115 So. 563 | Miss. | 1928
Lead Opinion
The appellants filed an answer to the bill of complaint, and in their answer demurred to that portion of the bill which charged that the trustees were without authority to make the contract or lease, assigning as grounds of demurrer, first, that the bill of complaint states no fact showing or tending to show that the board of trustees of the state insane hospital is without authority to make the contract in question; and second, no reasons are given, either of law or fact, for the invalidity of said contract. The answer also averred that, on the date in question:
"The state insane hospital then and there owned the lands described in the bill of complaint, and then and there the trustees of said hospital had the authority to use said property for said institution, and were authorized *441 to make such use thereof as a reasonable and prudent person would make of similar property, taking into consideration the extent, location, and nature of said property, and the needs and requirements of said institution, and that acting in pursuance of their authority the board of trustees of said hospital did on or about the 5th day of December, 1924, enter into a contract with the defendant, Ella Rawls Reader Stokely, then Ella Rawls Reader, whereby and wherein the said Ella Rawls Reader agreed to test and explore, at her own expense, for oil and gas on said property, and to drill, at her own expense, on or before March 5, 1925, for the purpose aforesaid, a well on said property, and in consideration thereof the said hospital, acting by and through its board of trustees, agreed to give the said Ella Rawls Reader seven-eighths of all the oil found or produced or taken from said land, and the said Ella Rawls Reader on her part further agreed to deliver to the credit of said hospital, free of cost, in the pipe line or tank in which she might connect her wells, the equal of one-eighth of all oil produced and saved from said land, and agreed to purchase from said hospital, with certain exceptions not necessary here to set out, all gas found or produced or taken from said property at and for the sum of eight cents per thousand cubic feet, measured at the wells, payments to be made for said gas every three months, all of which will more fully appear by reference to the contract made Exhibit B to the bill of complaint."
The appellees filed a motion to test the legal sufficiency of that part of the answer above quoted, and, upon the hearing of the demurrer and this motion, the demurrer was overruled and the motion was sustained, the answer being adjudged insufficient in point of law and not amendable, and from this decree this appeal was granted to settle the principles of the case.
For an understanding of the question to be decided, the facts necessary to be stated are substantially as follows: *442
During the year, 1924, and for some time prior there to, the state insane hospital owned a large tract of land consisting of more than one thousand three hundred acres, lying immediately north of the corporate limits of the city of Jackson, on which was located the numerous buildings and the equipment of the institution, and on which the various activities of the institution, including stock, truck, and produce farms and poultry yards, are located and carried on. On or about the 5th day of December, 1924, the board of trustees of said hospital passed the following resolution:
"Wherefore it appears that the `state insane hospital' has an opportunity to secure a test for oil and gas in the territory surrounding the hospital, and whereas, proceeding under the privilege and duty to make the best use of said property enjoined upon said trustees, it appears to the board of trustees that it would be to the best interest of the state insane hospital that such a test be made in this territory, and wherefore Ella Rawls Reader offers to make a contract with said board to test the state insane hospital lands for oil and gas for seven-eighths of all the oil found on said lands and the privilege of purchasing all the gas found on said lands, and wherefore it appears to the best interest of the institution to have such a test made:
"Therefore, be it resolved that, in consideration of one dollar and the promise and agreement on behalf of Ella Rawls Reader to test for oil and gas the lands belonging to the `state insane hospital,' the president and secretary of this board be and they are hereby authorized and directed to execute a contract with Ella Rawls Reader, whereunder and whereby she is to test the territory at her own expense and to receive as her compensation seven-eighths of all oil found on said state insane hospital lands.
"It is understood and agreed, however, that in the initial drilling for testing the lands of the institution such *443 locations shall be at points not specially inimical to the interest of the institution as may be decided by the superintendent.
"Said contract to be identical with the one attached hereto.
"By signing of said contract by the president and secretary of this board, the board of trustees approves said contract.
