In McNeese v. Renner, 197 Miss. 203, 21 So.2d 7 (1945), this Court recognized that minerals and land could be owned separately or concurrently, and that a reservation of "an undivided one-fourth interest in and to all minerals" reserved to the grantor a present undivided one-fourth interest in the minerals.Summary of this case from Thornhill v. System Fuels, Inc.
February 26, 1945.
1. MINES AND MINERALS.
A conveyance reserving to grantor an undivided one-fourth interest in and to all minerals, oil, and gas "that might hereafter be discovered on the land," reserved to grantor and its assignees a present, undivided interest in the minerals that might be discovered.
2. MINES AND MINERALS.
Where deeds reserved to grantor an undivided interest in and to all minerals, oil, and gas that might be thereafter discovered, it was not necessary for deeds to reserve any right to grantor to enter the land to ascertain the presence of and remove the minerals that might lie therein, since that right was necessarily implied from the reservation itself.
APPEAL from the chancery court of Jefferson Davis county, HON. LESTER CLARK, Chancellor.
Livingston Livingston, of Prentiss, for appellant.
A deed must be construed most strongly against the grantor, and most favorably to the grantee.
Soria v. Harrison County, 96 Miss. 109, 50 So. 443; Yazoo M.V.R. Co. v. Lakeview Traction Co., 100 Miss. 281, 56 So. 393.
A deed will be construed according to the manifest intention and object of the parties, though it is inartificially drawn.
An exception in a conveyance of land must be construed in connection with the context.
It was not the intention of the grantor to reserve any right-of-way over said land, or the right to mine said land for oil, gas and minerals or to do anything whatever until oil and gas or minerals were discovered on said land, and at such time as oil, gas or minerals were discovered the grantor would then participate in the same to the extent of a one-fourth interest royalty in the same and not a one-fourth mineral fee. We insist that the proper construction of this third paragraph in the deeds created a non-participating royalty interest in the oil, gas and minerals and not a mineral fee. In other words, it is the contention of appellants that when oil, gas or minerals are discovered that the grantor or its assignees would be entitled to a one-fourth of a one-eighth or one thirty-second royalty interest and not to a one-fourth mineral fee. This seems to us to be the correct interpretation of the said exception or reservation.
Jackson v. Delaney, 67 W. Va. 309, 67 S.E. 795; Luman v. Davis, 108 Kan. 801, 196 P. 1078; Harris v. Cobb, 49 W. Va. 350, 38 S.E. 559, 21 Mor. Min. Rep. 263; Denver Joint Stock Land Bank of Denver v. Dixon, 57 Wyo. 523, 122 P.2d 842, 140 A.L.R. 1270; Douglas v. Douglas, 176 Okla. A.P.L. 238, 56 P.2d 362; Myers v. Hines, 149 Okla. 232; Cline v. Humble Oil Refining Co., 67 S.W.2d 911; Schlittler v. Smith, 128 Tex. 628, 101 S.W.2d 543; Gill v. Bennett, 59 S.W.2d 473; Ralph v. Magnolia Petroleum Co., 95 S.W.2d 222; 3 Summers Oil and Gas 349, Sec. 572.
We maintain that the attempted reservation with reference to oil, gas and minerals in the deed executed by the grantee, the Great Southern Lumber Company, did not reserve any present interest in the oil, gas and minerals, but stated that under the reservation the said grantee would be entitled to participate in the said oil and minerals after the discovery of same. There has been no discovery of oil, gas or minerals in the land and we maintain that if the said reservation is valid it is to be construed as a perpetual non-participating royalty interest, the grantee not having reserved the right to participate in making future leases of such minerals or in rentals and bonuses.
United States v. Lavenson, 206 F. 755, 762; United States v. Safe Development Gold Mining Co., 258 F. 872, 877; Dalton v. Clark, 129 Cal.App. 136, 18 P.2d 752, 754; Way v. Venus, 147 Kan. 741, 35 S.W.2d 467; Schlitter v. Smith, supra; Myers et al. v. Hines et al., supra; Dill v. Rockwell, 94 Okla. 25, 220 P. 620; Dunlap v. Jackson, 92 Okla. 246, 219 P. 314.
