4 So. 2d 270 | Miss. | 1941
Lead Opinion
The questions presented for determination in this case are of very vital importance to the educable school children of every township in Mississippi wherein there is located a sixteenth section of land susceptible of development for the production of oil and gas in commercial quantities, since these minerals are now owned by the state in its sovereign and governmental capacity as trustee for the inhabitants of the townships under an obligation to utilize them for the support of the schools. The decision now reached by the court on the issues here involved *793 is also one which undertakes to adjudicate the rights of all holders of ninety-nine-year leases on such lands, herein denominated as agricultural or surface leases, as opposed to the rights claimed by the oil and gas companies under leases executed by various boards of supervisors, with the approval of the governor and attorney general, under the authority of Sections 6762 and 6763, Code of 1930, Chapter 318, Laws of 1926, by which such oil and gas lessees of the state are fully empowered to go upon these lands for the purpose of exploring for, drilling and removing any oil and gas to be found beneath the surface thereof, and in which leases a one-eighth royalty therein is reserved for the support of the schools of the respective townships.
It will therefore be readily seen that if numerous oil and gas fields should be discovered throughout the state equal to or greater in production than the "Tinsley Field" near which the particular sixteenth section now in controversy is alleged to be located, the far reaching effect of this decision cannot be estimated or foreseen.
Herein there is challenged the right of the state as trustee, suing by its attorney-general on behalf of the school children of the township as beneficiaries of the trust under which the state holds the title of these lands, and particularly Section 16, Township 11 North, Range 5 East, in Madison County, and also the right of the Stanolind Oil Gas Company, appellees, (1) to have the title of the state and the rights of said lessee confirmed and quieted to the minerals under the surface thereof; (2) to determine and adjudicate the right of the oil and gas company to enter upon the land for the purpose of exploring for, drilling and removing the oil and gas therefrom in accordance with the terms of the lease now held by it; (3) to cancel as clouds upon the title of said minerals certain easement contracts and the oil and gas leases executed in favor of third persons by the agricultural or surface lessees; and (4) to enjoin the defendants named in the bill of complaint from interfering with the rights *794 of the complainants in the premises, so as to enable the state, as such trustee to obtain realization of the value of its one-eighth royalty and the oil and gas lessee to enjoy the rights vouchsafed to it, by the lease in question, and to thereby prevent this great store of wealth from being wasted or dissipated to the detriment of the school children of the township by means of wells on adjacent lands, upon the offer of the complainants to do equity by paying all such damages as may be inflicted upon the surface rights of the defendants by reason of the proposed operation, to be conducted in the usual and customary manner, the complainants disavowing any purpose to cause any irreparable injury by reason thereof.
It is alleged in the bill of complaint that each of the defendants are claiming the right to prevent the complainants from going upon that portion of the land, for the purposes aforesaid, on which each of those in possession own an agricultural or surface lease, executed under the Act of February 27, 1833, running for ninety-nine years from September 1847, and that they are claiming the right to prior compensation for any damages that may be sustained to their surface rights as a condition precedent to the right of the state to have said minerals developed as a source of revenue for the support of the cause of education in keeping with the trust under which the state now holds title to the same; that the defendants have no title or interest by virtue of their ninety-nine year leases or otherwise, either in the minerals or the royalties to be derived from the development thereof, and that if they are permitted to successfully assert such title or interest by means of the contracts whereby they have attempted to grant the exclusive right of ingress and egress to third persons and to lease the oil and gas rights for a one-eighth royalty reserved to themselves, their action in that behalf will serve to cast a doubt, cloud and suspicion upon the true title; that unless said easement contracts and leases are cancelled and the defendants enjoined from interfering with the right of the state and *795 its oil and gas lessee to enter upon the land and develop the same as prayed for, the reservoirs of oil and gas which have been stored up under the surface through the ages by the forces of nature will, because of the fugacious nature of such products, be drained by wells on adjacent lands and forever lost to the schools, so as to constitute waste as effectually as if removed by the defendants themselves, and in violation of the obligation of the surface lessees to return the land at the end of the term unimpaired by any permanent injury to the freehold; and that the defendants cannot, in view of their financial condition, be made to respond in damages adequate to compensate for the loss to be sustained by reason of the complainants being prevented from drilling for and removing these minerals pending the adjudication of such claims and demands that may be made by the defendants while wells are being drilled on adjacent lands.
