Texaco, Inc. v. Melton

463 S.W.2d 301, 38 Oil & Gas Rep. 418, 1970 Ky. LEXIS 660
CourtCourt of Appeals of Kentucky
DecidedDecember 18, 1970
StatusPublished
Cited by6 cases

This text of 463 S.W.2d 301 (Texaco, Inc. v. Melton) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Texaco, Inc. v. Melton, 463 S.W.2d 301, 38 Oil & Gas Rep. 418, 1970 Ky. LEXIS 660 (Ky. Ct. App. 1970).

Opinion

STEINFELD, Judge.

Appellant, Texaco, Inc., is the owner of the minerals under the surface of appellees Meltons’ 789 acre farm which was formerly a part of Camp Breckinridge in Webster [303]*303County. Claiming that Texaco had damaged them in using their farm Meltons sued. Pursuant to a jury verdict, judgment was entered for $9,950.00. Texaco appeals. We reverse for a new trial.

Texaco acquired title to the minerals by a deed from the United States dated October 12, 1965, containing the following:

“Grantor does also grant to Grantee, its successors and assigns, the right to use any surface areas of the tracts of land hereinabove described which are reasonably necessary in order to use any and all methods of processes, whether now known or hereafter discovered or developed, to prospect for, explore for, mine, operate, produce, store, and remove the oil, gas, and all other minerals and mineral rights conveyed hereby, provided that the Grantee in the exercise of the rights and privileges granted by this paragraph shall be liable to Grantor or any future owner or owners of the surface areas for actual damages caused thereby to the surface areas, improvements, livestock, and growing crops, and provided further that nothing in this paragraph shall limit or be in derogation of any other rights of the owners of minerals and owners of the surface of lands under the laws of the State of Kentucky.”

It drilled for oil and engaged in related operations until April 20, 1967, when it completed its last well.

On November 16, 1966, the Meltons and Roman Weis obtained title from the United States to the surface for $200 per acre, a total of $156,000. Their deed provided:

“1. Rights of the owner or owners of minerals and mineral rights, including the United States of America, to such use of the surface areas of the property conveyed hereby which is reasonably necessary to prospect, explore, mine, operate, produce, store and remove minerals, provided, however, that the owner or owners of the mineral rights shall be liable to the owner or owners of the surface area for actual damages caused thereby to the surface, improvements, livestock and growing crops. This provision shall not be in derogation of any other rights of the owners of minerals and the surface under the laws of the State of Kentucky. Nothing herein shall constitute or be construed as a waiver of the sovereign immunity and powers of the United States of America as the owner of the reserved coal and mining rights in and under the property hereby conveyed.”

The deeds to Texaco, the Meltons and Weis also provided:

“Grantor also grants to Grantee, its successors and assigns, the nonexclusive right of use of existing roads located within the confines of the Camp Breck-inridge Military Reservation, of which the tracts of land herein referred to are a part, for the purpose of ingress and egress. The roads referred to in this paragraph are shown on the map of the Military Reservation annexed hereto as Exhibit A.”

On August 14, 1967, Weis conveyed his undivided interest to Meltons for $78,100. This suit was filed on March 12, 1968, and on July 26, 1968, Weis assigned to Meltons any rights he might have for “surface and crop damages.”

The trial court ruled that no damages could be recovered in connection with drilling for the original well because it was completed before title was acquired by the Meltons, but that recovery could be had for loss of use of land due to Texaco’s operation. After instructing the jury that Texaco “ * * * had the right to use surface areas * * * which were reasonably necessary * * * ” to extract minerals from the subsurface it permitted the jury to consider “ * * * actual damages caused thereby to surface areas, improvements and growing crops by reason of [304]*304the exercising of the privilege * * * ” it had. The verdict read:

“We, the jury, find the damages to he both permanent and temporary and find in the following amounts:
PERMANENT DAMAGES
$179,682.20 Fair Cash Value Before
174,000.00 Fair Cash Value After
5,682.20 Difference
TEMPORARY DAMAGES
$4,267.80
/s/ Fred Creasey
Foreman”

Errors claimed relate to instructions, admission of certain evidence, and the amount of the award. Additionally appellant contends that error was committed “* * * in admitting the Weis assignment after the action (was) commenced” and in the failure of the court to fix “ * * * a date of taking.”

Texaco claims that the trial court erred in refusing to instruct the jury on its theory for measuring the permanent damages. It charges that “ * * * contractual liability assumed by Texaco limits any claim by the landowners against Texaco for injury done the surface by Texaco to actual damages to those particular areas of land actually occupied and utilized by Texaco.” It terms this the “ * * * per acre theory as opposed to the before and after rule * * * It concedes that the latter rule is generally applied in tort cases involving permanent damage to land and in condemnation actions. See Blue Diamond Coal Company v. Press Eversole, Ky., 253 S.W.2d 580 (1952) and Com., Dept. of Highways v. Sherrod, Ky., 367 S.W.2d 844 (1963). However it says that the rule “ * * * cannot be invoked * * * where the parties have anticipated the damage and have by contract stipulated to a formula by which the damage may be ascertained.” Cited to support this argument are O’Connor v. Great Lakes Pipe Line Co. (8th Cir.) 63 F.2d 523 (1933); Fulkerson v. Great Lakes Pipe Line Co., 335 Mo. 1058, 75 S.W.2d 844 (1934); Shamblen v. Great Lakes Pipe Line Co., 158 Neb. 752, 64 N.W.2d 728 (1954) and Frankfort Oil Company v. Abrams, 159 Colo. 535, 413 P.2d 190 (1966). The Mel-tons say that the words in the deeds which Texaco contends are words of limitation were “ * * * placed in the deed for the protection of the owner.”

We find no language which we interpret as a formula for measuring the damage. On the other hand we agree that recovery must be limited to “actual damage” inflicted by Texaco to the “surface areas, improvements, livestock and growing crops” and for no other. To that extent the O’Connor, Fulkerson, Shamblen and Frankfort Oil Company cases support Texaco’s position. However, we find nothing in them which convinces us that the “before and after rule” announced in United Fuel & Gas Company v. Rowe, Ky., 375 S.W.2d 264 (1964), which is traditional in this state is not the better way of assessing permanent damage such as we have here. We reaffirm that rule and reject the “per acre” theory.

Texaco had the right to use the surface.

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Cite This Page — Counsel Stack

Bluebook (online)
463 S.W.2d 301, 38 Oil & Gas Rep. 418, 1970 Ky. LEXIS 660, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texaco-inc-v-melton-kyctapp-1970.