VALENTINE v. SUGAR ROCK, INC.

Justice KETCHUM:

The United States Court of Appeals for the Fourth Circuit has certified a complex question which intertwines issues about partnership interests in oil and gas wells, the Statute of Frauds, the common law "mining partnership," and the West Virginia Revised Uniform Partnership Act (W.Va.Code § 47B-1-1 et seq.). At its heart, the question asks us to differentiate between a partner in an ordinary, general partnership that has as its principal business mining or operating oil and gas wells, and a partner in a common law "mining partnership." While the two phrases sound the same, they are radically different forms of partnerships.

The case below involves oil and gas wells owned and operated by four partnerships. The partnerships also own real property: mineral interests in the form of leases to extract oil and gas from real estate. The plaintiff contends that he is a partner of each of these partnerships. The partners themselves do not own any part of the mineral interests. Nevertheless, another partner contends that the plaintiff should be excluded from the partnerships because he cannot produce a written instrument that meets with the Statute of Frauds showing he is a partner in the real-estate-owning partnerships.

The certified question from the federal court essentially has two parts. First, if a person contends he/she owns an interest in a common-law "mining partnership," then does the Statute of Frauds require the person to prove he/she is a partner of the mining partnership through a deed, will, or other written conveyance? We answer this part of the question "yes." A person can only be a partner in a mining partnership if he/she is a co-owner of the mineral interest with the other partners. Hence, proving a partnership interest in the mining partnership requires first proving the person has a deed, will, or other written instrument showing partial ownership of the mineral interest in the land.

The second part of the question is this: if a partnership is a general partnership (as defined in and governed by the West Virginia Revised Uniform Partnership Act), and the partnership owns leases to extract oil and gas from real property, then does the Statute of Frauds require a person to produce a written instrument to prove he/she is a partner in the general partnership? We answer this part of the question "no." Under the Revised Uniform Partnership Act, W.Va.Code § 47B-2-3 [1995], general partnership property belongs solely to the partnership and not to the partners. A person does not need a deed, will or other written instrument to establish a partnership stake in the general partnership, even if the general partnership owns an interest in real property.

I.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff-below Clifton G. Valentine alleges that, since the 1950s, he has owned a partnership interest in partnerships that operate six oil and gas wells in Ritchie County, West Virginia. The wells are on four separate tracts of land, and are owned and operated by four separate partnerships: Cutright Oil & Gas Co.;1 Iams Gas Co.; Iams Oil Co.; and Keith Gas Co.2 Each of the four partnerships operates under a written lease with the landowner that allows for the extraction of oil and gas from each tract of land. Valentine maintains he became a partner in each partnership when he bought interests in the partnerships from Frank "F.A." Deem, who created the four partnership entities in the late 1950s. Since that time, the partnerships continued to operate the oil and gas wells.

For about forty years, Valentine received payments from the four partnerships reflecting his share of the net profits generated by the well operations. Those payments stopped in 1999, however, when Frank Deem's son and successor in interest, William "W.A." Deem, sold the majority interest in the partnerships to the defendant below, Sugar Rock, Inc.

After Sugar Rock became managing partner of the four partnerships and simultaneously became the operator of the six wells, the wells allegedly began to operate at a net annual loss. Sugar Rock annually delivered partnership tax documents3 to Valentine reflecting these losses. Further, Sugar Rock billed Valentine for his share of the deficiencies, but he refused to remit payment. In 2001, Sugar Rock filed suit in state court against Valentine to recover the alleged deficiencies; the suit was dismissed in 2004 for failure to prosecute.

A. Proceedings before the U.S. District Court

On November 8, 2010, Valentine filed a diversity action against Sugar Rock4 in the United States District Court for the Northern District of West Virginia. Valentine asserted that Sugar Rock had not properly accounted for the proceeds and expenses of production for the six wells, and had breached its duty of good faith and fair dealing toward other partners in the four partnerships. Valentine claims Sugar Rock is "scheming to usurp partnership property" by depositing all the partnership income in Sugar Rock's account, and then invoicing the partnerships for unauthorized, unnecessary, and unreasonable expenses. Valentine demanded an accounting of the four partnerships, and sought compensatory and punitive damages together with reimbursement of his attorney fees and litigation costs. Sugar Rock answered the complaint and filed a counterclaim against Valentine seeking Valentine's share of the operating expenses attributable to his ownership interests in the four partnerships.

