McIntosh v. Ropp

233 Pa. 497 | Pa. | 1912

Opinion bt

Me. Justice Moschziskee,'

These four appeals are in cases arising out of the same state of facts. The causes were tried together in the court below and argued as one in this court, on the understanding that they should be here disposed of in like manner.

Addie McIntosh, the plaintiff and appellant, is the owner of an undivided one-half interest in a farm of 128 acres in Butler county, the other undivided half belonging to her brother, Edward E. McIntosh. This farm was originally owned by their mother, Rose McIntosh, who died intestate May 15, 1888, leaving to survive her a husband, Kenneth McIntosh, the above-named two children, and a daughter Lizzie. At the time of the mother’s death and during the period of the other facts here involved, the father lived on the farm with Edward and Addie, but the daughter Lizzie resided in New York state. Prior to the acquisition of this property by Rose McIntosh the land had been developed for oil and.gas, but the operation had been abandoned at the time of her death.

On July 22, 1895, Kenneth McIntosh executed a lease to B. B. Seibert for twenty acres of said farm at a one-eighth royalty; it was in the usual form, and was to run for fifteen years and as long thereafter as oil and gas should be produced in paying quantities. ' None of the children joined in the execution of this lease, but they were all of full age at that time. The lessee went upon the land and drilled two unproductive wells, and in November, 1896, when about to abandon the property, he assigned all his interests to Daniel Dierkin and Valentine Whitener for a consideration of $1,200. They,‘ ‘ as the result of the expenditure of a considerable sum of money” managed to make the wells “fair producers.” On March 19, 1898, Whitener sold his interest to Dierkin for $3,000, and the latter retained possession until July, 1907, at which time he assigned the lease to W. H. Ropp for $4,000. Ropp continued to operate the two wells until April 5, 1909, when he sold to C. E. Blaney for $4,000; and the latter still holds possession.

April 7, 1900, Lizzie McIntosh sold and conveyed her undivided one-third interest in the farm to her brother and sister. January 8, 1910, Kenneth McIntosh died. January 13, 1910, Edward E. McIntosh conveyed to his sister Addie all his interest in the oil rights, “in and to the twenty acres of land comprising said leasehold,” together with all oil produced in the past from the two wells, retaining the right to one-half of the royalty fixed by the lease. On the same day they executed a division order to the company through whose lines the oil was run, and thereafter the royalty was paid to them in equal proportions. Before that date the royalty had been paid to Kenneth McIntosh, with the knowledge of his two children, many of the payments having been made directly to Edward.

In 1907 Edward and Addie brought a joint action in trespass against Dierkin, and another against Ropp, to recover damages for the taking of oil under the lease; but on appeal it was held that Edward was estopped by his knowledge and conduct (as detailed in the report) from again enforcing “payment for the oil thus run,” this court stating, “as to the sister Addie .... we are of opinion that the facts established at the trial are not sufficient to constitute an estoppel as to her. However, the present action cannot prevail, because it being joint, and there being sufficient facts established to estop Edward, the right to a joint recovery being thus defeated, this action must fall.” Addie then instituted the following actions: April 20, 1909, proceeding in equity against Ropp praying for an accounting for her share of the oil, exclusive of the royalty, from July, 1907, to April, 1909; June 10, 1909, action of trespass against Dierkin to recover damages because of his operations from March 18, 1898, to July 1, 1907; January 13, 1910, action of ejectment against Blaney to recover the land and mesne profits; February 14,1910, action of trespass against Blaney to recover damages because of his operations from April 5,1909, to January 8, 1910; and these are the cases before us on appeal.

The plaintiff averred that the various defendants went upon the land and carried on their operations “without authority from or consent of the plaintiff,” and that they had wrongfully retained from her the oil and gas produced therefrom; that “at the time of the unauthorized, unlawful and wrongful entry of the defendant .... the plaintiff was the owner .... subject to the life-estate of her father, .... and had a property in the one-half of the oil, gas and other by-products .... taken out,‘removed, or appropriated, .... by the defendant, which, exclusive of royalty, belonged absolutely and immediately to her as personal property, and for one-half of which the defendant is answerable to the plaintiff in damages.” She claimed that the measure of her damages was the market value of the oil after it had been severed from the land less the expense of production and the royalty paid by the defendant, while the defendant contended that the only proper measure was the value of the oil in place as represented by the royalty already paid.

