Court Opinion

ID: 8180277
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:33:06.695101+00
Date Added: 2024-06-11T16:28:03.747307
License: Public Domain

Raymond, Judge,
dissenting:
I respectfully but emphatically dissent from the decision of the majority which affirms the judgment of the circuit court and holds the lease between the plaintiff and the defendant to be invalid and that the plaintiff is not entitled to the royalty which she seeks to recover and which is expressly provided by the lease. The holding of the majority is, I think, clearly erroneous and manifestly inequitable and is also contrary to the numerous findings by the circuit court which are approved by the majority and were based on undisputed facts.
The material facts are not disputed. The defendant entered into possession of the 75 acre tract on August 12, 1959 under a lease between it and the plaintiff dated March 6, 1959 and it has never surrendered that possession to the plaintiff or surrendered the lease but has continued to hold such possession until the institution of this suit and presumably continues to do so until this day.
On August 25, 1959, 13 days after it took possession, the defendant began to drill the well in question on the 34.48 *627acre portion of the 75 acre tract and by September 7, 1959 had drilled the well to a depth of 750 feet. The next day, September 8, 1959, the Hope Natural Gas Company, hereinafter sometimes referred to as Hope, notified the defendant that the well was being drilled on land covered by its prior lease on the larger tract of 246 acres, dated November 26, 1903, and that the defendant was a trespasser. On the same day the Hope Natural Gas Company verbally agreed to assign to the defendant its rights to the 34.48 acre tract under its lease of November 26, 1903 and on September 16, 1959 executed the assignment, which was given the prior date of August 1, 1959 to precede the August 12, 1959 date of the entry by the defendant under its lease with the plaintiff.
The defendant had discovered gas on September 13, 1959, 3 days before the execution of the assignment and though the defendant temporarily suspended its drilling during and until after the completion of its negotiations with Hope Natural Gas Company on August 8, 1959, it continued to drill and it discovered gas in paying quantities on September 19, 1959, fractured the well on September 24, 1959 and turned the produced gas into a line on October 16, 1959 for sale and delivery to Hope Natural Gas Company which agreed to purchase the gas produced from the well in connection with the execution of the assignment which authorized the defendant to develop oil and gas on the 34.48 acre tract.
Though the assignment was admitted to record on September 22, 1959, the plaintiff had no actual notice or knowledge of the assignment between the defendant and Hope until the latter part of September, or sometime in October, which was subsequent to the completion of the well. The plaintiff has never consented to the assignment or to any attornment by the defendant to Hope and, in fact, there has been no such attornment. Though there is privity of estate in the oil and gas between the plaintiff and Hope the plaintiff is not a party to the assignment and Hope is not a party to the lease between the plaintiff and the defendant. The defendant has at no time surrendered its lease from the plaintiff under which it entered upon the 75 acre tract of *628land of the plaintiff and drilled the Shearer well to completion between August 25 and September 24, 1959, has never abandoned that lease or surrendered possession of the 75 acre tract of land or any part of it to the plaintiff but remains in possession of such land and, despite any utterances to the contrary, is exercising all its rights and privileges under the lease from the plaintiff in the production and sale of the gas from the well on the 34.48 acre portion of the 75 acre tract. Furthermore, the defendant admits and this Court in the majority opinion concedes that the plaintiff owns the 75 acre tract and the oil and gas under it and the defendant does not dispute or deny her title to the land and the oil and gas under it.
All the foregoing facts are conceded and have been recognized to exist by the circuit court, as shown by its opinion which is a part of the record, and by this Court in the majority opinion.
In view of the undisputed material and controlling facts the question whether the relationship of landlord and tenant existed between the plaintiff and the defendant before the execution of the assignment from Hope Natural Gas Company to the defendant is not controlling or, indeed, important in the decision of this case. On the contrary the controlling question, in my judgment, is whether the defendant can continue to hold possession of the 75 acre tract which includes the 34.48 acre portion, exercise and retain the rights granted to it under the lease from the plaintiff, and continue to operate the well and produce gas from it under the lease which it has not surrendered, all of which it is now doing, and at the same time successfully contend that it is not required to observe the provision of that lease which expressly obligates it to pay the 1/8 gas royalty provided by the lease. In my considered opinion it can not ignore or disregard the royalty provision of the lease in that way. The lease can not be valid in part and invalid in part with respect to the production of gas. It is either valid in its entirety or invalid in its entirety. Clearly the lease is not invalid or ineffective in its entirety, as erroneously held by the circuit court and by the majority. On the contrary *629it is manifestly valid and binding between the parties to it and is merely subject to the prior lease dated November 26, 1903, Thompson v. Christie, 138 Pa. 230, 20 A. 934, 11 L.R.A. 236, 32 Am. Jur., Landlord and Tenant, Section 93, which was assigned to the defendant by Hope and the effect of which was merely to release Hope’s rights to the defendant. There is no basis for any claim that the lease between the plaintiff and the defendant is invalid or of no binding force and effect between the parties to it. It is based on a valid and a sufficient consideration and was entered into in good faith and in the belief of both parties, until the contrary was later discovered by them, that the 34.48 acre tract was not subject to the prior lease, and there is no contention that the plaintiff engaged in any fraudulent conduct in its execution.
