Case Name: Stokely v. State ex rel. Knox, Atty.-Gen., et al.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1928-02-13
Citations: 149 Miss. 435
Docket Number: No. 26721
Parties: Stokely v. State ex rel. Knox, Atty.-Gen., et al.
Judges: 
Reporter: Mississippi Reports
Volume: 149
Pages: 435–455

Head Matter:
Stokely v. State ex rel. Knox, Atty.-Gen., et al.
(In Banc.
Feb. 13, 1928.)
[115 So. 563.
No. 26721.]
Butier £ Snow, for appellant.
J. L. Byrd, Assistant Attorney-General, for appellees.
Argued orally by Geo. Butler, for appellant, and J. A. Lauderdale, for appellee.
Corpus Juris-Cyc. References: Asylums, 5CJ, p. 1419, n. 48 New; Mines and Minerals, 40CJ, p. 1059, n. 12; Use, 39Cyc, p. 845, n. 72, 78.

Opinion:
Cook, J.
The state, on the relation of the AttorneyGteneral and the state insane hospital improvement, removal, and land sale commission, instituted this suit in the chancery court of the First district of Hinds county seeking to cancel a certain contract or lease theretofore made by the trustees of the state insane hospital with the appellant, Mrs. Ella Rawls Reader Stokely, which said contract or lease had been assigned to the Standard Shale Products Corporation. The bill sought to cancel this contract or lease on two grounds: First, that the trustees of the insane hospital had no authority to make such a contract or lease. And second, that the lessee had not performed her part of the said contract or lease.
The appellants filed an answer to the bill of complaint, and in their answer demurred to that portion of the bill which charged that the trustees were without, authority to make the contract or lease, assigning as grounds of demurrer, first, that the bill of complaint states no fact showing* or tending to show that the board of trustees of the state insane hospital is without authority to make the contract in question; and second, no reasons are given, either of law or fact, for the invalidity of said contract. The answer also averred that, on the date in question:
' ' The state insane hospital then and there owned the lands described in the bill of complaint, and then and there the trustees of said hospital had the authority to use said property for said institution, and were author ized to make suck use thereof as a reasonable and prudent person would make of similar property, taking into consideration the extent, location, and nature of said property, and the needs and requirements of said institution, and that acting in pursuance of their authority the board of trustees of said hospital did on or about the 5th day of December, 1924,- enter into a contract with the defendant, Ella Rawls Reader Stokely, then Ella Rawls Reader, whereby and wherein the said Ella Rawls Reader agreed to test and explore, at her own expense, for oil and gas on said property, and to drill, at her own expense, on or before March 5,1925, for the purpose aforesaid, a well on said property, and in consideration thereof the said hospital, acting by and through its board of trustees, agreed to give the said Ella Rawls Reader seven-eighths of all the oil found or produced or taken from said land, and the said Ella Rawls Reader on her part further agreed to deliver to the credit of said hospital, free of cost, in the pipe line or tank in which she might connect her wells, the equal of one-eighth of all oil produced and saved from said land, and agreed to purchase from said hospital, with certain exceptions not necessary here to set out, all gas found or produced or taken from! said property at and for the sum of eight cents per thousand cubic feet, measured at the wells, payments to be made for said gas every three months, all of which will more fully appear by reference to the contract made Exhibit B to the bill of complaint."
The appellees filed a motion to test the legal sufficiency of that part of the answer above quoted, and, upon the hearing of the demurrer and this motion, the demurrer was overruled and the motion was sustained, the answer being adjudged insufficient in point of law and not amendable, and from this decree this appeal was granted to settle the principles of the case.
