14 Pa. Super. 167 | Pa. Super. Ct. | 1900
Opinion by
This action was brought against the defendants as surviving partners trading as the Citizens’ Oil & Gas Company. The affidavit of defense admits to be true the averments contained in the first, second, third and fourth paragraphs of plaintiff’s statement. The paragraphs in question substantially aver the following facts: That the plaintiff, on November 25, 1890, by agreement in writing, leased unto Thomas A. Book, for the sole and only purpose of drilling and operating for oil or gas, a certain tract of land in Lawrence county. The covenants of the lessee which are now material were that he would deliver onejeighth of the oil discovered and produced on said premises in pipe lines connected with the well, to the credit of the lessor ; and in case gas was obtained in paying quantities that he would pay to the lessor #200 per annum for each and every well, so long as utilized or marketed. By virtue of various mesne assignments, all the estate created by said lease, grant or contract became vested in the defendants and William P. Bennett, partners doing business as the Citizens’ Oil & Gas Company, who operated this and other leases under that firm style. William P. Bennett, died, leaving the defendants as surviving partners.
A well was drilled on the premises, gas therefrom was produced in paying quantities, and the same was utilized and marketed. It is admitted that the plaintiff is entitled to receive the amount for which this action is brought, from some quarter, under the terms of the lease. There was no privity of contract between the parties to this litigation, and if the defendants are to be held it must be from -privity of estate. The defendants admit that they had become privies to the estate created by the leasehold, but aver that such privity of estate had ceased, by force of a contract which they contended, as a matter of law, extinguished their estate in the land. The agreement upon which the defendants rely was entered into by all the members of the defendant company, as parties of the first part, and E. A. McMillin, one of their own number, and J. M. McMillin, who was not a member of the company,
The liability of an assignee of the lessee of an oil and gas lease for the rents and royalties which accrue to the lessor, is founded in privity of estate. He takes the lease with notice of its covenants, and is liable for all breaches thereof which occur while he holds the title, but is not liable for such as happen after he ceases to be privy to the estate of the lessee. Each successive assignee is liable for covenants maturing while the title is held by him : Washington Gas Company v. Johnson, 123 Pa. 576 ; Fennell v. Guffey, 139 Pa. 341. The principles upon which privity of estate in leases for the purposes of operating for oil and gas is to be determined, are in no wise different from those which apply to any other lease of land reserving rent. The privity of estate which induces the liability of the assignee is the actual or beneficial enjoyment of the premises. It is not necessary that the legal title shall be, or shall continue, in him who is to be held because of privity of estate. One who has a beneficial interest in the estate created by the lease,
The agreement between the defendants and E. A. and J. M. McMillin was not and did not pretend to be a conveyance to the latter of the estate in the lands of the plaintiff, which the defendants had acquired as successors to Thomas A. Book. It declared upon its face that its purpose was to realize a profit to-the owners of the leases, and to carry this purpose into effect the owners of the leases conveyed the leased premises to the McMillins, upon terms essentially different from those of the original lease. This agreement required McMillin, at his own expense, to lay pipe lines and conduct the gas to a distant market, and there sell the same and account for the proceeds. After the payment of royalties, rentals, drilling wells and a small sum per month for general expenses of operating the leases, one fourth of the proceeds arising from the sale of the gas was to be paid to these defendants. The oil right in the property did not pass from the defendants to McMillin. It thus appears that, while McMillin was not required to pay the royalties and rentals unless the fund derived from the sale of the gas was sufficient for that purpose, the defendants were not liable for the expenses of drilling the wells, and thus had the advantage of the development of their property at McMillin’s expense. The parties, in their agreement, recognized the fact
The allegation of the affidavit of defense that William P. Bennett, a deceased partner, ought to have been made a party defendant in this proceeding is not worthy of consideration. The affidavit of defense did not deny that the leasehold had been held as partnership property. It admitted that William P. Bennett had died prior to the bringing of this action, and it is not necessary in Pennsylvania to make the personal representatives of a deceased partner defendants in an action against the partnership. The allegation that J. M. McMillin ought to have been made a party defendant is equally without merit. The affidavit does not allege that McMillin was a member of the partnership, it relies upon the allegation that McMillin had acquired an interest in the lease by reason of his having been a party to the agreement between these defendants and E. A. McMillin and J. M. McMillin, hereinbefore set forth. We have arrived at the conclusion that, at most, McMillin was simply a .tenant under these defendants. It is true that the plaintiff might have brought an action jointly against all who were privies to the estate which he had by leasehold created.
The learned court below very properly entered judgment for want of a sufficient affidavit of defense, which judgment is now affirmed.