Case Name: BARNES et al. v. KEYS et al.
Court: Oklahoma Supreme Court
Jurisdiction: Oklahoma
Decision Date: 1912-07-18
Citations: 36 Okla. 6
Docket Number: No. 1833
Parties: BARNES et al. v. KEYS et al.
Judges: 
Reporter: Oklahoma Reports
Volume: 36
Pages: 6–12

Head Matter:
BARNES et al. v. KEYS et al.
(127 Pac. 261.)
No. 1833.
Opinion Filed July 18, 1912.
On Rehearing, October 23, 1912.
LIFE ESTATES — Mining Lease — Interest of Life Tenants. Where the owners of a life estate and the owners of the remainder join in an oil and gas mining lease, and the lessee develops the lease and produces oil, the life tenants are entitled either to have the royalties invested and to receive the income therefrom, or to receive such a proportion of the royalty as will amount to the present value of an annuity for the life expectancy of the life tenant equal to the interest on the royalties at 6 per cent.
(Syllabus by Bosser, C.)
Error from District Court, Muskogee County; John H. King, Judge.
Action by Leander A. Keys and Harry IT. Bell against George W. Barnes, Peter ITawkins, William Hawkins, Mack Hawkins, Raichie White, and Pearlie White, for partition. From the judgment George W. Barnes, Sr., Harry IT. Bell, and Leander A. Keys bring error.
Reversed and remanded, with instructions.
Preston C. West, for plaintiff in error Barnes.
N. A. Gibson, H. C. Thurman and T. L. Gibson, for plaintiff in error Bell.
W. D. Humphrey, for plaintiff in error Keys.
Chas. G. Watts, Bailey & Wyand, and Charles A. Moon, for defendants in' error Hawkins.

Opinion:
Opinion by
ROSSER, C.
This is a partition suit, brought March 10, 1908, by Leander A. Keys and another, against George W. Barnes, Sr., and others, to partition the allotment of Maria Hawkins, deceased, in which they were jointly interested. On the 31st of October, A. D. 1908, the court entered a decree holding that Leander A. Keys and Harry Bell were the owners of the life estate of David Hawkins in the land, and that the life estate was 80 per cent of the value of the land; that they also owned 19-32 of the fee; that Raichie White owned 1-32 of the fee; and that Peter Hawkins, William Hawkins, and Mack Hawkins each owned 1-8 of the fee; also, that George W. Barnes, Sr., was the owner of a valid oil lease on the land, covering the interest of all the parties, except that of Peter Hawkins. The decree appointed commissioners to partition the land, if partition could be made, and, if not, to apppraise it. The commissioners reported that the land was not susceptible of division, and appraised it. Afterwards, by order of the court, George W. Barnes, Sr., was permitted to buy the land at its appraised value. After the lease was made to Barnes, and before he bought the land at the appraised value he developed it and produced oil, and the royalty due the owners at the time he purchased the land was $18,682.17.
The only question presented here is as to the right of Keys and Bell, owners of the life estate, to share in the royalties from the oil produced. The trial court held that they were not entitled to share in the royalties as owners of the life estate, and awarded them 19-32 of the royalties, as owners of that fraction of the remainder in fee simple. The lease was executed after the death of the allottee by the various heirs and persons who had purchased the interests of some of the heirs. It is settled by a long line of decisions, beginning with Stoughton v. Leigh, 1 Taunt. 402, that a life tenant cannot open new mines, but that, where mines are already opened, the life tenant may work them. Coates v. Cheever, 1 Cow. (N. Y.) 460; Lenfers v. Henke, 73 Ill. 405, 24 Am. Rep. 263; Hendrix v. McBeth, 61 Ind. 473, 28 Am. Rep. 680; Seager v. McCabe, 92 Mich. 186, 52 N. W. 299, 16 L. R. A. 247; Wilson v. Youst, 43 W. Va. 826, 28 S. E. 781, 39 L. R. A. 292; 10 Ballard's Real Prop. sec. 450; Blakley v. Marshall, 174 Pa. 425, 34 Atl. 564. The doctrine or theory of these cases is that "the opening of new mines is a permanent injury to the inheritance, constituting waste. In other words, it is held that the minerals are part of the land itself, and that the life .tenant has no right to take minerals, any more than he would have the right to sell or dispose of a part of the surface of the land.
But in this case this question is not presented. All interested parties agreed that the land might be leased and that the oil might be produced. The question is, all having agreed that the lease should be made, what interest should each have in the income from the lease? It would seem that their interests would be the same as if that much land had been sold. The life tenant would be entitled to the income from the purchase price; that is, to interest during his life. The remaindermen would be entitled to the whole amount upon the death of the life tenant. This rule is supported by the authorities. In Blakley v. Marshall, 174 Pa. 425, 34 Atl. 564, the court said:
"Acting for themselves in their own right as tenants for life, and also as trustees for those in remainder, the plaintiffs executed the lease to N. B. Duncan, 'for the purpose of operating and drilling for petroleum and gas' for the term of fifteen years from August 10, 1894, 'and so long thereafter as oil and gas can be produced in paying quantities.' It was obviously necessary, as well as to the interest of both the tenants for life and the remaindermen, that they should thus unite in the lease, because no practical oil operator would undertake the development of supposed oil territory on the faith of a lease from life tenants only, and for the further and more important reason that, if not promptly developed and worked, the land would soon have been drained of its oil through wells on adjoining lands.