The parties engaged in discovery in the district court after which Sugar Rock moved for summary judgment. In its motion, Sugar Rock characterized the four partnerships as "mining partnerships," which arise when the co-owners or co-lessees of an interest in land cooperate in extracting oil, gas, or other minerals from the land. See, e.g., Syllabus Point 1, Childers v. Neely, 47 W.Va. 70, 34 S.E. 828 (1899) ("Where tenants in common or joint tenants of an oil lease or mine unite and co-operate in working it, they constitute a mining partnership."). Sugar Rock asserted it was entitled to summary judgment because Valentine could produce no written instrument creating his partnership interest in the four "mining partnerships" that own and operate the oil and gas wells.

In support of its motion for summary judgment, Sugar Rock argued that the creation of the four leaseholds conveyed interests in real property. See Syllabus Point 1, in part, McCullough Oil, Inc. v. Rezek, 176 W.Va. 638, 346 S.E.2d 788 (1986) ("An oil and gas lease (or other mineral lease) is both a conveyance and a contract."). Further, Sugar Rock argued that any subsequent assignment of a partnership interest in the oil and gas leases similarly conveyed interests in real property. Working from the premise that the partnership interests in the four leases claimed by Valentine are interests in real property, Sugar Rock maintained that their purported transfer could only be effected by a writing contemplated by the West Virginia Statute of Frauds, W.Va.Code § 36-1-1 [1923]. Thus, Sugar Rock reasoned, Valentine's lack of a written deed or will evidencing his ownership of the partnership interests in question doomed his claim.

In response, Valentine asserted to the district court that Sugar Rock's arguments failed to distinguish between "a direct ownership interest in real estate and an ownership interest in a partnership." West Virginia's common law and statutes permit a partnership agreement to be written, oral, or implied from the conduct and dealings of the partnership's members. See Syllabus Point 2, Duffield v. Reed, 84 W.Va. 284, 99 S.E. 481 (1919) ("A partnership, as to the parties thereto, springs from their intention, which need not be expressed in writing, but may be by oral agreement, or may be implied from their conduct and dealings with one another."); W.Va.Code § 47B-1-1(8) [2003] ("`Partnership agreement' means the agreement, whether written, oral or implied, among the partners concerning the partnership, including amendments to the partnership agreement."). Valentine contended that he did not purchase a direct ownership interest in real estate, but rather that he purchased an ownership interest in four partnerships, and it was the partnerships that owned the real estate interests. Valentine asserted there was substantial evidence to support a finding he was a partner in each of the four partnerships, and was therefore entitled to share in the profits generated by the leases owned by the partnerships.

In an order dated September 18, 2012, the district court granted summary judgment to Sugar Rock and dismissed Valentine's claims with prejudice.5 The district court discerned that, under West Virginia law, a "mining partnership" requires a member of the partnership to establish "co-ownership of lands or leases constituting a property interest." The district court determined that Valentine's assertion of an interest in the four "mining partnerships" failed because he could not produce a deed or will in conformance with the Statute of Frauds showing his ownership interest in the partnerships or in the subject leases.

Valentine timely appealed the district court's order to the United States Court of Appeals for the Fourth Circuit.

B. Washburn v. Sugar Rock

During the pendency of his appeal, Valentine notified the Court of Appeals of the existence of a similar lawsuit in the Circuit Court of Ritchie County styled Washburn v. Sugar Rock.6 Nine other people, who purported to be owners of partnership interests in the same four partnerships operating the same six wells, filed a class action in state court against Sugar Rock. On July 19, 2013, the circuit court granted the Washburn plaintiffs' motion for partial summary judgment against Sugar Rock and declared that the plaintiffs are partners in the four partnerships. Further, the circuit court determined that the plaintiffs own the claimed partnership interests despite being unable to corroborate the claim with a deed, will, or other written instrument. The plaintiffs' stake in the mineral interest derives indirectly from their proportional participation in the four partnerships, which own the mineral leases and operate the oil and gas wells.

The state circuit court in Washburn relied on evidence and legal arguments comparable to those presented to the federal district court by Valentine.7

C. Proceedings before the U.S. Court of Appeals

Writing for the U.S. Court of Appeals, Judge King perceived the conflict between the decisions of the federal district court and the state circuit court as a "chicken-or-the-egg conundrum." Valentine v. Sugar Rock, Inc., 745 F.3d 729, 734 (4th Cir.2014). The federal district court had ruled that "the absence of a preexisting property interest documented by deed or will forecloses, ab initio, the creation of a `mining partnership[.]'" Id. Judge King wisely observed, however, that the federal district court had failed to consider whether West Virginia law recognized "a `partnership in mining,' that is, the formation of an ordinary partnership that happens to have as its primary purpose the exploitation of minerals." Id.