At the trial the parties, inter alia, agreed: “That the lease was made by Kenneth McIntosh, who was a tenant for life with remainder in Addie McIntosh, the plaintiff, and her brother, Edward McIntosh;” that “Edward McIntosh, the owner of the one-half of the title in remainder, ratified the lease made by the life-tenant and the lessee' was in possession under him as well as under the life tenant;” that “If the plaintiff is not entitled under the circumstances and the law of the case to recover the one-half of the seven-eighths of the market value of the production during the life of the life-tenant after .it has been produced and severed from the land, less the proper cost and expense of its production, then judgment to be entered for the defendant;” that “If the court should be of opinion that the damages are not to be measured by the value of the oil and other products, after being severed, less cost and expense of production, but by the value of the royalty proper to be paid or delivered, then judgment to be entered for the defendant, as no proof will be offered as to the proper amount of royalty to be delivered and a royalty under the lease having been delivered to Kenneth McIntosh, which royalty is to be treated as having properly been delivered;” that “If damages are found in favor of the plaintiff, based upon the amount of production, it is to be based upon the one-half of the seven-eighths of the whole production, a royalty of one-eighth having already been paid to the life-tenant;” that “Upon the trial the plaintiff will not contend that the taking of the oil during the time the defendant was in possession, did in itself lessen the value of the inheritance, but that the damages are' to be measured only by the value of the oil produced, less the cost and expense of producing it, and will make no claim for damages in any other way, nor for injury done to the surface of the land;” further, “While this agreement admits that the plaintiff’s title to the land is as set forth above, it is not to be taken as an admission that the defendant or lessee under whom the defendant claims had actual knowledge of her title.” It was agreed in the ejectment suit, that the question whether the ratification of the lease by Edward “ended with the death of the life-tenant or still continued is to be decided by the court;” that in case of recovery of mesne profits according to the measure of damages contended for by the plaintiff the one-eighth of the whole value of the oil should be deducted, “the plaintiff having received one-eighth clear of expense as for royalty;” that in event of the court deciding that the value of the royalty proper to be paid was the correct measure of damages, the royalty already paid to the plaintiff “shall be taken to be a fair royalty in full of all claims for mesne profits;” and that “if the plaintiff’s measure of damages should not be adopted by the court, then the plaintiff shall make no claim for mesne profits.” Counsel for the appellant in his printed argument states, “The only qdestion involved is the measure of damages for one-half of the oil produced from her (the plaintiff’s) working interest in the wells.”

The court below refused to adopt the measure of damage contended for by the plaintiff and determined the equity and trespass cases against her. In the action of ejectment the court decided that the plaintiff could only recover her one-half interest in the land subject to the right of the defendant to continue to operate under the lease on paying her a one-eighth royalty, and entered judgment accordingly.

The plaintiff has filed many assignments of error, but none of them is in proper form. The Act of April 22,1874, P. L. 109, under which the common-law actions were tried, provides: “If exceptions to the findings of facts or conclusions of law be filed .... the court .... may .... order judgment to be entered according to the decision previously filed, or make such modification thereof as in justice or right shall seem proper, subject .... to review by ... . the Supreme Court. . . . Every such case taken to the Supreme Court .... shall be heard and determined therein as cases of appeal in equity proceedings. . . .” The scheme of this act is in practical accord with established equity practice, and in cases tried thereunder all specifications of error must be to the final rulings of the court below. Where, as in the present case, exceptions have been taken to the findings and conclusions of the trial court, the assignments should in each instance show that fact and the ruling upon the exception. We have expressly so decided in equity cases: New Cumberland Borough v. Riverton Cons. Water Co., 232 Pa. 531; Chisholm v. Thompson, 233 Pa. 181; Berg v. Bank, ante, p. 469. Furthermore, we have laid it down generally that assignments of error must be so complete in themselves that reference to other parts of the record is unnecessary: Landis v. Evans, 113 Pa. 332. In this busy age of overburdened courts, labor-saving rules of practice are essential to expeditious judicial work, and their observance must be insisted upon. The present assignments are defective in failing to show that the matters therein attempted to be called to our attention represent the final rulings of the court below, and for that reason they are dismissed. However, we have looked into all the points sought to be raised, and we shall now refer to those whose consideration seems essential to a proper disposition of these appeals.

While the lease made by Kenneth McIntosh, the life tenant, was not executed by his son, Edward, it was participated in by him to such an extent that he should be viewed as a party to it. In McIntosh v. Ropp, 222 Pa. 606, we ruled that the actions of Edward, prior and subsequent to the taking of the lease, were sufficient in law to constitute an estoppel against him. The practical effect of this estoppel, so far as these defendants are concerned, was to put Edward McIntosh in the position of a party to the lease; and when his father died and he became entitled to the full enjoyment of his estate, that circumstance merely served to feed the estoppel and strengthen the right to treat the lease as though executed by him. In addition, we have the express agreement upon the record that “Edward McIntosh, the owner of the undivided one-half of the title in remainder, ratified the lease made by the life-tenant and the lessee was in possession under him as well as under the life-tenant.”

