Case Name: J. T. Jones v. W. T. Wood
Court: Monroe County Court of Common Pleas
Jurisdiction: Ohio
Decision Date: 1894-09
Citations: 1 Ohio N.P. 155
Docket Number: 
Parties: J. T. Jones v. W. T. Wood.
Judges: 
Reporter: Ohio nisi prius and general term reports
Volume: 1
Pages: 155–165

Head Matter:
(Monroe County Court of Common Pleas.)
J. T. Jones v. W. T. Wood.
1. The Revised Statutes, section 2792, provides that when “the fee of the soil” of land is in one person, and the “right to any minerals therein,” in another, these estates shall be separately listed, and taxed to the parties owning the same, respectively. Held: (1.) That the phrase, “right to any minerals,” means a title- which severs them from the soil or remaining land, (2.) That petroleum oil and natural gas are to be regarded as minerals, within the purview of this statute.
2. A grant of the full right and privilege of digging and taking away the minerals under a tract of land, to any extent the grantee may think proper, conveys them in situ ; and the giving of the right to mine and take away all minerals also amounts to a grant of the minerals themselves. The form of the instrument of conveyance is immaterial, save what may relate to its mere execution, if the intention to pass the whole body of a mineral can be collected from it. A variety of privileges or rights may be given in or to a deposit of minerals, yet where what purports to be a “ lease, ” executed and acknowledged as is required for a deed, granted to the lessee, his heirs or assigns, the “exclusive right” to go upon a certain tract of land, for the “purpose of operating and drilling for petroleum and gas, to lay pipe-lines, erect necessary buildings, release and subdivide” the land, and so “to hold” the same for five years, and “so long thereafter as oil or gas can be produced in paying quantities” the lessee covenanting as a part of the consideration to deliver one-eighth of the oil mined, in the pipe-line, to the grantor’s credit; the instrument containing provisions for forfeiture and for surrender, in certain contingencies ; but it also appearing that the grantee was in possession, having sunk wells which were producing oil in quantity to be highly profitable. Held: (1.) That this was a lease of the land described, for the purpose of mining oil and gas. (2.) That the duration ot the right granted, was not the specified terms of years, but the time during which oil or gas can be mined at a profit, (3.) That so construed, the grant is of the right to take the whole body of these minerals, if found; as when the purposes and objects of the instrument are perfected, they would be exhausted. (4.) That as a consequence, this “lease” operated to convey the oil found, in place, and so the ownership of what thus remains, is in the grantee, the plaintiff here, and it therefore is subject to taxation, separate from the “fee of the soil,” as his property.
3. Our Revised Statutes, section 2803, makes it the duty of a county auditor to place lands omitted to be returned for taxation upon the duplicate for that purpose, at the value thereof, so near as may be. Held: (1.) That this provision of the law is constitutional. (2.) That the oil in question, as owned by the plaintiff, is “laud” within the import of this section. (3.) That it having been omitted to be returned for taxation, the defendant was authorized to place it upon the duplicate for that purpose, at the value shown, there being no claim that this is excessive.
(Decided September, 1894.)
This is an action to enjoin the collection of alleged illegal taxes. None of the essential facts is in dispute. Hence the case presents only legal questions as to their effect upon the rights asserted by the parties.
The leases involved in the litigation, in the provisions out of which it arises, are substantially alike, as follows:
“The said party of the first part, for and in consideration of the sum, of $100.00, to him in hand paid, the receipt of which is hereby acknowledged, and in further consideration of the covenants and agreements hereinafter mentioned, does covenant and agree to lease, and by these presents has leased and granted the exclusive right unto the party of the second part, his heirs or assigns, for the purpose of operating and drilling for petroleum and gas, to lay pipe-lines, erect necessary buildings, release and subdivide all that certain tract of land, situate in Jackson township, Monroe count3’', containing 149 acres, more or less; the party of the second part, his heirs or assigns, to have and to hold the said premises for and during the term of five years from the date hereof, and so long thereafter as oil or gas can be produced in paying quantities. The party of the sec ond part, his heirs or assigns, agrees to give to the party of the first part one eighth part of all the petroleum obtained from the said premises, as produced in the crude state, the said one-eighth part of the petroleum to be set apart in the pipe-line running said petroleum, to the credit and for the benefit of the said party of the the first part. The said party of the first part is to fully use and enjoy the said premises, for the purpose of tillage, except such part as shall be necessary for said mining purposes, and a right of way over and across said premises to the place or places of mining or operating ; the said party of the second part is further to have the privilege of using sufficient gas and water from the premises herein leased to run the necessary engines, the right to remove any machinery, fixtures and buildings placed on said premises by said party of the second part or those acting under him, and is not to put down any well for oil on said premises hereby leased, within ten rods of the buildings now on said premises, without the consent of said party of the first part. It is agreed that if gas is found in paying quantities, the consideration in full to the party of the first part for gas shall be $200.00 per annum for the gas from each well when utilized. The party of the second part agrees to commence operations within thirty days from the execution of this lease, or in lieu thereof thereafter pay to said party of the first part $10. per month in advance until well is completed down to and through all producing sands known to oil trade in the neighborhood, unless oil or gas is found in paying quantities before; and a failure to drill said well, or to pay said rental when due, shall render this lease null and void, and not binding on either party. And it is further agreed that the second party, his heirs or assigns, shall have the right at any time to surrender up this lease, and be released from all moneys due and conditions unfulfilled ; then and from that time this lease and agreement shall be null and void, and no longer binding on either party; and the payments which shall have been made, be held by the party of the first part as the full stipulated damages for the non-fulfillment of the foregoing contract; that all the conditions between the parties hereunto shall extend to their heirs, executors and assigns.”