For an understanding of the question to be decided, the facts necessary to be stated are substantially as follows :
During the year, 1924, and for some time prior thereto, the state insane hospital owned a large tract of land consisting of more than one thousand three hundred acres, lying immediately north of the corporate limits of the city of Jackson, on which was located the numerous buildings and the equipment of the institution, and on which the various activities of the institution, including stock, truck, and produce farms and poultry yards, are located and carried on. On or about the 5th day of December, 1924, the board of trustees of said hospital passed the following resolution:
"Wherefore it appears that the 'state insane hospital' has an opportunity to secure a test for oil and gas in the territory surrounding the hospital, and whereas, proceeding under the privilege and duty to make the best use of said property enjoined upon said trustees, it appears to the board of trustees that it would be to the best interest of the state insane hospital that such a test be made in this territory, and wherefore Ella Rawls Reader offers to make a contract with said board to test the state insane hospital lands for oil and gas for seven-eighths of all the oil found on said lands and the privilege of purchasing all the gas found on said lands, and wherefore it appears to the best interest of the institution to have such a test made:
"Therefore, be it resolved that, in consideration of one dollar and the promise and agreement on behalf of Ella Rawls Reader to test for oil and gas the lands belonging to the ' state insane hospital, ' the president and secretary of this board be and they are hereby authorized and directed to execute a contract with Ella Rawls Reader, whereunder and whereby she is to test the territory at her own expense and to receive as her compensation seven-eighths of all oil found on said state insane hospital lands.
"It is understood and agreed, however, that in the initial drilling for testing the lands of the institution such locations shall be at points not specially inimical to the interest of the institution as may he decided hy the superintendent.
"Said contract to be identical with the one attached hereto.
"By signing of said contract by the president and secretary of this board, the board of trustees approves said contract.
"This contract is expressly made assignable in whole and in part."
The instrument executed in pursuance of the foregoing resolution provided that, in consideration of Ella Rawls Reader agreeing to test for oil and gas at her own expense, and the consideration of her agreeing to drill for oil on some part of the state insane hospital! lands at her own expense, the trustees of said hospital agreed to give to her seven-eighths of all the oil found; or produced or taken from the lands of said hospital, the lands being therein specifically described.
In consideration of her employment to develop the said lands for oil and gas, the said Ella Rawls Reader agreed to deliver to the credit of the trustees, in the pipe lines or tanks to which she might connect her oil wells, the equal of one-eighth part of all oil produced and saved from said lands. It was further provided that all gas found or taken from the property was to belong to the trustees, but Mrs. Reader was given the right to purchase all or any part of it (with certain immaterial exceptions) at eight cents per thousand cubic feet, measured at the well. It was further provided that no well should be located within certain limited territory or nearer than two hundred feet to any dwelling house or barn on said premises without the written consent of the trustees, and the said Ella Rawls Reader and her assigns were granted the exclusive privilege of entering all of said lands for the purpose of drilling for oil or gas and conducting and operating all business in connection therewith.
The action of the court below upon the pleadings presents for decision the question of whether or not the board of trustees of the said hospital, who are charged with the control and management of the institution and its property, was authorized to execute the instrument which it is now sought to cancel.
The state insane hospital was established by chapter 66, Laws of 1848, which appears in Hutchinson's Code, at page 306, section 6, and it was there provided that:
"As soon as the buildings of said asylum shall be ready to receive patients, the Governor shall appoint five directors of said asylum, who shall have full power to make and ordain all such by-laws, rules, and regulations not inconsistent with the Constitution of the state or this act, which they may deem necessary and proper for the good government and management of said asylum; and said directors shall appoint a medical superintendent, and employ a steward and matron, and all such nurses as they may think necessary; and shall make a full and detailed report of all the affairs of said institution to each session of the legislature; and shall hold their offices for two years, and until their successors are appointed and qualified."
The institution was continued by chapter 12 * of the Revised Code of 1857, which provided for a board of trustees who "shall manage and direct the concerns of the institution, and make all necessary by-laws and regulations, not inconsistent with the Constitution of the state or of this act, and shall have power to receive, hold, dispose of, and convey all real and personal property conveyed to them, by gift, devise or otherwise, for the use of said institution," and who "shall have charge of the general interests of the institution." Articles 1 and 2.
