Wettengel v. Gormley

Opinion by

Mr. Justice Williams,

The question raised by this appeal is both novel and interesting. It is presented upon the following facts: James Gormley was, in his lifetime, the owner of three contiguous farms containing together about six hundred acres. In July, 1888, he made an oil lease to Tomlinson covering all the land. It was to run for fifteen years, and reserved a royalty upon all the oil produced of one eighth. The lease gave the lessee the usual privileges upon the land, among which was the right to take water from any part of it, and to any extent needed in his operations ; a right of way into, and over, the body of land; a right to lay pipe lines to conduct the oil from the wells. It concluded with the following stipulation: “ It is understood between the parties to this agreement that all conditions between the parties hereunto shall extend to their heirs, executors and assigns.” The lessor died in October, 1890. By his last will and testament he gave one of these farms to each of his three children in fee, making no mention of the lease which included them all. The devisees have entered into possession of their respective farms, under the will of their father, and each holds in severalty. The holder of the oil lease has meantime put down several oil wells and is producing oil therefrom; these wells happen to be on the farm devised to James T. Gormley, the defendant, and he claims the entire royalty.

The question is thus seen to be, who is entitled to the royalty reserved by the ancestor ? Should it be divided between the three devisees in proportion to the acreage held by each, or should it be paid to James T. alone ? The answer to this question must depend partly upon the character and legal effect of the lease, and partly on the nature of the product obtained under it. If the lease had been the ordinary agricultural lease, reserving a fixed annual rent payable in money, it would not be doubted that the fee descended to the devisees subject to the estate for years held by the tenant. The lessor could not change the rights of the lessee, or disturb his covenants, by a division of the land into parts and a devise of these parts to separate devisees. All the devisees together take the place of the devisor, and receive the rent due as an entire sum from the tenant. It would not matter that the grain was grown on one of the divisions, the grass upon another, while the third was unimproved and covered with forest, their interests would be several as to each other under the terms of the will, but as to the tenant they would be undivided under the terms of the lease made by their ancestor and covering the land at the time of his death. But this was not an agricultural lease, it was an agreement known as an oil lease ; it conferred an exclusive right upon the tenant to take the oil that might underlie the whole six hundred acres, and gave him fifteen years within which to take it. It was in its legal effect a sale of the oil, for the removal of which, the surface, and the sub-surface, were subjected to the necessary servitudes.

The subsequent division of the body of land by the lessor could not divide or diminish the privileges of the lessee, or change his covenants. The lessee may locate his wells where he pleases, regardless of the interests of the devisees of his lessor. He may distribute them over the six hundred acres, or locate them all ozz one of the divisions. He may crowd the lines of the adjoining divisions so as to enable him to draw the oil from them without drilling upon them, and in this manner deplete ultimately the whole territory by operations conducted on the farm of one of the devisees. It is well understood among oil opez'ators that the fluid is found deposited in a porous sand-rock, at a distance ranging from five hundred to three thousand feet below the surface. This rock is saturated throughout its extent with oil, -and whezi the hard stratum overlying it is pierced by the drill the oil and gas find vent, and are forced, by the pressure to which they are subject, izzto and through the well to the surface. After this pressure is relieved by the outflow the wells become less active. The movement of the oil in the sand-rock grows sluggish, and it becomes necessary to pump the wells in order both to quicken the movement of oil from the surrounding rock, and to lift it from the chamber at the bottom of tbe well to the surface. An oil or gas well may thus draw its product fi’om an indefinite distazice, and in tizne exhaust a large space. Exact knowledge on this subject is not at present attainable, but the vagrant character of the mineral, azzd the porous sand-rock in which it is found, and through which it moves, fully justify the general conclusion we have stated above, and have led to its general adoption by practical operators. For this reason an oil lease partakes of the character of a lease for general tillage, rather thazr that of a lease for mining or quarrying the solid minerals. In the case of a coal lease, for example, the exact location, with referezrce to lines on the surface, of every pound of coal taken may be easily determined. The stratum of coal is as fixed and permanent in its character as are the strata of superincumbent rocks and earth. Its ownership as between several devisees, or heirs at law after partition made, is as easily determined as that of the surface. The removal of the coal from one purpart does not diminish or disturb that which underlies another. The lines that divide the surface divide, with absolute fairness to all concerned, the subsurface, and secure to the several owners, with certainty, the mineral that belongs to each. The rules applicable to coal leases, or leases of land containing any other solid mineral, are therefore not always capable of application to leases for the production of oil or gas, because of the difference between the solid and the fluid minerals, and because of the deficient conditions under which they are found and brought to the surface.

There is in this state no precedent that we are constrained to follow, and we cannot find that the question has been decided in any other of the oil producing states.

We are in a position therefore to consider and determine it on principle. For the reasons now briefly outlined, we concur in the conclusion reached by the learned judge of the court below.

The judgment is affirmed.