The instruments were executed and acknowledged, as is required by law for a deed of land, and duly recorded.
At its June session, 1894, the board of equalization of said county valued the mineral interest in said lands, as owned by the plaintiff, separate from the “ fee of the soil ” at $20,750, and directed the defendant, as auditor of the county, to place the same on the duplicate for taxation, as omitted lands, according to section 2803, Revised Statutes. That was done, and upon this mineral right, whatever it may be, taxes, at such valuation, unless enjoined as illegal, are to be collected.
Long prior to these transactions looking to the taxation of this right or interest, under said “leases,” the plaintiff had entered on the premises, at large expense bored wells, found oil in great and paying quantities, and was in actual pessession, so taking the oil therefrom, when the proceedings to tax his interest were had.
No claim is made that the interest or right is overvalued. The sole controversy is as to authority to tax it at all, separate from the “fee of the soil.”
The controverted propositions made by counsel for the plaintiff are (1) that a mineral “right,” under section 2792, Revised Statutes, is an “ownership,” in distinction from a license or mere lease to mine; (2) that the instruments here in question conveyed at most a chattel interest or incorporeal right, and so did not bring tbe grantees within this provision; and (3) if this were not so, that the defendant had no authority to place the “ right to the mineral,” as omitted land, on the duplicate for taxation, because section 2803, by which alone this is authorized, is unconstitutional.

Opinion:
Sibley, J.
The three points in contention will be considered in the order of their statement.
I. What is the true reading of section 2792, Revised Statutes of Ohio, on the point-here in dispute?
1. The' provision in question originally1 appeared in our legislation as the last clause of section 10 of an act passed April 5, 1859, in these words: " Where the fee of the soil of any tract, parcel or lot of land is in any person or persons, natural or artificial, and the right to any minerals therein, in {another or others, the same shall be valued or listed agreeably to such ownership in separate entries, and taxed to the parties owning the same, respectively." (4 Curwen, 3309; 2 S. & C. 1443.)
Thus it stood until the codification of 1878, after which, with slight additions, immaterial to the .controversy here, it became section 2792, of the Revised Statutes. As amended in 1891, though enlarged in important particulars, this original clause is essentially unchanged. Nothing is added affecting its interpretation, as applied to this case.
2. That this proyision was not intended to change the prevailing laws of real property in the state must be assumed, in the absence of terms imperative to that effect. Long prior to its enactment, strata of coal and deposits of iron ore had been found and mined in Ohio and Pennsylvania. Out of a controversy over a grant of the right to take the coal under a tract of land, in the latter state, arose the leading case in this country, decided in 1858, holding that minerals may be conveyed, distinct from the surface, by grant of an unlimited right to take them, without livery of seisin. Caldwell v. Fulton, 31 Pa. St. 475, 72 Am. D. 760.) Very probably the doctrine of that decision gave rise to this statute. But, however that may be,' the act of itself clearly makes the phrase " right to any minerals," convertible with 11 ownership "; and as the latter is a term of definite legal import, it will determine the meaning to be given the phrase. The obvious -consequence is, that the provision must be held to apply not to cases of licenses to take minerals, or of chattels, or incorporeal rights thereto, but •only to such an ownership of, or title to a mineral as operates to sever it from the " fee ,of the soil."