Manifestly the execution of the assignment did not cancel or terminate the lease between the plaintiff, who was not a party to it, and the defendant. As previously pointed out all it did, or could do, as the plaintiff was not a party to it, was to transfer and release to the defendant the rights of Hope Natural Gas Company to the oil and gas in and under the 34.48 acre tract and to use and develop it for oil and gas without any opposition from or controversy with the Hope 'Natural Gas Company. The principal effect, and in fact the only effect, of the transfer to the defendant was to remove Hope from the picture and to enable the defendant to take advantage of a breach by the plaintiff of her warranty of title in the lease and to give the defendant the option to surrender the lease between it and the plaintiff, in accordance with the surrender clause, and to occupy and possess the land and to operate the well on it under the prior lease instead of under the lease from the plaintiff. The defendant did not do and has not done either. Instead, despite any declaration by it to the contrary, the defendant has actually continued in possession of the property under the lease from the plaintiff and has kept it in force and effect by its failure or refusal to surrender it as it is expressly authorized to do by the surrender provision in the lease. The continued failure or refusal of the defendant to sur*630render the lease shows clearly that the defendant considers it to be of binding force and effect, that it confers rights and benefits upon it, that it possesses and operates the premises and produces gas from the well under and by virtue of that lease, and that it is unwilling to give up or surrender its rights under it.
The majority emphasizes, unnecessarily in my opinion, the well established principle that title to oil and gas does not pass, under an oil and gas lease, from the lessor to the lessee until they are discovered by the lessee and that until then the relationship of landlord and tenant does not exist between the lessor and the lessee. It should be kept in mind that there is no controversy in this proceeding as to any claim of title between the defendant and Hope. If there had been no assignment by Hope and it had attempted to oust the defendant or sought to recover the value of the gas produced under the lease from the plaintiff the question of the prior title of Hope would perhaps have been the vital question for decision. But, as indicated, that issue is not raised by either the defendant or Hope, which is not a party to this proceeding.
If the defendant, when notified by the Hope Natural Gas Company of its prior lease, had abandoned the premises which it held under the lease from the plaintiff, because of breach of warranty of title by the plaintiff, or had surrendered its lease from the plaintiff which it was permitted to do by the surrender provision of its lease from the plaintiff which it did not do and has not done, and if the defendant had taken possession and used and occupied the premises under the assignment of the prior lease from the Hope Natural Gas Company to the exclusion of the lease from the plaintiff which the defendant has not done at any time, the foregoing principle that denies title to the oil and gas until their discovery would have prevented the relationship of landlord and tenant between the plaintiff and the defendant.
When, however, the defendant failed and refused to surrender the lease from the plaintiff and continues so to do and instead continued, and still continues, to hold the prem*631ises covered by that lease and to exercise the rights granted it by that lease, which are broader and more extensive than the rights granted by the prior lease to Hope, and continues to produce, take, sell and deliver the gas from the well on the 34.48 acre tract and recognizes the title of the plaintiff to the land in question and her ownership of any oil and gas which may underlie the surface of the leased premises and does not assert an adverse or hostile title or ownership to the premises and the oil and gas but merely claims the right to pay the plaintiff for the oil and gas produced at the rate specified in the prior lease, it is manifest to me that the relationship of landlord and tenant existed, at least, from the time gas was produced from the well in paying quantities on September 19, 1959 and has continued to exist and still exists and in consequence the defendant is estopped to deny the title and ownership of the gas, and the defendant is precluded from making any valid attornment to the Hope Natural Gas Company with respect to the leased premises and the oil and gas produced from such premises.
