GAS AND OIL LEASES.

[Lucas Circuit Court,

March 2, 1901.]

Haynes, Parker and Hull, JJ.

#### *Anthony A. Simmons et al. v. Buckeye Supply Co.

1. Grantee Charged With Notice by Possession in Operating eor Oil.

Where the owner of land permitted her husband and his partner to enter upon-the premises and operate the same for oil, without a written lease, and without reservation of interest, rent or royalty, the firm being permitted to receive the entire production, and to hold themselves out to the world as owners thereof, and being in absolute possession of the premises at the time of a sale thereof by the wife, her grantee is charged with notice, not only of rights which a mortgagee of the oil business may have acquired, but of rights which were acquired against grantor by estoppel; and grantee takes the premises subject to such rights.

2. Not Tenants at Will — Mortgage Succeeds to Rights Acquired.

Where the owner of lands permitted her husband and his partner to enter into possession of the premises, without written lease, reservation of rent or royalty, and operate the same for oil, being permitted to receive the entire product, such firm was not merely a tenant at will, but acquired a right in equity to compel the owner of such propertv to execute a lease or grant, conveying the usual rights and interest which are conveyed by such instruments and a mortgagee of such firm succeeds to the rights thus acquired.

8. Evidence oe Reservation Though not Contained in Deed.

In an action by the grantee of the land in question for rent and royalty, evidence that there was a reservation in fact of the oil, is competent notwithstanding the deed contained no such reservation, particularly where it appears that the grantor and her husband at the time of the conveyance expected that the mortgage of the oil interests would be paid off and that the rights would revert to them.

*4.*Claim as Between Original Parties — Does not Aeeect Successors.

The fact that as between the owner on the one part and her husband and bis partner on the other part, there was an understanding that she was to receive a rental, affords foundation for a claim against them, but does not in any way affect the rights of mortgagees of the partners without notice or their successors in interest, or the title acquired by estoppel.

*691Appeal.

*Hurd, Brumback*and *Thatcher,*for plaintiff :

Tenants at will: 1 Wood on Landl. and T., pp. 43,44,48, 67; 12 Am. & Eng. Ency. Law, 670, 671 (1st Ed.); Sarsfield v. Healey, 50 Barb. (N. Y.), 245; Le Tourneau v. Smith, 53 Mich.,473 [19 N. W., 151] ; Lea v. Hernandez, 10 Tex., 137; Goodenow v. Allen, 63 Me., 308; Rich v. Bolton, 46 Vt., 84; Murray v. Cherrington, 99 Mass., 229; Sanford v. Johnson, 24 Minn., 172; Williams v. Deriar, 31 Mo., 13; Knight v. Indiana, etc., 47 Ind., 105; Webb v. Seekins, 62 Wis. [21 N. W. Rep., 814]; Merrell v. Sizeland, 81 111., 457; Say v. Stoddard, 27 Ohio St., 478.

Decrees; Privity: 2 Black on Jdgt., Sec. 549.

Parol License: Mather v. Wright, 11 Circ. Dec., 578 [21 R., 103],

*Ira C.*Tabor» for defendant, cited:

