Scherger v. Northern Natural Gas Co.

Northern Natural Gas Co. (Northern) (defendant) transports natural gas in interstate commerce through a pipeline system. In 1931, Northern obtained a blanket easement over a portion of a farm property together with the right to access the property to construct, inspect, repair, maintain, and replace a pipeline. Under the agreement, Northern was required to pay the property owner 50 cents per lineal rod of pipeline. In 1932, pursuant to this agreement, Northern constructed a natural gas pipeline on the farm property. The Schergers (plaintiffs) subsequently purchased the farm property. In 1995, Northern informed the Schergers that it intended to replace the pipeline running through the Schergers’ property and paid the Schergers $905 as compensation. The replacement pipeline would run close to the original pipeline, but would take up a new area of land. The Schergers responded that, pursuant to a Minnesota statute, Northern was required to provide a definite and specific description of the present gas-pipeline easement. The Schergers also demanded that a new easement agreement be negotiated. The Schergers contended that if negotiations were unsuccessful, then Northern should acquire a new easement by condemnation. Northern responded that it would provide a description of the present gas-pipeline easement after the replacement pipeline was completed. Northern further asserted that the original easement agreement gave it the right to put the replacement pipeline anywhere on the property within the boundaries of the original easement. The Schergers petitioned the court to require Northern to commence condemnation proceedings to replace the pipeline. The Schergers argued that, under the terms of the 1931 easement agreement, the location of the pipeline easement was where the original pipeline was installed. The trial court dismissed the Schergers’ claims. The court of appeals reversed holding: (1) that the original 1932 pipeline defined the boundaries of the easement and (2) the replacement pipeline must be within those original boundaries. Northern appealed.