3. A question of more difficulty has been raised by my own investigations, and that is, whether the term " minerals," in this act, includes petroleum. At the time of its passage this oil was unknown as an article of commerce. Except as a curiosity, or for occasional use on account of supposed medicinal virtues, its production dates from 1859, when a boring for salt, in Venango county, Pennsylvania, " let out the first fountain ofoilin that now famous oil region." (Dana's Mineralogy, 725-5th ed.; Tarr's Economic Geol. of U. S. 339.) The statute, therefore, clearly could not have been enacted with specific reference to petroleum or natural gas. Consequently, if they are within its purview, it is solely because of their character as minerals. That by the uniform definitions of lexicographers, and the classifications of natural science, they are such, no one will deny. But so .also are water, sand, gravel, soil, and the like, which go to make up what in popular understanding is distinctively known as land. An able court in considering a grant of " mines and minerals," say, it is " clear that by the use of these terms the grantor did not intend to include everything embraced in the mineral kingdom, an distinguished from what belongs to the animal and vegetable kingdoms. If he did, he parted with the soil itself." (Hartwell v. Camman, 2 Stock. Ch. 128; 64 Am. D. 448.) So also, Prof. Tarr, in the work already referred to, says: "Miners use the term ' mineral ' as a synonym for ore." (Economic Geol. 96.) Further, in a case upon a reservation by the grantors in a deed, of " all minerals," it was held that pe troleum oil was not included. (Dunham v. Kirkpatrick, 101 Pa. St. 36.) Discussing the question of what was reserved, the court say: " It is true that petroleum is a mineral; no discussion is needed to prove that. But salt and other waters impregnated with mineral substance are minerals; so are rocks, clays and sand; anything dug from mines and quarries; in fine, all inorganic substances are classed under the general name of minerals." Citing a much earlier case, (Gibson v. Tyson 5 Watts. 34), in which it was said that "by the bulk of mankind nothing is considered a mineral except such things as be of a metallic nature, such as gold, silver, copper, lead, etc., and wherein, in that view, "ohromate of iron" would not have been regarded as within an exception of "all mineral of any kind," contained in a deed of land, but for the fact that by parol testimony it appeared to-have been regarded by the parties as a metallic ore, the court add: "But if a doubt was raised as to the popular classification of the chromate of iron, a well known mineral, what shall we say of oil, which is regarded even by science and law as a mineral only because of its inorganic character, or, as in Stoughton's Appeal, (¡7 Norris, 198), because of its forming' part of the freehold from which it is taken. Certainly, in popular estimation petroleum is not regarded as a mineral substance any more than is animal or veritable oil, and it can, indeed, only be so classified in the most general or scientific sense." Were this, then, a case of a grant or a reservation of minerals, to say the least, unless upon special circumstances, it would be extremely doubtful as to whether petroleum could be included. But it is different, in two particulars. This statute has been retained as a permanent feature of our tax astern. In its technical scientific sense, it clearly covers petroleum, oil and natural gas. There is nothing in its provisions to indicate that they were to be applied in a special or restricted sense. Hence, though the popular understanding may be different, and become controlling in the construction of grants of minerals eo nomine; yet, at least to such minerals as may in fact be the subject of ownership, and mined, separately from and leaving what commonly is understood by the word "land," this act must be held to extend. Not only is this construction in accord with the familiar rule that if technical words are used in a statute, "they are to be taken in a technical sense," but it is demanded by the proposition that where " the reason is general, the expression should be deemed general." (1 Kent, 462; Bishop Stat. Cr , sections 99-100.) The other ground for this interpretation is, that petroleum or mineral oil in place, as well as natural gas, are held like coal and iron to be a part of the realty, though severable in ownership, and the land from which they are taken, mineral lands. (Gill v. Weston, 110 Pa. St. 313; Williamson v. Jones, 19 S. E. Rep. 436; W. & C. N. Gas Co. v. DeWitt, 130 Pa. St. 235.) The conclusion then is that petroleum and natural gas are covered by the term " minerals," in the statute under consideration, and as a consequence, properly taxable separate from the "fee of the soil," if so owned and held.
II. What is the operation and effect of the leases here in question ?
I. The owner of lands containing separable minerals may give or grant four distinct classes of privileges or rights, with respect to the minerals.
1. He can simply licence one to dig and carry away the mineraL This will exempt the party from an action in trespass, for entering and taking the mineral, and giving him the property in what he actually diga and takes under it. But the license is revocable at the pleasure of the-giver, and is not assignable. It is a bare authority to do an act or series of acts on the land of the licensor, without possessing any estate therein, and is gone if the owner of the land transfers his title to another, or if ei ther party die. (Riddle v. Brown, 20 Ala. 412. 56 Am. D., 202; Hazelton v. Putnam, 3 Pinney, 107, 54 Am. D. 158; Cook v. Stearns, 11 Mass. 533.)
2. The owner may grant a right to mine, which is irrevocable, or extends to one and his heirs, but is not exclusive. This creates an incorporeal hereditament, and cannot be regarded as a mere license. Johnstown I. Co. v. Cambria I. Co., 32 Pa. St. 241, 72 Am. D. 783; Silsby v. Trotter, 29 N. J. Eq., 228; Riddle v. Brown, 20 Ala. 412, 44 Am. D., 20; Marble Co. v. Ripley, 10 Wall. 339; Williams v. Gibson, 84 Ala. 228, 5 Am. St., 368 ; Arnold v. Stevens, 24 Pick. 106, 35 Am. D., 305.)
