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MIDDLETON v. WESTERN COAL AND MINING COMPANY

May 21, 1965

ROBERT J. MIDDLETON, ROBERT E. MIDDLETON, RICHARD B. GRIFFIN, AND BRADLEY W. KIDDER, PLAINTIFFS,
v.
WESTERN COAL AND MINING COMPANY, A CORPORATION, MISSOURI IMPROVEMENT COMPANY, A CORPORATION, AND THE MISSOURI PACIFIC RAILROAD COMPANY, A CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: John E. Miller, Chief Judge.

This action was commenced May 13, 1964, by the plaintiffs in the Sebastian Chancery Court, Greenwood District, of Arkansas. The action was timely removed by the defendants June 2, 1964.

The defendant Western Coal and Mining Company (hereinafter called Western) is a corporation organized and existing under the laws of the State of Missouri, with its principal place of business at St. Louis. The defendant Missouri Improvement Company (hereinafter referred to as Improvement) is a Missouri corporation with its principal place of business at St. Louis. The defendant Missouri Pacific Railroad Company is a Missouri corporation with its principal place of business at St. Louis. The plaintiffs Robert J. Middleton, Robert E. Middleton, Richard B. Griffin and Bradley W. Kidder are citizens of the State of Arkansas and residents of Sebastian County. The court has jurisdiction of the action by virtue of the diversity of citizenship of the parties and the amount in controversy, 28 U.S.C. § 1332.

The plaintiffs in their complaint alleged that Robert J. Middleton and Floy Middleton, husband and wife, purchased certain real property in the Greenwood District of Sebastian County on February 28, 1945. On October 2, 1962, Robert J. Middleton entered into a contract of sale with Robert E. Middleton, Richard B. Griffin and Bradley W. Kidder to sell this property for the purpose of subdividing, improving and resale as residential and commercial lots. Pursuant to this agreement the property was subdivided and platted and a bill of assurance filed. Prior to the above described transactions the plaintiffs' predecessors in title, Franklin Bache and Nannie T. Bache, his wife, on April 2, 1904, conveyed to Western "all and singular the coal, fire clay and other minerals contained within and underlying" the property involved in the instant controversy.*fn1

In paragraph 9 of the complaint the plaintiffs alleged that the perpetual option in the April 2, 1904, deed is null and void for the following reasons:

  "(a)  It is too vague, uncertain and indefinite
        to constitute a binding option.
  "(b)  It fails to specify a time limit in which
        the said option is to be exercised; and in
        the event a reasonable time is to be
        inferred as the limit, then said reasonable
        time has expired.
  "(c)  It is an unlimited or perpetual option
        which violates the rule against
        perpetuities.
  "(d)  It is inherently inequitable in that it
        totally destroys the merchantability of
        plaintiffs' title to the surface of said
        property.
  "(e)  Defendants have failed to use due diligence
        in the exploration, development and working
        of the premises.
  "(f)  Defendants have permitted plaintiffs to
        make improvements upon the surface of said
        property and otherwise act in a manner
        wholly inconsistent with any purported
        right which defendants might claim under
        said perpetual option, and defendants are
        now estopped from asserting any rights
        thereunder.
  "(g)  Defendants are barred by laches from
        asserting any purported rights under the
        said provision.
  "(h)  The purported option to take the surface of
        said property is not necessary or required
        for the purpose of mining the coal, fire
        clay or other minerals underlying said
        property for the reason that defendants
        have other access to said minerals through
        the surface of adjacent lands owned by
        defendants herein."

In paragraph 10 of the plaintiffs' complaint it is alleged that Missouri Pacific is the successor in title to a purported right-of-way across this property; that although Missouri Pacific did at one time maintain railroad tracks across said property, they were removed several years ago, the exact date of removal not being known to the plaintiffs. That the Missouri Pacific removed all tracks, ties, rails and bridges along said right-of-way, and thereby wholly and completely abandoned any interest, right or ownership. That the right-of-way also constitutes a cloud upon the title to the surface of this property.

In paragraph 11 of the plaintiffs' complaint the plaintiffs alleged that the Bache deed did not convey oil and natural gas by the use of the words "other minerals" in the April 2, 1904, deed. That although the legal and commercial usage of the term "other minerals" in the Greenwood District of Sebastian County, Arkansas, did not include oil and natural gas at the time the deed was executed, the words "other minerals" constitute a cloud upon the title to the oil and gas underlying the property.