Res adjudicata: Grant v. Ramsey, 7 Ohio St., 157; Petersine v. Thomas, 28 Ohio St., 596; Covington & C. Br. Co. v. Sargent, 27 Ohio St., 233; Roby v. Rainsberger, 27 Ohio St., 674; Porter v. Wagner, 36 Ohio St., 471; Foster v. Busteed, 100 Mass., 409; Hughes v. U. S., 71 U. S. [4 Wall.], 232 [18 L- ed., 303]; Andrews v. Stelle, 22 N. H. Eq., 479 ; Ehle v. Bingham, 7 Barb., 494; Young v. Rummell, 2 Hill,, 478; Kingsland v. Spalding, 3 Barb. Ch., 341; Lyon v. Manufacturing Co., 125 U. S., 698 [31L- ed., 839]; Gelston v. Hoyt, 1 Johns. Ch., 542; Cook v. Canal & D. Co., 23 N. E. Rep., 629; Kelauder v. Hoover, I'll Ind., 10; McBurnie v. Seaton, 111 Ind., 56 [12 N. E. Rep., 101]; Chicago v. Cameron, 120 111., 447 [11 N. E. Rep., 899]; Snow v. Mitchell, 37 Kan., 636, 639 [15 Pac. Rep., 224; 16 Pac. Rep., 737]; Hanson v. Manley, 72 Iowa, 48 [33 N. W. Rep., 357]; Harmon v. Auditor, 123 111., Ill, 122 [13 N. E. Rep., 161]; Stockton v. Ford, 59 U. S. (18 How.) 413 [15 L. ed., 395]; Laird v. De Soto, 32 Fed. Rep., 652; Hughes v. Pipe Lines, 29 N. Y\, 564; Thompson v. Roberts, 65 U. S. (24 How.), 233 [16 L. ed., 648]; Garrett v. Greenwéll, 92 Mo., 120 [4 S. W. Rep., 441]; Chicago & N. W. R. R. Co. v. People, 120 111.. 104 [11 N. E. Rep., 418] ; Washington, etc., Packet Co. v. Sickles, 65 U. S. (24 How.), 333 [16 L. ed., 650]; Brooklyn City, etc., Ry. Co. v. Bank, 102 U. S., 14 [ 26 L. ed., 6]; Commercial Union Assurance Co. v. Scammon, 126 111., 355, 364 [18 N. E. Rep., 562; 9 Am. St. Rep., 607]; Orthwein v. Thomas, 127 111., 554 [21 N. E. Rep., 430; 4 L. R. A., 434; 11 Am. St. Rep., 159]; Kromer v. Friday, 10 Wash., 621 [39 Pac. Rep., 229; 32 L- R. A., 671]; Wolf v. Youbert, 45 La. Ann., 1100 [13 So. Rep., 806; 21 L. R. A., 772]; Vanfleet, Collateral Attack, Sec. 17; Fischti v. Fischti, 1 Blackf., 360.

Estoppel: Eldridge v. Walker, 80 111., 207; Ford v. Loomis, 33 Mich., 121; Winton v. Hart, 39 Conn., 16; Miles v. Lefi, 60 Iowa, 168 [14 N. W. Rep., 233]; Stewart v. Munford, 91 111., 58; Robbitt v. Shryer, 70 Ind., 513; Sebright v. Moore, 33 Mich., 92; Horn v. Coe, 51 N. H., 287; Howland v. Woodruff, 60 N. Y., 73; Barton’s Appeal, 93 Pa. St., 214; Kirk v. Hamilton, 102 U. S., 68; O’Connor v. Clark, 170 Pa., 318 [32 Atl. Rep/, 1029; 29 L. R. A., 607]; Quinlan v. Myers, 29 Ohio St., 500, 511; Miller v. Brown, 33 Ohio St., 547, 554; Stainchfield v. Emerson, 52 Me., 465; McCravey v. Renison, 19 Ala., 430 [54 Am. Dec., 194],

*

 For decision of the common pleas, see 5 Dec., 287.

Parker, J.

This case comes into this court on appeal. The plaintiffs seek to recover a share of the oil produced from wells drilled on certain prein*692ises of which they are the owners. It appears that they became the owners of the premises, consisting of about sixteen acres of land in Wood county, Ohio, by conveyance from Elizabeth Fuher, on October 14, 1892, and they seek to require the defendant, the person in possession of and operating these premises for oil, to account to them for a share of the oil, their contention being that under the custom of the country they should receive as landlords, the one-sixth part, at least, of the oil produced.

The defendant insists that it acquired the right to the oil under such circumstances that it is not bound to pay any rental or render any share of the oil. The history of the matter, in the main, is set forth in certain stipulations filed in the case and which read as follows:

> “ It is hereby stipulated by and between the parties to this cause as follows, to-wit:

> “ That one Elizabeth Fuher was the owner in fee and' held a good title to the property described in the petition, being between sixteen and seventeen acres of land located in the village of Prairie Depot, Ohio, prior to October 10, 1891, and continued as such owner until October 14, 1892. That there are no buildings upon said lands, but said lands are fenced; and upon the discovery of oil in the vicinity, four wells were drilled upon said property', which produced oil in payifig quantities.