Judge King was rightly troubled that the federal district court and the state circuit court had applied similar precepts of West Virginia law to the identical Ritchie County properties, and yet had reached manifestly irreconcilable outcomes. 745 F.3d at 735 n. 3. Further, he could not discern a clear, concise, or cogent controlling precedent in the decisions of this Court that would be dispositive of the question of which court's interpretation of the law was correct.

Because of the vagaries of West Virginia law on this issue, on March 12, 2014, the U.S. Court of Appeals decided to certify the following question to this Court:

745 F.3d at 735. We agreed to review the question.

II.

STANDARD OF REVIEW

When considering an order certifying a question from a federal court, we give the court's assessment of the question a plenary review. "A de novo standard is applied by this Court in addressing the legal issues presented by a certified question from a federal district or appellate court." Syllabus Point 1, Light v. Allstate Ins. Co., 203 W.Va. 27, 506 S.E.2d 64 (1998). Accord Syllabus Point 1, Bower v. Westinghouse Elec. Corp., 206 W.Va. 133, 522 S.E.2d 424 (1999) ("This Court undertakes plenary review of legal issues presented by certified question from a federal district or appellate court.").

In its brief to this Court, Sugar Rock argues that this Court is constrained to consider only those facts contained in the certification order from the Court of Appeals. Sugar Rock contends that this Court cannot consider any other facts of record. As its only authority, Sugar Rock cites to a footnote which states, "This Court is bound by the facts contained in the district court's certification order." L.H. Jones Equipment Co. v. Swenson Spreader LLC, 224 W.Va. 570, 573 n. 3, 687 S.E.2d 353, 356 n. 3 (2009). This Court has consistently held, however, that "language in a footnote generally should be considered obiter dicta" and that if this Court is to create a new point of law, it will do "so in a syllabus point and not in a footnote." State ex rel. Med. Assurance of West Virginia, Inc. v. Recht, 213 W.Va. 457, 471, 583 S.E.2d 80, 94 (2003).8

Still, Sugar Rock repeatedly cites the lone footnote in L.H. Jones Equipment. Sugar Rock insists that Valentine's brief "should be stricken by this Court" because it does not parrot the federal court's recitation of facts, but rather asserts facts taken from the record presented to the federal court. However, the language of the Uniform Certification of Questions of Law Act compels us to reject Sugar Rock's interpretation of our authority to review certified questions and to disavow and renounce our footnoted statement in L.H. Jones Equipment.

The Uniform Certification of Questions of Law Act, W.Va.Code § 51-1A-6(a)(2) [1996] requires a certification order from a federal court or other state appellate court to contain "[t]he facts relevant to the question [of law to be answered], showing fully the nature of the controversy out of which the question arose." The purpose of this requirement is that the certifying court sends only one document to this Court for review: the certification order. No briefs of the parties, no appendix, and no matters of record accompany the certification order. This Court must, therefore, "assume that the findings of fact by the certifying court are correct." Barefield v. DPIC Companies, Inc., 215 W.Va. 544, 550, 600 S.E.2d 256, 262 (2004). The only way this Court can fairly assess whether to accept the question for our discretionary review, or to reject it, is to weigh the question in light of the facts presented in the certification order. That is why the certification order must contain a statement of relevant facts.

Nevertheless, once this Court accepts the certified question for review, we may consider any papers or exhibits filed in the certifying tribunal. This is because the Uniform Certification of Questions of Law Act allows this Court to "require the certifying court to deliver its record, or any portion of the record" to this Court. W.Va.Code § 51-1A-5 [1996]. Further, the Act provides that proceedings for review of a certified question are controlled "by the rules and statutes of this State governing briefs, arguments and other appellate procedures." W.Va.Code § 51-1A-8 [1996]. Our Rules of Appellate Procedure [2010], specifically Rule 17(a)(4), says that "parties to a certified question case must file ... a joint appendix" containing relevant parts of the record that will assist this Court with a full understanding of the issues. And as a final stopgap measure, Rule 6(a) of the Rules of Appellate Procedure permits this Court to obtain and consider "portions of the record other than those provided by the parties."

Reading the Uniform Certification of Questions of Law Act and our Rules of Appellate Procedure together, it is plain that this Court is not constrained to consider only those facts contained in the certification order from the federal court. We therefore hold that, when reviewing a question certified from a federal district or appellate court, this Court will give the question plenary review, and may consider any portions of the federal court's record that are relevant to the question of law to be answered. See, W.Va.Code § 51-1A-5. To the extent footnote 3 of L.H. Jones Equipment Co. conflicts with this holding it is disavowed.

III.

