Court Opinion

ID: 4007520
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:08:15.567538+00
Date Added: 2024-06-11T13:57:00.728119
License: Public Domain

I am unable to concur in the opinion of the majority in this case.
On November 2, 1899, Mary E. Clerc conveyed to J. M. Stone, C. T. Gates, and R. L. Rogers, along with other lands, a tract of ninety-four acres, situated in Jackson county. The granting clause of the deed reads as follows: "The said Mary E. Clerc grants unto the said parties of the second part, with covenants of general warwanty, the following described three several parcels of land all situated in Jackson County, West Virginia," and then describes the ninety-four acre tract. Without more, this grant vested in the grantees a fee simple estate in the land conveyed; but the grantor made a reservation of the oil and gas, with operating rights, in the land conveyed, and did so in the following language: "The first party also expressly reserves from the sale herein made the oil and gas in and under all the lands herein conveyed, and also the exclusive right of operating thereon for oil and gas, together with the rights of way necessary for such operations and the right to lay necessary pipes over and to erect tanks thereon and to take and use water from said premises, and also the right to erect and remove, at any time, all property placed thereon by said first party, or her assigns, in prospecting for or producing oil or gas". She then limited the reservation by the following language, which immediately follows, and is an integral part of the reservation: "But if oil or gas is found in paying quantities on said lands, first party and her assigns shall yield and pay to parties of second part or their assigns, one full sixteenth (1/16) of the oil and gas produced and marketed from said lands."
Of course, the deed must be read and considered in its entirety, and likewise the reservation. This is a fundamental rule of construction, and in this case protects not only the grantor but the grantees as well. In the majority opinion this rule is recognized as applied to the deed in *Page 408 
its entirety, and repudiated when applied to the reservation.
Following simple and well established rules of construction, I think the deed in question did this: It conveyed the ninety-four acre tract of land in fee; and then reserved the oil and gas, but limited the reservation by the provision last quoted above, the effect of which was to leave vested in the grantees an interest in the oil and gas when developed, but, nevertheless, an interest which passed by the granting clause of the deed and then became fully vested in the owners of the land conveyed, and was at all times an interest attached to the ownership of the land. No violation of the rule against perpetuities is involved, because the interest was one created by the deed which became presently vested in the grantees therein. Their enjoyment of this interest was, in a sense, contingent upon the development of the oil and gas, but I think it was such an interest as could have been made the basis of a suit by the grantees to compel development thereof when necessary to avoid a sacrifice of their interests.
The interest which the grantees took in the oil and gas was not essentially different from royalty reserved in an ordinary lease for oil and gas purposes. In Jackson v. Dulaney, 67 W. Va. 309,67 S.E. 795, the grantor in a deed executed in 1864, made the following exception and reservation: "Excepting and reserving, however, out of and from the present grant at all times hereafter forever unto the said John S. Morton, his heirs and assigns, one-tenth part of all the mineral oil that may be obtained by the said Howard Spencer (grantee), his heirs and assigns from the said hereby granted tract of land, * * *". And it was held that the effect of this provision "is to except and reserve in such grantor, his heirs and assigns, to be delivered as stipulated, a royalty of one-tenth of all the oil produced, possessing the same quality of estate as royalty reserved in an ordinary lease for oil and gas purposes." What the grantor did in the deed involved in *Page 409 
the case at bar was to reserve to herself one-half of the royalty in the oil and gas when produced, just as the grantor reserved a one-tenth interest in the deed considered inJackson v. Dulaney, supra. If the interest reserved in that deed was the same quality of estate as royalty reserved in an oil and gas lease, why does not the same rule apply to the reservation in this case? The fact that she also reserved the right to control the leasing of the property, subject to the equitable rights of the grantees, does not affect the first proposition in the least. Taking the deed as a whole, that is exactly what the grantor did, and the remaining interest in the oil and gas passed to the grantees and became a part of the land conveyed, and, unless thereafter reserved, passed with the land.
