Court Opinion

ID: 8178398
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:24:23.603094+00
Date Added: 2024-06-11T16:27:37.876560
License: Public Domain

Hitz, Judge,

(dissenting):

With the conclusion that the royalties derived from the oil produced from the Lewis land must be divided ratably among Lis heirs, notwithstanding the land has been partitioned *387among them, no matter whether such oil comes from the part assigned to only one of them, or all of them, I cannot agree. Lewis executed the oil leases covering the land prior to his death. After his death, but before development for oil, his lands were partitioned among his heirs, no reference being made to the oil and gas lease in the partition proceeding. When the respective tracts were thus assigned it must be conceded that the party to whom each tract was so assigned, acquired every interest that Lewis had therein at the time of his .death. What was this interest? The oil and gas leases, it must be borne in mind, did not pass title to anything to the lessee. They simply conferred the privilege of going upon the land and exploring for oil and gas, and removing the same if discovered. Then, at the time the land was partitioned, each of the heirs to whom a parcel was assigned acquired everything that Lewis owned in such parcel at the time of his -death, including all oil and gas. Oil and gas are minerals, and so long as they are in place they belong to the. owner of the land under which they lie, and the right also belongs to that owner of the land to explore for them and extract them therefrom. If they escape from his premises to the premises of another before he has captured them, they no longer are his property ; and vice-versa, if by exploration upon his premises oil escapes thereto from the premises of an adjoining owner it thereby becomes his property. From this it necessarily follows that when the respective parcels were laid off to Lewis’s heirs,' each acquired all of the estate in the tract assigned to him, subject only to the rights of the lessee to explore for and produce the oil and gas. This right is exactly the same that would have existed in the heirs of Lewis holding the several tracts assigned to them had there been no lease, from which it necessarily follows that the owner of each sub-division is entitled to the royalties on all of the oil produced from wells drilled on his sub-division. Suppose the mineral affected by the lease was coa.1, can it be doubted that each of the parceners would take the coal under the tract assigned to him, and upon its production would be entitled to the payment therefor? I perceive no reason for invoking a different rule in the ease of *388oil or gas. They are as much a part of the realty as any other mineral and belong to the owner of the land under which they are captured as fully as coal belongs to the owner of the land from which it is taken. This view is supported by the ease of the Northwestern Ohio Natural Gas Co. v. Ullery, 68 O. St. 259. In that case the owner of two adjoining tracts of land containing respectively forty and sixty acres leased them for oil and gas purposes. He subsequently conveyed the forty-acre tract to the defendant Ullery, and the sixty-acre tract to a man by the name of Shoop. A well was drilled upon the forty-acre tract which produced gas. Ullery, the owner of this forty-acre tract, claimed the compensation provided to be paid for a gas well, and Shoop, the owner of the sixty-acre tract, also claimed an interest in this royalty. An action was brought by Ullery to recover from the ‘gas company the rentals provided to be paid. It will be seen from this statement that that ease was exactly in point with the case we have here. The very learned and philosophical Chief Justice Burket delivered the opinion of the court in that case, which fully supports the views above expressed. In the ease of Osborn v. Arkansas Territorial Oil & Gas Go., (Ark.) 146 S. W. 122, an exactly analogous case was presented to the Supreme Court of Arkansas for decision. T. N. Sloat, being the owner of a tract of eighty acres of land, executed an oil and gas lease thereon. After the execution of said lease and before the production of oil and gas he conveyed forty acres off said tract to another, and subsequently conveyed to the trustees of a church a tract of one-half acre from the remaining forty acres. The lessee, acting under the original lease executed by Sloat, drilled a well upon the half-acre tract conveyed to the church trustees, and upon the question being submitted to the Arkansas Supreme Court as to whether all of these royalties should be paid to