"This contract is expressly made assignable in whole and in part."
The instrument executed in pursuance of the foregoing resolution provided that, in consideration of Ella Rawls Reader agreeing to test for oil and gas at her own expense, and the consideration of her agreeing to drill for oil on some part of the state insane hospital lands at her own expense, the trustees of said hospital agreed to give to her seven-eighths of all the oil found or produced or taken from the lands of said hospital, the lands being therein specifically described.
In consideration of her employment to develop the said lands for oil and gas, the said Ella Rawls Reader agreed to deliver to the credit of the trustees, in the pipe lines or tanks to which she might connect her oil wells, the equal of one-eighth part of all oil produced and saved from said lands. It was further provided that all gas found or taken from the property was to belong to the trustees, but Mrs. Reader was given the right to purchase all or any part of it (with certain immaterial exceptions) at eight cents per thousand cubic feet, measured at the well. It was further provided that no well should be located within certain limited territory or nearer than two hundred feet to any dwelling house or barn on said premises without the written consent of the trustees, and the said Ella Rawls Reader and her assigns were granted the exclusive privilege of entering all of said lands for the purpose of drilling for oil or gas and conducting and operating all business in connection therewith. *444
The action of the court below upon the pleadings presents for decision the question of whether or not the board of trustees of the said hospital, who are charged with the control and management of the institution and its property, was authorized to execute the instrument which it is now sought to cancel.
The state insane hospital was established by chapter 66, Laws of 1848, which appears in Hutchinson's Code, at page 306, section 6, and it was there provided that:
"As soon as the buildings of said asylum shall be ready to receive patients, the Governor shall appoint five directors of said asylum, who shall have full power to make and ordain all such by-laws, rules, and regulations not inconsistent with the Constitution of the state or this act, which they may deem necessary and proper for the good government and management of said asylum; and said directors shall appoint a medical superintendent, and employ a steward and matron, and all such nurses as they may think necessary; and shall make a full and detailed report of all the affairs of said institution to each session of the legislature; and shall hold their offices for two years, and until their successors are appointed and qualified."
The institution was continued by chapter 12 of the Revised Code of 1857, which provided for a board of trustees who "shall manage and direct the concerns of the institution, and make all necessary by-laws and regulations, not inconsistent with the Constitution of the state or of this act, and shall have power to receive, hold, dispose of, and convey all real and personal property conveyed to them, by gift, devise or otherwise, for the use of said institution," and who "shall have charge of the general interests of the institution." Articles 1 and 2.
Section 2073 of the Code of 1871 provided that:
"The Mississippi State Lunatic Asylum, heretofore established, shall continue to exist as a body politic and *445 corporate, by that name and style, with all the rights, powers and privileges incident to such a body, and necessary and proper to accomplish the end of its organization, and may receive, hold and dispose of, all real and personal property, conveyed to it."
While section 2079 of that Code provided that:
"The trustees shall manage and direct the affairs of the asylum, and make all necessary by-laws and regulations for the control and government of said institution, not inconsistent with the Constitution and laws of this state."
Under the provisions of chapter 13, Code of 1880, the institution and its board of trustees were continued in substantially the same terms and with the same powers as were fixed and conferred by the Code of 1871.
Section 2807, Code of 1892, reads as follows:
"The lunatic asylum heretofore established at Jackson, with the annex for colored patients authorized by the Act of February 24, 1890, shall continue to exist as a body politic and corporate, under the name of the `State Lunatic Asylum,' with all the privileges conferred and duties enjoined on it by law; and it may receive and hold and use, as required by law, all the property, real and personal, belonging, or which may be given, to it for the purposes of its establishment."
Section 2812 of the Code of 1892 provides that:
"The board of trustees shall have charge of the interests of the asylum, and shall manage and direct its affairs and make all proper by-laws and regulations for its control and government not contrary to law."