The prayer of the complaint is (1) that the court construe the April 2, 1904, deed to include the right to conduct underground mining only; (2) that the court declare the perpetual option in the April 2, 1904 deed to be null and void, and the court remove same as a cloud upon the plaintiffs' title, or, in the alternative, require the defendants to elect whether they will exercise the option to use the surface, and if defendants elect to exercise said option that they be required to designate which portion of the surface will be used, and that the defendants be required to pay compensation for their interest as their interest may appear; (3) that this court declare the right-of-way in favor of St. Louis, Iron Mountain and Southern Railway Company, and its successor, Missouri Pacific Railroad Company, abandoned, and that the court remove same as a cloud upon the plaintiffs' title; (4) that this court construe the words "other minerals" in the April 2, 1904, deed to include only solid minerals and to exclude oil and natural gas; that the words "other minerals" be removed as a cloud upon the plaintiffs' title, and that Robert J. Middleton be declared the sole and exclusive owner of the oil and natural gas underlying said property exclusive of any claims by Western and Improvement and their successors and assigns.

The defendants in their answer generally deny the allegations of the plaintiffs' complaint, although they admit the execution of the April 2, 1904, deed. They deny that the plaintiffs have alleged any grounds upon which they are entitled to relief, and defendants further pray that the plaintiffs' complaint be dismissed.

On February 3, 1965, the parties, through their respective attorneys, filed a stipulation of facts, which contains the following:

"2.

    "On April 2, 1904, the Western Coal and Mining
  Company purchased from Franklin Bache and Nannie
  T. Bache, his wife, `all and singular the coal,
  fire clay and other minerals contained within and
  underlying' certain real property situated in
  Sebastian County, Arkansas, described as follows:

[description omitted]

    "A copy of the deed dated April 2, 1904, and
  filed of record in Deed Record Book 33, page 387,
  on April 4, 1904, is attached to this
  stipulation, and the parties agree that the said
  copy is true and correct.
                       "3.
    "The deed of April 2, 1904, referred to in the
  preceding paragraph contained a certain provision
  following the granting clause with which we are
  particularly concerned in this lawsuit as
  follows:
           [herein quoted the April 2
           1904, deed in Footnote 1.]

"4.

    "On November 1, 1904, Franklin Bache and Nannie
  T. Bache, his wife, conveyed the property
  described in paragraph 2 above to John F. Clay.
  John F. Clay died in 1936, and by the terms of
  his will title to the property passed to his wife
  Sally C. Clay. Sally C. Clay died in either 1941
  or 1942, and pursuant to her will title to the
  property passed to her sons, John Clarence Clay
  and James E. Clay. On February 28, 1945, James E.
  Clay and John Clarence Clay, together with their
  respective wives, conveyed to Robert J. Middleton
  and Floy Middleton, husband and wife, three
  hundred and twenty acres of said land described
  as follows:

[description omitted]

    "Floy Middleton died in March, 1954, and Robert
  J. Middleton became the sole owner of the above
  described property as survivor.

"5.

"6.

    "Pursuant to the sales contract referred to in
  the preceding paragraph Richard B. Griffin,
  Bradley W. Kidder and Robert E. Middleton
  purchased from Robert J. Middleton lot one in
  Montclair Acres No. 1, and Robert J. Middleton
  executed a warranty deed on that date conveying
  said lot one to Virgil Afton Embry and Mary Ann
  Embry, subject to title examination. The Embrys
  submitted an application to the Farmers Home
  Administration for a loan to build a house on lot
  one in Montclair Acres No. 1, and the loan was
  approved, subject to title examination. When the
  abstract was examined by the attorney for the
  Farmers Home Administration, title was determined
  to be defective for the reason that the provision
  in the deed of April 2, 1904, to the Western Coal
  and Mining Company, its successors or assigns,
  giving to them the right to purchase the fee
  simple title to the surface of the property
  constituted a cloud on the title of the
  plaintiffs to the surface. For this reason the
  application for the loan was denied. There have
  been no sales of any portion of the property
  since that time, and the status of the parties
  remains the same.

"7.

    "For the purpose of this lawsuit only, the
  defendants admit that Robert J. Middleton is the
  sole owner of the surface to the three hundred
  and twenty acre tract described in paragraph 4
  above, subject only to such rights as defendants
  may have to the surface of said land and to `all
  and singular the coal, fire clay and other
  minerals contained within and underlying' said
  land under the terms of the deed to the Western
  Coal and Mining Company dated April 2, 1904. For
  the purpose of this lawsuit only the plaintiffs
  admit that the Missouri Improvement Company is
  the owner of the coal, fire clay and other solid
  ...

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