Judges： Woodward
Filed Date： 1/7/1867
Status： Precedential
Modified Date： 10/19/2024
The opinion of the court was delivered, by
These cases are a bill in equity and a cross-bill, which are founded upon the respective titles of the parties to valuable oil lands on Oil creek, in Venango county.
The first remarkable feature of the case (for the two bills constitute, essentially, but one case) is the magnitude of the conveyancing that has taken place. Not less than twenty deeds and agreements are presented in our paper-books as bearing more or less directly upon the questions discussed, all of which have been made since 1859, when the right of the present parties first attached. It probably will not be necessary to notice particularly all of these conveyances, but several of them must be carefully analyzed and their legal effect fully stated, for in them the rights of the respective parties are rooted. And the principles of law appropriate to the case, and the mode of their application, are to be discovered only by a patient examination and comparison of the contents of several deeds.
On and before the 8th day of October 1859, David McElheny was the owner and occupier of two lots or tracts of land, one lying on both sides of Oil creek, in Oornplanter township, Venango county, containing 100 acres; the other lying on the north side of Oil creek in Cherry Tree township in said county, containing 85 acres, and the two together constituting his farm, though they touched each other only at one corner. To this latter lot in Cherry Tree, McElheny had then only an equitable title, but he obtained the legal title on the 27th of the succeeding February.
On the 8th day of October 1859, McElheny and wife entered into an instrument of writing with A. B. Funk, which is called an agreement, but is in form and substance a deed of conveyance,, with mutual covenants. In consideration of $200, the receipt whereof from Funk is acknowledged, McElheny and wife grant, bargain and sell unto the said Funk, his heirs and assigns, “ the free and uninterrupted use, privilege and liberty to go on to any part of the 200 acres now owned, occupied and in possession of the party of the first part, it being in the north part of Corn-planter township aforesaid, and lying each side of Oil creek, for the purpose of prospecting, digging, excavating and boring, and erecting thereon frames, vats, engines, or anything necessary for the prospecting, experimenting or searching to find any ore, oil, salt, coal or other mineral, and of taking the same out of the earth; also, we, the said party of the first part, do hereby grant unto the said party of the second part, the right, privilege and exclusive use of one acre of land at and around each well or pit, where
Then follow the covenants of Funk that he will use no more land for roads or ways than shall be absolutely necessary; that he will commence operating the next spring, and will, during the spring and summer, put in operation a steam-engine on said land, and will energetically and diligently use all reasonable efforts to obtain the oils, ore or minerals sought for; and if he succeed in finding or procuring any oil, ore, salt, coal or other minerals, then in addition to the $200 paid, he agrees to give the one-third part of all that is taken out of the earth on the premises, in barrels to be furnished by McElheny at the pit’s mouth. Should the prospecting and ejiperimenting prove a failure and the enterprise be abandoned, Funk was to have the privilege of removing all engines, vats and fixtures of every kind, and the premises to revert back to McElheny, whose right of tillage was in any event to be uninterrupted, except as to the one acre about each pit.
On the same day a supplemental covenant was made, that in case of a failure of the enterprise, Funk was to fill in all the wells or pits he may have opened, “ and in no case shall the said Funk be permitted to occupy any land within 100 yards of his (McElheny’s) buildings.”
Some question was made in the argument as to the territorial extent of Funk’s rights under this deed; — whether they extended to that part of the farm that lay in Cherry Tree township, or were limited to the part in Cornplanter township. Whatever might be the construction óf the deed, if taken by itself, and subject to the rule that deeds are to be construed most strongly against grantors, we entertain no doubt that the deed, when taken in connection with subsequent conveyances hereafter to be noticed, is to be limited in its operation to that part of the McElheny farm that lay in Cornplanter township, and can have no effect on the 85 acres in Cherry Tree.
Such was the original grant out of which this controversy sprang, but before pausing to notice its legal effect, it is necessary to bring several other conveyances into view.