I am not concerned as to how the interest conveyed, or, as the majority would say, reserved, is described. It may be that it is correctly described as a covenant running with the land. I prefer to treat it as an interest in land, which passed to the grantees under the deed, and which would pass by conveyance of the land, unless specifically reserved. There has been no such reservation, and therefore the present owners of the land are the owners of the interest in the oil and gas. But if it be, strictly speaking, a covenant running with the land, the result is the same. Many cases are cited to sustain the statement in one of the briefs that "A covenant, if it be appurtenant to and run with the land conveyed, must attach to the land conveyed the covenantee and must tend to diminish or increase the value of the real estate to which it adheres in the hands of the holder". Accepting this as true, it cannot mean to refer to the surface of the land only. Here the land was conveyed subject to a limited reservation of the oil and gas. The whole estate conveyed was affected by the provision concerning the oil and gas, when developed. The value of the estate, and the land conveyed, was increased, as to the grantees, by the provision which held out to them the prospect that at some time *Page 410 
rents and royalties would accrue from the oil and gas therein.
The cases of Tennant v. Tennant, 69 W. Va. 28, 70 S.E. 751, and Rawling v. Fisher, 101 W. Va. 253, 132 S.E. 489, do nothing more than hold, in the first case, that "In order that a covenant may run with the land, it must respect the thing granted and the act covenanted must concern the estate conveyed", and, in the second, "A covenant is a covenant real and runs with the land only when it attaches to the land or some interest therein actually granted to the covenantee". With these statements of law I fully agree; but in the case at bar, the interest in the oil and gas actually passed to the grantees by the grant in the Clerc deed of November 2, 1899. Therefore, these cases do not bar the contentions of the owners of the land, but support them.
How can it be successfully contended that the oil and gas interests involved herein are not connected with the land? Oil and gas are parts and parcels of the land. The parties to the Clerc deed were dealing directly with these minerals, in the sale of the land. The grantor reserved them, subject to a specific limitation, and to the extent that limitation was effective there was no reservation of the oil and gas. The assumption of the majority members that there was a severance of the oil and gas from what may be termed the surface of the land is the outstanding error in their position, and, without this assumption, their entire argument falls to the ground. This assumption is based on a part only of the reservation clause. I have always understood that to reach the meaning of any writing the whole thereof should be considered. Here a part of the reservation clause is completely ignored and the arbitrary statement made that there was a complete severance of the oil and gas from the surface of the land conveyed. There was, in my opinion, never any severance of the oil and gas effected by the reservation, when the limitation aforesaid is considered as it must be. To the extent of the limitation, the oil and gas remained a *Page 411 
part of the land conveyed. If it be said that all the grantees acquired was the right to royalties, the reply is that the right to receive such royalties is equivalent to the ownership of the oil and gas in place, as recognized in the majority opinion, and if that does not connect the oil and gas with the other elements of the estate granted, I cannot understand how such connection could be retained. I fail to see what the cases of Campbell v. Lynch, Pittsburgh  West Va. Gas Co. v. Ankrom, and Walker v. West Va. Gas Corp., admittedly cases dealing with the apportionment of royalty, have to do with the question at issue in this case.
But it is said that the language of the provision limiting the reservation provides that the grantor, Clerc, "shall yield and pay to the parties of the second part or their assigns", and that this creates a personal covenant on the part of the grantor, and not one running with the land; and that the benefits of such covenant still remain in the grantees in the deed of November 2, 1899, and not with the present owners of the land in which the oil and gas in question exist. In my view, that provision relates only to the mechanics of the transaction. It matters not how the royalties are paid or by whom. We should look to the substance of the transaction and not its form. The rights of the grantees are of the same value if royalties are paid by the original grantor, as they would be if paid by the person who develops the minerals from which the royalties accrue — no greater, no less. So we are governed by form, not substance, when we make a decision based on language which does nothing more than prescribe the manner in which the persons entitled to the royalties shall have them paid.