3. A lease of land for a fixed term of years, leaving a reversion in the lessor, may be given with the right to mine and take away minerals, which will grant an interest in the land, be a chattel real, .and liable to seizure and sale in execution. (Titusville, etc.. Appeal, 77 Pa. St. 103; Gill v. Weston, 110 Pa. St. 305; Harlan v. L. C. & N. Co., 35 Pa St. 287; Duke v. Hagae, 107 Pa. St. 67; Brown v. Beecher, 120 Pa. St. 590.)
4'. The mineral may be granted in situ, and its ownership thereby severed from the remaining land. (Caldwell v. Fulton, 31 Pa. St. 475, 72 Am. D. 760; Lillibridge v. L. C. Co., 143 Pa. St. 293, 24 Am. St. 544; Edwards v. McClurg, 39 Ohio St. 41; Knight v. I., C. & I. Co., 47 Ind. 195, 17 Am. R. 692; Hartwill v. Camman, 2 Stock Ch. 127, 64 Am. D. 448.)
At common law, if a grant of mines were made, without livery of seizin, the grantee would take only a power to dig and work them. That doctrine, however, does not obtain in this country. Here, delivery and registration of the deed are substituted for livery of seizin. (Caldwell v. Copeland, 37 Pa. St. 437, 78 Am. D, 438; Caldwell v. Fulton, 81 Pa. St. 475, 72 Am. D. 760) The principles which now prevail in respect to a grant of minerals in place, are clearly stated by Mr. Freeman, in an extended and able note to a late case, as follows : " The minerals under a tract of land may be conveyed by naming them, or by granting the full right, title and privilege of digging and taking away the minerals to any extent the grantee may think proper. The giving of the right to mine and take a way all the minerals amounts to a grant of the minerals themselves. No man can acquire any greater estate in minerals than the exclusive right in himself, his heirs and assigns, to mine and remove the whole of them. By the grant of such a right, the minerals become severed, and the title thereto becomes vested in the grantee." (Duke of H. v. Graham, L. R.. 2 Sc. App. 165; Caldwell v. Fulton, 31 Pa. St. 475 ; Whittaker v. Brown, 46 Pa. St. 197; Sanderson v. City of Scranton, 105 Pa. St. 469; Delaware, etc., Co. v. Sanderson, 109 Pa. St. 583; 24 Am. St. R., 555.) The doctrine thus set forth makes it evident that the operation and effect of grants of minerals, is always fundamentally a question of intention. A court is bound by no technical rules that might not equally apply to a written agreement for the sale of tangible personal property — save only as to its execution. Consequently, regardless of the form of an instrument by which a grant of rights in or to materials iSiinade, if it appears that the purpose was to give to the licensee, lessee or grantee, whichever he may be called, the privelege of miningand taking away the entire movable body or deposit of a mineral to which it refers, the title passes, and the ownership of the mineral in place, is severed. Two or three late cases will sufficiently illustrate the general propositions stated. Thus, a lease of "all the coal in and under" certain lands "for and during such term and period of time as shall be required therefor to mine and remove" it, was held to be a grant of the coal. (Scranton v. Phillips, 94 Pa. St. 22 ; Sanderson v. City, 105 Pa. St. 469.) So, an agreement "leasing" all the coal beneath the surface of a tract of land, on a royalty of a certain number tons annually, whether mined or not, with provisions for distress and forfeiture upon default of payment, but made "perpetual" to heirs and assigns "until all the coal was mined," was held to be "not a lease, but a sale of the coal in place." (Delaware etc. Co. v. Sanderson, 109 Pa. St. 588, 58 Am. R. 743 ; Armstrong v. Caldwell, 53 Pa. St. 284; Pa. Salt Co. v. Neil, 54 Pa. St. 9-.) Again, "a written contract, though not under seal, granting the privilege of digging all the coal or ore on the vendor's land, is equivalent to a conveyance of the coal or ore in fee." (Flummer v. Coal & I. Co., 160 Pa. St. 483.
Indeed, as respects the words by which its sale is evidenced, and that shall operate as a transfer of the property, no reason is apparent why a body of coal in a given tract of land should be regarded differently from the same mineral dug out and placed in an unmeasured mass upon the surface. Public policy may demand a written transfer in the one case that would not be required in the other. But this does not touch the question of the terms by which title will be passed- — the property transferred. Obviously the same view equally applies to oil in the pool, rock, or sand from which it is pumped or forced by subterranean pressure, and when so mined in tanks, supposing that all a body of land contained was thus gotten and stored. An instrument which would operate as a grant, or evidence a sale of these minerals, so placed above ground, on principle, ought to have the same effect while they are in place, as a part of the land ; for notwithstanding their legal character as realty, they are all the time bought and sold as a commodity to be taken, moved away, and consumed, as much in their original form and status, as when by separation from the remaining land, they have been transformed into personal estate, and as such gone into the market. Besides, our mineral wealth is so vast and varied, the value of mineral rights and interests so great, and their transfer as compared with ordinary sales of land, so frequent, that the movements of business call for freedom at this point from merely technical impediments, as loudly when the various minerals are yet in situ, as in cases where they actually have been severed and moved. The courts, accordingly, by the liberal spirit with which they generally regard transactions, and construe instruments of the character here in question, in effort to ascertain and give effect to the intentions of parties, however expressed, seem to have kept pace with business requirements growing out of the rapid development of the country's mineral resources.
