Chosar Corp. v. Owens

THOMAS, J.,

dissenting.

This is an extremely important property case which, in my opinion, has been wrongly decided by the majority in a decision that could have dire adverse consequences for the Commonwealth. The basic dispute is over the mining of coal. The owners of 85 % of the coal in question want to mine. The owners of the remaining 15% of the coal do not want to mine. As the majority acknowledges, because of Code § 8.01-81, the dispute between the owners cannot be resolved by a partition suit. Thus, the owners are locked in battle with no way out. The result of the majority opinion is that the rights of the 15% who do not want to mine have been made paramount to the rights of the 85% who want to mine. Indeed, the principle of the majority opinion is such that if the mineral rights here in dispute were jointly owned by 1,000,000 people and 999,999 of these co-owners wanted to mine, one solitary co-owner could enjoin all mining. The majority’s decision is neither required nor justified by existing Virginia law; moreover, it is not sound in principle or logic.

Two issues were presented to the trial court. The first was whether Chosar, the 85 % owner of the mineral rights in the Willis tract, committed waste by mining coal from the property. The second was whether Chosar committed a trespass by hauling coal belonging to third parties through tunnels in the Willis tract which had been created by the mining that was claimed to be waste. The trial court ruled against Chosar on both points. With regard to mining, the trial court wrote in a letter opinion as follows:

[T]he Court is of the opinion that this case is on all fours with Dotson v. Branham, 197 Va. 674, and therefore, the defendant’s [sic] are enjoined from mining the coal as said coal is not covered by the lease as to all of the owners of undivided interest and therefore, the mining of the coal by the defendant is a trespass as to the rights of the complainants and amounts to the commission of waste.

*667With regard to haulage, the trial court ruled as follows: “The defendants . . . are hereby restrained and enjoined from hauling through the underground passages in the 61 acre tract of land involved in this case, any coal produced from lands other than the 61 acre tract.”

Dotson v. Branham, 197 Va. 674, 90 S.E.2d 783 (1956), is the sole legal authority relied on by the trial court in deciding the instant case. As set forth above, the trial court was of the view that Dotson was “on all fours” and was thus controlling. Significantly, however, though it affirms the trial court’s decision, the majority pays little attention to Dotson. In my view, Dotson was handled so gingerly because it is not on all fours with the instant case and is therefore not controlling.

In Dotson, the majority interest holders sought to enjoin mining by a minority interest holder. The property in dispute in Dotson was a 12.59-acre parcel of a larger 89-acre tract which originally had been owned by Logan S. Mullins and which passed to his four children when Mullins died. Each child took an undivided one-fourth interest in the coal, oil, gas and minerals on the 89-acre tract. One of the children, John G. Mullins, and his wife, conveyed to B. E. Dotson and Kenneth Dotson fee simple ownership in the above mentioned 12.59-acre parcel. Although John owned only an undivided interest in the property, the conveyance to the Dotsons was described by metes and bounds. The Dotsons then leased the coal mining rights on the parcel to W. M. Kelly.

At the time of the conveyance to the Dotsons, there was only one acre of coal left to be mined on the entire 89-acre tract. This coal was located within the boundaries of the 12.59 acres that had been conveyed by metes and bounds to the Dotsons. Kelly contended that in reliance upon the Dotson lease, he had opened the mine and was in the process of mining. The Dotsons claimed all the coal on the 12.59-acre parcel and the right to lease it and to receive royalties. The trial court in Dotson found that the Dotsons and Kelly had mined part of the 12.59 acres “and would continue to mine it exclusively for their own benefit and in disregard of the rights of their co-owners.” Id. at 677, 90 S.E.2d at 786. The trial court in Dotson enjoined defendants from mining and removing the coal on the parcel without the consent of their co-owners, so long as the interests in said coal remained undivided.

The precise issue in Dotson was “whether it was proper to grant an injunction against them as owners of an undivided one-fourth *668interest in the minerals, whereas they were grantees of all the minerals in the deed from one who owned only an undivided interest therein.” Id. Put another way, was it proper to enjoin the Dot-sons from appropriating for themselves all the coal from the only remaining deposit when the Dotsons’ ownership was limited to an undivided interest in that coal. We held that under these circumstances the injunction was proper.

