Heman v. Jefferson
| Decision Date | 03 July 1985 |
| Docket Number | No. 4-84-0862,4-84-0862 |
| Citation | 136 Ill.App.3d 745,483 N.E.2d 537,91 Ill.Dec. 191 |
| Parties | , 91 Ill.Dec. 191 Jane S. HEMAN, Plaintiff-Appellee, v. Mary Anna JEFFERSON, a/k/a Mary Ann Jefferson, individually, and as Executor of the Will of John H. Jefferson, deceased, Pamela Baker Jefferson (Powell), individually and as Executor of the Will of William T. Jefferson, Stewart Jefferson Powell, Elliott Jefferson Powell and John H. Ryan, Defendants- Appellants. |
| Court | United States Appellate Court of Illinois |
Thomas J. Logue, Glenn & Logue, Mattoon, for John ryan.
Ward E. Dillavou, Dillavou, Overaker & Smith, Paris, for Jefferson, et al.
William F. Meehling, Meehling, Rich & Bernardoni, Marshall, for plaintiff-appellee.
This is the second time this cause appears in the appellate court. Plaintiff seeks cancellation of an oil and gas lease. We reverse and remand, finding that plaintiff was not entitled to summary judgment. A default judgment entered against one set of defendants may not be used as an admission of a disputed evidentiary matter by the nondefaulting defendants. Plaintiff's summary judgment motion in effect used the defaulted defendants' admission of a failure to reasonably produce the disputed property as the basis of cancelling the nondefaulting defendants' interests in the property.
A detailed summary of the history of the cause of action is necessary to an understanding of our disposition. In 1959, Vera Shaw leased 11 parcels of land, 438.5 acres, to John Jefferson for the production of oil and gas. The land is situated in Clark County. The primary term of the lease was for three years and as long thereafter as oil, gas, or casing head gas is produced or wells drilled on the property. Shaw reserved a one-eighth royalty interest.
On May 4, 1964, John Jefferson and his wife Mary Ann[a] Jefferson assigned their interest in the northeast quarter of section 4, township 11 north, range 14 west, Clark County to J.L. Cowan. The Jeffersons reserved an overriding royalty interest. On August 24, 1967, a corrected assignment was filed. The corrections dealt with the overriding royalty interest.
J.L. Cowan made 21 assignments equaling at least 67/64th fractional working interests in the northeast quarter of the northeast quarter of section 4, township 11 north, range 14 west, Clark County. The fractional working interests of two of the assignees were not listed. Cowan made 22 assignments totaling 50/64th fractional working interests in the south half of the northeast quarter of section 4, township 11 north, range 14 west, Clark County. None of the named assignees have interests in any other portion of the leasehold.
In 1980, Shaw filed a complaint seeking to cancel the lease as it pertained to a portion of the leasehold, 318.5 acres. Shaw alleged the named defendants, all of those who had or claimed an interest in the 318.5 acres, breached an implied covenant to develop the property. Shaw died. The court substituted Shubrick Kothe, executor of her estate, as plaintiff.
Plaintiff added John Ryan as a defendant. Ryan claimed a working interest in the leasehold through an assignment dated March 1980 from Jefferson's widow and his heirs.
Defendants claiming working interests through J.L. Cowan (Cowan heirs and assignees) defaulted. Subsequently, plaintiff moved for summary judgment as to the northeast quarter of the northeast quarter of section 4, and the south half of the northeast quarter of section 4, township 11 north, range 14 west, Clark County. The complaint did not seek cancellation of the lease as it pertained to the northwest quarter of the northeast quarter of section 4, township 11 north, range 14 west, Clark County.
Plaintiff moved for summary judgment on the section 4 land in question as to Jefferson's widow and his heirs (Jefferson heirs) and John Ryan. The trial court granted the motion. The Jefferson heirs and Ryan appealed.
This court reversed, finding the complaint did not state a cause of action because the implied warranty to reasonably develop the leasehold was indivisible. (Kothe v. Jefferson (1982), 109 Ill.App.3d 247, 64 Ill.Dec. 863, 440 N.E.2d 415.) The supreme court affirmed. However, it remanded to allow plaintiff an opportunity to file an amended complaint alleging defendants failed to reasonably develop the entire 438.5 acres. Kothe v. Jefferson (1983), 97 Ill.2d 544, 74 Ill.Dec. 43, 455 N.E.2d 73.
After remand, the trial court substituted Jane Heman, Shaw's devisee, as plaintiff. Ryan petitioned for a change of venue on November 16, 1983. The trial court denied the motion as untimely.
