Mineral Rights Upheld
[Note: The Court
of Special Appeals decision was subsequently reversed by the
Maryland Court of Appeals. To read the Real Estate Update report
of the later case,
click here.]
When Calvert Joint
Venture #140 purchased a tree farm it intended to subdivide into
residential building lots, the sellers reserved all oil, gas or
other mineral rights in and to the property. The Court of Special
Appeals reviewed the implications of that reservation in
Calvert Joint Venture #140 v. Snider.
The sellers had no
objection to the subdivision, and signed the documents necessary
to begin the subdivision process. However, when the developer
presented the final subdivision plat for the sellers’ signature,
the plat included statements that the sellers were unwilling to
sign. The requested provisions would have limited the scope and
duration of the mineral rights by stating:
We, [the
sellers], owners of all oil, gas or other mineral rights in
and to the aforesaid property, . . . by virtue of the
reservation . . . contained in the [special warranty] Deed
dated October 17, 1996, and recorded May 30, 1997 . . . . join
in this plat for the purposes stated above, and to confirm
said ownership in themselves for their lifetime and no longer
and to confirm their right to prospect, mine and operate in
and under the land for oil, gas or other minerals, by any and
all subterranean mining methods that are permissible under
current County and State regulations and will not interfere
with the use of the surface of the land as a residential
subdivision. [Sellers] acknowledge that said rights are
subordinate to the use of the property as a residential
subdivision and that they reserved no right of ingress to and
on and egress from the surface of the land for the purpose of
prospecting mining, drilling wells, and operating beneath the
surface and extracting and removing oil, gas or other minerals
from below the surface of the land....
When the sellers
refused to sign the plat, the developer filed suit seeking a
declaratory judgment limiting the extent of the reserved rights, or
alternatively, reformation of the land installment contract and
deed, and an order requiring the sellers to sign the plat. The
developer did not get any relief from the court. The Court of
Special Appeals affirmed the trial judge.
Noting that there
is little Maryland case law regarding the reservation of mineral
rights, the Court of Special Appeals found a case from Arizona on
point. In that case the court stated:
“[A]
reservation of ‘all minerals whatsoever’ reflects a general
intent of the parties to sever the surface estate from the
underlying mineral estate. It indicates that the parties
intended to create two distinct, coexisting, and individually
valuable estates. Thus, the grantor retains ownership of all
commercially valuable substances separate from the soil, while
the grantee assumes ownership of a surface that has value in its
use and enjoyment. ...
“In general,
the owner of the mineral estate possesses the incidental right
of entering, occupying, and utilizing the surface to explore for
and develop the underlying minerals.”
The Court of
Special Appeals held that the trial judge had correctly concluded
that there were “two distinct interests in the land.” Since there
was no language in the land installment contract or deed that would
limit the duration of the reserved interest to a life estate, there
was no basis for the trial court to accept the developer’s claim
that the interest was so limited. Consequently, the sellers were
within their rights not to sign the subdivision plat as the
developer had requested.
The Court of
Special Appeals also supported the trial judge’s refusal to reform
the land installment contract in the absence of “mistake by fraud,
duress, or other inequitable conduct.”
Calvert Joint
Venture #140 v. Snider,
No 885, September Term 2001, in the Court of Special Appeals of
Maryland, filed May 3, 2002.
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