> “ That- during the time Said Elizabeth Fuher was'the owner of said property, her husband, John Fuher, and Charles Villwock, were partners under the firm name of Fuher & Villwock, engaged in prospecting and operating for oil in Wood county, and as such partners, with the consent of said Elizabeth Fuher, entered into said premises, and drilled, completed and equipped four wells upon said land prior to February 10, 18&1, and that no other wells were drilled thereon. That there was no written lease between the said Fuher & Villwock and the said Elizabeth Fuher; that the said Fuher & Villwock received the entire production of oil on said lease, deducting no royalty, of which the said Elizabeth Fuher had full knowledge.

> “ That prior to February 10, 1891, the firm of Fuher & Villwock became indebted to the Buckeye Supply Company for material entering into the construction of said wells on said premises, and to secure the same said Fuher & Villwock did execute a chattel mortgage on certain oil well property, including sold wells aforesaid.

> “As an additional security, Fuher & Villwock also executed what is known as a transfer order, transferring all the oil to be produced from said wells in the future to be applied toward the payment of said indebtedness until said indebtedness should be fully paid.

> “ On October 14, 1892, said Elizabeth Fuher and her husband, John Fuher, duly conveyed said premises by warranty deed to the plaintiffs in this action, and the said plaintiffs thereupon entered into possession of said premises except in so far as the same were being occupied and used by the operation of said oil wells thereon, said John Fuher agreeing to pay to plaintiff a rental of $80.00 per year, rental for ground occupied by said oil wells, as per written agreement in that behalf a copy of which is hereto attached and marked “ Exhibit A,” and made a part hereof:

> “EXHIBIT A.

> “ Articles of agreement made and entered {into this 14th day of October, 1892, by and between John Fuher and Anthony A. Simmons in which the said John Fuher agrees to pay to the said Anthony Sim*693mons $30.00 per year commencing on the first day of April, 1893, as a rental for grounds now occupied by oil wells on lands this day purchased and now owned by said Simmons and Cora A. West, said lands purchased from Elizabeth M. and John Fuher lying south of Freeport, Ohio, containing sixteen and one-half acres, said term of lease to continue until the removal of all of said oil wells. (Signed) John Fuher, A. A. Simmons.

> '‘That on February 10,1894, John Fuher began an action in the court of common pleas of Lucas county, Ohio, against the Buckeye Supply Company, Charles Villwock, William Hardee and Elizabeth Fuher, for an accounting; and the Buckeye Supply Company filed its answer and cross-petition therein to foreclose its chattel mortgage given by said Fuher & Villwock and covering the said oil wells and appliances owned by said Fuher & Villwock upon said premises, and setting up the transfer order above described. Said Elizabeth Fuher also filed in said action her answer and cross-petition, in which she made claim to a royalty interest in the oil produced from the said wells and prayed an accounting-therefor against the Buckeye Supply Company and the said Fuher & Villwock, a copy of her answer is attached to the answer of defendant in this action. The plaintiffs, Anthony A. Simmons and Cora M. West, were not made parties in said cause.”

Upon the final hearing of said cause a decree was entered, etc.

The decree mentioned in the stipulation, a copy whereof is attached thereto, determines that Elizabeth Fuher was estopped as against the defendant herein from claiming any oil produced up to October 14, 1892. This decree is set up in the answer of defendant and it is contended that because thereof the claim of the plaintiff herein is *res judicata;*but we find that that is not so, because the plaintiffs herein were not parties to that suit and it was instituted after they had acquired whatever interest they have in the premises. But the same facts that were relied upon by the defendant in that case to estop Mrs. Fuher, plaintiff therein, are also relied upon here to defeat the claim of the plaintiffs herein who acquired their title from Elizabeth Fuher. It appears that at the time plaintiffs acquired their.title, as before stated, the defendants were in possession oí these premises, so that the plaintiffs were bound to take notice of defendant’s rights and title. It also appears from the stipulations and other evidence that Elizabeth Fuher had allowed her husband and Mr. Villwock to enter upon these premises to operate the same for the production of oil and that she had knowingly permitted them to hold themselves out to the world as the owners of all the oil being produced from the premises; in other words, as having the right to all of said oil without being required to share any part thereof with her, or render any rental. -