On December 2, 1983, plaintiff filed an amended complaint seeking cancellation of the lease, except for two parcels which were in production. Plaintiff alleged defendants breached an implied covenant to reasonably develop and produce the 438.5 acres. Plaintiff also alleged defendants breached an implied covenant to prevent drainage.
Plaintiff named all those who "have or may claim a record interest" in the 438.5 acres as defendants. Therefore, the amended complaint named Mary Ann[a] Jefferson, individually and as executor of John Jefferson's estate; Pamela Baker Jefferson Powell, widow of Mary Ann[a] and John's son William; and Stuart and Elliott Jefferson Powell, sons of William Jefferson (Jefferson heirs). The amended complaint also named all the heirs and assignees of the Jeffersons' assignee J.L. Cowan (Cowan heirs and assignees). Plaintiff named John Ryan as defendant. Ryan again claimed an interest based upon an assignment from the Jefferson heirs.
The Cowan heirs and assignees again defaulted as to the northeast quarter of the northeast quarter and the south half of the northeast quarter of section 4, township 11 north, range 14 west, Clark County (summary judgment land). Subsequently, plaintiff filed count III. In count III plaintiff sought to quiet her title as to the summary judgment land. She named the Jefferson heirs and Ryan as defendants. In count III plaintiff alleged that she owned the summary judgment land. Plaintiff also alleged that the Jefferson heirs and Ryan [hereinafter defendants] unlawfully claimed interests in the parcel as devisees or heirs of Jefferson through: (a) the August 24, 1976, assignment to Cowan, (b) a purported assignment dated March 20, 1980, from the Jefferson heirs to Ryan, and (c) a claim not based on the record.
Plaintiff argued that the defendants' interests were invalid because: (a) The overriding royalty interest preserved in the 1967 Jefferson-Cowan assignment terminated on cancellation of the lease as to all record working interest holders; (b) the working interest reserved in the Shaw-Jefferson lease at the time of the 1980 assignment to Ryan was owned of record by the Cowan heirs and assignees, whose interests had been cancelled by the default judgment entered on counts I and II of the amended complaint; and (c) the Jefferson heirs did not have any working interest to assign to Ryan on March 20, 1980. Plaintiff asked the court to declare the defendants' interests void and to quiet her title in the summary judgment land.
On May 14, 1984, defendants moved to strike count III for failing to state a cause of action. The motion alleged plaintiff's recovery was based upon the Cowan heirs and assignees' default being used as an admission by defendants of a failure to reasonably produce the summary judgment land. The trial court denied the motion.
Defendants answered count III. They denied that they unlawfully claimed an interest in the summary judgment land, admitted the Jefferson-Cowan assignment and the Jefferson heirs-Ryan assignment, and denied that their claim was based on nothing of record.
Defendants responded to plaintiff's first request for admission of facts. They admitted the Shaw-Jefferson lease, and that Jefferson and his wife had assigned their interest in the northeast quarter of section 4, township 11 north, range 14 west, to J.L. Cowan. Defendants also admitted the assignments made by Cowan and that none of Cowan's heirs or assignees had interests in any other portion of the leasehold. Defendants further admitted that none of them now have or claim a working interest in the summary judgment land except Ryan. The Jefferson heirs do not claim an interest except one from the Shaw-Jefferson lease. Ryan's interest is limited to the Jefferson heirs-Ryan assignment.
Defendants did not respond to plaintiff's second request for admission of facts. Therefore, the facts contained in the request are admitted. (87 Ill.2d R. 216(c).) The Jefferson heirs admitted that they claimed no interest in the summary judgment land except through John Jefferson and William Jefferson. Neither Cowan nor his heirs or assignees ever reassigned any interest in the summary judgment land to John Jefferson.
Plaintiff, armed with the default judgment and the admission of facts, moved for summary judgment on count III. By definition, an overriding royalty interest has no existence apart from a working interest. (Gordon v. Empire Gas & Fuel Co. (5th Cir.1933), 63 F.2d 487; Black's Law Dictionary 995 (5th ed.1979).) In her motion for summary judgment, plaintiff argued that Jefferson had assigned his working interest to Cowan who in turn assigned his interest to parties other than the defendants. Since the lease had been cancelled as to all those working interest holders by the default judgment, Jefferson's overriding royalty interest terminated. Plaintiff therefore argued that she was entitled to summary judgment since an overriding royalty interest cannot exist absent a working interest in the leased tract.
Defendants filed objections to the motion. They alleged the complaint did not state a cause of action because it relied upon the Cowan heirs and assignees' default as an admission by the nondefaulting defendants. The prior appellate and supreme court opinions had specifically precluded such reliance. Defendants...
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