Since the lease was in legal effect a sale (Marshall v. Mellon, 179 Pa. 371, 375; Stoughton’s Appeal, 88 Pa. 198; Blakley v. Marshall, 174 Pa. 425, 429), the case must be looked upon as a development of the land by a tenant in common and a claim by a cotenant for her share of the proceeds. The fact that the actual operations were carried on by third parties under a lease, and not directly by Edward McIntosh, would not serve to make the defendants trespassers, or to cause them to be regarded other than as cotenants: McGowan v. Bailey, 179 Pa. 470, 479. The defendants acted in good faith, with the honest belief that Kenneth McIntosh was the owner and that they were operating under a valid grant; and while we have heretofore held that the plaintiff was not estopped from claiming the value of her share of the oil, we at no time considered or determined what her proper share was, much less that she was in a position to ask that the lease be set aside as a nullity. In every case of this character the measure of damage must depend largely upon the peculiar circumstances, but compensation is the usual rule where there are no facts showing intentional wrong; and as between tenants in common such compensation may be measured by the fair market value of the mineral in place, which may be figured on the basis of the royalty to be obtained for the privilege of removing such mineral, in view of all the circumstances: Forsyth v. Wells, 41 Pa. 291; Lehigh Coal Co. v. Wilkes-Barre & Eastern R. R. Co., 187 Pa. 145, 150; McGowan v. Bailey, 179 Pa. 470; Fulmer’s Appeal, 128 Pa. 24, 39; Mercur v. Railroad Co., 171 Pa. 12.

At the common law, ordinarily an action could not be maintained by a tenant in common against a cotenant in sole possession to recover a share of the profits of the estate: Coleman’s Appeal, 62 Pa. 252, 276; Pico v. Columbet, 12 Cal. 414; but our Act of April 25,1850, P. L. 569, 573, sec. 24, recognizes such a right where minerals are held in common; and it is settled in this state that oil and gas contained in or obtainable through the land are minerals: Stoughton’s Appeal, 88 Pa. 198; Westmoreland N. Gas Co. v. Dewitt, 130 Pa. 235; Gill v. Weston, 110 Pa. 312; Marshall v. Mellon, 179 Pa. 370. In Fulmer’s Appeal, supra, we said as to a tenant in common, “His ownership is such that he cannot take his own share, without also at the same time and by the same act taking the share of the cotenant. But in mining operations there is always more or less expense and risk which must necéssarily be incurred by the person who conducts them. The tenant out of possession incurs none of the risk or expense, when the mining operations are conducted exclusively by the tenant who is in possession. Nevertheless, he is entitled to be compensated for the appropriation by his cotenant in possession for his proportion of the mineral taken by the latter. . . . Where the mineral land has never been developed .... the fair market value of the mineral in place, which would be the value of the privilege of removing it, in view of its special circumstances, would represent the true measure of compensation to the owner. So, too, if the land were fully developed .... and all the expenses incurred which would enable the operator to proceed at once to the taking of the mineral, the value of the mineral in place, ready to be taken, would be enhanced by these considerations, and the price of the privilege of taking it in such circumstances would also represent the measure of the compensation.” The case just cited distinguishes several of the authorities relied upon by the appellant to support her contention as to the proper measure of damage, and we feel that, on reason, the rule there laid down should be adopted in the present case; for, owing to the fugacious nature of oil and gas, and their liability to be diverted by operations upon adjoining and near-by lands, it is peculiarly necessary that cotenants should not be unduly restricted in the enjoyment of such properties.

The case of Williamson v. Jones, 43 W. Va. 562, cited to us by the appellant, largely rests upon statutory provisions. Crawford v. Forest Oil Co., 208 Pa. 5, is readily distinguishable; there the lessee knew that the lessor had but a life estate and “that the plaintiffs did not recognize the lease . .'. . as binding on them after his death;” the defendant purchased with like knowledge, after the death of the life tenant, and entered the land knowing that it was about to deprive the plaintiffs of their rights. There was no evidence as to a proper royalty to be paid; the rule prevailing between tenants in common had no application, and the measure of damage was adopted which best applied to the special facts in that case.

It would serve no good purpose to take up the question of the correctness of the remedies in the various actions instituted by the plaintiffs, and the assignments of error do not require us so to do. While we cannot agree entirely with the line of reasoning pursued by the court below, or with some of its conclusions, we are satisfied that the ultimate result reached in each case was in substance such as the facts involved called for under the law.

All of the appeals are dismissed at the cost of the appellant.