Mineral Interests; Deeds

Arclar Co v Gates, US Dist Ct, So Dist, 97-4335-JLF (1998).

Facts: A dispute arose between Gates, a landowner, and Arclar Company, a coal-mining operation that owned the mineral rights in Gates' property. A predecessor in Gates' title had conveyed to a predecessor in Arclar's title the mineral rights to the coal in the sub-surface of the property, an easement to convey the coal to market, and a right to purchase any surface lands necessary to extract the coal from the ground. Arclar brought a suit to enforce the right to purchase the property and to prevent Gates from interfering with Arclar's easement. Gates brought a motion to dismiss, asserting that Arclar's claims were barred by the following:

 

  • Illinois' 75-year statute of limitations;

     

  • The Rule Against Perpetuities;

     

  • Illinois' 40-year statute of limitations;

     

  • Arclar's failure to plead privity of contract with the predecessor in title;

     

  • Laches; and

     

  • The Rule Against Restraints on Alienation.

The United States district court for the southern district of Illinois considered the motion to dismiss.

Holding: Motion denied. When mineral rights are conveyed, a separate estate is created in the property. The court held that Arclar's claims were not barred by the 75-year statute of limitations because the statute applies only in situations where the parties are trying to assert the same interest in the same property. In this case the parties were not asserting the same claim in the land, but only seeking to enforce their own separate rights. Furthermore, the necessity of the claim that Arclar sought to assert had just arisen, so the 75-year period had never begun to toll. The district court relied on prior decisions of the Illinois Supreme Court in holding that the right to purchase surface rights is not subject to the Rule Against Perpetuities when the right to purchase the surface land is necessary to exercise some corresponding mineral right.

The district court also held that claims are not barred by Illinois' 40-year statute of limitations on commencing an action to enforce a claim in real estate, as the statute creating the 40-year statute of limitations expressly contains an exception that makes the statute inapplicable to bar any rights relating to a separate mineral estate in the property. The claim was not barred by failure of Arclar to plead privity of contract with the predecessor in title, as the court found that Arclar's complaint sufficiently demonstrated the chain of title. The court also held that there were no facts that demonstrated Arclar had unreasonably delayed the assertion of its rights, and therefore laches did not apply. Finally, the court rejected Gates' argument that the claims were barred by the Rule Against Restraints on Alienation, citing several cases that held the right to purchase a surface estate is not subject to the Rule Against Restraints on Alienation when the right of purchase was granted for the purpose of mining the mineral estate.

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