It is urged by counsel for plaintiff that there is something anomalous, something strange and unusual, in one occupying the premises of another and taking the oil therefrom in this manner without being required to render a part of the oil as royalty or to pay rental, but our experience with this business, both in and outside of courts informs us that it is very common in practice for the producer to acquire the entire interest in the oil, either by an outright purchase thereof or by other- arrangement, and we find from the evidence that under the circumstances the defendants dealt with Fuher & Villwock, in acquiring their security upon these wells and the oil, in the belief that Fuher & Villwock owned the entirety of the oil produced, and that this was done *694under such circumstances of knowledge and acquiescence upon the part of Mrs. Fuher as estop and cut her off from asserting any claim against the defendants, and that the defendants having been in absolute possession when the plaintiff bought, as before stated, the plaintiffs were bound to take no tice, not only of the rights that defendant had acquired in dealing with -Fuher & Villwock, but of the rights that they had acquired as against Mrs. Fuher, their grantor, by the estoppel.

But, it is urged by counsel for the plaintiffs that the utmost of the right that defendant had acquired was that of a tenant at will, and that, therefore, upon plaintiffs coming into the ownership of this land, they had a right to terminate that tenancy. If that were true, the right of the plaintiffs would extend to the whole of the oil produced and not merely to the rental or royalty; but we hold that that is not true; that Fuher & Villwock went into possession of these premises, drilled wells, and equipped and operated them under such circumstances that as against Mrs. Fuher they had a right in equity to compel her to execute to them a lease or grant, conveying to them the usual rights and interests' that are conveyed by such instruments, and that the defendant has succeeded to the right thus acquired by Fuher & Villwock. This right we find would include a right to operate these wells and drill and operate other wells upon the premises in a reasonable and ordinary manner so long as oil may be produced therefrom in paying quantities. It does not appear that the right to thus occupy these premises and operate these wells or drill other wells, has yet terminated. As before stated, the right to hold the premises free from any obligation to pay rent or royalty, is acquired as against Mrs. Fuher by the estoppel; the two are merged in the defendant and the plaintiff’s ownership is subject thereto.

We also conclude from the evidence that when plaintiffs acquired the ownership of these lands the conveyance of the oil underlying the same was not contemplated by Mrs. Fuher, but whatever right she had therein was intended to be reserved. Notwithstanding there is no such reservation in the deed, we hold that the defendant had a right to show that there was such a reservation in fact. At the time of this conveyance the rights of Fuher and Villwock had not been extinguished by the foreclosure and sale. It is clear that they then contemplated that the claim of defendant would ultimately be paid off, that the whole oil right would revert to them, and when that should occur it would also result that Mrs. Fuher, as against them, would have a right to exact royalty or rental and the occurrence of these events seems to have been contemplated by Mrs. Fuher and her husband, who acted in the transaction for her when the conveyance was made, and it seems to have been contemplated by Mr. Simmons, who acted in the premises for himself and for his daughter, Cora M. West. The oral testimony of the parties, both of Mr. Fuher and of Mr. Simmons, makes it clear to us that this is what was contemplated by the parties, and that the contract entered into between Mr. Fuher and Mr. Simmons, and which appears to have been on behalf of Mrs. Fuher, is to receive this construction. So that there is no hardship resulting to the plaintiffs from the conclusions of the court as to the rights acquired by the defendant by the way of estoppel against Mrs. Fuher and the plaintiffs. Making the claim for rental or royalty, seems to have been an after-thought on the part of Mrs. Fuher and on the ■ part of the plaintiffs, occurring after the rights of Fuher & Villwock had been foreclosed and sold to the defendant, as set forth in the stipulations. The facts that as between Mrs. Fuher on *695the one part and her husband and Villwock on the other part, there was an understanding that she was to be paid a rental, affords foundation for a claim on her part against them, but does not in any way affect the rights of the defendant in the premises.

The petition of the plaintiffs will be dismissed and the costs will be adjudged against them.