It should be conceded at the outset of the discussion of the relative rights of the parties to this litigation that the holders of these agricultural or surface leases are entitled to be adequately compensated for any damages that may be sustained to their surface rights in the course of the exploration or development of the land for oil and gas; that for obvious reasons the extent of such damages cannot be properly ascertained and determined in advance of, and as a condition precedent to, the right of entry upon the premises, assuming, as we should, that the state is entitled to remove the minerals in question; that such damages are wholly uncertain and indefinite in amount, and will remain so until the extent of the exploration and development shall have been determined, and until which time their ascertainment, with such reasonable degree of certainty as would be fair and equitable to all parties concerned, is impossible, for the reason that in some instances the exploration for oil and gas would be limited from the very nature of the case to mere prospecting by geophysical and other methods short of drilling more than a few "dry-holes" in the woods, entailing only *796
slight damage to the possession and occupancy of the surface lessee, whereas, in other instances, if production of these minerals in commercial quantities is to be had, the number of wells, derricks, pipe-lines, storage tanks, rights-of-way, etc., may represent a development conducted on a scale so extensive as to greatly handicap, if not precluded, the use of any appreciable area of the land for agricultural purposes; and that the same rule of law announced in the case at bar is of course, to govern the rights of the state and its oil and gas lessees as related to those of the surface lessees on every sixteenth section in the state, comprising approximately one thirty-sixth of its entire area. It should also be conceded in this connection that in either instance the surface lessee may be remitted to his action at law for damages at such time as the amount thereof can be ascertained with such reasonable certainty as to fairly compensate him; that this court has already declared in the case of Moss v. Jourdan,
It should also be observed that this cause was heard by the court below only on the bill of complaint and the demurrers, and that this appeal is as granted upon the overruling of the demurrers, and to settle the controlling principles of the case; that no damages are claimed to have yet been sustained to the surface rights of the defendants, and they cannot be required to propound their *797 claim by means of a cross-bill for any damage that may be hereafter sustained unless they elect to do so before final decree; that they may be remitted to their action at law on that issue, after all of the equities existing in favor of the complainants are disposed of and the rights vouchsafed to them by a decree, sustaining the prayer of the bill, shall have been exercised; that the only issues before the chancellor when the interlocutory decree here appealed from was rendered were: (1) whether on the face of the bill of complaint the title of the state and its oil and gas lessee to the minerals involved should be confirmed and quieted; (2) whether the oil and gas contracts and leases executed by the surface lessees should be cancelled as clouds upon the title of the complainants; and (3) whether the defendants should be enjoined from preventing an entry upon the land under the authority conferred upon the complainants by Sections 6762 and 6763, Code of 1930, and by the lease executed in pursuance thereof as now held by the state's oil and gas lessee; that no entry upon the land is contemplated until the court shall have first determined upon a final hearing the issues above stated in favor of complainants, as the full measure of relief to which they were entitled at the time of the institution of this suit; and, it should be further observed that upon an affirmance of the decree now appealed from this court is vested with full authority to remand the cause to be finally disposed of as to the equities involved, and with the suggestion, if such should be considered requisite, that instead of the defendants being required to prematurely, or otherwise, assert their claims for damages by means of a cross-bill in the present suit they may be remitted to their action at law in that behalf, and especially in view of the fact that their damages will not have accrued until after the pleadings are settled in the instant case.
With these preliminary observations, which the writer thinks will be helpful, and which are to some extent necessary, to a clear understanding of the questions now confronting *798
the court when viewed in the light of what was said in the controlling opinion in the case of Gulf Refining Company v. Terry,
That the state acquired the title of these lands upon its creation out of a part of the territory ceded to the United States by the State of Georgia, as trustee for the inhabitants of the township, and for the support of the schools therein, was forever settled by the decision of this Court in the case of Jones v. Madison County,
That the state did not part with the title of any oil and gas when the ninety-nine year leases in question were executed, was likewise settled by the principle announced in the case of Moss Point Lumber Company v. Harrison County,
In that case it was expressly said that "in no instance, however long may be the lease, can any right in the fee pass by a mere lease"; that "there is no authority given in the statute to do anything but lease this land"; that "no person reading this statute could possibly be misled into the supposition that he was getting a fee, when the statute said that it should be a lease, and when the conveyance made by the trustees only purported to be a lease"; that "a lease has an accurate, definite, certain legal meaning, and by this legal meaning the rights of the lessees under this statute must be measured"; and then to put the whole matter at rest the court further said that: "We state that the usual purposes for which lands are leased are agricultural purposes, and, unless the contrary be stipulated in the lease, the lease of the land carries with it only such rights as go with ordinary leases."
