OIL LEASE.

[Hancock Circuit Court,

May Term, 1894.]

Moore, Seney and Day, JJ.

#### †Meridian National Bank v. Thomas H. McConica et al.

1. Proceeds from Sale of Oil Lease Owned by Three Debtors.

In distributing proceeds in the bands of a receiver, derived from an oil lease owned by three debtors, they will be deemed tenants in common and no discrimination between their individual and joint creditors unless there was a partnership in fact or by holding out.

■2. Contract, with License to Enter.

An oil license is not a lease, but an incorporeal hereditament or contract, with a license to enter.

.3. Waiver of Mortgage Security.

If mortgagees let in to operate an enterprise in order to pay their own debt and apply the money realized to other creditors, they waive their security as to still other creditors whom such act tends to defeat.

On appear from the Court of Common Pleas of Hancock county.

†

This case was dismissed in the Supreme Court, by consent of parties, (s. n. Buckeye Supply Co. v. Bank.) March 26, 1896. 2 Legal News, 371.

Seney, J.

This action as presented by the facts as alleged in the pleadings, is one for the marshaling of .various liens; the liens as claimed growing out of the acts of the parties as well as by operation of law. Incidentally to the establishment of the various liens, and upon which, if they have any validity in law, the liens ■depend, is the question whether the property, or the money arising from the sale ■of the property, is the property of a copartnership firm, or is the individual property of the different members composing the firm. While these are probably the only issues tendered by the pleadings, the undisputed material facts in the case, as disclosed by the evidence, presents another question arising from equitable principles; not depending upon the doctrine of liens, as known to the law, but ■upon the right of partnership creditors to be first paid out of the partnership ■property or funds.

From the kind and character of the property, whether it is copartnership property or not, from the kind and character of the various claim liens, whether they are liens or not, from the lack of averments in the pleading, from the lack of testimony in the case, it has caused the court considerable trouble to arrive at a conclusion, so that exact justice may be done between the parties, that justice to be measured alone by legal and equitable principles. From what had been *107disclosed upon the trial, it appears to a majority of the court there are other undisclosed facts which, if disclosed, might change the rights of the parties.

Be that as it may, it is the duty of the court to dispose of the case as it is, and not as it might have been.

On June 20, 1890, A. R. Rafferty and E. A. Townley granted unto defendant, W. B. Ely, his heirs or assigns, for a valuable consideration, all the oil and gas •in and under certain described premises, together with the exclusive right to ■enter thereon for the purpose of drilling and operating for oil, gas or water; to ■erect, maintain and remove all structures, pipe lines necessary for the production .•and storage of oil, gas or water, upon the following terms:

W. B. Ely agrees to drill a well upon said premises within thirty-seven days from this date ; should Ely fail to so drill, then this instrument to be null and void. Should oil be found in paying quantities upon the premises, Ely agrees to ■deliver to Rafferty and Townley, one-sixth part of all the oil produced and saved from said premises. Should any well or wells produce two hundred or more barrels a day, then Rafferty and Townley should receive one-third of the oil thus produced. All rights under this agreement shall end in twelve years from this date, •or as soon as Ely, or his heirs or assigns, have abandoned or cease to operate the •same, for a period of six months. (Other conditions are mentioned in this instrument that is not necessary to notice.)

On August 26, 1890, the said W. B. Ely, for a valuable consideration, assigned and transferred, by a written endorsement endorsed thereon, one-third of his interest in said written instrument to the defendant, T. H. McConica, and onéthird of his interest in said written instrument, to the defendant, W. B. ChubIbuck.

The instrument with the endorsements thereon, was duly recorded by the ■recorder of Hancock county, Ohio, in a book kept in the recorder’s office for that purpose.

Upon the threshold of the case, and upon which must be built the respective rights of the different parties herein, is the determination of the legal character oí this written instrument.

This court held m the case of *Harrington*v. Wood, 3 Ohio Circ. Dec., 475 that the construction to be given to this class of instruments was :

> “That they are not-strictly a lease, but a license coupled with a conditional grant, convey sng the grantor’s interest in a gas well.”

The sixth circuit court held, in the case of *Ohio Oil Co.*v. Toledo, *Findlay and Springfield Railroad Co.,*2 Ohio Circ. Dec., 505.