ANALYSIS

The question certified by the federal court implicates one of West Virginia's statutes of frauds, W.Va.Code § 36-1-1 [1923], which "requires the creation and the conveyance of specified estates and interests in land to be by deed or will." Cottrell v. Nurnberger, 131 W.Va. 391, 411, 47 S.E.2d 454, 464 (1948). W.Va.Code § 36-1-1 states:

We have interpreted the "deed or will" language in W.Va.Code § 36-1-1 to require a writing with "words of transfer or conveyance" of an interest in an estate. Arbaugh v. Raines, 155 W.Va. 409, 413, 184 S.E.2d 620, 623 (1971). See also, Uhl v. Ohio River R. Co., 51 W.Va. 106, 114-15, 41 S.E. 340, 344 (1902) ("[D]eeds generally require the word `grant,' or the words `bargain and sell,' or some technical word suitable to the character of the conveyance; such is formal conveyancing; but the word `convey' is now held to be equivalent to the word `grant,' even at common law ... [A]ny word to show intention will do."); Lockhart v. United Fuel Gas Co., 105 W.Va. 69, 72, 141 S.E. 521, 522 (1928) ("[D]eeds generally require the word `grant' or some technical words suitable to the character of the conveyance.").

In this case, there are four tracts of land. The parties agree that at some point, the owners of those four tracts signed writings granting the four partnerships a right to drill for, take, and sell for commercial use oil and gas.10 In other words, there exists a writing that comports with the Statute of Frauds creating the leased interest in the oil and gas underlying each tract. This fact is not disputed by the parties.

The dispute in this case is over the ownership rights of one of the people who purchased and held a stake in the partnerships that own the leases and operate the wells. The documents and testimony of record suggest that Valentine was, in some manner, a partner in the four partnerships. The question certified by the federal Court of Appeals essentially asks this: is Valentine required to produce a deed, will, or other granting document conforming to the Statute of Frauds to establish that he is a partner in each partnership? The answer is two-fold, and lies in determining whether he is a partner in a common-law mining partnership, or a partner in an ordinary, general partnership that engaged in mining.

As we discuss below, the real property of a mining partnership belongs to the individual members of the mining partnership. Hence, each member of a mining partnership must prove their inclusion in the partnership by establishing ownership of an interest in the mineral estate that is being extracted. In other words, each partner of a mining partnership must have some writing conforming with the Statute of Frauds conveying to the partner the interest in the mineral estate.

Conversely, under the West Virginia Revised Uniform Partnership Act, the real property owned by a general partnership that is engaged in extracting minerals belongs to the partnership and not its partners. Any property given to or acquired by a partnership belongs to the partnership and not to the partners individually. Hence, the partners of a general partnership may prove their inclusion in the partnership, and thereby prove their interest in the partnership's property, by relying on any evidence that tends to show the partners intended to associate and carry on as co-owners some trade, occupation, or profession. The Statute of Frauds simply does not apply between partners of a general partnership. The members of a general partnership are not required to have a writing conforming with the Statute of Frauds conveying to the partners a stake in the partnership, even if the partnership itself owns an interest in real property.

A. Mining Partnerships

Mining partnerships are creatures of the common law. To understand how mining partnerships operate requires an understanding of why they were created. To understand why they were created requires a basic understanding of the ancient, common law rules surrounding the creation of ordinary, general partnerships.

For the sake of clarity, we will hereafter refer to the ordinary, general partnership as a "general partnership." This will distinguish the rules for common-law, ordinary, general partnerships from the legal precepts of mining partnerships.

Further, this opinion will not attempt to comprehensively discuss the common law rules of general partnerships, for a simple reason: most of those common law rules have been augmented or supplanted by statute. As we discuss in the next section, partnership law in West Virginia is now guided by the Revised Uniform Partnership Act. Hence, much of the following discussion on the common law of general partnerships is purely historical and academic.11 But understanding the primordial rules of general partnership law leads to an understanding of how mining partnerships came to exist, and why real property ownership by the partners is critical to the formation of a mining partnership.

A general partnership is an association of two or more persons who agree to carry on as co-owners a trade, occupation, or profession for profit. At common law, we defined a general partnership as:

Syllabus Point 4, Hi Williamson & Co. v. Nigh, 58 W.Va. 629, 53 S.E. 124 (1906).12

A mining partnership is not a general partnership. However, there are three basic tenets of general partnerships necessary to understanding mining partnerships. First is the rule that general partnerships are personal; they are created by voluntary agreements between two or more people, each agreeing to become a partner with the others. At common law, the rule was known as delectus personae or "choice of the person."13 It is the "rule that when personal relations are important, a person cannot be compelled to associate with another person," specifically "that one has the right to select the person or persons with whom one might form a partnership." Black's Law Dictionary 518 (10th Ed.2014). "Those forming an ordinary partnership select the persons to form it, always from fitness, [and] worthiness of personal confidence[.]" Childers v. Neely, 47 W.Va. 70, 73, 34 S.E. 828, 829 (1899). Because of delectus personae, the law gives "wide authority of one member [of a general partnership] to bind another by contracts, by notes, and otherwise. One is the chosen agent of the other." Id.

