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Adverse possession of mineral rights: one loser, one winer.

In two suits by surface property owners to seize ownership of the severed mineral estates on their properties and prevent further surface mining, one property owner was successful while the other's attempt was foiled by the appeals court's decision.

In the more recent Kentucky case where adverse possession of minerals foiled by court on appeal, the surface owners were successful in the lower courts in being awarded ownership of the minerals by adverse possession and received an award of $188K in lost royalties. On appeal to the Kentucky Supreme Court, the lower court's decisions and award were reversed. The surface owners were denied ownership of the minerals by adverse possession and forfeited the money award.

In Great Western Land Management, Inc. vs. Slusher, Ky, 1997, 939 S.W.2d 865, the surface estate owner, Slusher, brought an action in 1990 against the holders of record title of the mineral estate (the Stewarts) and against the mineral lessee to let title to the mineral estate. Slushers sued the mining lessee for damages for failure to pay royalties that the lessee would have owed the Slushers.

It is generally difficult for any surface owner to possess adversely a severed mineral estate on his land. In this Kentucky case, the Supreme Court found that "it has long been the law that the surface owner holds a severed mineral estate, acquired from a common grantor, in trust for the benefit of the mineral estate owner. Because the surface owner is in the position of a trustee, he cannot acquire title by adverse possession to the mineral estate except in the way and manner which a trust of other real property may acquire title against the trust."

In the present case, the surface estate owner, Slusher, and the mineral estate owner, Stewart, trace their interest to a common owner and grantor back to 1899. The mineral rights were severed from the surface estate in 1903.

A trustee can only acquire title to the trust property through adverse possession by repudiating the trust. An act repudiating the trust is required of the trustee to convert the surface owner's permissive possession as trustee of the mineral estate into possession that is hostile to the interest of the owner of the mineral estate. The repudiation act by the trustee must be one, by act or words, that clearly indicates to the mineral owner that the surface ownertrustee is claiming the minerals adversely. Thus, in this case, the Slushers were required by state statute to hold the minerals for the benefit of the Stewarts.

The only act of the Slushers that could be interpreted as repudiation of their trust was their leasing of the minerals to a mining company that proceeded to mine the property. Around 1982, the Stewarts leased their mineral interests to another company, Plastics Universal. During a title search, Plastics discovered the conflict of leased mineral interests.

The statutory period required for adverse possession in Kentucky is 15 years. The Slushers stopped the statute running when they filed the quiet title action in 1990, seven years short of the required period. Therefore, the court found that the Slushers could not have obtained legal title to the mineral estate underlying their property through adverse possession. The question of whether the Slushers had committed an act of repudiation of their trust was left undecided.

In a Missouri case involving adverse possession of minerals, the surface landowner acquired the severed mineral estate under his property. Had the mining company and the mineral owner-lessor been alert, the surface owner would not have succeeded.

In General Refractories Co. vs. Raack, 674 S.W.2d 97 (Mo.App.1984), the clay mining company lost its leased clay pits to the surface owner's adverse possession claim. Normally, a surface owner cannot acquire title to the severed mineral estate by adverse possession unless he or she mines the mineral by actual, notorious, exclusive, continuous, and peaceable means. without objection by the mineral estate owner.

In 1955, General Refractories leased the clay property with a provision that upon payment of all stipulated royalties within 10 years, it could become the owner of the clay in place and remove it at any time thereafter. General mined for the next 10 years, paying all stipulated royalties to acquire title in 1965 to the remaining clay in four pits. Shortly after in 1965, the fee owner sold the land subject to the lease with General and excepted the mineral rights accruing from the lease. In 1968 General removed all the clay from one of the four pits.

In 1969 the land was again sold to Raack. Before Raack's purchase, General explained to him that it planned to continue mining clay. Raack voiced no objection. After Raack's purchase, he notified General in writing that its "purported" lease was void and warned General to not enter the property or attempt to exercise any of their alleged rights under the void lease and threatened General with legal action for damages and injunctive relief.

General made no further attempt to mine for 12 years until 1981 when it and the mineral estate owner brought suit against Raack for the right to mine the clay. The lower and appeals courts held that General and the mineral estate owner had lost their clay ownership as the surface owner. Raack had successfully kept them from entering the property and exercising their right to mine for more than the 10-year statutory period. The court held that the surface owner had acquired title to the mineral estate by adverse possession.

R. Lee Aston, a mining engineer, geologist, and attorney, is a member of the Georgia, Virginia, Indiana, and Montana Bars. Contact: Aston Mineral Law & Engineering, P.O. Box 34, Elberton, Ga, 30635, USA.
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Publication:E&MJ - Engineering & Mining Journal
Date:Feb 1, 1998
Words:956
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