Neither the Southern Lumber Company nor its assigns would be entitled to any interest in the oil, gas and minerals until produced and reduced to possession. We here call to the attention of the court that neither the deed nor the reservation anywhere reserves the right to mine said minerals or the right of ingress and egress upon and over said lands for the purpose of mining said minerals, and did not reserve the right to lease the land for minerals, and did not reserve the right to participate in any bonuses or rentals of said minerals. A grant of royalties before lease is executed of rights to royalties and oil and gas produced may be reserved or granted before any oil and gas lease is executed, and in such case it is generally termed a perpetual non-participating royalty if no right is granted or reserved to participate in the making of future leases. The grantor in the case at bar did not reserve the right to participate in the making of future leases or in the right to any rentals or bonuses of any kind, but barely reserved the right to participate in said oil, gas and minerals, which might thereafter be discovered.
Denver Joint Stock Land Bank of Denver v. James Dixon et al., supra; Schlittler v. Smith, supra.
It is observed that grantor, the Great Southern Lumber Company, at the times it executed the two deeds did not reserve any right-of-way over and across said land for the purpose of entering upon the surface thereof and to mine for oil, gas and minerals. We submit that the grantor as aforesaid, had no intention of reserving any such right in said land and this assertion is sustained by the fact that it did reserve a right-of-way on the section line and on the quarter section line for the purpose of building and constructing roads for the general public and neighbors. If grantor had intended to claim any present right to the oil, gas and minerals, there is no doubt but that it would have reserved the right to enter upon said land for the purpose of mining the same with the right to lay pipe lines, build telegraph and telephone lines, tanks, power stations, road ways and other necessary structures commonly used in mining for oil and gas. These important matters are not mentioned in the reservation and no such rights, we maintain, can be implied.
Implied reservations, as against express covenants, are not favored and are to be limited to ways of strict necessity, and this is true, though the land was practically given by the grantor to the grantee is immaterial.
Dabney v. Child, 95 Miss. 585, 48 So. 897.
In the case of Bonelli v. Blakemore, 66 Miss. 136, 5 So. 228, 14 Am. St. Rep. 550, this court held that a way over an adjoining lot is an easement, to the enjoyment of which the act of the party is essential, and is therefore not a continuous easement; and, not being one of necessity, does not pass by conveyance by the common owner, under the doctrine of implied grants. It was held by this court in the case of Lanier v. Booth, 50 Miss. 410, that an easement may be created, or reserved by an implied grant, when its existence is necessary to the enjoyment of that which is expressly granted or reserved, upon the principal that, where one grants anything to another, he thereby grants him the means of enjoying it, whether expressed or not, however the case at bar is not such a case for the reason that no right-of-way was necessary in order that the grantor might enjoy the benefits of his reservation, for he would have received all of the benefits to which he may be entitled when the oil, gas and minerals might be discovered. So appellees do not have such a case that an easement is necessary in order that they might enjoy the one-fourth interest in the oil, gas and minerals after the discovery thereof.
In the case of Moss v. Jourdan, 129 Miss. 598, 92 So. 689, this court having under consideration the question of a right-of-way, in the closing paragraph of its decision said: "It follows from the foregoing views that where one person owns the surface of land and another the minerals therein, and the minerals cannot be removed without destroying the surface, the owner of the minerals, in the absence of an agreement to the contrary, is without the right to remove it." It is a matter of common knowledge that the mining of oil, gas and minerals is destructive to the considerable areas of the surface of the lands as it is necessary in the process of mining to build ponds, erect buildings, sink shafts and to destroy the land in such area to great depths. In other words, it is impossible to produce oil, gas and minerals without doing considerable damage to the surface. It is certain that if the grantee in the deeds in the case at bar had known that it was the intention of the grantor to mine the land for oil, gas and minerals that he would not have entered into the arrangement and would not have purchased the land. And this carries out his contention that the minds of the grantor and grantee did not meet, if the contention of appellants is adopted. So we urge that the court below erred in holding that by implication a right-of-way to mine the land was reserved.
