Dennard v. Freeport Minerals Co.

297 S.E.2d 222 (1982)

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Dennard v. Freeport Minerals Co.

Georgia Supreme Court
297 S.E.2d 222 (1982)

Facts

Dennard (plaintiff) held the mineral rights to a tract of land, and the Freeport Minerals Company (Freeport) (defendant) held a lease interest in the bauxite and kaolin clay under that land. Under the lease, Freeport was obligated to pay rent of $300 per year and royalties of 12.5 cents per ton of refined clay and bauxite removed from the land. The lease also gave Freeport the right to remove the clay and bauxite as it deemed to be commercially profitable at any time so long as the lease was in force. The lease allowed for its rights to be assigned to subsequent parties, which is how Freeport gained its interest (another company had entered the original lease). For decades, the land was not mined. Freeport then notified Dennard that it planned to begin mining operations. Dennard responded that she would require strict compliance with the lease terms. Freeport explained that it planned to pay 12.5 cents per ton of crude ore removed rather than per ton of refined kaolin clay or bauxite removed. As later established at trial, this calculation method would result in Dennard receiving greater monetary benefits than under the express terms of the lease. Freeport removed the clay and weighed the crude ore instead of the refined amounts. Dennard sued, claiming that this violated the express terms of the lease. The trial court sided with Freeport, reasoning that the new calculation method would be more monetarily beneficial for Freeport and that Freeport had not breached the lease by using subjective methods to determine whether the removal was commercially profitable. Dennard appealed.

Rule of Law

Issue

Holding and Reasoning (Gregory, J.)

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