> “That these leases are in the nature of an incorporeal hereditament; that strictly •speaking, it is not a right in the land as such, but a right to enter upon the land, to sink its ■wells, and to take from underneath the soil, such oil as it may ñnd; to take it from the land, and to render a portion of it to the land owner ; the remainder to become its own, to dispose of it as it sees fit.”

The Supreme Court of Ohio in the case of *Brick Company*v. *Pond,*38 O. S., 65, held as follows :

> “A, by an agreement in writing, leased to B all the clay that is good No. 1 fire clay on his land described, for a term of three years, subject to the condition that B shall mine, oi «ause to be mined, or pay for not less than 2,000 tons of clay, every year, and shall pay therefor twenty-five cents per ton for every ton of clay, monthly, as it is taken away.

> *“Held,*that this was a *contract,*which gave B the exclusive right to mine and remove all the good No. 1 fire clay that was on the land, and not a *lease*of the land itself.”

The only difference between the case at bar, and the one cited from 38 O. S., is, in the case at bar, the contract was for all the oil contained in the land; in the 38 O. S., it is for all the fire clay contained in the land of a certain quality. We .quote from the opinion of Johnston J., as found in 38 O. S., 71 :

> *108“The exclusive right to possession of the land, as far as it was necessary to mine and remove such clay was granted. This was not an exclusive possession of the whole tract, but only for mining purposes. The ownership of the land, with the right to the possession of the same, subject only to the right of possession for the purpose of mining and removing the clay, was in the owner. This was, therefore, a contract, for the privilege of mining and removing the kind of fire clay specified, as distinguished from a lease of the land.”

Does the fact that it was clay, instead of oil, change the character of its mining properties? It was held in 110 Penn., 317 as follows :

> “Petroleum, it is a mineral substance, obtained from the earth, by a process of mining and lands from which it is obtained, may with propriety, be called mining lands.”

From these authorities it must be held that the written instrument in the case at bar, is not a lease of the land, but simply a contract, coupled with the license or grant, to obtain possession of the land, for the purpose of the contract. Its sole and only reference to the land, is the license to take possession.

On April 13, 1891, the defendants, Thomas H. McConica, Wm. B. Ely and W. R. Chubbuck, executed and delivered to Sylvester Finch, David B. Batchley and A. J. Ferrell, partners as S. M. Finch & Co., a written instrument, whereby they granted, sold, assigned, transferred and conveyed to Finch & Co. all their interests in the written instrument executed by A. R. Rafferty andB. A. Townley, to Wm. B. Ely, on June 20,1890, as before stated, together with three derricks, three oil wells complete, including casing, . rods and everything going to make up a complete outfit to said wells, including three stationary steam-engines, two boilers, four 250 bbl. tanks, 3,500 ft. of steam pipe line, and all connections and fittings and all other personal property, belonging to said grantors, now on the said premises hereinbefore described; also one derrick, one boiler, one engine, one string tubing (1,250 ft.), one string casing (420 ft.), one carpenter rig complete, one strong sucker rod, and one 250 bbl. tank.

The condition contained in said written instrument or grant was:

> “That whereas the said Thomas H. McConica, William B. Ely and Walter R. Chubbuck, have, as partners under the firm name of McConica, Ely and Chubbuck, executed in such fina name, and delivered to said S. M. Finch & Co. their certain promissory note, dated April 11, 1891, in the sum of two thousand dollars, due and payable on or before the 11th day of April, 1892, and have further agreed that they will operate all said wells in a safe and prudent manner, and at the end of each month, render a just account, of the expenses of such operation, of said wells, including removing property and drilling said wells, and deduct said expense which shall be paid to them ; all the balance or net earnings of said wells shall be retainedl by grantees herein, and applied to the payment and liquidation of said note, and shall be credited on the same each month, as said payments are made. The oil shall be run to the credit of the grantee. Now, if the said McConica, Ely and Chubbuck, or any of them, their heirs or assigns, shall truly pay or cause to be paid, said promissory note with interest when the same shall become due and payable, and shall keep and perform the covenants and agreements above contained, on their part to be performed and kept, according to the intent and! meaning thereof, then this mortgage shall be void; otherwise to be and remain in full force and virtue in law.”

