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Youngs v. Old Ben Coal Co.

Citation: 31 ELR 20520
No. No. 00-2190, 243 F.3d 387/(7th Cir., 03/15/2001)

The Seventh Circuit affirmed the dismissal of a landowner's breach of contract claim against a mining company that failed to restore the oil wells on the landowner's property after the company strip mined the property and ceased its mining activities. In 1956, the landowner purchased land, except for an oil and gas estate that had been leased since 1949. The sales contract included a restoration clause that required the landowner to restore the wells on the oil and gas estate back to operating use should the lessee take them out of production. In 1959, the landowner leased the coal estate in his land to a mining company. The 1959 lease was subject to the 1956 restoration clause. In 1975, the landowner acquired the oil and gas estate, which continued to be leased, and sold its property, except for the oil and gas estate, to the mining company. The oil wells on the oil and gas estate ran dry in 1989, and in 1992, the mining company paid the lessee to strip mine the area. In 1995, the landowner discovered that the wells were plugged and wanted the mining company to restore them back to operating condition. The landowner argued that when he acquired the oil and gas estate in 1975, he became the obligee of the 1956 contract's restoration clause and the mining company became the obligor. The court, however, first holds that the right to demolish and strip mine the estate without obligation fell on the lessee because the lessee obtained his lease before the restoration clause entered the chain of title. The fact that the lessee received payment from the mining company is immaterial because the lessee is free to do anything he wants to the estate due to the priority of his lease. Moreover, there was no demand that the lessee leave the wells in working condition for the benefit of the lessor. Further, because there was no more recoverable oil, the restoration clause's requirement that the wells be restored if taken out of production was not triggered because they were no longer producing oil.

Counsel for Plaintiff
Theodore Lockyear
Lockyear & Kornblum
555 Sycamore St., Evansville IN 47734
(812) 422-1199

Counsel for Defendant
G. Daniel Kelly
Ice Miller
One American Sq.
P.O. Box 82001, Indianapolis IN 46282
(317) 236-2100

Posner, J. Before Flaum and Ripple, JJ.

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