Baker v. Eufaula Concrete Co.

Guy Baker and his wife (Bakers) (plaintiffs) owned a 30-acre property. The Bakers entered into a contract with Eufaula Concrete Company (Eufaula) (defendant) that gave Eufaula the right to mine sand and gravel from the property for 10 years. Under the contract, Eufaula would pay the Bakers a royalty on every cubic yard of material extracted from the property. Additionally, the contract prohibited Eufaula from assigning its right to mine the property to anyone else without the Bakers’ consent. Seven years into the contract, Williams Brothers, Inc. purchased Eufaula. Eufaula was unable to get the consent of the Bakers to transfer its lease to Williams Brothers. The purchase agreement between Eufaula and Williams Brothers listed Eufaula’s lease with the Bakers as one of the items that Williams Brothers was acquiring. However, the agreement also stated that it did not constitute an assignment in regard to leases requiring consent to be assigned if consent was not granted. After the acquisition, equipment belonging to Williams Brothers was used to mine the property. The first month after the acquisition, Williams Brothers paid the Bakers their monthly royalties. From that time forward, Eufaula paid the Bakers their royalties, and Williams Brothers reimbursed Eufaula. A third-party miner who also extracted materials from the property paid Williams Brothers royalties, and Williams Brothers reimbursed Eufaula for these amounts. When the Bakers saw that Williams Brothers was mining the property, the Bakers sued for a declaratory judgment stating that Eufaula had assigned its lease to Williams Brothers in violation of the lease. At trial, Eufaula moved for a directed verdict. The trial court granted the motion and entered a directed verdict in favor of Eufaula. The Bakers appealed.