On the 2d day of December 1859, McElheny and wife entered into another “agreement” with John H. Dalzell and Thomas Donnelly, which began by fully reciting the prior agreement of 8th October with Funk, and then went on in the form of an indenture to grant, bargain and sell to Dalzell and Donnelly “ the one-half of the oil, salt, coal or other minerals which may be
On the 28th of January 1860, McElheny sold and conveyed to William H. Ewing, in consideration of $595, one-twelfth of the royalty he was to receive from Eunk, together with a right of succession to all Funk’s rights in case he abandoned the enterprise, and Dalzell and Donnelly also elected not to take his place.
McElheny now retained to himself whatever interest in the freehold he had not conveyed to Funk, together with a right to one-twelfth of all the oil, salt or ore Funk should take out of the earth. Then, on the 22d March 1860, he and his wife in consideration of $20,000, conveyed by indenture to Joseph Gr. PIussey, William D. McBride and Levi Haldeman, all of the state of Ohio, both of the tracts of land before mentioned, particularly describing them by metes and bounds, the one in Cornplanter, the other in Cherry Tree township, and subject only to the three before-mentioned agreements, the first with Funk, the second with Dalzell and Donnelly, and the third with Ewing.
Four days after this deed had invested them with McElheny’s proprietorship, to wit, on the 27th March 1860, Hussey, McBride and Haldeman, with their wives, entered into agreement with Funk, that requires particular attention. It recites the conveyances by McElheny to Funk and themselves, and then follows this recitation: “ And whereas it is mutually desired by the parties hereto, that the boundaries of the land covered by the aforesaid grant to A. B. Funk, should be more definitely described, and that the part reserved and excepted from said grant should be more clearly ascertained and designated, than is done in said recited instrument of writing by reference to perishable buildings then, therefore, it is covenanted and agreed that the “ grant of rights and privileges unto the said A. B. Funk shall be deemed, considered and construed to cover, extend over and include all that certain tract of land situate in Cornplanter township, bounded and described,” &c., by courses and distances, “ excepting and reserving from said grant all that part of said tract included in a strip 43 rods wide, and extending along the south side thereof from the east to the west line across the whole
The next paper, dated 29th March, said to have been executed and delivered 5th May 1860, was an indenture between Elussey, McBride and Haldeman and their wives of the first part, and A. B. Eunk of the second part, wherein the parties of the first part in consideration of Eunk’s covenants, and of $1, granted to him the same rights on the tract in Cherry Tree township, which McElheny had granted to him in the tract in Oornplanter township, and in the same terms substantially, reserving however from this grant so much of said tract as is contained in lots marked and numbered 5 and 6 on a plot of a survey made by S. M. Irwin, dividing said tract into 10 parcels, said reserved lots 5 and 6, being about the centre of said tract, and running from the creek to the northern 'boundary line, being of the width of 36/% rods, and containing together 23 acres and 145 perches, within which said lots, 5 and 6, said parties of the first part retain to themselves, their heirs and assigns, all the rights of ownership, as though none of the grants and agreements herein contained had ever been made or entered into; but as to the other lots, marked Nos. 1, 2, 3, 4, 7, 8, 9 and 10, on the plot aforesaid, the said A. B. Eunk, his heirs and assigns, are to have and enjoy all the rights and privileges herein granted, and the liberty of assigning and transferring said rights and privileges in whole, or as to any one or more of said lots, severally at his and their option and discretion.”
Then follow Eunk’s covenants to commence operating that spring, to put up a steam-engine on the land, to use all reasonable efforts to obtain oil, and to deliver to the parties of the first part one equal third part of all that is taken out of the earth on the premises, and to use no more ground for roads and ways than shall be absolutely necessary.
On these several deeds it is to be observed :—
1st. That they limit Funk’s rights under the original deed of 8th October 1859, to the tract in Cornplanter township, and show that he acquired no right, by virtue of that deed, in the tract in Cherry Tree township.
2d. That as to the Cornplanter tract, his rights were extinguished in the part reserved, but as to all the rest of this tract, his rights were ratified, confirmed and renewed, with the very important additional right to subdivide said lands into suitable lots and to transfer them in severalty.
