Monday, June 24, 2013

Recent State Supreme Court Decision Defines "Surface" In West Virginia

In a June 13, 2013 decision, the Supreme Court of Appeals of West Virginia overruled a 1923 holding that the word “surface,” when used in a deed, is ambiguous on its face and always subject to interpretation with extrinsic evidence, setting forth a more useful and concrete definition and interpretation framework.  The opinion, written by Justice Menis Ketchum, is based on the long held principle in West Virginia that if the intent of the grantor in an instrument is clear and unambiguous, the Court has no right or province to alter it. 

The underlying dispute centered around the oil and gas ownership of a 225-acre parcel of land in Preston County, West Virginia.  A 1907 deed from a sister to a brother conveyed a 1/7 undivided interest in and to the “surface only” of the land and also recited that the coal and mining rights had been previously sold.  The Circuit Court of Preston County followed the old rule and found that “surface only” was ambiguous and subject to modern day interpretation.  In finding that the deed did not convey the oil and gas, the Circuit Court cited evidence that the oil and gas interest was not taxed or entered into the Land Books and that the grantor did not lease or later convey the interest.  The Circuit Court held that this showed intent to transfer everything the grantor owned to her brother and keep nothing for herself.

The Supreme Court of Appeals of West Virginia overruled this decision and found that the term “surface only” is clear and unambiguous, stating that parties are bound by general and ordinary meanings of words used in deeds.  In the Court’s view, the old rule violated two public policy principles.  First, courts and practitioners need terms with a definite meaning when drafting instruments; and second, courts want to reach the intended result of the parties and therefore confine themselves to the four corners of the document.

The new definition of the word “surface” when used in a conveyance “generally means the exposed area of land, improvements on the land, and any part of the underground actually used by a surface owner as an adjunct to surface use [.]”  The Court gave several examples of “adjunct to surface use,” including use as a medium for the roots of growing plants, groundwater, water wells, roads, basements, and construction footings. 

While the Court’s decision should make such determinations easier for those in the mineral title field, the effect of the new definition on the oil and natural gas production industry remains to be seen.

For the full opinion, click on the link below: