Unitex WI LLC v. CT Land and Cattle Company LLC rejected the surface owner’s effort to force the mineral lessee to bury a pipeline below plow depth. Surface owner CT’s claim was based on a mineral lease signed by former owner Fuller in 1948. CT had acquired the surface from Senns, who acquired it from Fuller. Wells had been drilled and numerous pipelines existed when CT bought the surface in 2013.
Lessee Unitex refused to bury the pipeline and CT sued. The trial court declared that CT had the right to enforce the burial covenant, Unitex was required to bury all pipelines covered by the Fuller lease below plow depth, and Unitex was compelled to satisfy the burial requirement as rapidly as reasonably possible.
The court of appeals reversed. The lease provided, “When required by Lessor, Lessee will bury all pipelines below ordinary plow depth … ” CT was not the lessor or successor to the lessor and as a result did not have the right to enforce the burial provision.
The deed by which Senns acquired the surface was by its terms “subject to” all valid and subsisting oil and gas leases. The parties agreed that 1948 lease claim was within the scope of that clause.
The meaning of “subject to”
The court disagreed with CT’s assertion that “subject to” meant that Senns and then CT were assigned the lessor’s rights, interests and obligations under the lease which pertained to the surface. Quite the opposite. The deed said nothing about Fulller assigning rights in the lease to Senns. The court declined to impose language evidencing an assignment where none existed. If the surface owner intended to transfer the lessor’s rights under the lease it could have memorialized that intent.
The word “subject to”, used in the ordinary sense, means subordinate or subservient to or limited by. That clause limits the estate and associated rights granted to a party. It does not create affirmative rights.
The covenant did not run with the land
CT also argued that the duty to bury pipelines ran with the land. That is generally correct. However, the subject-to clause limited the estate and associated rights that passed to Senns. The lease identified the category of people entitled to require burial of the pipelines: The lessor and his assigns, successors, and heirs. The provision did not include future surface owners. The parties could have said that but didn’t.
The pipe burial provision did not pass or was otherwise detached from the conveyance. Whether viewed as a reservation or detachment or whatever, the words selected by Fuller clearly revealed the intent to prevent Senns and their successors from gaining interests in or rights under the 1948 lease.
Fuller reserved and excepted from the conveyance so much of the surface as may be required to permit Fuller (and his lessee, of course) to drill wells and transport production. That clearly reveal an intent to bar impediment to the development of minerals and use of the surface to further that purpose. It follows that the reservation revealed an intent to restrict potential impediments such as the burial covenant.
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