Case Name: Kelly v. Keys, Appellant
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1906-01-02
Citations: 213 Pa. 295
Docket Number: Appeal, No. 164
Parties: Kelly v. Keys, Appellant.
Judges: Before Mitchell, C. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
Reporter: Pennsylvania State Reports
Volume: 213
Pages: 295–306

Head Matter:
Kelly v. Keys, Appellant.
Oil and gas lease — Title to mineral — Possession—Ejectment.
The grant of exclusive privileges to go on land for the purpose of prospecting for oil, the grantor to receive part of the oil mined, does not vest in the grantee any estate in the land or oil, but is merely a license or grant of an incorporeal hereditament; and the grantee, if he has never been in possession cannot maintain an action of ejectment against the grantor, or those claiming under him by a subsequent grant, although at the time of the ejectment oil was being produced in paying quantities.
The grant of an exclusive right to mine for and produce oil, though it be a mineral, is not a sale of the oil that may afterwards be discovered. When under such a grant oil has been discovered, it is the grantee’s right to produce it and sever it from the soil; so much as is thus severed, belongs to the parties entitled under the terms of the grant, not as any part of the real estate, however, but as a chattel, and only so much as is produced and severed passes under the grant: as to all not produced there is no change of property.
Argued Oct. 21, 1905.
Appeal, No. 164, Oct. T., 1905, by defendant, from judgment of C. P. Washington Co., Nov. T., 1904, No. 128, on verdict for plaintiff in case of W. C. Kelly v. A. M. Keys, C. D. Greenlee, and the Southern Oil Company.
Before Mitchell, C. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
Reversed.
Ejectment for oil in land in Smith township. Before Taylor, J.
The facts appear by the opinion of the Supreme Court.
Error assigned was in entering judgment on the verdict and in refusing judgment for defendant non obstante veredicto. that this decree would be asked for, was present in court when it was made and has never taken exceptions to the same nor an appeal therefrom. If the decree was simply voidable or reversible, that fact can be adjudged only on appeal' or certiorari and cannot be set up here. If, on the other hand, the decree was wholly null and void and all the defendant did to secure his discharge from the grip of the capias was done without authority of law, and this case comes under the class of cases of which Tenan v. Kane, 188 Pa. 242, cited by counsel, and Insurance Co. v. Tenan, 204 Pa. 332, are examples, then as we have already said everything that the defendant did under the act of 1836 was wholly null and void, including' the giving of the bond which he gave to the plaintiff, and the plaintiff cannot recover for the breach of a bond that is wholly void. Suit on the bond under such circumstances would not be his remedy. It would be to take a new start and issue an' alias capias. In other words, if the plaintiff would issue an alias capias on this judgment and the defendant would set up the decree of September 20, 1904, as a bar against a second arrest, the plaintiff could reply that the bond and all proceedings thereon were wholly void (not voidable or reversible^) and if the court found this to be so and made such a decree as was made in Ins. Co. v. Tenan, 204 Pa. 332, then the defendant would have to give a proper bond and pursue the proper proceeding de novo to be discharged. In saying this we do not want to be taken as indicating that the court thinks the decree of September 20,1904, wholly void. We were simply assuming that what the plaintiff claims as to this decree under the authority of Tenan v. Kane was correct, and then suggesting the result on certain contingencies. Our opinion, however, is that the decree of September 20, 1904, at most is only reversible by a higher court on appeal on account of error of judgment committed by the court below and not on account of such a total want of jurisdiction ■ in the court below as would make its decree “ void and of no legal effect,” as was the judgment in the case of Tenan v. Cain, 188 Pa. 242, and Ins. Co. v. Tenan, 204 Pa. 332.
Eugene Mackey and R. W. Irwin, with them Isaac Baum, lames W. Lee, Cornelius D. Scully and Ralph R. Lee, for appellants.
-The plaintiff, a lessee under a so-called “ oil lease ” who has never been ousted from, or in possession of, the land in question cannot maintain this action of ejectment against the landowner and his privies : Funk v. Haldeman, 53 Pa. 229; Rynd v. Rynd Farm Oil Co., 63 Pa. 397; Union Petroleum Co. v. Bliven Petroleum Co., 72 Pa. 173 ; Dark v. Johnston, 55 Pa. 164; Hicks v. American Nat. Gas Co., 207 Pa. 570; McNish v. Stone, 152 Pa. 457.
The right granted to the plaintiff, Kelly, by the defendant, landowner Keys, being a mere incorporeal hereditament, and Kelly never having taken possession of the land in dispute under his said right, and what is more to the point, having never been ousted therefrom, it is clear from the authorities that he cannot maintain an action of ejectment to secure such possession : Clement v. Youngman, 40 Pa. 341; Carnahan v. Brown, 60 Pa. 23; Dark v. Johnston, 55 Pa. 164 ; Union Petroleum Co. v. Bliven Petroleum Co., 72 Pa. 173; Hicks v. American Natural Gas Co., 207 Pa. 570.
Samuel Amsjpoker, with him John M. Buchanan and Arthur B. Barnett, for appellee.
An agreement to lease land for a term of years, with the exclusive right to bore for and collect oil, giving one-fourth to the lessor, passes a corporeal interest: Chicago, etc., Oil Co. v. U. S. Petroleum Co., 57 Pa. 83.