Moreover, every grant by the sovereign is construed most strongly against the grantee. Oil and gas, though remaining in place, is susceptible of distinct and separate ownership from the title of the land. Whatever is not unequivocally granted is deemed to be withheld in grants from the government, especially in conveyances of an estate less than the absolute fee, under the rule that nothing passes in such case but what is conveyed in clear and explicit language, inferences being resolved not against but for the government. 1 McAdam on Landlord and Tenant, Ambert, (5 Ed.), sec. 118; 5 Thompson on Real Property, Sec. 2861; Pearl Oyster Co. v. Heuston, *800
Furthermore, the previous decisions of this court, holding that the title of the timber on these sixteenth sections of land did not pass to the ninety-nine year lessee (although not reserved by the terms of the lease) should be sufficient authority to sustain the view that the state still owns the minerals to be found beneath the surface. Warren County v. Gans,
Again, the rights of a tenant under a lease for a term of one or more years can be no greater than those vested in a tenant for life. It is settled beyond controversy with reference to coal mines that a life tenant has no interest in or right to open and work new mines not in operation at the time he becomes vested with the estate. To do so *801
amounts to the commission of waste, as a lasting injury to the inheritance, and equity will enjoin him from its commission. Bond v. Godsey,
In dealing with the right of the state to make an entry, it should be said that since the school trustees of the township did not convey the minerals when only leasing the land in 1847, the law will regard them as having been reserved. If reserved, then under the rule announced in Moss v. Jourdan,
In the case of Gulf Refining Co. v. Terry,
But assuming that a private individual, firm or corporation, as absolute owner in fee of a tract of land, may by his implied covenant with the lessee thereof for quiet enjoyment be precluded from making an entry such as *803 would disturb the occupancy and possession of the lessee, because of the right and power held by such private owner in fee to either expressly or impliedly waive the privilege of entering upon the land during the life of the lease so as to interfere with the exclusive occupancy of the lessee, it would not follow that the school trustees of a township could preclude the state from the future exercise of its sovereign right to go upon this trust property for the purpose of conserving these natural resources in the interest of the public welfare, merely because of the failure to expressly reserve such right under the agricultural leases in question.
An attribute of sovereignty, such as the police power of the state, is not the subject of a waiver, barter, forfeiture or sale. It can neither be contracted away, nor nullified by legislation. It needs no constitutional sanction for its valid exercise; it is a power inherent in the existence of a government. Since the school trustees of the township were without power to waive the right of the state to go upon these lands in the future and utilize any source of revenue that may be derived from them not disposed of by these agricultural or surface leases, it was not essential that such right be expressly reserved therein, since there is necessarily reserved that which the grantor is without power to convey or contract away.
The application of the rule in the case at bar as announced in the case of Gulf Refining Co. v. Terry, supra, to the effect that a lessor may not later go upon the leased premises to remove minerals during the life of a lease unless the right to do so is reserved in the contract, is to disregard entirely the question of the state's sovereignty, and its right to exercise its said powers in a governmental capacity as distinguished from the discharge of corporate functions, a consideration to which the court did not address its attention in the Terry case, wherein the state was not a party to the litigation, and where no relief was sought for the stated purpose of enabling it to utilize in the interest of the public welfare the minerals sought to *804 be explored for in that case. Nor was the court there concerned with any issue raised by the pleadings involving the right of the state, as one of the contracting parties in a ninety-nine year agricultural lease, to prevent the other party thereto, or his assigns, from committing waste, defined in Moss Point Lumber Company v. Harrison County, supra, as "any substantial injury done to the inheritance," in violation of the covenant not to do so which is either expressed or implied in every lease contract; it being alleged in the instant case that the commission of such waste is being attempted through the expedient of keeping the state and its oil and gas lessee off the land until the reservoir of minerals shall have been withdrawn by wells on adjacent lands, and by the efforts of the agricultural lessees to convey to third persons the exclusive right of ingress and egress in order that they may produce and remove the oil and gas, owned by the state in trust for public purposes.
