Court Opinion

ID: 9839572
Source: CourtListenerOpinion
Date Created: 2023-09-13 15:06:28.964798+00
Date Added: 2024-06-11T09:41:02.537233
License: Public Domain

2023 IL App (5th) 220206
            NOTICE
 Decision filed 09/13/23. The
 text of this decision may be                 NO. 5-22-0206
 changed or corrected prior to
 the filing of a Peti ion for
                                                IN THE
 Rehearing or the disposition of
 the same.
                                   APPELLATE COURT OF ILLINOIS

                                 FIFTH DISTRICT
______________________________________________________________________________

PATRICK J. O’MALLEY JR., as Trustee Under Trust        ) Appeal from the
Agreement Dated January 1, 2006,                       ) Circuit Court of
                                                       ) Crawford County.
        Plaintiff and Counterdefendant,                )
v.                                                     ) No. 16-CH-9
                                                       )
MARCIA P. ADAMS, as Successor Trustee of the           )
Almyra M. Prather Revocable Trust Agreement            )
dated December 15, 1967, and Individually,             )
and LAWRENCE P. LUBY, Executor                         )
of the Estate of Betty P. Luby, Deceased,              )
                                                       )
        Defendants, Counterplaintiffs, and Third-Party )
        Plaintiffs-Appellees                           )
                                                       )
                                                       ) Honorable
(Chicago Title Insurance Company and Walter Adams,     ) Sonja L. Ligon,
Third-Party Defendant-Appellants).                     ) Judge, presiding.
______________________________________________________________________________

         JUSTICE CATES delivered the judgment of the court, with opinion.
         Justices Welch and McHaney concurred in the judgment and opinion.

                                            OPINION

¶1       The third-party plaintiffs, Marcia P. Adams, both individually and as successor trustee of

the Almyra M. Prather Revocable Trust Agreement dated December 15, 1967, and Lawrence P.

Luby, executor of the estate of Betty P. Luby, deceased, 1 (collectively, the Prather Trust) brought

         1
          Marcia Adams and Betty Luby were successor trustees and the only income beneficiaries of a trust
created by their mother, Almyra M. Prather, and referred to as the Prather Trust. During the pendency of
the litigation, Betty Luby passed away, and Lawrence Luby was named as the executor of her estate.
                                                    1
a third-party action against Chicago Title Insurance Company and Walter Adams 2 (collectively,

Chicago Title), alleging that the third-party defendants conspired to slander title to the Prather

Trust’s 50% interest in a mineral estate 3 and to convert the Prather Trust’s share of the proceeds

from the sale of minerals extracted from the mineral estate. Chicago Title moved for summary

judgment, arguing that the Prather Trust’s claims failed as a matter of law because the removal

and sale of minerals by a tenant in common, without the consent of its cotenant, did not constitute

a tort under Illinois law. The trial court denied the motion for summary judgment. Thereafter, the

trial court certified three questions of law involving the interests and obligations of cotenants, and

Chicago Title filed an application for leave to appeal under Illinois Supreme Court Rule 308(a)

(eff. Oct. 1, 2019). This court initially denied Chicago Title’s application, but pursuant to a

supervisory order from the Illinois Supreme Court (Adams v. Chicago Title Insurance Co., No.

128586 (Ill. Sept. 28, 2022) (supervisory order)), we vacated that order and allowed the

interlocutory appeal.

¶2      This case began in March 2016, when the plaintiff, Patrick J. O’Malley Jr., as trustee under

a trust agreement dated January 1, 2006 (O’Malley Trust), filed an action for adverse possession.

The O’Malley Trust and the Prather Trust each held a 50% interest in the mineral estate in farmland

located in Crawford County. In the complaint, the O’Malley Trust alleged that it had acquired the

Prather Trust’s 50% interest in the mineral estate by adverse possession. The Prather Trust filed

an answer and affirmative defenses and successfully defended its interests, eventually obtaining a

summary judgment in its favor on the O’Malley Trust’s claim for adverse possession.