the church trustees, or whether they should be divided between the owners of the eighty acres of land in the proportion in which they were interested therein, it was held that the church trustees were entitled to the whole thereof. In this connection, the following quotation from the opinion of the court in that case is instructive: “We are of the opinion *389that the fact that the lease was executed before the conveyance to the trustees of the church did not alter or lessen their right of ownership of the gas, which was a part of the realty granted to them. As was said in the case of Natural Gas Co. v. Ullery, supra: ‘The fact that oil and gas are vagrant and transitory in their nature does not prevent their adhering to and becoming a part of the land while passing from one tract to another, and while so in one tract they are a part of that tract and belong to the owner thereof until they escape from such tract, and, if brought to the surface before such escape they become personal property belonging to the owner of the land. It therefore irresistibly follows that the oil or gas taken from the well on a particular tract of land belongs to the owner of that tract, even though the contract under which the well was drilled included other tracts of land. Because the contract of production may have included two or more tracts of land, such contract cannot have the force of taking from the owner of one tract the oil or gas adhering to such tract for the time' being and bestowing it upon the owner of another tract, where it may never have been.’ ” In the case of Fairbanks v. Warrum, 56 Ind. App. 337, 104 N. E. 583, an exactly similar question was before that court. Noble Warrum was the owner of two tracts of land containing fifteen acres and three hundred and fifty-three acres respectively, and he executed an oil and gas lease covering both of them. Subsequently he sold and conveyed the fifteen-acre tract and fifty-eight acres off the other tract. A well was drilled under the lease upon the 353-acre tract, but not upon that part thereof 'included in the 58 acres conveyed away. The grantees in the deed from. Noble Warrum conveying the 15 aeres and the 58 acres above referred to, contended that they were entitled to receive part of the royalties from this well. This contention was not sustained by the court, but on the contrary it was held that the royalties belonged to the party upon whose land the well was drilled. The reasoning of the courts in these cases commends itself to my judgment, and I believe condemns the conclusion reached by the majority in this case. I am satisfied that each of the heirs of Lewis took every estate there was in the parcel of land *390assigned to him, inelnding the oil and gas underlying the same, or which might be captured by development thereon, whether such development was made under the lease executed by the former owner Lewis or otherwise.
I am not unmindful of the fact that the above views are inconsistent with some expressions contained in the opinion in the case of Lynch v. Davis, 79 W. Va. 437, 92 S. E. 427. Upon a consideration of that opinion I 6nd that there are expressions contained in it which were not at all necessary for the decision of that case. The controlling fact there was that the separate owners of the several adjoining tracts of land combined them themselves for the purpose of oil and gas production. The tracts of land were small; they lay contiguous to each other; and it may be well assumed that the oil and gas could be produced therefrom more economically if the whole acreage was treated as one tract than if each tract was leased separately. In fact, it could not well be held otherwise than that the purpose of those parties was to treat their oil and gas as held by them in common. They combined their holdings under a single description, and so far a,s the lease goes there is but one tract of land to be dealt with. The case of Higgins v. California Petroleum and Asphalt Company, 109 Cal. 304, is very similar in its facts to the ease of Lynch v. Davis. In that case the owners of two adjoining tracts of land, for the purpose of having the mineral asphalt mined therefrom,- combined them and leased them as a single tract, and the court held that by thus doing they in effect made themselves tenants in common in such mineral. That is the effect of the holding in Lynch v. Davis, and the only effect which should be given to the opinion in that case. Confining the language used in the opinion in that case within these limitations, it is not inconsistent with the opinion I now entertain, and correctly solves the questions there involved.