Hence, under the common law, when a person left a general partnership association the partnership was instantly dissolved and ceased conducting its ordinary business.14 The reason the person left was irrelevant. It might have been by personal choice to leave, or the choice to sell the person's interest in the partnership to a stranger; by the person's expulsion by other partners; or by the person's death or bankruptcy. Whatever the reason, dissolution of the partnership was required at common law.15

By the same token, at common law a stranger to the general partnership (like a bankruptcy trustee) could not join the enterprise without the unanimous assent of all of the partners.16 "It is only by the unanimous consent of all the persons concerned that they become partners." Blackmarr v. Williamson, 57 W.Va. 249, 253, 50 S.E. 254, 255 (1905). "[W]hen one member dies or is bankrupt, or sells his interest to a stranger, even to an associate, the partnership is closed, one chosen member is gone, the union broken, because he may have been the chief dependence for success, and the newcomer may be an unacceptable person, who would entail failure upon the firm." Childers v. Neely, 47 W.Va. at 73-74, 34 S.E. at 829.

The second rule of general partnerships we should remember is this: at common law, a partnership required some form of contractual agreement between the partners. No formal writing or act was required to create a general partnership, but nonetheless, there must have been some explicit or implicit evidence of a contractual relationship. As we said in Syllabus Point 1 of William Deering & Co. v. Coberly, 44 W.Va. 606, 29 S.E. 512 (1898):

Third and finally, at common law, the mere shared ownership and use of property by two or more individuals (including a joint tenancy, tenancy in common, tenancy by the entireties, etc.) was not enough to create a partnership. One example given by this Court involves personal property: "Where two partners own a chattel, and make a profit by the use of it, they are not partners without some special agreement which makes them so." Childers v. Neely, 47 W.Va. at 72, 34 S.E. at 828 (citation omitted). Another example involves real property: "Two heirs or other co-owners of a farm, jointly farming it for profit, are not partners." Id. Even if the property owners shared the profits from the use of the property, that alone was insufficient to form a partnership.18

With these three common law rules for general partnerships in mind, we now consider the common law rules for mining partnerships.

In the mid-to late-1800s, largely in the American West, mining enterprises "were organized and operated before the establishment of any firm governmental authority and long before the widespread application of any body of commercial law." David Sive, 2 Rowley on Partnership 688 (2nd Ed.1960). There is great expense, and great uncertainty, in mining operations, and few individuals "are willing to risk all their means in such undertakings[.]" Skillman v. Lachman, 23 Cal. 198, 206 (1863). Further, much of the expense occurs at the beginning of the enterprise, opening the mine or drilling the well, when the enterprise does not (and may never) produce any income. So, as a general rule, individuals are impelled to associate with others and pool their resources, time and skills to work the mine. Many times, in the 1800s, these individuals tried to work together under the legal framework of a general partnership.

The problem came when one individual died, went bankrupt, or just wanted to sell or convey his interest in the mining operation. "[I]n ordinary partnerships, such sale would dissolve the partnership, and compel a winding up and settlement of the business, which would be most disastrous to a mining enterprise." Id. "Unlike a factory, service profession, or grocery store, an oil well or a coal mine cannot sensibly be shut down and closed each time a joint owner wants to withdraw from the venture.... The capital outlay necessary for most mining ventures is so heavily front-loaded that it is inherently unfair to allow or force the venture's termination before affording [all of the partners] a legitimate opportunity to recoup the investment." Harry L. Mathison, Jr., "Mining Partnerships, a New Perspective on an Old Theory," 2 Journal of Min. Law & Pol. 319, 321 (1987).

Additionally, a creditor or supplier who had "provided materials or services to the mining venture could easily have his legitimate claim defeated if one of the partners withdrew and the mineral property was not liquidated at a price sufficient to satisfy his claim. This scenario would obviously work an injustice on the supplier, but it would also deter creditors from extending credit to mining ventures[.]" Id. at 322.

