## Facts

- A 1945 coal lease granted the lessee rights to mine all coal beneath a 40-acre tract and provided a 25-year primary term with a secondary term tied to removal of the coal.
- Phillip and Dorothy Dethloff later became surface owners of the tract.
- No coal was mined during the 25-year primary term, which ended in June 1970.
- Around the primary-term expiration, the Dethloffs notified Zeigler Coal Company (successor lessee) that the lease had expired and offered to renegotiate; Zeigler declined.
- In 1976, Zeigler entered the land and mined coal.
- The Dethloffs sued for trespass and conversion (compensatory and punitive damages) and for a declaration that the lease expired in 1970.

## Issues

1. Whether the lease’s habendum clause allowed the lease to continue beyond the 25-year primary term despite no mining during that term.
2. Whether Zeigler’s 1976 entry and extraction constituted willful trespass (bad faith) or good-faith trespass for purposes of the damages measure.
3. Whether punitive damages were available in addition to compensatory damages measured under willful-trespass rules.

## Decision

- The Illinois Supreme Court held the lease expired automatically at the end of the 25-year primary term because mining had not begun within that term.
- The court held Zeigler was a willful trespasser as a matter of law given notice of the adverse claim and its decision to mine without first obtaining judicial resolution or a new agreement.
- The court applied the willful-trespass measure of damages: market value of the coal removed minus lifting (severance) costs.
- The court left in place the denial of separate punitive damages, reasoning that the willful-trespass damages measure already contains a punitive component.
- The court affirmed in part and reversed in part and remanded for further proceedings consistent with its holdings.

## Legal Principles

- A mineral lease with a fixed primary term and an “as long thereafter” clause generally requires commencement of operations or production during the primary term to extend the lease into the secondary term.
- If the condition for continuation into the secondary term is not satisfied, the lease terminates automatically at the end of the primary term, and the former lessee has no right of entry.
- A party that extracts minerals after termination and after receiving notice of an adverse claim, without seeking judicial determination, may be treated as a willful trespasser as a matter of law.
- For willful mineral trespass, damages may be measured by the market value of the minerals removed minus lifting costs, denying the trespasser profit and allocating it to the owner.
- Separate punitive damages may be unavailable where the compensatory award, by virtue of the willful-trespass measure, already serves a punitive function.

## Conclusion

The court enforced the primary-term requirement in the lease’s habendum clause, deemed the lessee’s post-term mining a willful trespass after notice of lease expiration, and applied a damages measure designed to strip the trespasser of profit while rejecting additional punitive damages.


Dethloff v. Zeigler Coal Co., 412 N.E.2d 526 (Ill. 1980)