Warfield Natural Gas Co. v. Small

In Warfield Natural Gas Co. v. Small, 282 Ky. 347, 138 S.W.2d 488 (1940) a dispute arose between Maudie Small, who was the surface owner of a tract of land with a gas well constructed on it, and Warfield Natural Gas, which owned the mineral rights to Small's land. Small was not the owner of the land when the lease was originally executed. Warfield argued that Small was not entitled to free gas as a surface owner because the original lease did not expressly state that the right to free gas would extend to subsequent owners. Rejecting this argument, the Court stated: "We see no merit in this contention because the free gas clause in the original lease is a covenant running with and attached to the surface of the land. That covenant was for gas sufficient for domestic use on the premises and certainly could not be taken advantage of by the owner of the oil, gas and mineral rights, which had become separated from the surface of the land, because the owner of such mineral rights did not live on the land. A covenant or agreement in a gas lease that the lessor shall have a part of the gas free is a covenant running with the land. Thorton Oil and Gas, section 159, Indiana Natural Gas & Oil Company v. Harper, 50 Ind. App. 555, 98 N.E. 743. See also in this connection Swiss Oil Corporation v. Dials, et al., 232 Ky. 298, 22 S.W.2d 912. As the free gas covenant is a covenant running with the land, it runs with the surface of the land and not with the oil, gas and mineral rights since the covenant could be a benefit only to one occupying and using the surface of the land (138 S.W.2d at 489.)