Duff v. Hopkins

Opinion by

Mr. Justice "Williams:

The title to tract No. 2009, prior to 1878, was in several tenants in common, among whom were A. P. Baum and B. P. Montgomery. On the 1st of May, 1878, they undertook for themselves and their cotenants to lease the tract to- the Sandy Lick Coal & Ooke Company, for mining purposes, giving to the company the exclusive right to mine all the coal therein at an agreed rate or royalty per ton. In 1882, some of the part owners, not recognizing the right of Baum and Montgomery to represent them, brought an action of ejectment against the coal company, and in order to stop the removal of the coal caused a writ of estrepoment to issue. This writ was subsequently dissolved by the court, and an order was made appointing a receiver and directing the payment of all royalties to him for distribution by the court to the parties entitled. The company resumed mining and paid the royalty to the receivers. The court has distributed the fund to those entitled, except the sum now in court which represents the interest of Baum. Since the lease was made he has become a bankrupt and his assignee in bankruptcy claims the money. Hopkins is the holder of a mortgage made prior to the execution of the léase and he claims it upon his mortgage. The question is, To which of these claimants should the money be awarded? The first point to be determined is, What does the fund represent ? The instrument under whose provisions it has been paid is called a lease, but the royalties to be paid under it have none of the qualities of rent. They certainly are the price of the coal in place. They are not paid for the use of the tract by a tenant, but for the price of the chief article of value in it by a purchaser. Every ton of coal mined reduces the tract in value, and when the mines upon it are exhausted the security for the mortgage debt is also exhausted. That royalties are part of the corpus of the estate and not a profit issuing out of it was held in Caldwell v. Fulton, 31 Pa. 475, 72 Am. Dec. 760. See also Sanderson v. Scranton, 105 Pa. 469.

The owner of a tract of land has the right to remove and convert into money for his own use the timber growing upon the surface and the minerals underlying it; but, if he has lien creditors, they have the right to object to the commission of waste to the prejudice of their liens, and at their instance the owner will be restrained in the exercise of the rights and powers of an owner. Until the machinery of the court was set in motion to arrest the commission of waste, Baum had the right to the price of the coal; but when waste was enjoined and the estrepement was subsequently dissolved under an order directing the money to be paid into court for distribution to the parties entitled, his right as an owner was suspended and the court held the fund in lieu of the coal for the benefit of those who were entitled to it.

It is not an answer to this proposition to' call attention to the fact that the estrepement was not issued at the instance of the mortgagee. When issued at the instance of any person who is in a position to object to the commission of waste, it is a protection to all persons so situated; and when the court by the appointment of a receiver brought the funds of the coal into court for distribution, the method of distribution could not depend upon the result of an inquiry as to what part owner, mortgagee. or other person caused the writ to issue. All part owners and all other persons having a right to stay waste may present their claims upon the fund in the same manner and with the same effect as though all had joined in the application for the wilt of estrepement.

When the commission of waste was stopped by the writ, the right of the owner to receive the proceeds of the waste was suspended; and neither he nor his assignee in bankruptcy has any claim upon the fund until the mortgagee is first paid. Judgment affirmed.