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Seventh District Court of Appeals Finds the Conveyance of "Coal and Other Minerals" To Include Oil and Gas

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

In Coldwell et al. v. Moore, et al., the Seventh District Court of Appeals reviewed a decision from the Columbiana County Court of Common Pleas that found rescission of a purchase and sale agreement was appropriate based on the mutual mistake of the parties as to whether “minerals” included oil and gas rights, and further held as a matter of law that “coal and other minerals” includes a fee interest in oil and gas.  The Seventh District partially reversed, finding rescission to be inappropriate. 

In Coldwell, both the seller (severed mineral holder) and buyer (surface owner) believed they owned the oil and gas rights.  Nevertheless, they executed a purchase and sale agreement covering “mineral rights only” to approximately 200 net mineral acres, retaining royalties on coal.  Subsequently, the seller asserted the executed purchase and sale agreement and proffered deed incorrectly stated that the right to receive royalties from the oil and gas were to be transferred to the buyer.  The Seventh District disagreed there was any mutual mistake as to the meaning of “minerals” regardless what the parties believed they owned, as the buyer intended to buy and seller intended to sell all of their mineral rights, stating “the only thing the [seller] may have been mistaken about was the value of their mineral rights when negotiating the purchase price,” finding the seller bore the risk that the value placed on the mineral rights might not comport to current or future market prices. 

The Seventh District also addressed the issue of whether the seller owned the oil and gas rights, based on a prior deed conveying “coal and other minerals.”  The Seventh District held such language includes oil and gas rights, absent language demonstrating the parties contemplated something less.  The buyer asserted that the prior deeds which previously severed the coal and other minerals did not sever the oil and gas rights based on Detlor v. Holland, 57 Ohio St. 492 (1898), which held the grant of “other valuable minerals” did not include oil and gas if words of limitation as to the methods of extracting did not contemplate production of oil or gas, but rather focused on exclusively hard mineral extraction.  However, the Seventh District found “coal and other minerals” to be a conveyance of oil and gas based upon their determination that the deeds at issue included easements allowing extraction of other minerals. 

Coldwell, et al. v. Moore, et al., 7th Dist. Columbiana No. 2011CV131, 2014-Ohio-5323 (Nov. 21, 2014)

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

If you have any questions concerning this client alert, please contact Attorney Gregory W. Watts at 330-497-0700.

 
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