Clutter, S. v. Brown, A. Appeal of: Gemmell, J.
1542 WDA 2016
| Pa. Super. Ct. | Sep 21, 2017Background
- Landowners (Clutter and Lapping families) own two adjoining tracts in Greene County derived from a 1919 deed from Anna M. Brown et al. to Caleb M. Stewart. The deed contains a clause “reserving… one half of the oil and gas royalty.”
- The 1919 grantors were descendants of Louisa D. McVay, who had earlier (1901) executed oil-and-gas leases that provided royalties and annual gas payments; those 1901 leases were no longer producing and had not generated royalties for the parties.
- In 2011 Landowners executed new leases with EQT, which is producing and paying royalties to Landowners but withholding one-half of each royalty based on the 1919 deed reservation.
- Landowners filed a quiet-title action seeking a declaration that the 1919 clause reserved only royalty payments (a personal-property right) that did not survive the grantors’ deaths, so defendants (heirs of the 1919 grantors) have no present real-property royalty interest.
- The trial court granted summary judgment for Landowners; Gemmell (an heir/defendant) appealed arguing the 1919 clause was an exception of a real-property interest in oil and gas that passed to heirs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nature of 1919 clause: exception (real property) vs reservation (personal property) | Landowners: clause reserves only royalty payments (personalty) that were not in esse and thus did not survive grantors’ deaths | Gemmell: clause excepted one-half of the oil-and-gas right (real property) that passed to heirs | Court held it is a reservation of royalty payments (personal property) that ceased with grantors’ deaths; summary judgment for Landowners |
| Effect of using term “reserve” | Landowners: “reserve” here refers to royalties (incorporeal, not existing as property until production) | Gemmell: terminology should not defeat an exception of realty; reservation could nonetheless be an exception of real property | Court applied precedent: if right did not exist at grant, term creates reservation of personalty; therefore does not create an inheritable real property interest |
Key Cases Cited
- Ralston v. Ralston, 55 A.3d 736 (Pa. Super. 2012) (summary-judgment standard; deed interpretation principles)
- Walker v. Forcey, 151 A.2d 601 (Pa. 1959) (distinguishing reservations and exceptions; reservation creates new incorporeal right; exception retains existing real property)
- Silvis v. Peoples Natural Gas Co., 126 A.2d 706 (Pa. 1956) (language creating no new rights treated as exception)
- Smith v. Glen Alden Coal Co., 32 A.2d 227 (Pa. 1943) (lease of minerals vests fee in lessee and lessor’s interest in royalties is personal property)
- Snyder Bros., Inc. v. Peoples Nat. Gas Co., 676 A.2d 1226 (Pa. Super. 1996) (lease of subsurface minerals leaves lessor with royalty interest classified as personal property)
- Duquesne Natural Gas Co. v. Fefolt, 198 A.2d 608 (Pa. Super. 1964) (contrasting older authority treating reserved royalty as realty; discussed but distinguished in light of later precedent)