The reservation in the deeds is ultra vires. The resolution passed by the corporation provides that D.T. Cushing, Assistant Treasurer, is authorized to execute for and on behalf of the Great Southern Lumber Company any such deed, notarial acts or other instruments as may be proper for the execution and delivery covering the sale of cut over lands belonging to the company, located in the state of Mississippi. Nowhere in this resolution is there authority for reserving oil, gas and minerals under any of said land, hence the reservation is void because not authorized by the corporation.
Petrie's Ex'rs v. Wright, 6 Smedes M. (14 Miss.) 647.
See also McPhearson v. Foster, 43 La. 48, 22 Am. Rep. 215, 35 L.J. Ch. 156; National P. Bank v. Porter, 125 Mass. 333, 28 Am. Rep. 235; Miners Ditch Co. v. Zellerbach, 37 Cal. 543, 99 Am. Dec. 30; Minnesota Thresher Mfg. Co. v. Langdon, 44 Minn. 37, 41, 46 N.W. 310; 3 Bouvier's Law Dictionary 3445; 39 Cyc. 664.
The deeds of conveyance of the Great Southern Lumber Company to the Southern Minerals Development Corporation fall far short of the requirements stated in the above authorities. It follows that the court erred in the construction of the deeds in controversy; erred in finding that it was not necessary to fix the interest of appellants and appellees as to the property rights of each; erred in its conclusion of law with reference to the reservation being ultra vires; erred in finding that the minds of appellants and the Great Southern Lumber Company met at the time of the execution of the deeds with reference to the reservations; erred in its conclusions of law that appellees had the right to enter upon appellants' said land without first obtaining a right-of-way over the lands and the right to mine for oil, gas and minerals; it erred in its conclusions as to the right of appellees to lease appellants' lands for oil, gas and minerals; erred with reference to the demurrer not confessing the allegations of the bill of complaint that the minds of the original contracting parties met at the time of the execution of the original deeds in controversy; and erred in its conclusions of law and its findings of fact with reference to the authorities of the Southern Mineral Development Corporation to convey rights-of-way over the land and authorizing the mining of the lands of the appellants by the appellees.
Jno. T. Armstrong, of Hazlehurst, and Watkins Eager and Green Green, all of Jackson, for appellee.
Minerals, like timber, are land, capable of separate ownership in fee, in severalty, or as tenants in common.
Fox v. Pearl River Lumber Co., 80 Miss. 7, 31 So. 583; Butterfield Lumber Co. v. Guy, 92 Miss. 361, 46 So. 78; Stokely v. State, 149 Miss. 435, 115 So. 563; Pace v. State ex rel. Rice, 191 Miss. 780, 4 So.2d 270; Merrill Engineering Co. v. Capital Nat. Bank, 192 Miss. 378, 5 So.2d 666; Wight v. Ingram Day Lumber Co., 195 Miss. 823, 17 So.2d 196; Liverpool London Globe Ins. Co. v. Delaney, 190 Miss. 404, 200 So. 440.
The exception contained in the deeds is unambiguous, valid, and was correctly interpreted by the chancellor.
That for construction is "The Great Southern Lumber Company reserves and retains an undivided one-fourth interest in and to all minerals, oil and gas that might hereafter be discovered on the land herein described, and it is understood and agreed that the right of title so retained shall not be extinguished by the prescription, but shall persist without limit of time notwithstanding that the seller had done nothing on said land or in the discovery of said minerals, oils and gases prior to their discovery." Appellants' contentions are (a) void abinitio, or (b) only a non-participating royalty, whereasto appellants and other owners of the surface have uncontrolled rights to lease said undivided one-fourth interest in the minerals upon such terms as they think proper without any right upon the part of the appellee therein to interfere, appellants taking for their action (1) all bonus money received (2) all delay rentals to accrue, and (3) such royalty as may to them seem just, there being no restriction thereasto upon appellants, who may fix the royalty at their pleasure at one-half or one-one hundred twenty-eighth, either more or less, with an appropriation by appellants of all bonuses, all bonuses, all delay rentals and all augmented receipts derived from a fixation of the royalty. Appellees (or the Great Southern Lumber Company) could not drill their own well or operate as they saw fit by a proper lease to a proper tenant upon a proper contract basis. In short, though there be this reservation of "one-fourth interest in and to all minerals," that by appellees to be therefrom derived depends not on appellees' consent, but upon appellants' pleasure.