        2
          Walter Adams was an associate regional counsel for Chicago Title Insurance Company at the time
of these events.
        3
          The term “mineral estate” is a generic term used herein to describe the oil, gas, and other minerals
available for extraction from the land.
                                                      2
¶3        In the same case, the Prather Trust filed a counterclaim for an accounting against the

O’Malley Trust and third-party claims against several defendants, including Chicago Title. The

Prather Trust alleged that since 2008, its cotenant, the O’Malley Trust, had contracted with a third

party to remove and sell the oil and natural gas from the mineral estate, without the knowledge or

consent of the Prather Trust. The Prather Trust further alleged that the Chicago Title defendants

conspired to slander title to the Prather Trust’s interests in the mineral estate and to convert its

share of the natural gas proceeds from the mineral estate by issuing a title policy that falsely

declared that the O’Malley Trust had merchantable title to 100% of the minerals in the mineral

estate.

¶4        Chicago Title moved for summary judgment, arguing that the Prather Trust’s claims failed

as a matter of law because the removal and sale of minerals by a tenant, without the permission of

its cotenant, was not a tort under Illinois law. The trial court denied Chicago Title’s motion for

summary judgment. In a detailed order, the trial court examined the applicable statutes and the

case law and provided the basis for its decision. Subsequently, the trial court certified three

questions for interlocutory review under Rule 308(a). All of the certified questions were derived

from the issues discussed in the summary judgment order regarding the interests and obligations

of cotenants to a mineral estate.

¶5        Rule 308(a) authorizes the appellate court, in its discretion, to permit an appeal of an

interlocutory order when the trial court has made a written finding that “the order involves a

question of law as to which there is substantial ground for difference of opinion and that an

immediate appeal from the order may materially advance the ultimate termination of the

litigation.” Ill. S. Ct. R. 308(a) (eff. Oct. 1, 2019). Generally, appellate review under Rule 308 is

limited to the specific questions of law identified by the trial court. Rozsavolgyi v. City of Aurora,

                                                  3
2017 IL 121048, ¶ 21. A reviewing court will decline to answer a certified question where the

answer is dependent upon the underlying facts of a case or where the question calls for an answer

that is advisory or provisional. Rozsavolgyi, 2017 IL 121048, ¶ 21. Rule 308 was not intended to

provide a mechanism for expedited review of an order that merely applies the law to the facts of a

particular case, and it does not generally permit the reviewing court to analyze the propriety of the

underlying order entered by the trial court. In re Estate of Luccio, 2012 IL App (1st) 121153, ¶ 17.

A question certified under Rule 308 presents a question of law that is reviewed de novo. Moore v.

Chicago Park District, 2012 IL 112788, ¶ 9.

¶6     In this case, the trial court certified the following three questions for permissive

interlocutory review under Rule 308:

               “1. Whether, in light of Illinois Supreme Court cases such as Reward

       Oil Co. v. White, 333 Ill. App. 241 (1948)[,] and Pure Oil Co. v. Byrnes, 388

       Ill. 26 (1944), Illinois law provides a tenant in common owning at least half of

       the mineral interest in land with an unfettered right to drill for oil and gas

       without cotenant permission?

               2. Whether 765 ILCS 520/2, which provides that the owners of at least

       half of a mineral interest ‘desiring to drill for and remove oil and gas may file

       a complaint … asking the court for permission to drill…’:

                    a. imposes a mandatory requirement that a cotenant must always

           seek court permission prior to drilling for oil and gas; and,

                    b. necessarily subjects a drilling party to tort claims if they do not

           follow the statutory procedure?

                    3. Does the Supreme Court of Illinois’ holding in Pure Oil Co. v.

                                                  4
       Byrnes, 388 Ill. 26 (1944), which provides ‘[t]he stern rule of liability of a

       cotenant, who commits waste or damage to the common property, has been

       relaxed where the profit taken from the land is of a fugacious nature and liable

       to be exhausted by adjacent operators’:

                    a. preclude a nondrilling cotenant from bringing a conversion

               claim against a drilling cotenant when the latter removes oil and gas

               from property without the former’s permission; and

                    b. preclude a nondrilling cotenant from bringing a slander of title

               claim against their cotenant following the cotenant’s decision to grant

               a lease to a third party to drill for oil and gas on the property?”

               (Emphasis in original.)

¶7     All three certified questions concern the rights and obligations of tenants in common.