Chapter 92 of the Code of 1906, and chapter 134, Hemingway's Code 1927, continue the institution and its board of trustees upon the same terms and with the same powers, in so far as they are here material, as were fixed or conferred by the Code of 1892.
From an examination of these statutes it will be noted that prior to the adoption of the Code of 1892, the institution, *446 through its board of trustees, had the authority to dispose of the real and personal property belonging to it, but since the adoption of that Code there has been no express provision for the trustees to sell or dispose of any of the property of the institution.
The question as to whether or not, under the powers and the authority conferred on the board of trustees "to have charge of the interests of the asylum, and manage and direct its affairs," the board of trustees, taking into consideration the extent, location, and nature of the property, and the needs, requirements, and best interest of the institution, had the implied power and authority to make and execute the instrument in question will be determined by a consideration of the legal effect of the instrument and the nature and character of the estate conveyed thereby.
In consideration of the grantee agreeing to explore, test, and develop the said lands for oil and gas, the instrument in question granted to her, and her assigns, the exclusive right to enter and possess the land itself, with no limitation upon the number of wells the grantee might sink, or the extent of her operations in that connection, and consequently no qualification of her right of possession of all such parts of the surface of the land as might be necessary to its full use by the grantee for the purposes named, except that no well should be drilled on the territory between the administration building and the building adjacent thereto and the homes of the employees of the institution, or nearer than two hundred feet to any dwelling house or barn on said premises without the consent of the trustees. Under this instrument the title to seven-eighths of the oil in the land is vested in the grantee, while she is given the exclusive right to purchase all gas produced therefrom at a fixed and unchangeable price. Under the provisions of the instrument the rights conferred thereby continue so long as oil or gas, or either of them, is produced on said land, *447 provided drilling was commenced by a fixed date. Under this provision, the termination of the grant is wholly uncertain, and the rights granted may endure forever.
From a practical standpoint, the rights of the grantee under an instrument which conveyed the oil and gas under the land and granted the exclusive right to conduct operations to produce and dispose of the same, or under an instrument which leased, demised, and let the land for the same purpose, would be no other, different, or greater than the rights of the grantee in the instrument here involved, and we are of the opinion that this instrument is, in legal effect, a lease of the land and a conveyance of an interest therein. It follows from the views herein expressed that, in the absence of legislative authority so to do, the board of trustees was without the power and authority to make the contract in question.
For an able and elaborate discussion of an analogous question, and a collation of the authorities which support the view herein expressed, see the case of Stephens County v. Mid-Kansas Oil Gas Co.,
The decree of the court below will therefore be affirmed.
Affirmed.
Dissenting Opinion
I think the construction placed upon the powers of the trustees of the insane hospital is too narrow and restrictive, and that it would be better to hold that the board of trustees had the power to execute the contract here involved.
Section 5768, Hemingway's Code 1927 (section 3187, Code of 1906), provides that the state insane hospital heretofore established shall continue to exist as a body politic and corporate, with all the privileges conferred and duties enjoined on it by laws; and it may "receive *448 and hold and use, as required by law, all property, real and personal, belonging or which may be given to it for the purposes of its establishment." Section 5771, Hemingway's Code 1927 (section 3190, Code of 1906), as amended by the Laws of 1908, chapter 183, creates a board of trustees and provides that the control and management of the insane hospital shall be vested in such board. Section 5773, Hemingway's Code 1927 (section 3192, Code of 1906), provides that the trustees shall have charge of the hospital, and shall manage and direct its affairs and make all proper by-laws and regulations for its control and government not contrary to law.
The word "use" in the first section above named is a word of comprehensive signification, and, in my opinion, warrants the contract here involved. This word is defined in 39 Cyc. 845, as follows:
"Usefulness, utility, advantage, productive of benefit; the act of employing anything or applying it to one's service, application, employment, conversion to some purpose; the act of being so employed or applied; application, employment, conversion to some purpose, the act of using, employment, as of means of material for a purpose; application to an end, particularly a good or useful end; a synonym of benefit."
