Opinion
2 Div. 257.
November 18, 1948.
Appeal from Circuit Court, Choctaw County; Joe M. Pelham, Jr., Judge.
Johnston, McCall Johnston, of Mobile, for appellants.
A grant or a reservation of rents, incomes and profits from real property is in substance a grant or reservation of the land itself. Scruggs v. Yancey, 188 Ala. 682, 66 So. 23; Jordan v. Walker, 201 Ala. 248, 77 So. 838; Guesnard v. Guesnard, 173 Ala. 250, 55 So. 524; Powe v. Payne, 208 Ala. 527, 94 So. 587; Roberts v. Cleveland, 222 Ala. 256, 132 So. 314; Ralls v. Johnson, 200 Ala. 178, 75 So. 926; Keeter v. Bank of Ellijay, 190 Ga. 525, 9 S.E.2d 761. Minerals are a part of the real estate where they have not been severed from the soil. 40 C.J. 903; 1 Summer's Oil Gas, Ch. 6 § 133; Adams v. Riddle, 233 Ala. 96, 170 So. 343, 107 A.L.R. 657. A reservation of oil and gas royalties, rents and income is a reservation of the oil and gas in place. Toothman v. Courtney, 62 W. Va. 167, 58 S.E. 915; Rist v. Toole County, 117 Mont. 426, 159 P.2d 340; 162 A.L.R. 406, 415; Weakland v. Cunningham, 3 Sad., Pa., 519, 7 A. 148; Updegraff v. Blue Creek Coal Land Co., 74 W. Va. 316, 81 S.E. 1050; McIntosh v. Vail, 126 W. Va. 395, 28 S.E.2d 607, 151 A.L.R. 804. Where property rights are involved all persons having legal or equitable rights in the subject matter must be made parties, on the theory that in equity the entire controversy should be settled so as to bind all interests. Amann v. Burke, 237 Ala. 380, 186 So. 769; Silverstein v. First Nat. Bank, 231 Ala. 565, 165 So. 827; Try Me Bottling Co. v. Teaver, 241 Ala. 266, 2 So.2d 611; Cook v. Benton, 245 Ala. 683, 18 So.2d 405.
J. Massey Edgar, of Butler, for appellees.
If there be a reservation at all in the instruments in favor of appellants, it could only be a divisional interest in the returns from the actions of appellees in leasing the property for purpose of exploring for minerals. There is a difference between rental monies derived from that act of leasing and an interest in the minerals. Demurrer to the bill was properly overruled.
Bill for declaratory judgment by J. M. Andrew, Sr., J. R. Nettles, and J. M. Andrew, Jr., as partners doing business as Nettles Lumber Company, against Daniel T. McCall, Sr., and Caroline B. McCall. From a decree overruling a demurrer to the bill as amended, respondents appeal
The bill alleges that respondents executed and delivered to complainants two certain deeds, conveying fee simple title to tracts of land thereon described; that each of said deeds contained the clause set out in the opinion; that said deeds carried a warranty clause and by the terms, thereof complainants own not only fee simple title to the surface but all gas, oil and minerals in, on or under said land, and the right to lease said lands or any portion thereof for drilling or exploring for gas, oil or other minerals, or to convey, encumber or lease same in any manner they see fit; that at the time said deeds were executed and delivered there were no outstanding leases for gas, oil or other mineral, and no royalties derived therefrom; that since execution of said deeds complainants have executed to one Gholson a lease and agreement to explore for oil, gas or other minerals on said lands; that by the terms of such lease and agreement drilling or exploring was to begin at a time therein provided; that respondent McCall was familiar with the terms of said lease and agreement; that the lessee moved equipment on or near said lands for the purpose of such drilling or exploring, but said respondent notified him not to proceed with his operations and that complainant had no right to execute the instrument to him; that he, respondent, had some interest in the lands or the gas, oil or other minerals and refused to permit lessee to continue with his operations; that as a result complainants have been damaged.
It is further alleged that a fair determination of the rights of the parties requires a construction and interpretation of the instruments involved, and it is prayed that the court so interpret and construe said instruments.
The decree of the trial court is as follows:
"This cause is submitted to the court on demurrers filed to the bill of complaint as amended.
"This bill of complaint was filed for the construction of certain exceptions and reservations contained in deeds made by the respondents to J. M. Andrew, Sr. and J. R. Nettles. It appears that J. M. Andrew, Jr., has acquired an interest in the property since the execution of the two deeds mentioned in the bill of complaint for construction of the exception or reservation. It appears that the respondents have objected to the leasing of the land by the partnership composing the Nettles Lumber Company and that as a result of this objection the partners have been unable to lease the same for the development of any oil, gas, coal, or other minerals.
"In the exception or reservation it appears that the grantors use the words 'Fifty per centum of all rentals that may be derived from coal, oil, gas or other mineral leases in and to said lands hereinabove described and fifty per centum of all royalties whether in kind or money.' The words 'rentals' and 'royalties' have some significance and indicate the grantors intended that the grantees execute any lease that they desired.