Chicago Title asserts that a tenant in common who owns at least one-half of the mineral interest in

land has “an unfettered right” to drill for, remove, and sell the minerals from the mineral estate,

without the permission of the other cotenants, and that the nondrilling cotenants’ only remedy is

an accounting. Chicago Title further asserts that the Oil and Gas Rights Act (765 ILCS 520/0.01

et seq. (West 2020)) does not require an owner of at least one-half of the mineral interests in land,

who does not have consent of its cotenants, to follow the procedures outlined in the Oil and Gas

Rights Act as a precondition to drilling for oil and gas and that the failure to follow the statutory

procedure does not constitute a tort. In response, the Prather Trust argues that, under Illinois law,

one cotenant cannot remove and sell minerals from a mineral estate without either (a) the

permission of the other cotenants or (b) a court order obtained after complying with the statutory

procedures in the Oil and Gas Rights Act. It further argues that when a cotenant extracts and sells

                                                 5
minerals from a mineral estate, without first obtaining either the permission of the cotenants or a

valid court order, the cotenant is liable for trespass to the nonconsenting tenants’ interests and for

conversion of their respective shares of the proceeds. 4

¶8      In Illinois, it has been long held that each tenant in common has the same right as all other

tenants in common to use and enjoy the property. Fyffe v. Fyffe, 292 Ill. App. 539, 548 (1937). A

tenant in common may not prejudice the rights of his cotenants by a conveyance of any specific

part or of any interest, right, or license in any specific part of the common property. Zeigler v.

Brenneman, 237 Ill. 15, 23 (1908); Murray v. Haverty, 70 Ill. 318, 320 (1873). Thus, a tenant in

common could not lawfully commit waste on or destroy the common property or do any act that

would work a permanent injury to the inheritance, and therefore, he could not grant that right to a

stranger. Murray, 70 Ill. at 320; Fyffe, 292 Ill. App. at 549. 5 At the time the Murray case was

decided, an Illinois statute 6 authorized a tenant to maintain an action for “trespass or trover” against

a cotenant who took, destroyed, lessened in value, or otherwise injured the common property. See

Murray, 70 Ill. at 320. The statutory provision was amended in 1935. See 1935 Ill. Laws 936 (§ 1)

(amending 1919 Ill. Laws 633 (§ 4)). The current version of the statute is found in section 4 of the

Joint Tenancy Act and provides:

        “If any person shall assume and exercise exclusive ownership over, or take away, destroy,

        lessen in value, or otherwise injure or abuse any property held in joint tenancy or tenancy

        4
           Pursuant to leave of this court, the Illinois Oil & Gas Association filed an amicus curiae brief in
opposition to the brief of Chicago Title and incorporated the arguments made by the Prather Trust.
         5
           In Fyffe, 292 Ill. App. at 549, the court found that, although there was a conflict among some
authorities about the right of a tenant in common to grant a third party the right to take oil and gas from a
common property, “no such right rests in a tenant in common in this state.” The court did not consider other
common-law actions, as the issue before the court was in reference to the accounting portion of the
litigation.
         6
           The statute was initially enacted in 1821 and subsequently amended. It is a predecessor to what is
now called the Joint Tenancy Act (765 ILCS 1005/0.01 (West 2020)). See generally Svenson v. Hanson,
289 Ill. 242, 246 (1919).
                                                      6
       in common, the party aggrieved shall have his civil action for the injury in the same manner

       as he would have if such joint tenancy or tenancy in common did not exist.” 765 ILCS

       1005/4 (West 2020) (formerly Ill. Rev. Stat. 1991, ch. 76, ¶ 4).

The 1935 amendments also added a provision for the accounting of profits or benefits. 1935 Ill.

Laws 936 (§ 1). The current version of the provision is found in section 4a of the Joint Tenancy

Act and provides:

       “When one or more joint tenants, tenants in common or co-partners in real estate, or any

       interest therein, shall take and use the profits or benefits thereof, in greater proportion than

       his or their interest, such person or persons, his or their executors and administrators, shall

       account therefor to his or their cotenants jointly or severally.” 765 ILCS 1005/4a (West

       2020) (formerly Ill. Rev. Stat. 1991, ch. 76, ¶ 5).

¶9     In 1939, the Illinois legislature passed the Oil and Gas Rights Act of 1939 (Act) (1939 Ill.