No decision concludes a point which is neither involved under the scope of the pleadings nor considered by the court. Lusk v. Seal,
That the state cannot abdicate its duty as trustee of property in which the whole people are interested, any more than it can surrender its police powers in the administration of government and in the preservation of peace and order, is fully sustained by the following authorities: Illinois Central R. Co. v. Illinois,
The issues involved in those cases and the holding of the court in each instance, are as follows:
In Illinois Central R. Co. v. Illinois,
In Darling v. City of New Port News,
In St. Anthony Falls Water-Power Co. v. Board of Water Commissioners of the City of St. Paul,
In Chicago, Burlington Quincy Railroad Company v. State of Nebraska,
In Newton v. Mahoning County,
The third question raised by the appellants is whether Sections 6762 and 6763, Code of 1930, under which appellees assert their right to go upon the land and drill for oil and gas, are unconstitutional, in that they authorize (1) a sale of these minerals in situ, as a part of the realty, and (2) that the lease may under its terms remain in force so long as oil and gas are produced on the land, and therefore perhaps for longer than twenty-five years, all in violation of Section 211 of the State Constitution which prohibits either a sale of any part of the sixteenth section lands, or a lease thereof for a period of more than twenty-five years.
Answering the first of these objections, it was held in the case of Dantzler Lumber Co. v. State,
The second objection is obviated by Section 2118, Code of 1930, providing that conveyances purporting to convey or pass a greater estate than the grantor may lawfully convey or pass, shall operate to pass such a right or estate as the grantor may lawfully convey. At most the lessee could only be prevented from asserting rights under such a lease after the expiration of the constitutional limitation of twenty-five years.
Finally, it may be said that since it is true under the decision of Moss v. Jourdan, hereinbefore cited, the owner of the surface may not enjoin the owners of the minerals from going on the land to remove the same, he would not be entitled to prevent them from doing so by force; and hence, the owners of the minerals would be entitled to injunctive relief to prevent any threatened interference with their rights in that behalf under the facts alleged in the present case.
The decision of the court below holding that the bill of complainant states a good cause of action for: (1) confirming the title of the complainants in the oil and gas upon said lands, (2) cancelling the oil and gas easement *810 contracts and leases executed by the ninety-nine year agricultural or surface lessees, and (3) awarding the injunctive relief prayed for, should be affirmed. That court is vested with plenary power on a final hearing under the complainants' offer to do equity, and as a condition precedent to keeping the injunction in force, to make secure the rights of agricultural lessees and afford them an adequate remedy in equity, or at law if desired, to collect such damages as may be later sustained to their surface rights, and all in keeping with the spirit of said Sections 6762 and 6763 of the Code of 1930, authorizing the exploration and development of these lands for oil and gas upon such terms and conditions as may be deemed proper or advisable. The rules of evidence for the assessment of damages to property rights in this state are already well established, and the law-making power has had more than nine years since the decision in the Terry case to enact the additional legislation therein suggested, and no further action has been taken, either because of apathy and complacency or due to the belief that it was unnecessary in order to enable the state to exercise its attributes of sovereignty in the interest of the public good, a right which was not being asserted by the state in the case then before the court. At any rate, it would be contrary to every rule of reason to require that prior compensation be made to the surface lessees of their damages, as a condition precedent to the state's right to enter upon these lands to explore for, drill and remove these minerals, where it is known that the measure of such compensation cannot be ascertained until after the extent of such exploration and drilling operations shall have been determined, following such an entry. To require that whatever demands are made by the surface lessees shall be paid in advance, whether fair or exorbitant, or that they be first litigated through the courts, would be to defeat realization by the state of the value of its royalties in these minerals while they are being withdrawn by wells on the adjacent lands, and would be to deny the potency *811 of its governmental power to protect the interest of the beneficiaries of the trust involved, whose rights should be held paramount.