The lease in such case is not a grant of property in the oil, but is a grant of possession for the purpose of searching for and procuring oil, and such lease partakes of the character of a lease for general tillage, rather than of a lease for mining or quarrying the solid minerals: Barnhart v. Lockwood, 152 Pa. 82; Wettengel v. Gormley, 160 Pa. 559.
January 2, 1906 :

Opinion:
Opinion by
Mr. Justice Stewart,
The defendant, Keys, being the owner of a certain tract of land in Washington county, by instrument in writing duly executed and acknowledged, granted to Kelly, the plaintiff, the exclusive right to mine and produce therefrom petroleum and natural gas, with possession of so much of the land as might be necessary for such purposes, for a term of two years, subject to certain conditions and stipulations which, do not here call for recital. Kelly never exercised any rights under the grant, and never entered into possession of any part of the premises. Subsequently, Keys, claiming that by reason of a default, Kelly had forfeited his rights under the grant, conveyed a like right in the premises to C. D. Greenlee and the Southern Oil Company, the other defendants, who proceeded to explore the property and succeeded in producing oil therefrom in paying quantity.
Kelly, averring compliance on his part with all the conditions and stipulations of the grant under which he claimed, and denying a forfeiture, brought this action of ejectment against the defendants to compel surrender of possession to himself. The action resulted in a verdict for the plaintiff, subject to the decision of the court on a question reserved, viz.: whether ejectment in such case would lie. Upon consideration judgment was rendered upon the reserved point in favor of the plaintiff. The assignment of error that relates to the action of the court on this point, is the only one that calls for present consideration.
In reaching his conclusion on the point reserved, the learned judge gave full recognition to the binding authority of Funk v. Haldeman, 58 Pa. 229, and the cases that follow it, wherein it is held that the grant of exclusive privileges to go on land for the purpose of prospecting for oil, the grantor to receive part of the oil mined, as in this case, does not vest in the grantee any estate in the land or oil, but is merely a license or grant of an incorporeal hereditament.
This court has found frequent occasion to assert its continued adherence to the doctrine of these cases. Only recently, in the case of Hicks v. American Natural Gas Company, 207 Pa. 570, it reasserted it without qualification. Once it was determined that the subject of such a grant was an incorporeal hereditament, and not an estate in the land or oil, it logically and necessarily resulted, that it would not support an action in ejectment. And this view has been steadily adhered to. In no case has ejectment been sustained under such a grant, except where possession had been acquired by the grantee, and he had been wrongfully disseised. In the present case disseizin was, not, and could not be, asserted. Nor could it be contended, that the instrument under which Kelly claimed, though spoken of as a lease, and so denominated in the instrument itself, is in point of fact and law, a lease, notwithstanding it allows possession of so much of the surface of the premises as may be necessary to conduct mining operations. This much will be implied without express stipulation; and the stipulation being expressed in no way distinguishes this from the cases' where such an instrument is held to be merely a grant or license. The court below put no other construction on this, so long as it concerned no one but grantor or grantee; but because the defendants holding under a subsequent lease, being in possession, had produced and were producing oil in paying quantity, reached the conclusion that what had been the grant of an incorporeal hereditament, now that the oil had been found and was being produced, was an estate in the land, since oil was a mineral, and 'therefore part of the land; and that Kelly being entitled to be put in possession of so much of the estate, ejectment could be brought for such purpose.
This line of argument overlooks the very consideration on which the authorities cited rest. In no case is it held that the grant of an exclusive right to mine for and produce oil, though it be a mineral, is a sale of the oil that may afterward be discovered. When under such a grant oil has been discovered, it is the grantee's right to produce it and sever it from the soil; so much as is thus severed, belongs to the parties entitled under the terms of the grant, not as any part of the real estate, however, but as a chattel, and only so much as is produced and severed passes under the grant: as to all not produced there is no change of property. It is expressly so ruled in Funk v. Haldeman, 53 Pa. 229 ; and the same l'uling was repeated and emphasized in the case next following on the same subject, Dark v. Johnston, 55 Pa. 164. These were the first cases in which grants of rights to explore for oil were considered and passed upon by this court. The rulings therein have been steadily and consistently followed. In this connection it is only necessary to refer to the case of Union Petroleum Company v. Bliven Petroleum Co., 72 Pa. 173, where the grant was the same as in the present case, with the additional fact that there as here, oil had actually been discovered and was being produced, and Barnhart v. Lockwood, 152 Pa. 82.
The reason for the rule thus established, is to be found in the peculiar character of mineral oil. This is very clearly indicated in the earlier cases, where the distinction is drawn between minerals which are fugacious in their nature, such as water, gas and oil, and those which have a fixed situs and are necessarily part of the land; and this distinction has been allowed with controlling significance whenever oil in situ has been the subject of the dispute. Both rule and reason are against the theory that prevailed with the court below, to the effect that the mineral once discovered, all that was in situ became in law part of the real estate.
With the rights of the appellee thus defined and limited by the cases cited above, it is manifest, without discussion, that he is in no position to maintain ejectment for the property. The question reserved was to this very point, and was raised in the first point submitted by the defendant, denying plaintiff's right to ejectment. The latter should have been affirmed. Its refusal is the subject of the eighth assignment of error, which must be sustained. It is unnecessary to consider the other assignments of error.
Judgment reversed, and judgment is directed to be entered on the point reserved in favor of defendant, non obstante veredicto.