Analyzing this reservation, (1) appellee "reserves and retains." This is in the present, not the future, tense; (2) an undivided one-fourth interest in all minerals; (3) not as contended by appellants, but "that might hereafter be discovered on the land herein described." This phraseology is widespread, as will be shown in the cases hereinafter discussed, and has never been given the interpretation wherefor appellants contend; (4) "the title so retained shall not be extinguished . . . but shall persist without limit of time;" and (5) the title so retained shall persist "notwithstanding . . . the seller has done nothing on said land." This retention of that on the land — a part thereof — is held notwithstanding the seller has done nothing "in the discovery of said minerals . . . prior to their discovery." With the utmost deference to appellants, this exception is clear and specific and should have no further discussion, but even if appellees had no right of entry (which we deny), and no right to lease (which we deny), still, even though appellants had these rights as to appellees' undivided one-fourth interest in all said minerals, appellants could not, in virtue of such right to lease, take from appellees their right to an aliquot portion of the bonus money, the delay rental, and the royalty, or, if appellees desired to operate instead of lease, the right under such a usual agreement to receive one-fourth of the minerals, paying their proportion of the expense.
If in the grant or reservation of a separate interest in oil and gas the grantor does not expressly grant or retain such legal relations as are necessary for the production and operation of the land for oil and gas purposes, these relations are held to be created by implication.
Pace v. State ex rel. Rice, 191 Miss. 780, 4 So.2d 270, 275; Gulf Refining Co. v. Terry, 163 Miss. 869, 142 So. 457; Moss v. Jourdan, 129 Miss. 598, 92 So. 689; Wight v. Ingram Day Lumber Co., 195 Miss. 823, 17 So.2d 196; Stern v. Great Southern Land Co., 148 Miss. 649, 114 So. 739-740; Merrill Engineering Co. v. Capitol National Bank, 192 Miss. 378, 5 So.2d 666; Callahan v. Martin, 3 Cal.2d 110, 43 P.2d 788, 796; Brooks v. Mull, 147 Kan. 740, 78 P.2d 879, 882; Melton v. Sneed (Okla.), 109 P.2d 509; Morgan v. McGee, 117 Okla. 212, 245 P. 888; 1 Summers Oil Gas, Per. Ed., p. 325, Sec. 133; 42 Am. Jur. 189, Sec. 4; Compare Words Phrases, p. 239, Per. Ed., Sec. 52, et seq., Judicially Defined, title "property."
See also Bishopric v. City of Jackson, 196 Miss. 720, 16 So.2d 776; Hinds v. Terry, Walk. (1 Miss.) 80; Bennett v. Bennett, 84 Miss. 493, 36 So. 452; Sam v. Allen, 152 Miss. 572, 120 So. 568; Prairie Oil Gas Co. v. Allen, 2 F.2d 566, 571 (8 Cir.), 40 A.L.R. 1389; Earp v. Mid-Continent Petroleum Corp., 167 Okla. 86, 27 P.2d 855, 858, 91 A.L.R. 188; Compton v. People's Gas Co., 75 Kan. 572, 89 P. 1039, 10 L.R.A. (N.S.) 787; Howard v. Manning, 79 Okla. 165, 192 P. 358, 12 A.L.R. 819; 1 Summers Oil Gas, Sec. 38; 62 C.J. 422; 14 Am. Jur. 96, Sec. 25, Co-tenancy; 36 Am. Jur. 398, Sec. 169, Mines Minerals.
The court should not place a construction on a clause that is clear and unambiguous so that it would change the whole meaning of said clause.
The reservation dealt with the present interest in that part of the minerals reserved.
Since the word "royalty" was not inserted in the reservation in the deed to appellant, it cannot now be read as including said word. A reservation of minerals or mineral rights without limitation includes royalty, bonuses, and rentals.
See 3 Summers Oil Gas, Per. Ed., Secs. 571, 586, p. 394, note 60; 54 C.J. 1107.