To avoid the conundrum caused by the common law rules of general partnerships, various customs developed "because of the need of the mining community for a type of association not subject to the same rules that applied to the ordinary partnership." Meister v. Farrow, 109 Mont. 1, 92 P.2d 753, 757 (1939). In this chaotic legal environment, the mining partnership was adopted as a legal device used "by the courts when all other theories have failed to fit the pattern that justice requires." Clarence A. Brimmer, "Mining Partnerships," 15 Rocky Mtn. Min. L. Inst. 4 (1969).19 The mining partnership theory is a "legal fiction" that "affords a solid foundation for resolving some of the thorniest issues which arise among joint owners of mineral properties and third parties directly affected by the activities of those joint owners." Mathison, 2 Journal of Min. Law & Pol. at 319-20.

Generally speaking, a "mining partnership is governed by all the rules applicable to ordinary partnerships, except such as flow from [the] fundamental difference[s] in the two associations." Manufacturers Light & Heat Co. v. Tenant, 104 W.Va. 221, 225, 139 S.E. 706, 707 (1927) (citation omitted). The common law rules of mining partnerships evolved out of necessity, "differing from those [rules] regulating ordinary partnerships," to protect individual members of a mining enterprise "and at the same time properly secure the claims of creditors and insure the successful working of the mine." Skillman, 23 Cal. at 206-207.20 "A mining partnership is a hybrid concept designed to facilitate the development of mineral properties in a commercially reasonable manner." Mathison, 2 Journal of Min. Law & Pol. at 320.

This Court has defined a mining partnership in this way: "Where tenants in common or joint tenants of an oil lease or mine unite and co-operate in working it, they constitute a mining partnership." Syllabus Point 1, Childers v. Neely, 47 W.Va. at 70, 34 S.E. at 828. A similar definition is found in Syllabus Point 1 of Manufacturers Light & Heat Co. v. Tenant, 104 W.Va. at 221, 139 S.E. at 706: "While co-owners or joint owners of a mining lease, before they operate for oil or gas, are tenants in common or joint tenants, when they unite and co-operate in working the lease, they constitute a mining partnership."

Encompassed under this definition are three characteristics of mining partnerships which differentiate them from general partnerships. The first, and most obvious, difference is the absence of delectus personae. The members of a mining partnership lack any control over the individuals who are associated with the enterprise; "any person may become a member by virtue of an inter vivos conveyance or even inheritance, against the other members' consent." Bob Kiesling, "Mining Partnerships," 12 Baylor L.Rev. 103, 105 (1960). "If death, insolvency, or sale were to close up vast mining enterprises, in which many persons and large interests participate, it would entail disastrous consequences." Childers v. Neely, 47 W.Va. at 74, 34 S.E. at 829.21

Hence, members of a mining partnership may come and go without forcing the dissolution of the partnership and the interruption of the mining business. Unlike a common-law general partnership, a mining partnership "is not terminated by the death, lunacy, or bankruptcy of a partner, nor by the transfer of his interest to a stranger."22 Stephen Ailes, "Student Note: Mining Partnerships in West Virginia," 41 W.Va.L.Q. 144, 145 (1934). Put concisely, "a mining partner relationship continues until the time the mine or the lease ceases its existence, since this relationship's very nature involves the existence of a mine." Kiesling, 12 Baylor L.Rev. at 106.

Second, a mining partnership may form without any express agreement between the members of the association. While a mining partnership "may be the product of a formal agreement," Brimmer, 15 Rocky Mtn. Min. L. Inst. at 4, it can also be created purely by operation of law, inferring a partnership from the conduct of the parties. A mining partnership "arises by operation of law when cotenants of mining lands unite and cooperate for the purpose of extracting minerals, whether coal, oil or gas from the land." Ailes, 41 W.Va. L.Q. at 144. Accord, Wagner Supply Co. v. Bateman, 118 Tex. 498, 505, 18 S.W.2d 1052, 1055 (1929) ("The rule is that a mining partnership arises by operation of law where co-owners work a mine."). "Mere co-working makes them partners, without special contract." Childers v. Neely, 47 W.Va. at 73, 34 S.E. at 829. "In fact, even an express contract provision stipulating that the parties do not intend to form a mining partnership will be held immaterial, if in fact their acts and conduct constitute that relationship as a matter of law." Brimmer, 15 Rocky Mtn. Min. L. Inst. at 4 (citing Meister v. Farrow, 92 P.2d at 760 ("the action of the parties ... creates all of the elements of a mining partnership")).

Finally, and most important to the instant case, is the issue of shared ownership of the real estate being mined. While a common law general partnership cannot arise solely by sharing ownership of property, shared ownership is the keystone of a mining partnership. "It is well settled that a mining partnership cannot exist in the absence of co-ownership of a mineral interest. Some form of concurrent ownership is an indispensable requisite." Brimmer, 15 Rocky Mtn. Min. L. Inst. at 4.