II. While in legal as in scientific view, petroleum and natural gas are classed as minerals, their peculiar nature has no more escaped the attention-of the courts than of those dealing in them. "Water and oil," it has been said, "and still more strongly gas, may be classed by themselves, if the analogy be not too fanciful, as minerals Jerae naturae . They belong to the owner of the land, and are a part of it, so long as they are on or in it, and are subject to-his control; but when they escape and'go into other land, or come under another's control, the title of the former is gone." ( W. & C. Nat. Gas Co. v. DeWitt, 130 Pa. St. 235.) This was further considered in a later case, wherein the court marked some resulting variances in coal and oil leases. " The difference in the nature of the two minerals," it is remarked, "and the manner of their production, has resulted in considerable differences in the forms of the contracts or leases made use of. When oil is discovered in any region, the development of the region becomes immediately necessary. The fugitive character of oil and gas, and the fact that a well may drain a considerable territory and bring to the surface oil that, when in place in the sand rock, was under the land of adjoining owners, makes it important for each land owner to test his own land as speedily as possible. Such leases generally require, for this reason, that operations should begin within a fixed number of days or months, and be prosecuted to a successful end or to abandonment. Coal, on the other hand, is fixed in location. The owner may mine when he pleases, regardless of operations around him. There is no necessity for haste, nor of moving pari passu with adjoining owners." (Plummer v. Coal & I. Co., 160 Pa. St. 493. And the same court, in another case, say, that after this mineral was discovered, it was ll found necessary to guard the rights of the land owner as well as public interest, by numerous covenants" in oil grants, to "prevent their lands being burdened by unéxecuted and profitless leases, incompatible with the right of alienation, and the use" of their property. Hence, covenants were inserted to "regulate the boring of wells, their number and time of succession, the period of commencement and of completion. Prominent among these was the clause of forfeiture to compel performance and put an end to the lease in case of injurious delay or want of success. (Brown v. Vandegrift, 80 Pa. St. 147.) A very remarkable case in which a result was worked out from a devise of land subject to an oil lease, quite different from what would nave followed had the mineral been solid and the place fixed, was recently decided. ( Wettengel v. Gormley, 160 Pa. St. 559. See, also, Peoples' Gas Co. v. Tyner, 131 Ind. 777, 3 Am. St. 433.) And as to the implied obligation to proceed and test oil, and to work other mineral lands, leased, the following adjudications are valuable: McKnight v. M. N. Gas Co., 146 Pa. St. 185, 28 Am. St, 790 ; Rorer 1. Co. v. Trout, 83 Va. 397, 5 Am. St. 285. A very peculiar case in respect to the right-of a surface owner to bore for oil, through a stratum of coal he has granted to another, without the latter's consent, lately has been considered and an injunction to enjoin it refused- — the- parties being left to their rights at law. (Chartiers B. C. Co. v. Mellon, 152 Pa. St. 286, 34 Am. St. 645.) Another holding is that under a lease of the right to mine oil "the title is inchoate, and for purposes of exploration only, until oil is found. ( Venture Oil Co. v. Fretts, 152 Pa. St. 451.) But as this would be equally true of the grant of the right to mine solid minerals, in lands wherein they were not known to exist, it constitutes no essential basis of distinction. And it will be observed that none of the differences in the cases referred to relate to any distinctive effect in the same form of grant of either kind of mineral, coal, oil or gas. They • touch other features of the instrument by which the right is created or title transferred, or concern the relative rights of owners in- different, but adjacent tracts of land ; as for example, when the well of one may draw off the oil or gas from the territory of another. These differences leave oil leases or grants, therefore, in so far as regards the question of whether or not they operate to convey the oil in situ within the full force and effect of the doctrine as to the conveyance of coal, or any other solid mineral. There is a distinction, however, though immaterial to this case, based upon the view which puts petroleum as a fluid, in the same category with underground water or springs. A recent writer states quite fully the principles which both mark this difference, and seem also to apply to the case in hand. "Petroleum oil," he says, "like subterranean water, is included in the comprehensive idea which the law attaches to the word land, and is apart of the soil in which it is found. Like water, it is not the subject of property except while in actual occupancy, and a grant of either water or oil is not a grant of anything for which ejectment will lie. A lease of land for the purpose of mining coal, rock or carbon oil, passes a corporeal interest which is the proper subject of an action in ejectment, and a proportionate share of the oil to be produced by an oil well is an interest in land, a parol sale of which is void under the statute of frauds." (Gould on Waters, sec. 291.)
