Wettengel v. Gormley, Appeals, Nos. 185 and 186

Appeals, Nos. 185 and 186 | Pa. | Jan 3, 1898

Opinion by

Mr. Justice Williams,

These cases depend upon the same question. The parties were before us on tliat question in 1893, and the ease is reported in 160 Pa. 559" court="Pa." date_filed="1894-04-02" href="https://app.midpage.ai/document/wettengel-v-gormley-6242137?utm_source=webapp" opinion_id="6242137">160 Pa. 559. It is frankly conceded by counsel for defendants that if the rule laid down in that case is to be adhered to it rules these. In deference to the decided views of the learned judge of the court below, and the earnest request of counsel, we have listened to what is substantially a rearguinent of Wettengel v. Gormley, 160 Pa. 559" court="Pa." date_filed="1894-04-02" href="https://app.midpage.ai/document/wettengel-v-gormley-6242137?utm_source=webapp" opinion_id="6242137">160 Pa. 559, and have undertaken to reexamine the reasons on which our decision in that case rests. The facts upon which the controversy arises are in no doubt, but need to be stated in order tbat the precise point in question may be seen. In July, 1888, James Gormley was the owner of three contiguous farms, containing together nearly six hundred acres of land. He made an oil and gas lease of the six hundred acres as a single body to Tomlinson, for the term of fifteen years, reserving a royalty of one eighth part of the oil produced. This lease gave Tomlinson the exclusive right to bore and operate for oil upon the entire six hundred acres during the term of fifteen years, and hound him to conduct operations under the lease in such manner as to interfere as little as possible with operations by tlie lessor and his tenants in the cultivation of the surface. It closed with a stipulation providing that “ all conditions between tlie parties liereto shall extend to their heirs, executors or assigns.” The legal operation of tliis lease, as between the lessor and tbe lessee, “ tlieir heirs, executors or assigns,” was to sever the leasehold from the freehold estate. Thereafter the exclusive right of access to the oil bearing stratum was in the lessee, whose duty it was to develop and operate the leasehold estate for oil and gas. The exclusive right to cultivate the surface, subject to the easement created upon and over it in aid of the operations of the lessee, was in the lessor and his tenants. A sale of the freehold to any person having notice, actual or constructive, of the lease would have been subject to its provisions, and would in no way have impaired the rights or interest of the lessee. The purchaser would have taken just the estate his vendor was competent to convey, and he would have held it subject to the terms of the lease in every particular. The estates were separate, independent, and in independent hands. The one was personal, an estate for years. The other was real, a fee simple. The right to receive or demand the rent was a chose in action that would fall, under our intestate laws, to the personal representar tive of a decedent. The heir could not disturb or interfere in any manner with the production of oil or gas pending the settlement of the estate of the testator, or with the collection of the royalties. But Gormley made a will, by the terms of which he severed the six hundred acres into three tracts or farms, and devised one of these to each of his three children. They took the title precisely as the testator held it, subject to all the provisions of the lease. As between themselves, the division of the surface was absolute; but as to the holder of the leasehold, each took the part devised to him, subject to the common burden which had been put upon the entire body of the land as a single undivided tract containing six hundred acres, more or less. As the lease covered all the land, so the rent may be said to issue from each and every part of it. The royalties belonged to the owners of the six hundred acres, and not to the owner of any subdivision of it. But as we have seen the royalties were personal. They were not disposed of by Gormley’s will. They were not even referred to in it. The intestate laws must in such case be looked to for the disposition of this very considerable part of his estate. The children hold together all the acreage that is covered by the lease, and each should receive such share of the royalty as his or her share of the land bears to the whole tract covered by the lease. It does not matter in what acre or hundred acres the wells may be situated. The royalties are not payable by the acre, nor by the farm into which the surface maj'be divided, but upon the total production, wherever within the six hundred acres the production may take place.

There is no escape from this proposition. The cleaver of the testator applied by the terms of his will for the division of the lands between his children made a clean cut separation of the shares of each down till the leasehold was encountered. There its descent was arrested until the term created by the lease expires. When that occurs, its downward course will be instantly resumed, and the severance of the freehold and its minerals will bo complete. The further reflection bestowed upon this question has in no sense shaken our confidence in Wettengel v. Gormley, 160 Pa. 559. We adhere to it.

There is however one new question raised in these cases. It is whether the injury done to any one of these devisees upon whose surface the wells may happen to be should not be borne as the benefit is shared, in equal proportions by the three devisees of James Gormley. The learned judge of the court below so held. He found as a fact that the injury done the defendant in the reduction of the rental value of his part of the six hundred acres was $¡200 per annum, and had been for three years prior to his decree ; and he found as a conclusion of law that this sum of §600 for three years’ loss upon rentals should be deducted from the royalties before division. This conclusion we are not disposed to disturb. It is equitable in its operation. But the defendant has his share of the benefit arising from the production of the oil, and should bear his share of the loss of rental resulting from its production. As to the finding that “ It will require time and expense depending largely upon the number of wells that may have been drilled ” to restore the surface to a proper condition after the lease has ended, we see no reason to doubt that the learned judge is correct; and it may be that the sum he fixes upon, viz: §200 per well will be required for this purpose, but it is certainly not demandable now. The lease has some years to run. Meantime the defendant will be fully reimbursed for any loss he sustains because of the operations under it by the allowance for loss of rental resulting from such operations. The cost of repairing injuries to the realty can be considered when the time for entering on such repairs approaches.

The decree requiring an account for royalties is affirmed. The calculation should be modified to meet the requirements of this opinion. The §600 loss of rental should be deducted from the three devisees in proportion to their ownership of the surface, and the cost of repairs omitted from the calculation until such time as the approaching termination of the lease makes it possible, intelligently, to consider the subject.