This instrument in writing, was duly recorded as a real estate mortgage, and was duly filed and recorded as a chattel mortgage. The note mentioned and. described in this instrument in writing, before its maturity, was duly assigned and transferred by the said S. M. Finch & Co., to the Meridian National Bank, which it now holds and asks that the instrument in writing, securing it, be foreclosed.

After the execution and delivery of this instrument, to Finch & Co., Finch & Co., took possession of the premises, and these various chattels, operated the oil wells upon said premises, and received in money from the sale of the products of these wells, more than enough to pay said note, after deducting, the expense incidental to the operating of said wells.

The money realized by Finch & Co., in the operation of said wells, was paid by them in a great part to the creditors of the firm of McConica, Ely and Chub-buck ; only a small part being paid upon this note. The payment was made with the knowledge and under the express direction of McConica, Ely and Chub-buck.

After this action was commenced, and after this money was realized, by Finch & Co., the court of common pleas appointed a receiver, who, since his *109appointment, has been operating said wells, and has in his hands, by virtue of said operation, a large sum of money for distribution.

The Meridian National Bank, under this state of facts, claim a lien upon these oil wells, the chattels connected therewith, and the proceeds arising from the sale of the oil, made by the receiver; have they such a lien ?

So far as this security is conserned, the Meridian National Bank stands in the shoes of Finch & Co. Finch & Co. could not claim a lien by virtue of these facts, neither can the Meridian National Bank. As we have seen from the case cited in the *Brick Co.*v. *Pond, supra,*the interest of Thomas H. McConica, Wm. B. Ely and Walter E. Chubbuck, is an interest in the contract, and not an interest in the land. So that this instrument in writing recorded as a real estate mortgage, created no lien. Query? Can this contract be the subject of a chattel mortgage, so as to create a lien ? If it can, the condition of it provides that when, with the operation of the oil wells, after deducting expenses, enough money is realized to satisfy this note, the mortgage is void. Enough was realized, hence the security is void by its terms, unless the direction of the firm of McConica, Ely & Chubbuck apply the money thus realized to other firm debts, changes it. The security is that of Thomas H. McConica, Wm. B. Ely and Walter E- Chubbuck, and not the security of the firm of McConica, Ely & Chub-Luck. When Finch & Co. consented and applied the money thus realized to other firm creditors, in preference to applying it to their own security, in equity they waived or released their security, upon the plain principal of equity, that by tfieir act, it tends to defeat the other creditors. At this point another equitable principle may be pertinent, although not pleaded, and that is this, the doctrine of subrogation. The claims that were paid by Finch & Co. in preference to their own, were the claims of McElwaine & Co., and Solomon Funk, which claims were for materials furnished, for these oil wells, and which is claimed were prior liens to this lien of Finch & Co., by reason of McElwaine & Co. and Solomon Funk, perfecting a mechanic’s lien under the statutes of Ohio. The question thus arises, had they valid mechanics’ liens?

In the case of McElwaine & Co., the first item of account is dated Aug. 29, 1890, $475. The second, third and fourth items of account are dated Dec. 11, $205.55; Dec. 13, $210.31; Dec. 14, $43.97; Dec. 30, $183.31; Jan. 10, 1891, $-. The lien was filed for record May 7, so all these items were furnished with the exception of the last item, more than four months prior to the filing of the same for record.

In the case of Solomon Funk, the same condition exists.

On account of the date at which these items were furnished, the date of the filing of the lien, does the fact that one of the items was furnished within the four months, preserve the lien, as to the other items ? We think not.

We cite the case of *Choteau*v. *Thompson & Campbell,*2 O. S., 114; a part of the syllabus of the case reads:

> “ But where they are furnished for different purposes (materials) or where there are intervals of time in the account, so long that it can not with propriety be called one account, there is not, in the absence of an entire contract, a lien for the whole from the date of the first article furnished. The items in such case will be regarded as forming one, two or more distinct accounts. ”

So we hold (a majority of the court,) that the Meridian National Bank has no lien so far as the lien is claimed, by virtue of the mortgage described in the petition.

“On April 29,1891, the firm of Shaw, Kendall & Co., recovered a judgment before a justice «gainst the firm of McConica, Ely & Chubbuck, and on May 6,1891, they caused a transcript of said judgment to be filed with the clerk of the court, which judgment was assigned to the defendant, The Buckeye Supply Co.”