Upon the facts of this case, then, in so far as- relates to the right or title they confer, there is nothing to prevent the application to these " leases," of the settled principles in regard to grants of coal or other solid mineral. Hence, when a lease was given on a large tract of land, the court said : " This was not an agricultural lease; it was an agreement known as an oil lease ; it conferred an exclusive right upon the ten ant to take the oil that might underlie the whole 600 acres, and gave him fifteen years within which to take it. It was in legal effect a sale of the oil, for the removal of which, the surface, and sub surface, were subjected to the necessary servitudes." (Wettengel v. Gormly, 160 Pa. St. 559). Again, where a guardian made a lease of the "sole and exclusive right to bore and dig for oil," in the lands of his ward, for twenty-one years, it was held to "amount to an absolute sale of the oil" they contained; and so, on the ground that "oil is no less part of the realty than timber and coal," beyond his power. (Appeal of Stoughton, 88 Pa. St. 188; 109 Pa. St. 583.) In another case, "two persons leased land for the purpose of boring salt wells and manufacturing salt, so long as the salt well contemplated in the lease should be carried on by them, the survivor or their assigns, under certain provisions for forfeiture, and for a rent of every twelfth barrel of salt manufactured, held: — that the lease in effect was a grant of the crude salt in the land, for a twelfth of the manufactured article." (Kier v. Peterson, 41 Pa. St. 357). So also, "an agreement to lease land for a term of twenty years, with the exclusive right to bore and colleet oil, giving one-fourth to the lessor," was held to "pass a corporeal interest." (Chicago, etc., Co. v. U. S. F. Oo., 57 Pa. St. 83). Finally, it was decided that, by a lease of land for twenty-five years, to one and his heirs, "for the purpose of mining coal, rock or carbon oil, and other minerals, a corporeal interest was vested in the lessee which is the proper subject of an action of ejectment." (Cir. Ct. U. S. West. Dist. Pa., Barker v. Dale, 8 Pitts. 190; Beatty v. Gregory, 17 Iowa, 109.)
III. With the law, as stated, we are brought directly to-the leases themselves. As respects the oil to which they refer, into which class do-the mineral rights created by them fall ?
That these instruments operate as leases of the lands described, for the purpose of mining the oil therein, it is presumed all parties will concede. This, since its discovery, is their clear effect. (Venture Oil Co. v. Fretts, 152 Pa. St. 451.) Do they go farther, and operate also as a conveyance of the oil found, while still in place?
At the outset it is not to be overlooked that the words "lease," "grant" and "right," used in the instrument, are apt for the creation of a term, or incorporeal hereditament merely, and are not the terms commonly used alone for the conveyance of corporeal interests. But it is also true that a mere "grant" of ones "right" in land, who has the entire estate therein, to another and his heirs, may convey the fee. (Coke Litt.. 96, 42a, 345a.) Their use here, therefore, while a circumstance to be considered, is by no means decisive of the intention of the grantor, or of the effect of the leases. So, also, as the authorities clearly show, of the provisions for rent, royalty, forfeiture, and the like, which have come into these instruments in consequence of the peculiar nature of this mineral, the modes and the results of its mining, and the uncertainty at to finding it in any particular place.
The point most strongly urged against the proposition that the leases convey title to the oil in situ is, that they contain no formal grant of the mineral itself — confer, it is said, only a right to enter upon the premises described, and mine and take it away. On these grounds is principally based the contention that no property passes until the grantee actually severs the oil, when ipso facto, it changes to personalty, and as to all but the royalty, he becomes its owner as such. But this was long ago answered, in Caldwell v. Fulton, supra. The only right there given was, to dig and take away coal " to any extent" the grantee " may think proper to do, or cause to be done;" yet it was held to convey the coal in place. The court, in answer to the argument that there was " not a grant of the thing itself, but of a right to take it, and until it is seized or taken, the property in the thing remains in the grantor," say: " But if the conveyance of the whole use of a thing, and of the absolute dominion over it, is a grant of the thing itself, only differing in the mode.of describing the subject, it is not easy to see what more Caldwell could have sold than he did. If in another form of words, he had described the coal as the subject of the grant, Greer would have possessed no greater beneficial rights than were given to him by the form adopted. The ownership of the coal in the ground is but a full right, title, and privilege to dig and carry it away; nothing more, nothing less. The words employed in the deed express absolute dominion and complete enjoyment. These constitute property, and all that is understood in proprietorship." (72 Am. D. 763.) The application of this reasoning to the case in hand, is too obvious to require comment, while its force, when the two sets of facts are compared, seems irresistible.