It is impossible for me to understand how the majority of this Court can correctly hold that the lease between the plaintiff and the defendant is invalid and that the defendant is required to pay, not the royalty specified in the lease, but at the rate specified in the prior lease, when the majority at the same time states in point 2 of the syllabus that the defendant recognizes the title of the plaintiff to the land in question and her ownership of any oil and gas which may underlie the surface of the leased premises and does not assert an adverse title or ownership in any other person but merely asserts its right and duty to pay the plaintiff for the royalty and the gas produced at the rate specified in the prior lease. On the contrary it seems to me that the only simple, clear and equitable decision in this proceeding should be that the defendant, while recognizing the foregoing rights and title of the plaintiff and while possessing and operating her premises under the lease from her, should be required to recognize all the provisions of that lease and to comply with its provision that the defendant *632pay as royalty 1/8 of the gas produced under the lease. I would so hold.
In Annotations 3b, 87 A.L.R. 2d 608, there is this pertinent language: “* * * when the lessee goes into possession, enjoys the benefits of the leasehold property, and remains undisturbed in his possession, then he may be estopped to deny the lessor’s title, although actual title to the property may be in another.” In Stover v. Davis, 57 W. Va. 196, 49 S. E. 1023, this Court held in point 3 of the syllabus: “A tenant in possession cannot disclaim his landlord’s title without surrendering possession to him. He cannot collude with, and attorn to another claiming a hostile title to the prejudice of his landlord.”
In The Putnam Company v. Fisher, 128 W. Va. 383, 36 S. E. 2d 681, this Court said: “A tenant will not be permitted to deny the title of his landlord in the absence of fraud or mistake in the procurement of a lease, and no proof of title is required by the landlord in an action against his tenant. Voss v. King, 33 W. Va. 236, 10 S. E. 402. The at-tornment of a tenant to a stranger is void unless the landlord consents, or such attornment is the consequence of a judgment, order or decree of a court. Code, 37-6-4. See Allen v. LaFollette, 94 W. Va. 700, 120 S. E. 176; Rosin Coal Land Co. v. Martin, 81 W. Va. 33, 94 S. E. 358; Stover v. Davis, 57 W. Va. 196, 49 S. E. 1023; Voss v. King, 38 W. Va. 607, 18 S. E. 762.” In Harman v. Lambert, 76 W. Va. 370, 85 S. E. 660, this Court, quoting from the then Section 4, Chapter 93, Code of West Virginia, used this language: “ ‘The attornment of a tenant to any stranger shall be void, unless it be with the consent of the landlord of such tenant or pursuant to or in consequence of the judgment, order or decree of a court’. Construing this section, we said, in effect, in Coal & Lumber Co. v. Lumber Co., 71 W. Va. 21, Voss v. King, 33 W. Va. 236, and Stover v. Davis, 57 W. Va. 196, among other cases, that the recognition of the title of another than the landlord who put him in possession, or attornment to such other, by the tenant of an adversary claimant, will not interrupt the continuity of the landlord’s possession except as provided by that section, unless with *633knowledge or notice the landlord acquiesces in the disloyal conduct of his tenant; or, as in Voss v. King, if a tenant takes a secret lease or conveyance from another claiming to be the true owner, without the knowledge of his landlord, the character of his possession will not be altered. 32 Cyc. 1341.”
Certain it is that the defendant can not accept, as it is doing, the benefits of its lease with the plaintiff and at the same time ignore and refuse to shoulder or bear the burdens which it imposes, one of which is the obligation to furnish or pay the plaintiff the value of 1/8 of the gas produced from the leased premises.
The defendant admits that it owes the plaintiff rental or royalty for the gas which it produces, takes and sells from the well which it has located on the premises covered by her lease to the defendant. The sole and simple issue in this case is how much and under which lease it must pay her for the gas which it takes. By every precept of equity, fair dealing and the law of contracts, the defendant should be required to comply with its express agreement in the lease between it and the plaintiff to pay the plaintiff, not the $75.00 quarterly installments provided by the prior lease to which she is not a party, but the 1/8 of the gas produced by it under the lease between it and the plaintiff.
For the foregoing reasons I would reverse the judgment of the circuit court and remand the case with directions that the defendant be required to account to the plaintiff for the value of 1/8 of the gas produced less the payments made by the defendant under the prior lease and that judgment be rendered for the amount of the unpaid 1/8 of the gas produced and that the defendant be required to comply with the lease provision that the defendant furnish or pay the plaintiff the value of the 1/8 of the gas produced as long as it possesses and operates the premises under the lease between it and the plaintiff which it is now doing.
I am authorized to state that Judge Berry concurs in the views expressed in this dissenting opinion.