“ On July 13, 1891, the Buckeye Supply Co., obtained a judgment in the court of common pleas of Hancock county, Ohio, against the defendants, Thomas H. McConica, William B. Ely and Walter U. Chubbuck, as partners under the firm name of McConica, Ely & Chubbuck.

*110“ On May 6, 1891, the Buckeye Oil Well Supply Co. recovered a judgment against McKinnis, McConica & Co/ before a justice, and on June, 11,1891, they caused a transcript to> be filed with the clerk of the court, that the defendant, Thomas McConica, was a member of said firm of McKinnis, McConica & Co., and that the Buckeye Supply Co. is the owner of said judgment.”

“On July 13, 1891, the Buckeye Oil Well Supply Co. recovered a judgment against the partnership of McConica, Ely & Bicknell, by the consideration of the court of common pleas-of Hancock county, Ohio; that the Buckeye Supply Co. is the owner of said judgment, that the defendant, Thomas H. McConica, was a member of said partnership firm of McConicar Ely & Bicknell.”

Such, in effect/is the claim lien of the Buckeye Supply Co. Do these facts create a lien so far as the property or money in question is concerned? They are either the property of T. H. McConica, Wm. B. Ely and Walter E- Chubbuck as; individuals, or the property or moneys of the copartnership firm of McConica,. Ely & Chubbuck,-and a judgment against the firm of McKinnis, McConica & Co. against the firm of McConica, Ely & Bicknell does not create a lien upon the property of the firm of McConica, Ely & Chubbuck, or the individual members of this firm; although it may be that a member of the firm, is common to all the firm.

As to the judgments against the firm of McConica, Ely & Chubbuck, they are a lien without levy upon the real estate of the firm in the county. Nothing; else, and as we have seen, the firm of McConica, Ely & Chubbuck, or the individuals composing the firm, are not the owners of any real estate; hence we hold! that the Buckeye Supply Co. has no lien upon the property, or proceeds from the property by virtue of this judgment lien.

For the reasons heretofore given, the facts pleaded in the answer and cross-petition of Solomon Funk create no lien in his favor against the property in Controversy.

As to the facts alleged in the answer of S. M. Finch other than the facts; alleged in which he asks that the payments that he made to McElwaine & Co.,, ■and Funk, be ratified and approved by the court, to-wit, for services rendered while he had charge of the property, creates no lien against the property or its; proceeds from the fact alone of such services.

Adams Bros. & Co., claim a lien from the following facts:

> “Tbat on May 22, 1891, they recovered a judgment before a justice, against the partner ship firm of McConica, Ely & Chubbuck; that on Nov. 19, 1891, they filed a transcript of said! judgment with the clerk of the court; that on Mav 3, 1891, they recovered three several judgments against the defendant, McConica, Ely & Chubbuck, as partners, before a justice. That on Sept. 19, 1891, they filed a transcript of each of said judgments with the clerk of the court", that on April 13, 1892, they caused executions to issue and the same were levied upon all the premises, and all the property, both real and personal, described in the petition.”

> . “That on May 10, 1892, they recovered a judgment against the defendants, Thomas H„ McConica, and Wm. B. Ely, by the consideration of the court of common pleas of Hancock, county; they caused an execution to be issued and levied upon McConica’s undivided interest in said property, and upon Wm. B. Ely’s undivided interest in said property.”

The difference in this claim lien of Adams Bros. & Co,. and. the Buckeye Supply Co., is this:

In Adams Bros. & Co., there was a levy made; in the Supply Co., there was. no levy. Does this difference create a lien in favor of Adams Bros. & Co. ?

Section 5375 of Rev. Stat., provides:

> “ Lands and tenements within the county, where the judgment is entered, shall be bound for the satisfaction thereof, from the first day of the term, at which judgment is rendered, but judgments by confession, and judgments rendered at the same term, at which the action is commenced, shall bind such land only from the day on which such judgments are rendered, and all other land as well as goods and chattels of the debtor, shall be bound from the time that they are seized in execution. ”

Adams Bros. & Co. have no lien by virtue of their levy upon the proceeds arising from the sale of oil in the hands of the receiver, because this oil in the *111hands of the receiver could not be seized in execution; being in the hands of the receiver, it was already in the possession of the court. They have no lien by virtue of their levy upon the oil wells and the products thereof, because they' .are held under a contract, and are not lauds and tenements; and the contractual rights under the contract, are not goods and chattels, hence could not be seized in execution. As to the derricks and other chattel property connected with the oil wells, a lien could be created, by seizure upon execution, provided in the-Adams Bros. & Co. case, these derricks and other chattels were property of the firm of McConica, Ely & Chubbuck, or the property of Thomas H. McConica and Wm. B. Ely, against whom the executions were issued.