A vital point here is, that whatever rights these leases were intended to create, have vested. The oil to which they refer has been found in richly paying quantities. Hence the full right to it, according to the terms and conditions of the contract, is fixed in the grantee. ( Venture Oil Co. v. Fretts, 152 Pa. St. 451.) Moreover, it is especially to be noted that not only is the right to mine and take the oil in these lands exclusive to the grantee, but it extends to his heirs and assigns. Furthermore, it is to endure not merely for five years, but so long thereafter as oil or gas can be produced in paying quantities." As held in a case on an almost identical instrument, by the New York Court of Appeals, this clause, therefore, and not the specified number of years, fixes the duration of the grant. Eaton v. Aleg. Gas Co., 122 N. Y. 416; 25 N. E. Rep. 981; Effinger v. Lewis, 32 Pa. St. 367.) The effect of that is to give the plaintiff, his heirs or assigns, the exclusive right to mine and take from these lands all the oil and gas that can be found in paying quantity, regardless of the time it requires — to exhaust the two minerals; for it would be an affront to common sense and the general business understanding, to say that such is not the meaning of this provision. In that aspect of the case, the late Ohio decision is in point. (Edwards v. McClurg, 39 Ohio St. 41.) The grant in this case was of all coal which the grantees,could mine at " a profit," on a royalty of thirty cents a ton. The holding is, that " all minable coal in place passed absolutely to the grantees." As has been shown, it is clear that to give to one and his heirs the exclusive right to enter upon lands and take all of a given mineral therein, is the legal effect a grant of it in place. (Caldwell v. Fulton, 31 Pa. St. 475; Delaware, etc. Co. v. Sanderson, 109 Pa. St. 583; Plummer v. Coal Co., 160 Pa. St. 483.) This ease goes a step further, and settles the proposition that a right given to take what it will pay to mine, or that can be produced in paying quantity, is to be regarded as a grant of the corpus of the mineral to which it refers. Hence by the principle of this ruling, on the facts here, when the proceedings to tax were had, title to all the minable oil had passed to the grantees, under these leases. The provision that a certain , number of tons should be mined annually, makes no essential difference, except as it mitigates against the conclusion there reached. The absence of anything like it in these instruments is more in harmony with the view that they gave title, as it leaves the ownership free from a constraint imposed in the other case, by the grantor. Here, also, let the lessor's relation to the oil, since it has been found, be considered. That so long as it can be produced in paying quantity — until for all practical purposes it is exhausted — his grant debars him from any right to mine or sell a particle of the oil, except what comes to him from the grantee, as royalty, is evident. The exclusive right to take it from the land, whereby it is severed in fact, at will to dispose of all but the royalty, is unquestionably in the grantee. If, as was said by the court-in Caldwell v. Fulton, "ownership" of "coal in the groud is but a full right, title, and privilege to dig and carry it away, nothing more," or less; can it successfully be maintained that the grantor, and not the plaintiff is the owner of the oil remaining in place ?
Again, it is perfectly clear that when the rights of the grantee, the plaintiff here, under these leases have been fully worked out, the oil, in mining and business contemplation will be exhausted — the entire deposit* so far as it can be regarded as an article of value, taken. The obvious coni sequence, is that in this mineral there is and can be no reversion to the grantor, which is a crucial circumstance in determining whether they are to-be regarded as leases or conveyances upon condition of its beiDg found, of the oil in situ. " What is termed a mineral lease is frequently found to be an actual sale of a portion of the land. It differs from an' ordinary lease in this, that although both convey an interest in land, the latter merely conveys the right to its temporary use and occupation, whilst the former conveys absolutely a portion of the land itself. It is one of the essentials of a lease that its duration shall be for a determinate period, shorter than the duration of the estate of the lessor, hence the estate demised is called a term, and necessarily implies a reversion. If the entire interest of the lessor is conveyed, in the whole or a portion of the land, the conveyance cannot therefore be properly regarded as a demise, but as an assignment." Referring to the provisions of the lease before them, which was of "all the coal beneath the surface of the tract," with the right to mine and remove it* the court, in language equally applicable to the conveyances herein questioned, and; " when the purposes and objects of this instrument are perfected, the coal will be exhausted, and the lessor can take nothing by the reversion." Hence, notwithstanding the lease contained a reservation of rent, with provisions for distress and forfeiture, in case of default, it was held to operate as a severance and sale of the coal in place. (Sanderson v. City of Scranton, 105 Pa. St. 469.) On solid grounds of reason and authority, then, the leases in this case must be held to have a like effect. The consequence is that the plaintiff must be regarded as the owner of the oil mineral in the lands in question, separate from the " fee of the soil," in which view, so far as this branch of the case is concerned, its value is properly on the duplicate for taxation as his property. (Del. L. & W. Ry. Co. v. Sanderson, 109 Pa. St. 583, 58 Am. R., 743; Cincinnati College v. Yeatman, 30 Ohio St. 276.)