Herein appellants received a conveyance from appellees whereunder appellants received the surface and appellees specifically reserved one-fourth of the minerals and appellants paid a cash consideration. A person cannot claim under an instrument without confirming it. He must found his claim on the whole, and cannot adopt that feature or operation which makes in his favor, and at the same time repudiate or contradict another which is counter or adverse to it.
Chism v. Hollis, 152 Miss. 772, 118 So. 713; Fornea v. Goodyear Yellow Pine Co., 181 Miss. 50, 178 So. 914, 917; Broom's Legal Maxims, 7th Ed., p. 539; 16 Am. Jur. 610, Sec. 303; 19 Am. Jur., Sec. 5, p. 603, p. 619, p. 624, Sec. 26.
Appellants' contention as to Great Southern Lumber Company not being an indispensable party is erroneous. If title of Great Southern Lumber Company is not vested in appellees, still the bill was properly dismissed because appellants must recover on the strength of their title and not on a defect, if any, in that of appellees, and no cancellation may be granted where appellants' title defective.
Appellants must recover on their own title and cancellation of that reserved by Great Southern Lumber Company may not be had where complainants show inferiority of their title to the title attacked. Toulman v. Heidelberg, 32 Miss. 268; Gambrell Lumber Co. v. Saratoga Lumber Co., 87 Miss. 773, 40 So. 485. So that when, as is demonstrably the case here, appellants have no title to the undivided one-fourth interest in the minerals, of necessity the bill must be dismissed, it being immaterial, quo ad appellants, whether proper conveyances from Great Southern Lumber Company to Southern Mineral Development Corporation to appellees were made or not.
With deference, the provisions of this deed are so specific as to appellees' rights that the court may not construe. There is no ambiguity.
Restatement of the Law, Contracts, Mississippi Annotations, Sec. 235; 4 Mississippi Digest, Contracts, Key No. 143.
Where there is an inconsistency between general provisions and specific provisions, the specific provisions ordinarily qualify the meaning of the general provisions.
Appellants completely overlook that there are no words of inheritance in either of these deeds, and without our statute changing the common law rule, appellants would take not a fee in the surface, but a mere life estate, and so taking at common law would be without right to open new mines.
33 Am. Jur., Life Estates, etc., p. 829, Sec. 328.
Let the court keep clearly in mind that there has been no attempt upon the part of the Great Southern Lumber Company to reserve any royalty interest. That reserved, as shown by the preceding Mississippi cases, was simply and solely an interest in the minerals, as such, and when counsel for appellees assumes to deal with those cases wherein the courts draw distinctions between the mineral fee and a fee in a royalty estate, this court in this cause has naught therewith to do.
While at common law upon dissolution real estate reverted, presently it vests in the stockholders as tenants in common. Presumably this is applicable to foreign corporations.
A foreign corporation dissolved in the state of its domicile may be deemed alive in Mississippi so as to afford remedy to its citizens against property within its jurisdiction.
Appellants contend that due to there being no express power in Cushing to reserve, the reservation in appellants' deed from the Great Southern Lumber Company by Cushing was "ultra vires" and therefore void, but claiming under this deed, appellants must claim in accordance with its terms.
Wailes v. Cooper, 24 Miss. 208; 14 Miss. Digest, Key No. 230, Vendor Purchaser.
Furthermore, claiming under this deed, no one other than the state may raise the question of "ultra vires."
Federal Land Bank of New Orleans v. Cooper, 190 Miss. 490, 200 So. 729; New Orleans N.E.R. Co. v. Jemison, 144 Miss. 890, 110 So. 785; Middleton v. Georgetown Mercantile Co., 117 Miss. 134, 77 So. 956.
The Great Southern Lumber Company, having reserved an undivided one-fourth interest in all of the minerals as property, thereover possessed those rights by law conferred. It was and is lawful for this company and its successors in title to have and to hold this undivided one-fourth as a tenant in common. Thereasto it has not constituted appellants its agent with power of disposition and with power to appropriate on such disposition, the bonus, the delay rental, and such other sums as appellants might see fit to realize at the expense of the Great Southern Lumber Company when leasing their three-fourths of the minerals. Royalty, while usually a one-eighth, in some instances in the Heidelberg Field has been as great as one-half. In many instances the owner operates directly without a lease, paying the proportionate part of operating cost as the property is drilled. The right of independent operation — co-leasing, and all such usual rights, — are completely ignored by the appellants.