A common law mining partnership cannot exist without there being two or more people sharing ownership of a mineral interest. Some form of concurrent ownership is an indispensable requisite. Whether a fee simple title to an entire tract or a lease of one seam of one mineral below the surface, the members of a mining partnership share ownership of the mineral rights. As we stated in one of our earliest cases defining mining partnerships, "Ownership of shares or interests in the mine is an essential element of a mining partnership." Blackmarr v. Williamson, 57 W.Va. at 253, 50 S.E. at 256. Our other cases similarly have required partners of a mining partnership to have an ownership interest in the minerals. See, Syllabus Point 1, Childers v. Neely, 47 W.Va. at 70, 34 S.E. at 828 ("Where tenants in common or joint tenants of an oil lease or mine unite and co-operate in working it, they constitute a mining partnership."); Syllabus Point 1, Wetzel v. Jones, 75 W.Va. 271, 84 S.E. 951 (1914) ("Where joint owners of an oil and gas lease unite in operating the demised premises thereunder, without any special agreement as to the character of their relation to each other, they constitute a mining partnership."); Syllabus Point 1, Manufacturers Light & Heat Co. v. Tenant, 104 W.Va. at 221, 139 S.E. at 706 ("While co-owners or joint owners of a mining lease, before they operate for oil or gas, are tenants in common or joint tenants, when they unite and co-operate in working the lease, they constitute a mining partnership.").

To be clear, however, a mining partnership does not arise simply by reason of two or more people having a cotenancy or co-ownership of an interest in minerals. Instead, a mining partnership "arises only when the co-owners or cotenants unite in working the same for the purpose of extracting mineral therefrom." John P. Gray, "Mining Partnerships," 3 Wis. L.Rev. 13 (1924). "Until the ground is worked ... [t]he owners are merely cotenants and their rights and duties are to be determined as such." Id. at 15. "If two or more owners of a mine unite in working it, without any partnership agreement, the act of working it together creates a mining partnership; and the same is true of two or more holding interests in a lease of mining property." Syllabus Point 1, Kirchner v. Smith, 61 W.Va. 434, 58 S.E. 614 (1907). "Cessation of the firm's business will return the parties to the status of" cotenants or co-owners of the mineral estate. Ailes, 41 W.Va. L.Q. at 146.

We now turn to the question certified by the Court of Appeals, but rephrase the question (pursuant to our authority to do so).23 The Court of Appeals asks this:

Our thorough examination of the common law leads us to the firm conclusion that each member of a mining partnership must hold an ownership interest in the mineral estate that is being mined. Because a mineral interest is an estate in lands which "may be taken, destroyed, or consumed," any ownership interest in a mineral estate must be created or conveyed by a deed, will, or similar written conveyance under the Statute of Frauds. See Syllabus Point 1, in part, McCullough Oil, Inc. v. Rezek, 176 W.Va. 638, 346 S.E.2d 788 (1986) ("An oil and gas lease (or other mineral lease) is ... a conveyance[.]"); Syllabus Point 2, Lawson v. Kirchner, 50 W.Va. 344, 40 S.E. 344 (1901) ("An oil lease for oil and gas purposes is a conveyance or sale of an interest in land conditional and contingent on the discovery and reduction to possession of the oil or gas.").

We therefore conclude that, for a person to establish an ownership interest in a mining partnership, the Statute of Frauds requires that the person show their interest was created or conveyed by a deed, will, or similar written conveyance. See W.Va.Code § 36-1-1.

B. General Partnerships

The second part of Judge King's "chicken-or-the-egg" certified question essentially asks this: if Valentine is not a member of a mining partnership, but is simply a member of a general partnership that owns and operates oil and gas wells under a mineral lease, then is Valentine required by the Statute of Frauds to produce a written instrument showing he is a partner in the general partnership? The answer is buried in West Virginia's statutes, and is unequivocally "no."