That cases may be found, which reach a different conclusion upon essentially the same state of facts, is admitted, iunk v. Haldeman, 53-Pa. St. 229, is one. But the very important ruling in Eaton v. Alleg. Gas Co., 122 N. Y. 416, by which a specified term is changed into a grant of the corpus of the mineral, whenever the lessee is entitled to hold and mine so long as it can be found in paying quantities, had not then been made. Nor had Edwards v. McClurg, 39 Ohio St 41, which decides that a right to-.take all the coal in a tract, which could be mined at a profit, passed the title in place, been reported. These views of the effect of such a provision were neither presented nor considered, though they constitute very material elements of doctrine in this class of cases, and serve to distinguish the instruments in question from those where the terms are fixed, and which do not, therefore, exclude a reversion in the lessor. Most of the cases cited for plaintiff, are on these grounds, and others inapplicable. In Del., etc., Co. v. Sandersdn, supra, the court, while approving the strong case of Stoughton's Appeal, 88 Pa. St. 198, so powerfully in aid of the defendant here, distinguishes others upon the ground that the right granted was either not exclusive to the grantee, or that the term was fixed. These distinctions apply to the following cases, viz.: Johnston 1. Co. v. Cambria Co., 32 Pa. St. 241; Rynd v. Rynd, 63 Id. 379; Bismark v. Bolster, 92 Id. 123 ; Thompson's Appeal, 101 Id. 225 ; Duffield v. Hue, 129 Id. 94; Brown v.. Beecher, 120 Id. 590; and McElwaine v. Brown, 11 Atl. Rep. 789. Watterson v. Reynolds, 95 Pa. St. 474, is at least as strong for the defendant as the plaintiff. The weight of the adjudications definitely in point, or which touch the principles involved, on the special circumstances of this case, seems to sustain the conclusion reached. The facts in Brick Co. v. Pond, 38 Ohio St. 65, distinguish it. The lease was for a fixed term. So of Newbury Pet. Co. v. Weare, 44 Ohio St. 604, and Meridan N. B. v. McConica, 8 O. C. C. Rep. 442, in which the lease was to "end in twelve years from" its date. In all such cases there may be a reversion to the lessor, after the rights of the lessee are exhausted. This, as has been pointed out, is not true of the leases here in question. Harrington v. Wood, 6 O. C. C. Rep. 326, is on a lease similar to this, which is declared tobe a "license coupled with a conditional grant, conveying the grantor's interest in the gas well" there in dispute, "conditioned that gas or oil is found in paying quantities." This is in harmony with the views here presented. (Venture Oil Co. v. Fretts, 125 Pa. St. 458.) There are dicta which probably would not have been uttered, had the case of Eaton v. Alleg. Gas Co., 122 N. Y. 416, been before the court. Ohio Oil Co. v. R. R. Co., 4 O. C. C. Rep. 210, does not seem to decide the point respecting which a view is expressed in the able opinion given. The railroad right of way did not necessarily touch any of the lessee's rights if the lease were construed as here contended for. These cases therefore, while entitled to great respect in this court, even as to expressions of opinion, are not controlling. Neither of them decides the point vital in the controversy.
J. P. Spriggs, Hunter, Mallory & Jeffers, Pearson & Okey and Blackmarr & Young, for plaintiff in error.
Weems, Walton & Cook, and Robert W. McCammon, for defendant.
III. Is section 2803, Revised Statutes, unconstitutional?
This section, in its material features, provided that " in all cases where any county auditor shall discover or have its attention called to the fact, that any assessor in any previous year shall have omitted to return, or shall in any future year omit to return, any lands subject to taxation, situated within his county it shall be the duty of said auditor to ascertain the value thereof for taxation, as near as may be, and to enter said land upon the duplicate of the county, then in the hands of the county treasurer of such county, and to add to the taxes of the current year the simple taxes of each and every preceding year in which such property shall have escaped taxation."
1. So long as the decision in the cases of Caldwell v. Carthage, 49 Ohio St. 434, and Probasco v. Raine, 50 Ohio St. 375) remain in forpe, the constitutionality of this statute is not open to question in a trial court of this state.
2. By the ordinary legal import of the term, this oil in place is "land," when owned separately from the "fee of the soil." So it is also by sections 2730 and 2792, Rev. Stat.; and therefore, clearly within the provisions of sec. 2803, Rev. Stat.
3. The mineral " right" of the plaintiff under the leases in question, having been omitted to be returned for taxation, under the authority of section 2803, Rev. Stat., the defendant properly placed it on the duplicate for that purpose, at the valuation stated, there being no claim that the value named is excessive.