Dunham v. Loverock , 158 Pa. 197 ( 1893 )

Opinion by

Mr. Justice Williams,

The important facts in this case are few and free from controversy. The question presented is new and has considerable practical^ importance. For some time prior to the 16th January, 1889, William Loverock was the owner of an undivided one half part of a leasehold estate in about ten acres of land, and of the oil well, fixtures and machinery on said leasehold. At the date above mentioned M. B. Dunham purchased the other undivided one half part of the same leasehold and of the well and other property thereon from a former owner. At the time of his purchase the well was being operated for oil, and the oil produced was run into the pipe lines and credited to the several parties interested as follows: the royalty to Coutant, the lessor; one half of the residue to Loverock, and the other half to Black, who was Dunham’s vendor. It is not denied that the relation existing between Dunham at the time of his purchase, and Loverock, was that of tenants in common. There was no unity of title between them, but there was unity of possession. The leasehold was being operated for the common benefit of its owners; and the production divided equally between them in the hands of the pipe line company that transported and stored the oil. Each took his own share of the oil, and paid his share of the current expenses of production. Dun-ham subsequently conveyed one half of his title to his son, who thus became a tenant in common with the other owners by virtue of the conveyance, and without regard to the wish or consent of Loverock. Some time after the Dunhams had acquired their interest in the leasehold, Loverock called on them to suggest that another well should be drilled on the land. He offered to put up a derrick for that purpose and pay his proportion of the cost of the well if the Dunhams would take charge of, and conduct the work on the ground. This was agreed to. He built the derrick. The Dunhams drilled the well, which proved to be productive. The oil therefrom was run into the same tank, taken into the same line, and there divided in the same manner as the oil from the first well. The plaintiff now claims a balance to be due him from Loverock for his share of the cost of the well. Pickett having meantime purchased Loverock’s half of the property, the plaintiff alleges that the cotenants were partners, and that Pickett took subject to a settlement of the accounts between his vendor and the firm. No contract of partnership written, or oral is shown, but it is contended that a partnership resulted from the agreement to drill another well on the leasehold at the common cost of the owners. It must be remembered that this question is not raised between third persons and the tenants in common, but inter sese. What other persons may have thought, or in what manner they may have charged goods furnished for the work on the well, is not now the question; but what was the actual fact as between themselves ? When the new well was proposed they were simply tenants in common of the ten acres covered by the lease, and of the well and machinery thereon. As such they contributed to the cost of operating the well and divided the product. The new well was on the same lease. It was to the interest of each of the cotenants that it should be put down, and it was an undertaking which was appropriate to tenants in common, since it would increase the product of the common property. In the absence of a distinct agreement between them that their relations to the property and to each other should be changed, the presumption is that the old relation continued and that they treated with each other as owners of separate interests in an undivided lease.

It is elementary law that a partnership is created only by a contract express or implied. The burden of showing its existence is on him who alleges it, and this burden the court below rightly held had not been lifted by the plaintiff. To be sure there was undivided possession of the lease, but unity of possession is one of the distinguishing characteristics of a tenancy in common. There was contribution to the cost of operating the well or wells, but this could be compelled between tenants in common by bill or by account render. There was division of the product, but this was in accordance with the rights of the cotenants. Each had a right to share in the product in proportion to his interest in the estate. It may be said that there was a resulting division of profits, since, if the product exceeded the cost of production, there was a profit to each part owner; but if so it was shown by the settlement of his individual accounts only, and grew out of the fact that he received from his share of the product more than it cost him to secure it. So it may be said there was a contribution to losses, since each tenant sustained a loss when the value of his share of the product fell below its cost to him, but this was the individual loss of each, with which no one else had any concern, and to which no one was bound to contribute. There is, therefore, no circumstance relating to the business done upon, or the development of, the lease not fairly and naturally referable to the relations the parties sustained to each other as tenants in common. There is no agreement shown that tenants in common might not properly make with each other for the development of the property in which each held a separate title, but an undivided possession. Between persons so situated a partnership does not result by implication of law. It must be created by an agreement. As we fully agree with the court below that no such agreement is shown, it is not necessary to consider the authorities cited by the learned master, and by counsel in their printed briefs, showing what are the ordinary indicia of a partnership. There can be no controversy over such questions in this case, for the plaintiff fails for want of proofs sufficient to furnish a foothold for him on the facts. Tenants in common may become partners, like other persons, where they agree to assume that relation towards each other; but the law will not create the relation for them as the consequence of a course of conduct and dealing naturally referable to a relation already existing between them, which made such a course of conduct to their common advantage. The plaintiff and defendants upon the facts before us were tenants in common.

The decree appealed from gave to the plaintiff all the relief to which he is entitled in this case, and it is now affirmed.