3d. That the same rights were conveyed to Funk by the deed of 29th March 1860, as to all of the tract in Cherry Tree, except 23 acres 145 perches reserved, being lots Nos. 5 and 6 on Irwin’s plan, and that as to these lots he had no rights, but as to all the rest of the lots on Irwin’s plan he had the same rights as had been granted and confirmed to him in the land in Cornplanter township, with the right of subdivision and alienation in severalty fully granted.
Hussey, McBride and Haldeman made leases to various parties of oil rights within their reservations, and Funk subdivided his territory (all the unreserved portions of both parts of the Mc-Elheny Farm) into suitable lots and let them to various parties, individuals and oil companies, for the purpose of raising oil, all his lessees being bound to yield the appointed royalty to the landlords, and to divide with him as agreed by them respectively. I do not know, that a more minute reference to these various leases,, all bottomed on the conveyances we have gone over, would help, us materially in defining the rights of the original parties.
But when Hussey, McBride and Haldeman, not content with mining for oil upon their reserved portions, claimed a right in common with Funk to mine within his lines, upon any land not actually occupied by him for mining purposes, and claimed, moreover, that Funk, by subdividing his rights, had forfeited them, so that neither he nor his lessees might lawfully take oil from any part of the premises, litigation became inevitable, and these bills were filed.
Two learned judges in the court below passed upon the ques
1st. That the conveyances vested in Funk, in fee simple, within the lines designated in the deeds, an incorporeal hereditament.
2d. That this interest, which would have been entire and indivisible at law, was made divisible by the terms of the grants.
3d. That this interest, which at law would have been held in common with the grantors, was made by the parties exclusive in Funk, his heirs and assigns, within the designated lines.
4th. That whatever may be rights of way, of tillage and of building, reserved to the grantors within Funk’s lines, they have no mining rights therein, and can have none, until Funk, or those claiming under him, have forfeited their rights by breaches of their covenants.
Our reasons in support of each of these conclusions shall be stated as briefly as possible.
1st. The interest granted to Funk is an incorporeal hereditament. The first word that occurs in the definition of an incorporeal hereditament is “ right.” A right issuing out of a thing corporate, or concerning, or annexed to or exercisable within the same. It is no part of the corporate thing; that remains as perfect, after the right has issued or been exercised, as before. The incorporeal hereditament, always a creature of contract, is a collateral incident which may belong or not belong to the thing corporate, without any visible alteration therein.
When this right takes the form that is designated, in the classification of incorporeal hereditaments, a “common,” it is called a profit which one man hath in the land of another. Not ordinarily an exclusive profit, for in the instance of common of pasture, though an owner of the soil grant another common of pasture, sans nombre, yet the grantee cannot use the common with so many cattle, that the grantor shall not have sufficient common for his own cattle : 1 Coke Litt. 122.
Recurring now to the very language of the several grants, which I have quoted from the deeds, it will be seen to amount neither to a'* lease, nor a sale of the land, nor of any of the minerals in the land. No estate or property, either in the soil or minerals, was granted. If the grantor’s dominion over these was not as complete after the grants as before, it was because of the covenants which restrained 'it, and not because of any title to either soil or minerals that had vested in Funk.
This is a matter o'f construction. It was argued that upon the principles laid down in Caldwell v. Fulton, 7 Casey 476, we
If Funk acquired no estate in lands or minerals, what is his right to be denominated ? I answer, a license to work the land for minerals. Bainbridge, in his work on the law of mines and minerals, p. 246, says, “ there is a great distinction between a lease of mines and a- license to work mines. The former is a distinct conveyance of an actual interest or estate in lands, while the latter is only a mere incorporeal right to be exercised in the lands of others. It is a profit a prendre, and may be held apart from the possession of land. In order to ascertain whether an instrument must be construed as a lease or a license, it is only necessary to determine whether the grantee has acquired by it any estate in the land, in respect of which he might bring ejectment. If the land is still to be considered in the possession of the grantor, the instrument will only amount to a license, and though the licensee will certainly be entitled to search and dig for mines according to the terms of the grant, and appropriate the produce to his own use, on payment of the stipulated rent or proportion, yet he will acquire no, property in the minerals till they are severed from the land, and have thus become liable to be recovered in an action or+-rover.”
