Pavlik v. Consolidation Coal Co.

Pavlik (plaintiff) granted Consolidation Coal Co. (defendant) an easement “for the purposes and with the rights of constructing, maintaining, operating, altering, repairing, replacing and removing one pipe line for the transportation of coal slurry.” The easement, which cost $995, would terminate if the pipeline ceased to be used “for the purpose set forth herein” for a period of one year. Consolidation supplied coal to the Cleveland Electric Illuminating Company (CEI) using the pipeline from 1957 to 1963. In 1963, Consolidation and CEI executed a supplemental agreement by which they put the pipeline into an inactive state, although Consolidation was obligated to maintain the pipeline in standby, ready to resume operations upon notice. Meanwhile, Consolidation and Pavlik agreed by a series of supplemental agreements to extend the one-year defeasance timeframe. They stipulated that they had negotiated to remove the defeasance clause and to allow the transmission of products other than coal slurry, and that the purpose of the extension was to “preserve the status quo” during negotiations. Negotiations failed and there were no more extensions after May 1967. Pavlik then sought a declaration of rights under the contract. The district judge held that the inactivity of the pipeline did not terminate the easement because it was kept ready to transport coal slurry. Pavlik appealed.