"In support of plaintiffs' claim to the whole of the royalty, etc., much stress was laid on the'doctrine of waste;-but we fail to see that it has any application whatever to the facts of this case. It is conceded that the oil was produced under the lease made by plaintiffs, in their own right as life tenants and as trustees, for those in remainder; and as appears by the opinion of,the court, their action as trustees for the remaindermen was with its sanction and approval. It is difficult to see on what principle the cestiiis que trust should be excluded from participation in the royalty that accrued 'during the existence of the life estate. Assuming, for the sake of illustration, that- they had been of full age and sui juris, and instead of being parties, through their trustees, to an oil lease, they and the tenants for life had united in a conveyance in fee of part of the land; could it, in the absence of any agreement on the subject, be successfully claimed that the life tenants were entitled to the purchase money? We think not. There is no difference, in principle, between the two cases. As was held in Stoughton's Appeal, 88 Pa. 201, and other cases in same line, oil in place is a mineral, and, being a mineral, it is part of the realty. An oil lease, investing the lessee with the right to remove all the oil in place, in the premises, in consideration of his giving the lessors a certain per centum thereof, it in legal effect a sale of a portion of the land, and the proceeds represent the respective interests of the lessors in the premises. If there be life tenants and remaindermen, the former are entitled to the enjoyment of the fund (i. e., interest thereon) during life, and at the death of the survivor the corpus of the fund should go to the remaindermen. This is as nearly a just and equitable distribution as can be made."
This case was followed in Wilson v. Youst, 43 W. Va. 826, 28 S. E. 781, 39 L. R. A. 292, and the rule was approved in Higgins Oil & Fuel Co. v. Snow, 113 Fed. 433, 51 C. C. A. 267. The authorities hold that oil is part of the realty until taken from the ground. Kelley v. Ohio Oil Co., 57 Ohio St. 317, 49 N. E. 399, 39 L. R. A. 765, 63 Am. St. Rep. 721; Murray v. Allard, 100 Tenn. 100, 43 S. W. 355, 39 L. R. A. 249, 66 Am. St. Rep. 740; Williamson v. Jones, 43 W. Va. 562, 27 S. E. 411, 38 L. R. A. 694, 64 Am. St. Rep. 891. And it follows that the proceeds of the oil belong to the remaindermen, just as the proceeds of the land itself would; but the owner of the life estate would have the right to interest on the royalties produced during his life.
The rule laid down does not conflict with Duff v. Keaton, 33 Okla. 92, 124 Pac. 291, in which it was held that a lease for oil and gas mining purposes was not a conveyance within the purview of section 5314, Comp. Laws 1909. Neither is it in conflict with Frank Oil Co. v. Belleview Oil & Gas Co., 29 Okla. 719, 119 Pac. 260. That case held that an oil lease did not convey an interest in the oil in the ground, but only conveyed what the lessee might find. Nor is it in conflict with Kolachny v. Galbreath, 26 Okla. 722, 110 Pac. 902, in which it was held that an oil lease did not pass anything that could be subject of eject- meat or real action. Nothing in those cases intimates that oil is not part of the realty, and that the proceeds from an oil lease, made by life tenant and remainderman after the death of the ancestor, should not be treated in the same- way as the proceeds of the land itself.
In this case it appears that David Hawkins had a life expectancy of about 38 years. The owners of his life estate, therefore, were entitled either to have all the royalties invested and to' receive the income during the life of David Hawkins, or to a sum out of the royalties which, lent at 6 per cent per annum, and exhausting both principal and interest, would give them 6 per cent, on the whole amount of the royalties for the period of the life expectancy. The amount to be received by each party is capable of exact computation. It is contended that the court, by the judgment entered October 31, 1908, fixed the proportion the parties were to receive. That order appears to have been made for the purpose of settling the proportion each should receive out of the land to be divided or- sold. The money from the royalties was apparently not considered in that judgment. It is likely that the proportion there fixed is about correct; but, as to the royalties, the amount is capable of accurate computation and exact division.
The case should be reversed and remanded, with instructions to enter judgment, either investing or lending the royalties, with the income payable to Keys and Bell during the life of David Hawkins or paying to Keys and Bell as owners of the life estate such a sum as, lent at 6 per cent., and adding the interest each year, will pay 38 annual payments of $1,120.93 each, and will be exhausted upon paying the thirty-eighth payment, and paying the balance to the remaindermen in proportion to their respective interests. If properly divided, the amounts to be paid the remaindermen, invested at 6 per cent., will amount to $18,682.17 at the end of 38 years.
A calculation of the writer shows that, if the money is divided, the owners of the life estate are entitled by virtue of that ownership to $15,083.57. The calculation was hurriedly made, and may not be entirely accurate. Counsel in this case are prob ably better mathematicians than the writer, and will not likely liave any trouble in getting the exact sum.
B)r the Court: It is so ordered.