Missouri Pac. Rd., Thompson, Trustee v. Strohacker
1941 Ark. LEXIS 246, 202 Ark. 645, 152 S.W.2d 557 (1941)
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Rule of Law:
The interpretation of a deed's reservation of "minerals" is governed by the common understanding and intent of the parties at the time of the conveyance. A general mineral reservation in a deed from an era and location where oil and gas were not commonly considered or commercially exploited as minerals does not include oil and gas.
Facts:
- In 1892 and 1893, the St. Louis, Iron Mountain & Southern Railway Company ('Iron Mountain Company') conveyed tracts of land in Miller County, Arkansas.
- The deeds for these conveyances contained a reservation for 'all coal and mineral deposits.'
- Missouri Pacific Railroad Company is the successor to the rights of the Iron Mountain Company.
- At the time the deeds were executed, there was no significant oil or gas exploration or production in Arkansas, and these substances were not generally given commercial consideration in connection with land values.
- Internal correspondence from the Iron Mountain Company's attorneys at the time indicated the reservation was included primarily to protect the railroad from warranty claims in case the U.S. government later reclaimed minerals under the original federal land grant.
- The appellees are the current fee-simple owners of the lands, having acquired title from the original grantees.
Procedural Posture:
- The landowners (appellees) filed suit in the chancery court (trial court) to cancel the mineral reservations and quiet title to the oil and gas in themselves.
- The chancellor entered a decree in favor of the landowners, holding that the reservations did not include oil and gas.
- The Missouri Pacific Railroad Company (appellant) appealed the chancellor's decree to the Supreme Court of Arkansas.
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Issue:
Does a reservation of 'all coal and mineral deposits' in deeds from 1892 and 1893 include oil and gas, when at the time of the conveyance, oil and gas were not commonly understood or commercially considered as minerals in that region?
Opinions:
Majority - Griffin Smith, C. J.
No. A reservation of 'all coal and mineral deposits' in these 1892-93 deeds does not include oil and gas. The court's primary task is to determine the intent of the parties at the time the instrument was executed. The court found that at the time of these conveyances, the term 'minerals' was not commonly or commercially understood in Arkansas to include oil and gas. The court reasoned that the best interpretation is one that views the subject of the contract as the 'mass of mankind' would have viewed it at that time. While modern legal definitions and scientific classifications may consider oil and gas to be minerals, that was not the general construction or commercial reality in this region in the 1890s. The court distinguished this from cases where reservations were made in areas or times when oil and gas were known and commercially viable, in which case a general reservation of 'minerals' would include them.
Analysis:
This decision establishes the principle of contemporaneous construction for interpreting mineral reservations in Arkansas, prioritizing the parties' historical intent over modern, technical definitions. It means that the legal meaning of 'minerals' can vary depending on the date and location of the deed. This ruling has a major impact on land title disputes involving old deeds, as it requires a historical and contextual analysis to determine ownership of later-discovered resources like oil and gas. It creates a potential divergence in interpretation, where old grants are read narrowly while modern grants of 'minerals' are read broadly to include oil and gas.