Laws 805 (§ 1)). The Act provided an orderly statutory process by which the owners of a majority

interest in land could petition the circuit court for an order permitting them to drill for and produce

oil or gas for the use and benefit of all cotenants where the interests of their cotenants was in

imminent danger of being drained of its oil or gas by wells on an adjoining premises. Pure Oil Co.

v. Byrnes, 388 Ill. 26, 29 (1944). In such cases, the owners of a majority interest were required to

account to the cotenants for their respective proportions of the net value of the oil produced, “which

is its market value, less the cost of extracting and marketing it.” See Pure Oil, 388 Ill. at 39.

¶ 10   Under the current version of the Act, the circuit court may authorize the majority holders

of joint interests in land to drill and extract oil to protect the land “in the manner hereinafter

provided.” 765 ILCS 520/1 (West 2020). Section 2 of the Act provides:

                                                  7
                “§ 2. The owners of such interest desiring to drill for and remove oil and gas may

        file a complaint in the Circuit Court of the county in which such lands, or some part thereof,

        are located, asking the court for permission to drill for and remove oil and gas therefrom

        for the use and benefit of all the owners of the right to drill for and remove oil and gas from

        such lands, and setting forth the relevant facts and the interests of all persons owning the

        right to drill for and remove oil and gas under such lands, so far as the same are known to

        the plaintiffs.” 765 ILCS 520/2 (West 2020).

¶ 11    The Act further requires the plaintiff to name all other cotenants, including unknown

owners, as defendants and to summon or notify all defendants in the same manner as known or

unknown defendants may be summoned or notified in other civil cases. 765 ILCS 520/3, 4 (West

2020). The circuit court is authorized to investigate and determine all questions regarding

conflicting titles, remove clouds from titles, and confirm the title to the right to drill for and remove

oil and gas from the lands. 765 ILCS 520/6 (West 2020). If the circuit court finds that the material

averments in the complaint are true and that the plaintiffs own a one-half interest or more in the

right to drill for and remove the oil and gas from the land as joint tenants, tenants in common, or

coparceners, the circuit court shall enter an order authorizing the plaintiffs “to drill for and remove

oil and gas from such lands so as to realize the full value thereof for the benefit of the parties

entitled thereto.” 765 ILCS 520/7 (West 2020). The circuit court shall also order the plaintiffs to

provide for payment to nonconsenting cotenants their respective shares of the oil or gas produced,

after deductions for their proportionate share of the costs of drilling for, producing, and disposing

of the oil or gas. 765 ILCS 520/7 (West 2020). Section 9 of the Act provides that the Civil Practice

Law and the Illinois Supreme Court rules apply to suits filed under the Act. 765 ILCS 520/9 (West

2020). Thus, the Act sets forth an orderly process through which a cotenant who does not have the

                                                   8
consent of the other cotenants may obtain the permission of the circuit court to remove minerals

from the mineral estate, while also protecting due process rights and property interests of

nonconsenting cotenants.

¶ 12   The above-referenced legal principles regarding the Act and the obligations of cotenants

were discussed in Pure Oil, 388 Ill. at 39, and Reward Oil Co. v. White, 333 Ill. App. 241, 245

(1948). Notably, in each of those cases, the majority owners of joint interests in the land, or their

lessees, followed the statutory procedures in the 1939 version of the Act. In each case, the majority

owners or their lessees filed a complaint, seeking a court decree authorizing drilling on the

property, with summons and notice to the cotenants. Pure Oil, 388 Ill. at 29; Reward Oil, 333 Ill.

App. at 242.

¶ 13   In Pure Oil, our supreme court noted that, prior to the enactment of the oil and gas rights

statute in 1939, one cotenant could not remove oil and gas from a common property without the

permission of its cotenants and that any cotenant who commenced drilling and production without

the consent of the nondrilling cotenants became liable to account for damage to the inheritance

and was not entitled to deduct the expenses incurred in taking profit from the land. Pure Oil, 388