In the note to this volume cases are cited furnishing examples of the meaning of the word "use," and at the top of note on page 846 it is said:
"It is the ancient definition for every form of beneficial or equitable ownership. There is no more all-embracing term for any estate which is less than legal" (citing Matter of Scharmann, 63 Misc. Rep. 640, 118 N.Y.S. 687). "In its general and popular acceptation, the term refers to a temporary occupancy of land, rather than to an estate in it, coupled with the power of alienation. Fay v. Fay, 1 Cush. (Mass.), 93, 104."
The word "use" also has been defined in 29 Am. and Eng. Encyc. of Law, p. 439, as follows: *449
"To use is to make use of, to convert to one's service; to avail one's self of; to employ; to put to a purpose, as to use a plow, to use a chair, to use a book, to use time, to use flour for food; to accustom to and habituate. One of common meanings of the noun `use' is usefulness, utility, advantage, productive of benefit. In the notes will be found a number of phrases in which the word `use' or some of its derivatives which have been constructed by the courts."
At the top of page 444 of this last-named book, under "Gifts, Bequests, and Conveyances of Use of Property," I find the following:
"As a general rule the use of a thing does not mean the thing itself, but means that the user is to enjoy, hold, occupy, or have in some manner the benefit thereof. If the thing to be used is in the form of real estate, the use thereof is its occupancy or cultivation, etc., or the rent which can be obtained for its use. If it is money or its equivalent, generally speaking, it is the interest which it will earn. A wider signification, however, is sometimes given to the word,"
— and this book then states the nature of such enjoyment of property by the tenant for life.
It must be remembered that the insane hospital owns land in fee simple, and the evident purpose of the legislature was to permit authority to use this land in any legitimate way for the benefit of the hospital, and the legislature evidently only meant to restrict the alienation of the corpus of the soil itself. The word "use" therefore should be given its most liberal signification to render the land of the highest practical utilization to the institution.
The contract itself provides every reasonable safeguard to protect the state or the institution in the carrying out of the contract, and the terms therein imposed, or contracted for by the parties, are as liberal to the institution as is customary in such leases, as will appear *450
from a statement in one of the cases collected on this proposition. The majority opinion relies upon the case ofStephens County et al. v. Mid-Kansas Oil Gas Co.,
Beginning on page 586 of 29 A.L.R., there is a case note by the editor in which are cited cases belonging to the majority rule upon the subject. However, there is a minority rule on page 589 in which are cited cases decided by the United States Supreme Court which hold differently, and which recognize a distinction between oil and gas, and other minerals such as coal, iron, etc.; and there are several cases which take the view that:
"Oil and gas are somewhat in the nature of animals feraenaturae or of waters percolating through the earth, and are of vagrant nature and liable to escape, and therefore that while in place they are not the subject of an absolute, but only of qualified, ownership until reduced to possession, and that there can be no transfer of title to them before they have been so reduced." Brown v. Spilman,
The reasoning of the Supreme Court of the United States upon this proposition in the several cases cited is very convincing, and seems to me to be, by far, the most reasonable view to take. I never feel lonesome, and seldom doubtful, when in company with the Supreme Court of the United States. Its Judges are usually of the most profound learning, and they are diligent in the examination and consideration of their cases. At page 247 of 15 S.Ct. of Brown v. Spilman (
"The subject of the grant was not the land, certainly not the surface. All of that except the portions actually necessary for operating purposes and the easement of ingress and egress was expressly reserved to Taylor. The real subject of the grant was the gas and oil contained in or obtainable through the land, or rather the right to take possession of the gas and oil by mining and boring for the same. Petroleum gas and oil as substances of a peculiar character, and decisions in ordinary cases of mining, for coal and other minerals which have a fixed situs, cannot be applied to contracts concerning them without some qualifications. They belong to the owner of the land, and are part of it, so long as they are on it or in it or subject to his control; but when they escape and go into other land, or come under another's control, the title of the former owner is gone. If an adjoining owner drills his own land, and taps a deposit of oil and gas, extending under his neighbor's field, so that it comes into his well, it becomes his property. Brown v. Vandergrift,