Judge PoeeenbaRGER in his opinion proceeds upon the theory that by the execution of the oil and gas lease there was created or brought into being an estate in the land which had not theretofore existed, to-wit, the royalty in the oil and gas. He says: "The royalty is a separate and distinct en*391tity. It is not the land, nor the land title. It is a wholly different thing from either, and is complete in itself, notwithstanding it comes from the land.” I cannot agree that the royalty in the oil and gas is a separate and distinct entity from the land. It is well established that a grant of the rents and profits, or the income of land, passes the land itself, both in law and in equity. Judge Poffenbarger declared in Toothman v. Courtney, 62 W. Va. 175, that the reservation of the rental or royalty arising from the oil and gas was a reservation of the oil- and gas in place, so that this, estate or entity -which Judge Poffenbarger calls royalty is. nothing more than the oil and gas in place, and it could not. be separate from the principal estate, inasmuch as both of these estates were vested in Lewis.' He had never parted with the oil and gas, or with the royalty to anyone. It is fundamental that a party cannot have two estates in the same piece of land. There may be, it is true, several estates or interests carved out of it held by separate parties, but when one party acquires them all the lesser estates áre immediately merged into the greater, and he becomes the owner of a single estate therein, the fee. simple absolute. So I say when Lewis died he was the owner of but a single estate in the land of which he died seized, to-wit, a fee simple absolute, and this passed to and vested in his heirs at law. They did not inherit from him the land, and then another estate called the royalty in the’land, but they inherited simply the land. Judge Poffenbarger holds that when this land was partitioned the division of the land did not divide the royalty among the heirs, because of the fact that it is a separate entity and had an existence separate and apart from the land itself. This position is untenable if there was no other, estate vested in Lewis’s heirs than the fee simple absolute. It must be conceded that prior to the partition of the estate there was vested in these heirs of Lewis every interest in this land, including the oil and gas, and the right to receive any rentals or royalties that might be derived therefrom. What was the effect of partitioning the land? It did not change in any way the title by which it was held, or the estate which the parties held in it, but it simply converted their joint holdings *392into separate holdings. It conferred upon each of the heirs to whom a part was assigned the title and estate of all the heirs in that part, so that the owner of each of these parcels got everything in them which was theretofore vested in himself and his co-parceners so far as the parcel assigned to him is concerned. There is nothing about oil and gas which distinguishes it from other minerals except its vagrant character, and this does not affect in any way the ownership thereof. It is as much the property of the party upon whose land it is discovered as is coal the property of the party upon whose land it exists, or as timber belongs to the land upon which it grows. Suppose for the sake of the argument in this case that part of Lewis’s land had timber growing thereon, and he had executed a paper granting to another the right for ten years to cut the timber off the whole tract of land, and providing that in case the timber was so cut at any time within the ten years oné-eighth of the lumber manufactured from such timber should be delivered to Lewis, and before any operations, were commenced under such a contract Lewis died and his heirs partitioned his estate, just.as was done here, and one of the heirs had assigned to him a tract of land u]5on which there was no timber, and subsequently the timber was cut under the contract, would it be contended for a moment that the royalties arising from the cutting of the timber did not belong to the party from whose land the timber was cut? A number of cases are cited holding that when leased land is divided among several parties the rents arising therefrom wdll also be divided. Those cases arc without application here for the reason that the leases in those eases were general leases. The whole estate in the land was' leased. Here only a particular part of the land is leased. To make a correct application of an agricultural lease, we wdll say that Lewis owned a large tract of land, as was the case here, and he leased this land for the purpose of raising corn thereon. There is only a very small part of the land upon which corn can be raised. In a division of the land among Lewis’s heirs this corn land goes to one of them as his part; to another is assigned a piece upon which corn cannot be grown, but it is valuable fruit land, and because *393of that fact it is worth just as much as the corn land; another is valuable mineral land, and because of the minerals under it it is worth just as much as the corn land. Would it be said that the rents arising from the corn raised upon the tract of land which was capable of bearing corn must be divided among all of .the heirs just because it had been leased for that purpose before the death of their ancestor? This, it can readily be seen, would impose a manifest hardship upon the one who would happen to receive the assignment of the land which would bear corn. It is argued that no hardship can result from the application of the rule laid down in the opinion by Judge Poeeenbarger. I do not agree with that conclusion. Serious hardship may result. After the exhaustion of the oil on part of this land the lessee may abandon the land as not being profitable under present conditions, and leave the oil in place upon the lands of some of the co-parceners. Subsequent developments, the increased use of- these minerals for commercial and scientific purposes, may make very valuable in the near future what is now of no value, so that the party who owns the land which was not developed will have a very valuable estate in the future in the oil and gas therein, while his co-parceners’ land.has been depleted of its oil and gas for the common benefit. Can it be said that this is an equitable result? It is one that is bound to flow from the application of the rule laid down in this case.
Judge Miller concurs with me in this dissent.