The question may be asked how will you subject this oil lease or contract of McConica, Ely & Chubbuck, to the payment of their debts; whether it is the pioperty of the firm, or the property of the individuals composing the firm? This is provided for by sec. 5464, Rev. Stat., which provides:

> “When a judgment debtor has not personal or real property subject to levy on execution, sufficient to satisfy the judgment, any equitable interest which he has in real estate, as mortgagor, mortgagee, or otherwise, or any interest he has in any banking, turnpike, bridge or other stock company, or¡ in any money, contract, claim or chose in action, due, or to become due, to him or in any judgment or order, or any money, goods or effects, which he has in the possession of any person or body politic, or corporate, shall be subject to the payment of the judgment by action.”

So we hold that Adams Bros. & Co. have no lien upon the property, or moneys in controversy, by virtue of their judgment and levy, excepting the derrick and chattels connected with the wells, and this dependent upon whether tliese derricks and chattels were the property of the firm of McConica, Ely & Chubbuck, or Thos. H. McConica and Wm. B. Ely, at the time of the seizure upon execution.

The Farmers’ National Bank of Findlay, Ohio, claim a lien from the following facts:

> “ On February 6, 1892, the bank recovered a judgment against the defendant, Thos. H McConica, by the consideration of the court of common pleas of Hancock county, Ohio; execution was duly issued upon the judgment, and levied upon the property described in the petition.”

> “ On Feburary 6, 1892, another judgment was rendered, similar to the above, excepting amount, execution issued, and levy made.”

> “On March 2,1892, the bank recovered a judgment against the defendant, W. L.Chubbuck by the consideration of the court of common pleas, of Hancock county, Ohio, execution issued and levy made upon all the property in the petition described.”

For the reasons given in Adams Bros. & Co’s, claim, this bank has no lien by virtue of its judgment and levy, excepting the derrick and chattels connected-with the wells, and this dependent upon whether these derricks and chattels were the property of the defendants, Thos. H. McConica and W. E. Chubbuck, at the time of the seizure upon execution.

> “On April 20, 1891, the defendant, Wm. B. Bly, sold and assigned his one-third interest *m*the oil lease or contract (made by Rafferty and Townley) to one Wm. S. Bly, together with his interest in all oil wells, lines, tanks and machinery now on or pertaining to said lease.”

> “This assignment was duly entered oí record upon the same day; although this transfer and sale is absolute upon its face, the pleadings aver it was a pledge or mortgage, given, by Wm. B. Bly to Wm. S. Bly to secure him on account of his suretyship to Wm. B. Ely.”

This is not a claim lien, but an absolute sale of an interest in all the property-in controversy, which carries with it the proceeds in the hands of the receiver,, produced from that interest, dependent alone upon the fact whether Wm. B. Ely, at the time owned, in his individual right, this interest he sold.

Wm. S. Ely further claims, by virtue of his purchase from Wm. B. Ely, that, he is entitled to an accounting from the firm of Finch & Co. for the proceeds of. the oil sold by them, in excess of the sum of money that was required to pay the note now held by the Meridian National Bank. The product of the oil wells that *112were placed in the hands of Finch & Co., by the individuals composing the firm of McConica, Ely & Chubbuck, by virtue of the so-called chattel mortgage, was first a pledge by the individuals composing this firm, to the extent of the payment of this note. In this relation they were the pledgees of the property of product. And as such were responsible in that relation. They, still retaining possession of the property and its product, after this relation terminated and being put in possession originally by the individuals composing the firm of McConica, Ely & Chubbuck, which was known to Wm. S. Ely, after the relation of pledgee terminated, they then bore the relation to the individuals composing the firm of McConica, Ely & Chubbuck, of agent, and paying the money out under their direction, and Wm. S. Ely permitting it to be done, he is now estopped from claiming that Finch & Co. should account to him; his accounting for this transaction, if any he has, must be with Wm. B. Ely, from whom he purchased.