In Ohio Oil Co. v. Indiana,
"The confusion of thought which permeates the entire argument is twofold: First, an entire misconception of the nature of the right of the surface owner to the gas and oil as they are contained in their natural reservoir, and this gives rise to a misconception as to the scope of the legislative authority to regulate the appropriation and use thereof. Second, a confounding, by treating as identical, things which are essentially separate; that is, the right of the owner of land to bore into the bosom of the earth, and thereby seek to reduce the gas and oil to possession, and his ownership after the result of the borings has reached fruition to the extent of oil and gas by himself actually extracted and appropriated. In other words, the fallacy arises from considering that the means which the owner of the land has a right to use to obtain a result is in legal effect the same as the result which may be reached. . . . Does the peculiar character of the substances, oil and gas, which are here involved, the manner in which they are held in their natural reservoirs, the method by which and the time when they may *453
be reduced to actual possession or become the property of a particular person, cause them to be exceptions to the general principles applicable to other mineral deposits, and hence subject them to different rules? True it is that oil and gas, like other minerals, are situated beneath the surface of the earth, but except for this one point of similarity, in many other respects they greatly differ. They have no fixed situs under a particular portion of the earth's surface within the area where they obtain. They have the power, as it were, of self-transmission. No one owner of the surface of the earth, within the area beneath which the gas and oil move, can exercise his right to extract from the common reservoir, in which the supply is held, without, to an extent, diminishing the source of supply as to which all other owners of the surface must exercise their rights. The waste by the owner, caused by a reckless enjoyment of his right of striking the reservoir, at once, therefore, operates upon the other surface owners. Besides, whilst oil and gas are different in character, they are yet one, because they are unitedly held in the place of deposit. InBrown v. Spilman,
In the light of the above cases, the court has further discussed the question, but I will not take up space to set the language out in this opinion.
It is manifest, however, that wise husbandry of the state's property would require those in charge to act promptly, and secure such oil as might be found, before others occupying adjoining lands could tap the reservoir and withdraw from the earth the entire deposit of oil or gas, leaving the state with nothing.
At the time the contract here involved was made, there was much activity in buying leases in this territory, and great hopes were indulged that some well might be dug that would produce a gusher. There is still, in parts of *454 the state, experimental drilling for gas and oil, and great hopes are entertained that this will be successful and oil may be struck. Should deposits be found near the state's property, or property belonging to the different institutions of the state, where no specific provision has been made to authorize contracts like those here involved, it will be possible for adjoining owners to extract all the oil or gas from the reservoir before the state could act, as it would be necessary to assemble the legislature and get specific authority at each institution to make contracts or to develop lands themselves. The risks involved in experimental development are great, and it is not likely that the state will enter that field. The contract in the present case is highly beneficial to the state, and is as liberal as any of those in the various decisions which have set out the contracts involved in them. Where the state owns land in fee, and no other person's rights are involved, liberal construction should be placed upon the power of the managing officers of these institutions, to utilize the land for any particular advantage.
It seems to me that the principle involved in the sixteenth section cases ought to be applicable in the present case.
In section 211 of the state Constitution 1890, preserving to the people the sixteenth sections for school purposes, sale of the lands was expressly prohibited, and, of course, the legislature could take no action prohibited by this section, but it was held in Dantzler Lumber Co. v. State,
If we could uphold the contract, that might be the means of bringing to the state great wealth, and still do no great, material harm, as all the risk and expense incident to the boring for oil were contracted to be borne by the appellant. It is hoped that the legislature will enact laws permitting proper contracts to meet the situation.