But though we hold the papers in this instance to constitute a license and not a lease, it is a license coupled with an interest; not a mere permission conferred, revocable at the pleasure of the licensor, but a grant of an incorporeal hereditament, which is an estate in the grantee, and may be assigned to a third party. Even a parol license, without consideration, on the faith of which the grantee expends money, cannot be revoked at the pleasure of the grantor, but will he enforced in equity: Le Fevre v. Le Fevre, 4 S. & R. 241; Rerick v. Keen, 14 Id. 271; and see Wood v. Ledbitter, 13 M. & W. 840, and cases in note.
Though this proposition is doubted, perhaps denied, in some of the states around us, it is not to he doubted that where large expenditures have been made under a ivritten license, rights are acquired which will be upheld both at law and in equity.
2d. The second proposition is that the interest of Eunk, which would have been entire and indivisible at law, was made divisible by the terms of the grants.
As to the first branch of this proposition, the indivisibility of such interests at law, Lord Mountjoy’s Case is the leading case upon which all our subsequent law on this subject is built. What was that case ? According to Anderson, who, as Chief Justice of the Common Pleas, took part in the decision and therefore ought to be the best reporter of it, there was nothing decided or said about the entirety and indivisibility of the mine-rights in question. Lord Mountjoy, seised of two parts of the manor of Sanford, sold and conveyed them by deed to J. Brown and Charles Brown, with a proviso that it should be lawful for Mountjoy, his heirs and assigns, at all times, to have, take and dig, in and upon the heath ground of the premises, sufiicient ores, heath, turves, and other necessaries for the making of alum or copperas, and to build necessary houses, &c. Mountjoy then by deed granted full mine-rights in said manor to one Richard Leycolt, for the term of thirty-one years, the said Leycolt yielding therefor yearly to Mountjoy one-half of the clear profits of his mining operations. The case being before the Lords of the Privy Council, was by the royal command referred to Anderson, Chief Justice of the Common Pleas, and to Peryam, Chief Baron, to certify their opinions on the disputed points. These justices reported that we “ have divers times conferred thereon, not only between ourselves, but with some other justices,” and are of opinion, “ 1st. That
“ 2d. That Lord Mountjoy, by the assurance passed between him and the Browns, had a right in fee, to dig turves, ores, &c., as mentioned in the proviso.
“ 3d. That Mountjoy might dig ore and other things for making alum and copperas as he should think fit.
“ 4th. That we and others that conferred are very doubtful and cannot agree, whether any remedy by law is given for the things reserved by the indenture or no.”
According to Anderson, these were the only points ruled in this famous case, and as he had studied the case with the aid of Ch. J. Wray of the K. B., Chief Baron Manwood of the Exchequer, “ et autres,” and decided it for the Privy Council, he surely ought to know, better than any pther, what the points in judgment were. Yet Lord Coke, who was of counsel for Mountjoy, reports the points ruled, not in his reports, but several years afterwards, in his comments upon Littleton, and among them he states the following: — “ That Mountjoy might assign his whole interest to one, two or more, but then, if there be two or more, they could make no division of it, but work together with one stock; neither could Mountjoy assign his interests in any part of the waste to one or moi-e, for that might work a prejudice and surcharge to the tenant of the land, and therefore if such an uncertain inheritance descendeth to two coparceners, it cannot be divided between them: 1 Coke, Litt. (Thomas’s Ed.) p. 536.”
This point has been stated by subsequent reporters, Grodbolt, Leonard, Moor, and perhaps others, and has been taken for law by the courts, both English and American: Chetham v. Williamson, 4 East 469; Doe v. Wood, 2 B. & A. 789 ; Grubb v. Bayard, 2 Wallace C. C. R. 97; Lyman v. Abeel, 10 Johns. R. 31; Caldwell v. Fulton, 7 Casey 475.