Section 2073 of the Code of 1871 provided that:
"The 'Mississippi State Lunatic Asylum, heretofore established, shall continue to exist as a body politic and corporate, by that name and style, with all the rights, powers and privileges incident to snch a body, and necessary and proper to accomplish the end of its organization, and may receive, hold and dispose of, all real and personal property, conveyed to it."
While section 2079 of that Code provided that:
"The trustees shall manage and direct the affairs of the asylum, and make all necessary by-laws hnd regulations for the control and government of said institution, not inconsistent with the Constitution and laws of this state."
Under the provisions of chapter 13, Code of 1880, the institution and its board of trustees were continued in substantially the same terms and with the same powers as were fixed and conferred by the Code of 1871.
Section 2807, Code of 1892, reads as.follows:
"The lunatic asylum heretofore established at Jackson, with the annex for colored patients authorized by the Act of February 24, 1890, shall'continue to exist as a body politic and corporate, under the name of the ' State Lunatic Asylum,' with all the privileges conferred and duties enj'oined on it by law; and it may receive and hold and use, as required by law, all the property, real and personal, belonging, or which may be given, to it for the purposes of its establishment. ' '
Section 2812 of the Code of 1892 provides that:
"The board of trustees shall have charge of the interests of the asylum, and shall manage and direct its affairs and make all proper by-laws and regulations for its control and government not contrary to law."
Chapter 92 of the Code of 1906, and chapter 134, Hemingway's Code 1927, continue the institution and its board of trustees upon the same terms and with the same powers, in so far as they are here material, as were fixed or conferred by the Code of 1892.
From an examination of these statutes it will be noted that prior to the adoption of the Code of 1892, the in stitution, through, its hoard of trustees, had the authority to dispose of the real and personal property belonging to it, but since the adoption of that Code there has been no express provision for the trustees to sell or dispose of any of the property of the institution.
The question as to whether or not, under the powers and the authority conferred on the board of trustees "to have charge of the interestse of the asylum, and manage and direct its affairs," the,board of trustees, taking into consideration the extent, location, and nature of the property, and the needs, requirements, and best interest of the institution, had the implied power and authority to make and execute the instrument in question will be determined by a consideration of the legal effect of the instrument and the nature and character of the estate conveyed thereby.
In consideration of the grantee agreeing to explore, test, and develop the said lands for oil and gas, the instrument in question granted to her, and her assigns, the exclusive right to enter and possess the land itself, with no limitation upon the number of wells the grantee might sink, or the extent of her operations in that connection, and consequently no qualification of her right of possession of all such parts of the surface of the land as might be necessary to its full use by the grantee for the purposes named, except that no well should be drilled on the territory between the administration building and the building adjacent thereto aild the homes of the employees of the institution, or nearer than two hundred feet to any dwelling house or barn on said premises without the consent of the trustees. Under this instrument the title to seven-eighths of the oil in the land is vested in the grantee, while she is given the exclusive right to purchase all gas produced therefrom at a fixed and unchangeable price. Under the provisions of the instrument the rights conferred thereby continue so long as oil or gas, or either of them, is produced on said land, provided drilling was commenced by a fixed date. Under this provision, the termination of the grant is wholly uncertain, and the rights granted may endure forever.
Prom a practical standpoint, the rights of the grantee under an instrument which conveyed the oil and gas under the land and granted the exclusive right to conduct operations to produce and dispose of the same, or under an instrument which leased, demised, and let the land for the same purpose, would be no other, different, or greater than the rights of the grantee in the instrument here involved, and we are of the opinion that this instrument is, in legal effect, a lease of the land and a conveyance of an interest therein. It follows from the views herein expressed that, in the absence of legislative authority so to do, the, board of trustees was without the power and authority to make the contract in question.
Por an able and elaborate discussion of an analogous question, and a collation of the authorities which support the view herein expressed, see the case of Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S. W. 290, 29 A. L. R. 566,
The decree of the court below will therefore be affirmed.
Affirmed.