The answer of Isaac Davis, claims an interest in the property, and the proceeds through an assignment by Wm. S. Ely to him of the undivided one-third interest, that he obtained from Wm. S. Ely, to protect Davis, inhis suretyship for Wm. S. Ely.

His interest depends, first — whether Wm. S. Ely has any interest, and second —by his pleading, it is very doubtful if he pleads facts sufficient to create any interest; it might be supplied by evidence, but we have none.

J. E. Walcott claims a lien from the following facts:

> “By virtue of the same judgments set forth in the answer and cross-petition of the Buckeye Supply Co., as before stated, these judgments constitute no lien. In addition to this, on October 29, 1891, for the purpose of securing the payment of these judgments, Thos. H. McConica assigned and transferred to Walcott, all his interest in the leasehold and property, connected therewith, mentioned and described in the petition. The transfer was made to Walcott, he being the treasurer of the Buckeye Supply Co., for the use and benefit of the Buckeye Supply Co., and no other party. That he, Walcott, is the sole owner of the interest of the said Thos. H. McConica in the property subject to the amount that may be required to pay the partnership debts of the firm of McConica, Ely & Chubbuck.

This pleading of facts constitute no cause of action. For even if McConica was the absolute owner of the interest he sold, the sale inured to the benefit of the Buckeye Supply Co., and Walcott, the answering defendant, has no interest in it.

As we have seen, none of the parties to the action have any liens upon this license or contract, which carries with it the oil wells, and the product therefrom, by virtue of any mortgage, by virtue of any judgment or levies, or by virtue of any mechanic’s lien.

Under the pleadings and the evidence introduced without objection, we treat the action as two-fold: first — the marshaling of liens as to the derrick and other chattels connected with the wells, and second, as to the oil wells, and products therefrom, as an action under sec. 5464, of the Rev. Stat., to subject the right of the .debtor under this license or contract, to the payment of his or their debts. Thus treating the case as to the oil wells and the products therefrom, the interest in the proceeds thereof, are determined upon equitable principles. All creditors of a class share pro rata, without priority; partnership assets are first subject to the payment of partnership debts; individual assets, are first subject to the payment of individual debts.

If we concede that the copartnership firm of McConica, Ely & Chubbuck own this license or contract, together with all the chattels connected therewith, at the start, on April 20,1891, a member of the firm of Wm. B. Ely sold his interest to Wm. S. Ely. This, at common law, dissolved the firm. We have no data, either in the pleadings or evidence, to determine the substantial effect of it.

If the law governing mining properties is applicable to the drilling for oil, and which some courts of recognized distinction and ability hold — then a copartnership firm for drilling for oil is governed by rules of law entirely different from rules of law governing an ordinary partnership, We have no data either *113in the pleadings or evidence to make the application of the law governing mining.

So the question is, is the property in controversy the property of the copartnership firm of McConica, Ely & Chubbuck, or is it the individual property of Thos. H. McConica, Wm. B. Ely and W. E. Chubbuck. So far as the respective rights of creditors are concerned, to hold in partnership property, there must be a partnership *in fact.*This partnership in fact, is determined and depends upon the intention of the parties sought to be charged as partners, This intention is formed by the acts of the parties. What were those facts?

This license or contract, appears of record (and the law of Ohio requires it to be recorded,) in the name of Thos. H. McConica, yi; Wm. B. Ely, yi; and W. E. Chubbuck, |.

“On April 13, 1891, Thos. H. McConica, Wm. B. Ely and Walter D. Chubbuck, as grantors, conveyed to S. M. Finch & Co., all the property in controversy, to secure a note executed by the firm of McConica, Ely & Chubbuck. This instrument was recorded as a real estate mortgage, and chattel mortgage, and in it they claimed to own the property as individuals. It will be noticed that it is not a conveyance by the firm.”

“On the same day, Thomas H. McConica, Wm. B. Ely and Walter D. Chubbuck, grantors, conveyed to S. M. Finch & Co., all the property in controversy, to secure another note executed by the firm of McConica, Ely & Chubbuck. This instrument was recorded as a real estate mortgage and chattel mortgage, and in it they claim to own the property as individitals.”