How are these discrepant reports to be accounted for ? That Lord Coke was not superior to the professional infirmity which sometimes makes the “ wish father to the thought,” is shown by his frequent substitution of his own arguments for the resolutions of the judges. In his reports it is often very difficult to distinguish the points ruled by the judges from Ms inferences and observations. Southcote’s Case, 4 Coke 83, is an instance in point, for which Lord Holt in the great case of Coggs v. Bernard, 2 Lord Raymond 915, rebuked his habit of “ improving” upon cases and drawing unwarranted conclusions. It was probably a similar liberty he took with Mountjoy’s Case.
But however this may be, it is certain that the courts in modern times have taken the law of that case from Coke rather than from Anderson, and it is now too late to correct the common error. We take it as it is ordinarily received, and we say
But the legal effect of the grant could be controlled by the agreement of the parties, and we think it was very essentially modified by what we find in some of the deeds. In the original agreement between McElheny and Eunk, we find no stipulation for the divisibility of the interest granted, but in the confirmatory deed o,f 26th March 1860, which was limited to the Cornplanter tract, it was expressly stipulated that Eunk, his heirs and assigns, at his and their discretion, have the right of assigning and transferring the rights and privileges ^herein granted, in whole to any one or more parties (which was declaratory only of the legal effect of the instrument), “ or to subdivide said lands into suitable lots, and assign and transfer his rights and privileges aforesaid, to be exercised and enjoyed by his assignees or transferees severally, within the limits of such lots or subdivisions.”
Now, it will be remembered that this deed withdrew altogether from Eunk so much of what McElheny had conveyed as was contained in the “ reservation,” but as to the residue of the Corn-planter lot, if he was not to have the right to subdivide it into lots, and grant them in- severalty, the above words are unmeaning. His rights are called “ lands,” by which we are not to understand the title to soil or minerals, but the rights were to be subdivided by subdividing the lands in which they existed and were to be exercised. And such a subdivision might be made as would constitute his grantees tenants in severalty — the technical word for a sole, separate and exclusive dominion. “ Suitable lots,” mean lots fitted for mining purposes, and there is no allegation that the divisions made were unsuitable in this sense. Upon such a subdivision the power of partition, not inherent in the title originally, attached, and the exercise of so plainly granted a power cannot work a forfeiture of estate. In Lord Mountjoy’s Case there was no similar provision, but only a grant and a proviso in the ordinary technology of. conveyancing. Without impairing the effect of'that case a jot, we are bound to give effect to all the terms in which these parties have expressed their intentions. It would be a superstitious reverence for the name of Coke to allow his report of Mountjoy’s Case to overrule the clearly expressed intentions of the parties now before us. He himself, if here, would “ note the diversity,” and we must not overlook it, nor fail to give it effect. The same observations are applicable to the deed of 29th March 1860, relative to the tract in Cherry Tree, for there the division agreed on with Eunk, and the power conferred on him to
3d. My third proposition has been somewhat anticipated already in what has been said. That Funk’s interest would have been, by force of the mere terms of conveyancing, held in common with the grantors, is one of the deductions from Mountjoy’s Case which is not to be questioned, but that, by supplemental terms, the parties meant to make it exclusive in Funk, his heirs and assigns, is, we think, equally unquestionable. Nobody will doubt that this effect may be imparted' to a conveyance of such an interest. Says Bainbridge, p. 274, after reviewing the ease of Lord Mountjoy and its English sequents, “ it appears therefore that an exclusive right to minerals will not necessarily be conferred by the grant of a license to work them. But it must not be concluded, from these decisions, that the license to work may not be in such a form as effectually to vest in the grantee a sole and undisturbable right to the minerals. It may be generally laid down, that if it appear to be the intention of a deed of grant or license, that the grantee should be solely and exclusively entitled to -work for minerals, the grantor will be afterward precluded from abridging or derogating from his grant by any attempt to exercise a right, similar only indeed, but incompatible with its former disposition.” And even at common law a man may prescribe or allege a custom to have and enjoy solam vesturam terree, from such a day to such a day, and hereby the owner of the soil shall be excluded to pasture or feed there; and so he may prescribe to have separalem pasturan, and exclude the owner of the soil, or separalem piscarium in such a water, and the owner of the soil is not to fish there: Thomas’s Coke Litt. p. 185. All incorporeal interests lie in grant, and if custom may impose the quality of . exclusiveness, much more the terms of the grant may.