This and a companion case, Appeal No. 9472, which may be referred to as the Starcher case, decided today, will illustrate the point. In the Starcher case the provision limiting the reservation of oil and gas reads: "But in event of oil or gas being developed on said land said second party or his assigns shall be entitled to have one full *Page 412 
sixteenth of all oil marketed and one-half of the next proceeds from all gas sold from said land." The words "second parties or his assigns shall be entitled" are relied upon to distinguish that case from this. In the case at bar, the grantor agrees to "yield and pay to" the grantees, while in the Starcher case the grantors are said to be "entitled to * * * the proceeds from all oil and gas sold from said land". Each provision plainly contemplates the sale of the oil and gas, because the word "marketed" is used. What is the real difference between the two expressions? I do not think there is any. There is nothing sacrosanct in these expressions. The phrase "yield and pay" is not uncommon in leases where rents or royalties are reserved. Under the reservations in the deeds in this case and theStarcher case, only the grantor, Clerc, or her assigns, had the right to lease the land in question, and it is reasonable to assume that the royalties provided for in such a lease would be paid to the lessor. Of course, other methods of payment could have been followed, but it would be out of the ordinary to do so. In case of production of oil or gas, the lessor would be under obligation to make a division of the royalties under the deeds she had executed. As to one deed, that obligation would arise from her agreement to "yield and pay"; and as to the other, her agreement that her grantee was "entitled" to a specific share thereof. Both deeds, in substance, did exactly the same thing, namely, created a right in her grantees, or their assigns, to a specific share of the royalties in the oil and gas, when developed. Title to oil and gas in place is sometimes said to pass under provisions which give the right to the proceeds thereof, and in this aspect no substantial, if any, difference is perceived as to the status of the parties in this case and those asserted in the Starcher case, wherein it is held that the interest in question passed with the land, whereas, in this case, the majority opinion holds the interest to be a mere personal covenant, not attached to or passing with the land. I am unable to see any consistency in the two holdings. *Page 413 
I think the Starcher case reaches the correct result, and I would apply the same sound principle to the case at bar, and decree the same result.
Suppose a case in which the grantees were prosecuting a suit to collect from the grantor, Clerc, or her assigns, one-half of the royalties, would anyone say that any distinction could be made as to the rights of the parties, merely because in one of the deeds Clerc had agreed to "yield and pay", while in another deed she stated that her grantee was "entitled". Certainly, the same obligation in favor of the grantees in the deeds arises under either expression, and yet the two cases are attempted to be distinguished, and different decisions made on the same day, each based entirely upon what is supposed to be a fundamental distinction between the two expressions. What creates the fundamental distinction between the supposed case and this case?
Another consideration, not highly important, but which should have influence, is this: The law favors certainty in the vesting of estates, and this applies particularly to lands and interests in lands, for the reason that the free transmission of title thereto is supposed to encourage use and development and is, therefore, in the public interest. Were we to hold the oil and gas interest here involved to be such as passed with the land, where not reserved, there would never be any question as to its ownership; or, if reserved or separated from the surface, it would necessarily be by recordable writing, and thus the owner could be located. On the other hand, if we treat it as a personal estate, or a personal covenant, the real ownership of the interest may be difficult, if not impossible, to locate. This is illustrated by the fact that, in the case at bar, only one-half of the royalties involved can now be paid, for the reason that the Gates distributees are understood to be unknown.
In my opinion, applying simple and common sense rules of construction, it is clear from a reading of the deeds involved in this case and the Starcher case, that what the *Page 414 
grantor therein intended was to reserve one-half of the oil and gas royalty, together with the right to lease the properties for oil and gas purposes. One-half of the royalties passed to the grantees under the deeds. The right of the grantor to control the leasing of these properties was not absolute, and could be controlled where, in circumstances of time and opportunity, development became necessary for the protection of those interested in the minerals mentioned in the deeds. Had the grantor, prior to her deed, leased the property for oil and gas purposes, no one would say that the subsequent conveyance of the land would not have passed title to the oil and gas, unless specifically excepted and reserved, together with the royalties which might be derived therefrom under the lease; and who will say that, had the grantor reserved one-half the royalties accruing under the lease, the remaining one-half would not have remained attached to the lands in the hands of the grantees. The case at bar is no different in substance from the suppositious case stated and cannot be distinguished, except through a resort to a species of metaphysical gymnastics, having no relation to realities, and far removed from the ken of the average mind. Instead of following simple rules, well established by our decisions, we now have a technical construction which can only result in future uncertainty and confusion.
I would affirm the ruling of the court below, and I am authorized to state that Judge Lovins concurs in this dissent. *Page 415