands,
and therefore to invade the neighboring surface was unreasonable.  It is a
bit unclear whether the outcome would have been different if the grantor
had sold the adjacent lands - the editor thinks that the answer should be
"no," since there would be no basis upon which to infer the covenant.

This court reflects a rather conservative view of the highest court in
Maryland concerning implied easements in general.  It states that there
can be no implied right of access of any kind arising by reservation, even
when there is a quasi easement existing at the time of transfer, unless
such access is strictly necessary.  This is a significant departure from the
law in most jurisdictions, some of which would not differentiate between
implication by reservation and implication by grant at all, and some that
would, even though recognizing a different degree of necessity, still
permit a reserved easement of access in situations involving reasonable
necessity at time of reservation, instead of strict necessity.

As an alternative ground, the Developers argued that the Owners were
restricted from going on the surface because of the understanding of the
parties the grantor transferred property to grantee for purposes of the
development of a residential subdivision.  The papers required the
grantor to participate in applications for the subdivision approval (since
the land for a while was made subject to an installment land contract, and
the grantor remained the record titleholder.)  Thus it was clear that the
parties intended a use on the transferred property that was not consistent
with surface oil extraction activities. The court didn't hold  specifically
that the understanding relating to the subdivision precluded surface
extraction of oil or minerals, however.  It was clear to the court that there
was no right of access in any event unless such access was strictly
necessary.

The grantee also argued that the grantor's obligation to provide absolute
subjacent support justified requiring the grantor to sign the admission of
responsibility that it provided as part of the subdivision consent.  Here
the court did not agree.  The subjacent support duty is not absolute when
a mineral estate is reserved.  Instead, the responsibilities of the party with
the subjacent estate has the general duty of reasonableness.   Apparently
the court did not feel that the understanding at time of sale that the
property would be subdivided for a residential development tipped the
scales to any absolute duty.  It must be assumed, however,  that in
evaluating the reasonableness of any mining behavior, this fact would
have been taken into account.

The court did acknowledge that, at the conclusion of any mineral
extraction, a party with a mining right has the absolute duty to provide
subjacent support for the surface from any excavation that the mining
operation may have caused underground.  But that does not necessarily
mean that the surface cannot be broken if the right to go on the property
to mine otherwise exists and breaking the surface is a reasonable method
of extracting the oil or minerals.

Comment 1: Although, at bottom, the case is based upon a rather
conservative view of implication of easements, there is still a lot of
"mining" to be done here of the discussion and authorities concerning the
relative rights of the owner of a reserved mineral estate and the grantee
of the surface property.  Of primary significance is the finding as a
matter of first impression that in fact there can be an implied easement
for mining the surface when there is a reservation of oil or
mineral rights.

Further, is also significant that the court was not disposed to find that the
right did not exist based solely on the parties' understanding concerning
the subdivision project.  If the buyer intended to prioritize the
subdivision use over the mining use, it would have been well advised to
set forth that priority specifically,

Thus, despite the final result and interpretation of the implied easement
doctrine generally, the case does recognize that courts will imply
easements to carry out mining purposes even when the documents
creating mineral rights do not expressly create such easements.

Comment 2: The court's steadfast adherence to the distinction between
easements reserved by grant and those reserved by reservation is also
worthy of note.  The court's conservative view concerning implication by
reservation is grounded on the notion that "a grantor may not derogate
from the terms of his grant."  In the editor's view, this is similar to the
notion, still frequently cited, that ambiguous terms, even in a commercial
instrument, will be construed against the "drafter."

Both concepts strike the editor as overly mechanical and useful only as
"tie breakers."  The real inquiry of the court ought to be what the parties
intended.  In negotiated commercial instruments, the intent to accept
certain language in an instrument can as easily be inferred by one's
acceptance of the instrument as in can by one's drafting of the language.
All should be expected to be looking after their own interests, reading
what they sign, and refusing to sign when they find the language
objectionable. Similarly, the grantor and the grantee of a deed each have
a strong interest in seeing to it that the deed accurately reflects their
intentions.  The presumption that it does so reflect their intentions ought
to have the same strength regardless of which of the parties is arguing
otherwise.

In fact, the editor believes that there are many good bases upon which
one can conclude that parties to a deed in fact did intend to create an
easement notwithstanding their failure to mention it, but the editor is at a
loss to understand why they are less likely to have intended to create a
reserved easement than a granted one.  The tests should be the same in
both cases.

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