Clearly the injunction was proper. It is shown beyond controversy that the Branhams owned an undivided three-fourths of this coal. That was shown by the records which the defendants testified they had examined. The defendants owned only an undivided one-fourth of this coal. That was all that their grantors owned and all they could convey to the defendants. Those grantors could not by their deed to the defendants convey or diminish the property of the Branhams. The defendants did not contend that they were mining for the benefit of themselves and the Branhams. They asserted in their pleadings and in their evidence that they owned all this coal and that they were mining it for themselves to the exclusion of their co-owners. They had, of course, no right to exclude their co-owners from their interest in the property and appropriate all of it to themselves.

Id. at 678, 90 S.E.2d at 786-87 (emphasis added).

In the instant appeal, the facts are significantly different. Here, Chosar has never claimed exclusive right to all the coal from the mine in question. Chosar has always acknowledged the ownership interest of its co-owners. Further, Chosar attempted to leave unmined sufficient coal to represent the interest of the 15% who did not want to mine and Chosar also set up a fund into which it made royalty payments for the benefit of those who had refused to mine. Unlike the situation in Dotson, Chosar never contended that it had a right to all the coal and all the proceeds from the sale of the coal.

In my opinion, Dotson is distinguishable on its facts and is thus not controlling. Moreover, the other cases cited by the majority do not address the precise issue raised in this appeal. I would treat the present problem as a case of first impression in the Commonwealth and establish a rule that protects the property rights of both the minority and the majority.

*669Although Dotson was the only legal authority relied on by the trial court in ruling against Chosar, it is apparent from the record that part of the trial court’s rationale was that Chosar could have protected its rights by filing a partition suit. At one of the hearings the trial court stated as follows:

They had an adequate remedy before they tried to obtain the lease .... There wasn’t anything to keep you from filing a partition suit and whether the statute prohibits the partition or whether or not the fact that you don’t know how to partition coal because of the nature of it not being discoverable just from a view of the surface, the Court then could have ordered a sale.

Of course, as the majority concluded and as I agree, partition is the very thing that Code § 8.01-81 does not permit in this situation. Thus, the trial court was wrong to conclude that Chosar had “an adequate remedy.”

With regard to the issue of trespass and waste, I would consider the totality of the circumstances, including the fact that coal can be enjoyed only through extraction and is valuable only as a result of extraction. See 1 Kuntz, A Treatise on the Law of Oil and Gas § 5.3 (1987). Moreover, I would consider the fact that an overwhelming majority of the interest holders want to mine yet are prohibited from partitioning the property. Then I would adopt a rule such as that which is said to be the majority rule regarding extraction of oil and gas:* “Under the rule which is applied in the majority of states which have decisions on the point, a cotenant in the fee may enter to explore for and produce oil and gas without consent of his cotenants. He must, however, account to his cotenants for their proportionate share of production.” Id. (citations omitted) (emphasis added) . By such rule, in the special class of cases represented by the instant appeal, I would undertake to prevent a tyranny of the minority interest holders. Without such a rule, the majority’s interest in otherwise valuable mineral rights could be absolutely destroyed on the whim of one recalcitrant co-owner.

*670The portion of the majority opinion which concerns the haulage issue does not even address the issue which was presented to this Court. That issue is whether Chosar trespassed upon its own property when it transported a third party’s coal through passageways located in the Willis tract. The facts are that the haulage does nothing to damage the mineral estate.

I cannot understand, and the majority does not explain, how a co-owner of property can trespass on his own property simply by moving through that property. The haulage issue does not involve a question of entering the property to commit waste. Hauling coal through tunnels is not the same as removing coal from the property. The theory of trespass in the context of waste is that not even a co-owner of property will be permitted to enter the property to commit waste. In that limited situation, the law says that even the co-owner has no right to be on the property. But where no act of waste is being committed, the co-owner’s original rights to enter his property will obtain.

The majority has, by brute force, simply declared that because it was waste to extract coal in the first instance, it is trespass to move through the tunnels created by the original extraction even if no more extraction is being done. I disagree with the first proposition. But even if it were true, the second proposition does not follow from the first. I would reverse the judgment of the trial court on both issues.

Although the rule I would adopt derives from the law of oil and gas, which substances have characteristics different from coal, it is noteworthy that the Dotson decision was itself based on oil and gas principles. See Dotson, 197 Va. at 679, 90 S.E.2d at 787.