It has always been true at least in both England and America, and justly so, that the citizen is proud of, and has been zealous to defend, his legal rights, but often there come times when he must exercise even the higher duty and privilege of yielding his own conceptions of what his rights are under the law to the promotion of the ends of government and the demands of progress.
We do not mean to say that it would be a reasonable exercise of the sovereign power of the state, when seeking to utilize these minerals for the benefit of the township schools, that entries be made upon these lands, through its oil and gas lessees, in such manner as to interfere with any farming or other use to which the agricultural lessees are entitled to devote them, unless such sixteenth section is located within such proximity to some producing well on other lands as will afford reasonable ground to justify the belief that an exploration and drilling thereon would result in the discovery of such minerals in sufficient quantities to be of real benefit to the school children of the township, since the promotion of the public welfare in the utilization of the minerals for the good of the schools, and not the purely speculative results that might perhaps accrue, through what is termed in oil industry parlance as "wildcatting," is the sole object to be attained by the permitted interference with the occupancy and possession of the agricultural lessees. The bill of complaint now before us alleges facts justifying the right to explore and drill for oil and gas on the land in question, since there is some reasonable relation between that sought to be done and the governmental purpose to be served, and we confine the decision to the issues involved in the instant case.
To whatever extent the case of Gulf Refining Company v. Terry, hereinbefore discussed, may be deemed to be in conflict with the decision herein, we are of the opinion that it should be, and the same is, hereby overruled, for *812 the reason that if adhered to as controlling here, the result would be to deprive the township schools of any revenue to be derived from the development of the minerals underneath these sixteenth sections of land during the unexpired term of the ninety-nine year leases on the alleged ground that to allow the state to go upon the land would be to impair the contract rights of such lessees, and which impairment the legislature would be powerless to authorize by the additional legislation suggested in the Terry case; and because we are also of the opinion that the decision should not be followed for other reasons hereinbefore set forth.
Even though the state had the right to sell these lands in fee simple prior to the adoption of the Constitution of 1890, it did not do so; consequently it still owns both the land and the minerals, and its right to go upon the land and take the minerals should be sustained and enforced.
The decision of the court below in overruling the demurrers to the bill of complaint will therefore be affirmed, and the cause remanded.
Affirmed and remanded.
Dissenting Opinion
The state's title to the sixteenth sections in the several townships rests upon a grant thereof from the Federal Government made pursuant to its agreement with the State of Georgia when the land in which the sections are situated was ceded to it by that state. Heretofore, under the decisions of this Court and of the U.S. Supreme Court, this grant vested in the state the absolute power to lease or sell any portion of the land, and if leased the rights of the state and the lessee therein were governed by the terms of the lease and the general law of landlord and tenant. The only obligation assumed by the state in accepting the grant was to devote it, or the revenue derived therefrom, or the proceeds of a sale thereof, to "the support of schools within the" township, and under leases of the character here under consideration, the lessees have "the right to the exclusive possession and occupancy of every part of the land," and the state, the lessor, is without the right to enter thereon except when, under the law of landlord and tenant, it has the right so to do in order to prevent the commission of waste. Gulf Refining Company v. Terry, supra, is but one of many decisions of this court so holding, and not only that case but the many others holding that these leases conveyed to the lessees the right to the exclusive possession of the land have by the decision just rendered been overruled. The two opinions in the Terry case discussed every question that was then though to have any bearing thereon, but it now appears that the Judges in that case, and in many other prior cases, were mistaken in supposing that the relationship between the state and its lessees under these *814 leases was merely that of landlord and tenant for, as it now appears, the state acquired and deals with the land in its sovereign capacity under its police power, which power cannot be contracted away, in whole or in part, and therefore if the state should be held under these leases to have contracted away its right to enter a sixteenth section and remove minerals therefrom, that contract is not binding on it. If this is correct, the lessees of sixteenth section land have no rights therein except such as the state chooses to recognize, and in effect are but tenants thereof at the will of the state, for the holding cannot be limited to the right of the state to remove oil and gas from sixteenth section land which it has leased but applies to all of the relations created by the lease between the state and its lessee.
The history of this court's dealing with the rights of the state and its lessees under these ninety-nine year leases of sixteenth section land is quite interesting. Until the decision in Warren County v. Gans,
Griffith, J., concurs in the foregoing opinion.