"It is the opinion of the Court that the demurrers to the bill of complaint as amended are not well taken and should be overruled. It is hereby ordered, adjudged and decreed by the Court that the demurrers to the bill of complaint as amended be, and the same are hereby overruled. The respondents are allowed thirty days within which to file an answer."
This suit was begun by a bill in equity filed by appellees seeking a declaratory judgment in respect to the proper interpretation of certain deeds, and fixing their respective rights in the property. The bill sufficiently shows such an actual controversy as to support the jurisdiction of the court for such declaratory judgment. Title 7, section 156 et seq., Code, Act of October 9, 1947, General Acts 1947, page 444. There is no ground of demurrer which points out a deficiency in pleading or any reason why such declaratory judgment should not be rendered. It does not always follow that a decree which overrules a demurrer to such a bill is an authoritative declaration of the rights of the parties, which is proper only for a final decree.
The trial court properly overruled the demurrer to the bill, but in doing so interpreted the deeds in question as passing to the grantees the surface and mineral rights with the power to lease the same, and without declaring just what was the effect of the exception in the deeds, insofar as concerned the grantors.
It is not always appropriate to make construction of an instrument on a demurrer to the bill seeking a declaratory judgment (Alabama State Milk Control Board v. Graham, 250 Ala. 49, 33 So.2d 11), and we do not perform such a task as a rule unless counsel for both sides have argued the case on that basis and seem desirous of such an interpretation. Sometimes an instrument is affected by conditions surrounding the parties, and therefore a definite interpretation should not be made except on an answer and on issues so made. Fillmore v. Yarbrough, 246 Ala. 375, 20 So.2d 792; Gilmer v. Gilmer, 245 Ala. 450 (3), 17 So.2d 529; Hawkins v. Tanner, 243 Ala. 641, 11 So.2d 351.
The question argued by counsel for both sides is whether a proper interpretation of the deeds executed by the grantors, who are appellants, except from their operation an interest in the property so conveyed. The clause is as follows:
"The grantors further except from this conveyance and reserve unto themselves, their heirs and assigns forever, fifty percentum (50%) of all rentals that may be derived from coal, oil, gas or other mineral leases in and to said other lands hereinabove described, and fifty percentum (50%) of all royalties, whether in kind or money, that may be derived therefrom."
We have numerous cases on the subject. More often in this State the question has arisen on the effect of a devise. But in our case of Powe v. Payne, 208 Ala. 527, 94 So. 587, the Court was dealing with a deed reciting that "as long as the undersigned shall live, the rents on said property shall be paid as the undersigned may direct." The Court said: "This is conceived in the brief for appellant to amount to the reservation of a life estate in the land, and properly so, we think." See, Williams v. Owens, 116 Ind. 70, 18 N.E. 389; Lake v. Sealy, 231 Ala. 466, 165 So. 399; 90 A.L.R. 772; 131 A.L.R. 1372; McIntosh v. Vail, 126 W. Va. 395, 28 S.E.2d 607, 151 A.L.R. 818.
The rule as applied to the construction of a will, which devises rents, income and profits of land, without other disposition of the property, has been often considered. If it be for a fixed period or without limitation as to time and unrestricted, it then ordinarily carries an estate in the property for that period, unless there is something in the will to manifest a different intent. For it is an interest created by implicaton. Jordan v. Walker, 201 Ala. 248 (5), 77 So. 838; Scruggs v. Yancey, 188 Ala. 682, 66 So. 23; Roberts v. Cleveland, 222 Ala. 256, 132 So. 314; 69 Corpus Juris 454, section 1516.
The clause of the deeds here in question does not except rentals or income derived from the use of the surface of the land. It only excepts fifty percent of the rentals and royalties derived from coal, oil, gas or other mineral leases.
There are no facts alleged which affect a proper interpretation of the deeds. Unless there is something brought out in the further trial of this case which would change the result, we think that the deeds reserve an interest in the minerals themselves as they are imbedded in the ground before there is an effort to extract them.
But the deeds imply a power granted to the appellees to make leases of the mineral rights, whereby rentals or royalties will be obtained in kind or money, in which the grantors will have one-half interest. The grantees in making such leases will be in a sort of trust relation to the grantors, and in exercising the power should act with the same good faith, care and diligence, which controls a trustee in performing the duties of the trust.
Necessary Parties.
Since this is a statutory proceeding for a declaratory judgment, the court has the power to settle the controversy which exists between complainants and respondents. If someone else has a collateral interest, the statute would not require his presence in court in the controversy alleged to exist between those who are parties. Of course his rights would not be concluded. He is not a necessary party, and, therefore, the ground of demurrer on that point is not well taken.
The decree of the trial court overruling the demurrer to the bill is affirmed with an enlargement upon the opinion expressed in it.
Affirmed.
BROWN, LAWSON, SIMPSON, and STAKELY, JJ., concur.