Ill. at 39. The supreme court further noted that this “stern rule of liability” to account for damages

had been relaxed where the profit taken from the land was of a fugacious nature and where the oil

and gas were being drained, or in imminent danger of being drained away, through wells on

adjacent land. Pure Oil, 388 Ill. at 39. In those cases, the applicable rule allowed a deduction for

the money spent in protecting, preserving, and marketing the oil and gas and required the cotenant

who took the oil or gas to account to his cotenants for their respective proportions of the market

value, less the costs of removal and marketing. Pure Oil, 388 Ill. at 39. The supreme court then

found the same relaxed rule of accounting was provided in the oil and gas statute of 1939. Thus,

                                                  9
where the trial court, acting pursuant to the statute of 1939, entered a decree authorizing the owner

of a majority of the joint interest to drill, produce, and market oil from common property to protect

it from being drained by adjacent wells, the statutory accounting rule required that owner to

account to his cotenants for their respective proportions of the market value of the oil produced,

less the costs of extracting and marketing it. Pure Oil, 388 Ill. at 39. The same rules were applied

in Reward Oil, 333 Ill. App. at 245-46.

¶ 14     Contrary to the contention of Chicago Title, the courts in Pure Oil and Reward Oil did not

hold that a tenant in common owning at least one-half of the mineral interest in land had “an

unfettered right” to drill for oil and gas without the permission of cotenants. Accordingly, the

answer to the first certified question is no.

¶ 15     Under Illinois law, a tenant in common does not have a legal right to take oil and gas from

a common property without the permission of the cotenants, and the nondrilling cotenants may file

a civil action and seek damages to redress the injuries to their respective interests. See 765 ILCS

1005/4 (West 2020); Pure Oil, 388 Ill. at 39. In a case where a cotenant with a one-half interest or

more wants to drill for and remove oil from the mineral estate and where he does not have the

consent of the cotenants, he may seek relief under the Act. 765 ILCS 520/1 (West 2020). In order

to obtain a court order granting permission to drill and remove the oil or gas, the cotenant-plaintiff

must follow the proper statutory procedures, including filing a complaint, providing summons

and/or notice to his cotenants, and proving that the material averments in his complaint are true;

he must also account to the nonconsenting cotenants as provided in the Act. 765 ILCS 520/7 (West

2020).

¶ 16     Accordingly, the answers to the second and third certified questions are similar to the first.

The owner of a one-half interest or more in a mineral estate does not have an unfettered right to

                                                  10
remove and market the minerals from the mineral estate. The owner of a one-half interest or more

in a mineral estate may, with the permission of the cotenants, remove and market the minerals

from the mineral estate. The owner must then account to the cotenants for their respective shares

of the market value of the oil or gas produced, less the costs of extracting and marketing it. When

the owner of a one-half interest or more in a mineral estate does not have the permission of the

cotenants, he may seek an order from the circuit court to obtain permission to remove and market

the oil and gas from the mineral estate in compliance with the Act. In that case, the court shall

provide by order for the payment and distribution of the net proceeds from the disposition of the

oil and gas, after deduction of the proportionate costs of extracting and marketing of the oil and

gas. When the owner of a one-half interest or more in a mineral estate removes and markets the

minerals from the mineral estate, without either the permission of his cotenants or an order of the

circuit court obtained in compliance with the Act, the owner is subject to an action in tort for any

injuries to the respective interests of the cotenants, and the owner may invoke appropriate defenses.

¶ 17   Having answered the certified questions, we remand this case to the circuit court for further

proceedings.

¶ 18   Certified questions answered; cause remanded.

                                                 11
                    O’Malley v. Adams, 2023 IL App (5th) 220206

Decision Under Review:     Appeal from the Circuit Court of Crawford County, No. 16-CH-
                           9; the Hon. Sonja L. Ligon, Judge, presiding.

Attorneys                  Michael T. Reagan, of Ottawa, and Gerard T. Carmody (pro hac
for                        vice), Kevin M. Cushing, and Ryan M. Prsha, of Carmody
Appellant:                 MacDonald P.C., of St. Louis, Missouri, for appellants.

Attorneys                  A. Courtney Cox, of Sandberg Phoenix & von Gontard, P.C., of
for                        Carbondale, and David M. Foreman, of Foreman & Kessler,
Appellee:                  Ltd., of Salem, for appellees.

Amicus Curiae:             J. Nelson Wood, of Illinois Oil & Gas Association, of
                           Mt. Vernon, amicus curiae.

                                        12