We respectfully submit that when this deed was made the Great Southern Lumber Company reserved precisely that which was therein declared, an undivided one-fourth interest in all minerals. Thereof it was and is owner and it may not be separated therefrom by its vendee who paid only for the surface and three-fourths of the minerals, leaving in the Great Southern Lumber Company that ownership as to which we invoke the law's protection confidently.
In 1926, The Great Southern Lumber Company, a corporation, and the then owner of the land here involved, conveyed a portion of it to the appellant by a deed in which the description of the land was followed by:
"It is understood and agreed, that the said Company, for itself, its successors and assigns, reserves the right to lay out and establish a road or roads, not more than thirty feet in width, along and upon the section lines surrounding the section in which the above described property is situated, and also along and upon the quarter-section lines of said section, for the use of the public, or as neighborhood roads.
"The Company hereby reserves and retains an undivided one-fourth (1/4) interest in and to all minerals, oil and gas that might hereafter be discovered on the lands herein described, and it is understood and agreed that the right of title so retained shall not be extinguished by the prescription, but shall persist without limit of time notwithstanding that the seller has done nothing on said land or in the discovery of said minerals, oil and gas, prior to their discovery."
In 1927, it executed another deed to the appellant to another portion of the land with the same two clauses therein. The appellees have succeeded by mesne conveyances to whatever right The Great Southern Lumber Company retained in the minerals, oil and gas lying in the land. It has not yet been ascertained whether there are any minerals of any kind in this land. In March 1934, the appellant exhibited a bill of complaint against the appellees in the court below and prayed "that all claims of the said Defendant to the lands of the Complainant, S.J. McNeese, be cancelled as a cloud upon the title of Complainant; that if Complainant is mistaken in this his general prayer for relief, then he prays that the Court will construe the deeds of conveyance, conveying the lands to him and especially as to Paragraphs Three in the said Deeds of Conveyance and to fix the intended interest in and to the Oils, Gas and Minerals in, on or under the said land that the said Defendants now have under said Deeds of Conveyance, if any they have; . . ." A demurrer by the appellees to this bill of complaint was sustained, and on the complainant's declining to plead further, the bill was dismissed as to these appellees. There are other defendants to this bill of complaint who have no connection with the claim of the appellees to the minerals in this land, and by stipulation of counsel, the cause was continued as to them to await the outcome of an appeal by the appellant to this court from the decree dismissing the bill as to these appellees.
The appellant's contentions, as we understand them are: (1) That the exceptions in these deeds do not retain title to minerals in the land in The Great Southern Lumber Company but only vest it with the right to one-fourth of any minerals that might be discovered to be therein, prior to which time The Great Southern Lumber Company and its assignees have no interest whatever therein; and (2) that no right was retained in these deeds by The Great Southern Lumber Company to enter the land to explore for and remove any mineral that might lie therein.
The words "that might hereafter be discovered" in these deeds neither add to nor detract from what the exceptions therein would have meant had they been omitted and the exceptions have been permitted to read as follows: "The Company hereby reserves and retains an undivided one-fourth interest in all minerals, oil and gas on the land herein described." Where minerals lie under the surface of land, their presence is usually unknown until discovered by penetration beneath the surface sufficient therefor. In Moss v. Jourdan, 129 Miss. 598, 92 So. 689, 690, the language of the exception of minerals from the grant was "all minerals that may be on the above-described land."
There was no necessity for these deeds to reserve any right to The Great Southern Lumber Company to enter the land to ascertain the presence of and remove minerals that might lie therein, that right being necessarily implied from the reservation itself. Moss v. Jourdan, supra; Pace v. State, 191 Miss. 781, 4 So.2d 270; 1 Summers Oil Gas, sec. 133, p. 325. It follows from this that the appellees have a present, undivided one-fourth interest in the minerals that may be in this land, as tenants in common of the appellant. Wight v. Ingram-Day Lumber Co., 195 Miss. 823, 17 So.2d 196.