It will be noticed that it is not a conveyance by the firm.

“On April 20, 1891, Wm. B. Ely transferred and sold to Wm. S. Ely, his one-third interest in all the property in controversy. This was entered of record as the law required.”

“On April 20, 1891, Thos. H. McConica transferred and sold to David T. Davis, an equal undivided one-third in all the property in controversy. This was entered of record as the law required.”

“On April 22,1891, W. D. Chubbuck transferred and assigned to J. B. McElwaine & Co., the undivided one-third interest in all the property in controversy. This was entered as the law required.”

Wm. B. Ely, testifies:

> “ We agreed to drill wells on it and develop it. Each one of us to pay our third interest in the fund, and draw our oil separately. Each one raising his one-third. The oil was sold to the Buckeye Pipe Dine Co., on division run orders. Each one drew his oil when he wanted it. Duiing the time that we were putting down the wells, each one of us did pay each his own part as long as each could from his own resources. No, sir, not considered a firm. When we started it was the understanding of all of us, especially understanding there would be no firm about it.” -*

> “Each one would draw his oil. I kept the books in each one’s individuality, and made statements to each one individually. The money in bank came this way: I would ask Mc-Conica or Chubbuck, they would give me a check; they had their own bank acconnt, and I asked them to give me a check. If we had any notes or bills, or anything of the kind, we had to pay, they would give me a check; sometimes for a third of the note, or something that way. Sometimes they would turn over what they had received from the Buckeye Pipe Dine Co., for oil sold. They would turn me' over that check, which I would put in the bank, and check it out.”

It was conceded on tbe trial by all parties, that each one of the three received their own orders, and sold their oil separately.

Mr. Chubbuck testifies:

> “It was understood that we would take leases together, and become partners in the business and operate. (This amounts to nothing; his understanding is nothing; facts upon which he based his understanding is what proves something.) We deposited sometimes individually to the firm credit, and sometimes we checked out the individuals we owed for firm labor. Whenever there was any bills to be paid, or any money necessary to carry on the business, each one undertook to get one-third of it from his own resources, if there was no company fund in the bank. Each one was to get his own oil, each one was to draw his own oil.”

Thos. H. McConica testifies:

> “We began taking leases together; we never made any firm arrangements, excepting each one had a third interest in what the company required. We didn’t make any partnership agreement; I don’t know that we ever really adopted a name.”

*114These are in substance the material facts (excepting two others which we shall notice hereafter) that are offered in evidence tending to prove the intention on the part of these parties to become partners. To a majority of the court, this falls short of proving such relationship. But on the contrary, it proved beyond a question, they were tenants' in common. It is urged that the fact, that these parties, under a firm name, bought property to be used in connection with this license or contract, and gave notes in the same firm name to pay for it, charges them as partners. This is no doubt true as to the parties that dealt with them in that relation, but it is not because they are a partnership *in*fact, but because by the law of estoppel, they would be estopped from denying that relationship. But as to all other parties, the question is, was there a partnership *in fact.*It is further urged from the i act that the property thus bought in the firm name, was used in enhancing the value of the license or contract.

Equity should give the property to the parties who by their property increased its value. Under certain facts and circumstances, equity would so decree, but in the case at bar, those facts and circumstances, that would entitle the parties to such relief, are neither pleaded nor attempted to.be proven.

So the majority of the court hold that all of the chattels connected with these wells, of every description, as described in the petition, together with the oil wells and the product therefrom, including the moneys in the hands of the receiver, and that may come to his hands, together with all the rights and privileges under this license or contract,is the property of Thomas H. McConica, Wm. B. Ely and W. L. Chubbuck, as tenants in common, each one-third, and the court will so decree.

That out of the proceeds in the hands of the receiver or that may come to his hands, together with the proceeds arising from the sale of the license or contract, including all oil wells, and all chattels connected therewith, there be paid:

> “First — The taxes, if any.

> Second — All costs of this action, which shall include the stenographer’s fees, which fee shall include the transcribing in this court of the short hand notes into long hand, and the copying of this opinion.

> Third — Of the balance of the fund, one-third should be set apart for Thos. H. McConica, one-third should be set apart for Wm. B. Ely and one-third should be set apart for W. E. Chubbuck.”