The West Virginia Revised Uniform Partnership Act, or "RUPA," defines a partnership as:

W.Va.Code § 47B-1-1(7) [2003]. Likewise, RUPA states that, generally, a partnership is formed in the following way:

W.Va.Code § 47B-2-2(a) [1995].25 Under this definition, people operating a business together for profit "may inadvertently create a partnership despite their expressed subjective intention not to do so." Allan Donn, Robert W. Hillman, & Donald J. Weidner, The Revised Uniform Partnership Act, § 202, Official Comments (Thompson Reuters 2014) [hereinafter Donn, Revised Uniform Partnership Act]. If there is any agreement governing a partnership, it may be written, oral, or implied. W.Va. Code § 47B-1-1(8).26

The West Virginia Legislature adopted RUPA in 1995, and stated that RUPA "governs all partnerships" in existence before, on, or after July 1, 1995. W.Va.Code § 47B-11-4 [1996].27 RUPA is a "gap filler" in that it only governs partnership affairs when there is no partnership agreement, or to the extent a partnership agreement does not otherwise provide.28 West Virginia Code § 47B-1-3(a) [1995] provides that:

RUPA's "underlying philosophy differs radically" from the common law and prior statutes, "thus laying the foundation for many of its innovative measures." Shoemaker v. Shoemaker, 275 Neb. 112, 125, 745 N.W.2d 299, 309 (2008). Key among these innovative measures is that RUPA adopts the "entity" theory of partnership as opposed to the "aggregate" theory that previously applied.

Id., 275 Neb. at 125, 745 N.W.2d at 309-10. A leading treatise on RUPA best summarizes the distinction between the aggregate and entity theories of partnership:

Donn, Revised Uniform Partnership Act, § 201. This new philosophy is bluntly expressed in West Virginia Code § 47B-2-1 [1995]: "A partnership is an entity distinct from its partners."

This philosophical distinction is important to understanding property owned by partnerships. Under the entity theory, "Partners are no longer conceived of as co-owners of partnership property. Rather, the partnership entity owns partnership property." Donn, Revised Uniform Partnership Act, § 203. "Even property that is contributed by partners becomes property of the entity rather than property of a cotenancy of the contributing partners." Id.

In light of the entity theory, RUPA provides the following rule for the ownership of property by a partnership:

W.Va.Code § 47B-2-3 [1995]. "[I]f property has become partnership property, the individual partners no longer have a direct interest in it." Donn, Revised Uniform Partnership Act, § 204.30

In this case, Valentine asserts that he did not purchase a direct ownership interest in real estate. Instead, he argues that Frank "F.A." Deem sold him an ownership interest in four general partnerships, and that it was the general partnerships which owned the real estate interests. Valentine asserts there was substantial evidence to support a finding that he was a member of the four partnerships, that the leases were owned and operated by the four partnerships, and that he was therefore entitled to share in the profits generated by those leases.

The Court of Appeals precisely assessed that the question that needed to be resolved was whether Valentine needed a writing conforming to the Statute of Frauds to show his ownership interest in the general partnerships that owned the mineral leases.

Neither of the parties has produced any evidence of partnership agreements for the four partnerships, so their relations are governed by RUPA. Under RUPA, any property given to or acquired by the four partnerships (whether real or personal property) "is property of the partnership[s] and not of the partners individually." W.Va. Code § 47B-2-3. Accordingly, any interest in the mineral estates would be owned by the four partnerships, and not by the individual partners such as Valentine or Sugar Rock. Hence, Valentine need only establish that he is a member of each of the four partnerships, and there is no requirement under the Statute of Frauds that he produce a deed, will, or other written instrument to establish he was granted a partnership interest in the partnership.

To be clear, this was also the rule under the common law. When a partnership owns real estate, it is a well-established rule that the Statute of Frauds could not be applied between partners. As we said in Syllabus Point 2 of Lantz v. Tumlin, 74 W.Va. 196, 81 S.E. 820 (1914),31

In other words, an oral partnership agreement to carry on a business that buys, owns, and/or sells real estate is enforceable and is not within the Statute of Frauds. "[A] partnership interest — regardless of the nature of the partnership's assets — is personalty, not realty. Indeed, if the legal characterization of a partnership interest depended on the nature of the partnership's assets, that characterization might change every time the partnership acquired or disposed of assets. The legal chaos inevitably flowing from such a rule of law was surely not intended" when the Legislature adopted RUPA. Forward v. Beucler, 702 F.Supp. 582, 586-87 (E.D.Va. 1988).

We therefore conclude that, under RUPA, a partnership interest — regardless of the nature of the partnership's assets — is personal property, not real property. The Statute of Frauds is therefore inapplicable to the relationship between partners, and does not require that a partnership interest in the partnership be proven by a written instrument.

IV.

CONCLUSION

We answer the question posed by the Court of Appeals, as reformulated, in two parts. We conclude that the Statute of Frauds requires the partners of a mining partnership to show their membership through a deed, will, or other written conveyance establishing they are co-owners of the mineral interest being mined. However, because the real property of a general partnership belongs to the partnership entity and not the individual partners, no such writing is required to establish a partnership interest in a general partnership.

Certified Question Answered.