We take up these multitudinous conveyances, then, to discover what relations the parties intended to establish between themselves ; and what do we find ? We find the parties arranging for a full development of the oil in these lands. The owners cut off and reserve to themselves a part of each tract, in which they might mine for oil in their own time and AYay. They license Funk to enter upon the unreserved portions of each tract to experiment for oil, to subdivide his premises into suitable lots for this purpose, and to assign and transfer said lots, in whole or severalty, according to his option and discretion, and then place him under covenants to erect machinery and fixtures, and “ energetically and diligently” to use all reasonable efforts to obtain oil, and to give them one-third of all that he raises. Exclusive
Now, although there is no express stipulation that his mining rights shall be exclusive of the grantors, is it not a fair and necessary inference from the premises ? Is it conceivable that the parties meant that when, after much labor and large expenditures, Funk should strike oil, the grantors might sink wells on the adjoining acre, and take not only a third of Funk’s product, but all they could pump from their own wells, though they should dry up and ruin his wells altogether ? If so, to what end were the premises so carefully marked out and divided between the parties ? If so, what significance or value was there in the clearly expressed right to subdivide and assign to third parties ?
Assuredly Funk’s lessees would not have gone on to operate upon the subdivisions, if they had not thought they were getting exclusive rights therein. And the grantors would not have stood by in silence and seen their lessee and his sub-lessees expending time, and labor, and money, upon the faith of an exclusive right, if they had not also understood the papers to vest such a right. Their conduct in this regard might, with considerable reason, be treated as an equitable estoppel; but, as bearing upon the construction of the papers, it is exceedingly significant; and this is the light in which we are now contemplating it. Surveying the case all over as presented in the bills, answers and proofs, it is impossible to account for the conduct of the parties, except upon the presumption that, up to a comparatively recent period, they construed the papers as conferring an exclusive right to mine for oil within the lines marked out for Funk. When we construe them in the same manner, we are justified, therefore, by that best of all rules of interpretation — contemporaneous construction.
4th. The fourth proposition results as a corollary out of the former ones. If Funk’s mining rights were exclusive within the lines assigned to him, it follows that the grantors can exercise no rights within those lines until a breach of the covenants has been established. Whatever rights they possess relate to the surface ; and as to subterranean treasures, they have excluded themselves, as an owner of the soil may be excluded from a separalem pasturam, or a separalem piscarium.
Throughout this opinion I have-treated oil as a mineral. Until our scientific knowledge on the subject is increased,' this is the
One other observation shall conclude this too long opinion.
The parties stand in a court of equity; and it is impossible to shut our eyes to the fact, that what is asked for on behalf of Hussey, McBride and Haldeman, is that we should declare a forfeiture of the rights granted to Funk; not, perhaps, a forfeiture in form, but, in substance and legal efiect, a forfeiture.
If Funk has violated his tenure or his covenants, — if he has undertaken to subdivide into severalty that which he could only hold as an entirety, he has lost all; for unless he remained clothed with the whole, he had nothing. Even then, however, a chancellor would be likely to send the grantors into a court of law, to enforce the forfeiture by ejectment; for equity does not, ordinarily, enforce forfeitures.
But upon full consideration of the papers, we are of the opinion that there has been no violation either of tenure or covenants, and therefore there is no forfeiture to enforce, either at law or equity.
And now, to wit, January 7th 1867, these cases having been argued and fully considered, it is ordered, adjudged and decreed, that the decree of the Court of Common Pleas of Venango county, of the 19th of July 1866, be reversed, set aside and taken for nought, and that the decree of the said court of 28th April 1864, be restored and confirmed as the decree of this court in the appellants’ bill, and that the cross-bill filed in behalf of the appellant, be dismissed, and that the appellees pay the costs.