Out of the one-third to Thos. H. McConica thus set apart, pay:

> “1st. Farmers’ National Bank (two judgments) of date Feb. 6, 1892, and one-half of the judgment in favor of Adams Bros. & Co., of date May 10, 1892, against Thos. H. McConica and Wm. B. Ely, without priority, *pro rata,*figuring interest to this date, July 16, 1894.

> 2nd. Meridian National Bank’s judgment against McConica, Ely & Chubbuck, Buckeye Supply Co.’s judgments against McConica, Ely & Chubbuck, dated April 29, 1891, July 13, 1891; E. M. Finch’s claim for services against McConica, Ely & Chubbuck, Adams Bros. & Co., judgment against McConica, Ely & Chubbuck, dated May 22, 1891, May 5, 1891, and one-half of the judgment in favor of Adams Bros. & Co., against Thos. H. McConica, Wm B. Ely, dated May 10, 1892, without priority, *pro rata,*figuring decree to this date, July 16, 1894.

> 3rd. Balance, if any, to Thos. H. McConica.”

Out of the one-third of Wm. B. Ely thus set apart, pay :

> “1st. To Isaac Davis, the amount paid by him for Wm. S. Ely, figuring interest to this date, July 16, 1894.

> 2nd. To Wm. S. Ely, the amount paid by him for Wm. B. Ely, figuring interest to this date, July 16, 1894, less the amount paid Isaac Davis as above.

> 3rd. One-half of the judgment in favor of Adams Bros. & Co., against Thos. H. McConica and Wm. B. Ely figuring interest tothis date, July 16, 1894.

> 4th. Meridian National Bank, judgment against McConica, Ely and Chubbuck, Buckeye Supply Co., judgments against McConica, Ely & Chubbuck, dated April 29, 1891, and July 13, 1891. E. M. Finch’s claim for services against McConica, Ely & Chubbuck, Adams Bros. & Co., judgment against McConica, Ely & Chubbuck, dated May 22, 1891, and May 5,1891; and one-half of the judgment in favor of Adams Bros. & Co., against Thos. A. McConica, and Wm. B. Ely, dated May 10, 1892, without priority, *pro*rata, figuring interest to this date, July 16, 1894.

> 5th, Balance, if any, to Wm. B. Ely.”

*115*John Poe*and *W. H. McElwaine,*for plaintiff.

*Ira C. Tabor,*for The Buckeye Supply Co., and J. E. Wolcott.

*J. Frank Axline,*for Finch & Co.

*W. H. McElwaine,*for Adams Bros. & Co.

*A. &P. P. Blackford,*for Farmer’s National Bank.

*Geo. A. Phelps, Duncan & Duncan,*for Wm. B. and Wm. S. Ely & Isaac Davis.

*Theodore*Totten, for Solomon Funk,

Out of tbe one-tbird of W. L,. Chubbuck thus set apart, to pay:

> “1st. The Farmers’ National Bank, judgment against W. I* Chubbuck, dated March 2, 1892,- figuring interest to this date, July 16, 1894.

> 2nd. The Meridian National Bank, judgment against McConica, Ely & Chubbuck, The Buckeye Supply Co., judgment against McConica, Ely & Chubbuck, dated April 29,1891; E. M. Finch’s claim for services against McConica, Ely & Chubbuck; Adams Bros. & Co.’s claim against McConica, Ely & Chubbuck, dated May 22, 1891, and May 5,1891, without priority, *pro*rata, figuring interest to this date, July 16, 1894.

> 3rd. Balance, if any, to W. L. Chubbuck.”

The cross-petition of Wm. S.' Ely, so far as the claim against Finch & Co. is concerned, dismissed. The cross-petition of the defendant, J. A. Wolcott, dismissed.

The cross-petition of the defendant, The Buckeye Supply Co., so far as the judgment against McKinnis, McConica & Co., dated May 6, 1891, and the judgment against McConica, Ely & Bicknell, July 13, 1891, are concerned, dismissed.

The cross-petition of the defendant, Solomon Funk, dismissed.

From this distribution, counsel can draft a decree, adjusting the priority oi liens.

We will appoint W. H. Kinder to prepare the decree in accordance with this opinion, and will allow him a fee of $25.00 to be taxed and paid as part of the costs.

Moore, J., concurs, and Day, J., dissents.