In April, we reported on an Arkansas Supreme Court case which held that, at least as of 1934, the term “mineral rights” included oil and gas as a matter of law. But what about deeds of an older vintage? Last week, the Arkansas Supreme Court, in Nicholson v. Upland Industrial Development Co., 2012 Ark. 326 (Sept. 13, 2012), ruled that a 1903 deed reserving “mineral rights” included oil and gas rights because at the time of the deed and in the general region where the deed was executed, that was the common understanding. In other words, the per se rule announced in Staggs v, Union Pacific RR Co.* did not apply.
While there were several bases for appeal, the most notable for future cases was the Court’s holding that in determining the “commercial or legal usage” of the term “mineral rights,” the lower court was correct to look not just at the county in which the property was located, but also in the surrounding general area. Another issue raised was which party had the burden of proof — the plaintiff/surface right owner, who contended that oil and gas were not included in the definition of mineral, or the mineral owners, who contended that they were included. The trial court found the burden to be on the plaintiffs as the party bringing the claim. The Supreme Court did not decide the issue but rather, because the case was non-jury, determined that, as both parties had “ample opportunity” to present evidence, if there was error, it was not reversible.
So, if there’s a lesson to be learned, it is that timing may be everything, and the older the mineral researvation, the less certain the interpretation.
*Interestingly, this decision does not even mention Staggs.