Hutton v. Carnegie Natural Gas Co.

Decision Date14 October 1912
Docket Number132-1912
Citation51 Pa.Super. 376
PartiesHutton v. Carnegie Natural Gas Company, Appellant
CourtPennsylvania Superior Court

Argued April 16, 1912 [Syllabus Matter]

Appeal by defendant, from judgment of C.P. Westmoreland Co.-1911 No. 197, on verdict for plaintiffs in case of William Hutton and Angeline Hutton, his wife, v. The Carnegie Natural Gas Company.

Assumpsit for the recovery of six quarterly installments due under a written grant of oil and gas. Before McConnell, J.

The opinion of the Superior Court states the facts.

At the trial the defendant presented the following points:

1. It appearing from the evidence that the gas well mentioned in the testimony was abandoned and disconnected on August 2 1909, or prior thereto, and that no gas was used off the premises after that date, we instruct you that the plaintiffs cannot recover in this case under the true interpretation of the contract signed by the plaintiffs. Answer: That is refused.

2. The said contract is in the nature of a grant of the gas in place, and not a lease thereof, and the relation of landlord and tenant did not exist, and, therefore, the defendant was not required to give to the plaintiff actual notice of abandonment to be relieved from liability. The mere cessation of the use off the premises of the said gas by the defendant was sufficient to relieve it of anything for which the plaintiffs claim in this case. Answer: That is refused.

3. If the court is not of the opinion that the cessation of use off the premises and abandonment of the well took place on or before August 2, 1909, and that it did take place on November 27, 1909, at which time the casing was withdrawn from the well and taken off the premises, there would be no liability, and the recovery under this view of the case, would be restricted to two quarters' rent or royalty at the rate of $ 75.00 a quarter, falling due on August 8, 1909, and November 8, 1909, with interest. Answer: That is refused.

4. Under all the evidence the plaintiffs are not entitled to recover and the verdict should be for the defendant. Answer: That is also refused.

Verdict and judgment for plaintiffs for $ 496.30. Defendant appealed.

Errors assigned were in giving binding instructions for plaintiffs, and answers to points as above.


Robt. W. Smith, with him James S. Moorhead, for appellant. -- The agreement of the parties constituted a sale of the oil and gas under plaintiff's land in situ, and therefore the payments of $ 75.00 per quarter to be paid in the event gas only was found " for the product of each well while the same is being used off the premises," was in the nature of additional consideration of royalty, and under the facts in this case the plaintiffs should not recover: Stoughton's App., 88 Pa. 198; Blakley v. Marshall, 174 Pa. 425; Marshall v. Mellon, 179 Pa. 371; Hicks v. Gas Co., 207 Pa. 570; Lambert v. Smith, 9 Oregon, 185; Des Moines County Agricultural Society v. Tubbeissing, 87 Iowa, 138 (54 N.W. 68); Hosack v. Crill, 18 Pa.Super. 90; Fritz v. Menges, 179 Pa. 122; Gardner's Estate, 199 Pa. 524.

There was a failure of the very thing for which and out of which the royalty was payable, and certainly the obligation of the appellant to pay cannot be carried beyond the failure of the subject-matter of the grant: Boyer v. Fulmer, 176 Pa. 282; Bannan v. Graeff, 186 Pa. 648.

John E. Kunkle, with him J. Harry Pershing, for appellees. -- We believe that there is nothing in the contract sued upon to differentiate it from the other contracts of a similar nature, which have been construed in the following authorities: Nesbit v. Godfrey, 155 Pa. 251; Double v. Union Heat & Light Co., 172 Pa. 388; Wilson v. Philadelphia Co., 210 Pa. 484.

Before Rice, P. J., Henderson, Morrison, Orlady, Head and Porter, JJ.



The agreement out of which this case arose was executed on June 25, 1907, and begins as follows: " In consideration of Thirty $ 30 Dollars the receipt of which is hereby acknowledged and the agreements hereinafter mentioned William M. Hutton and Angeline Hutton his wife . . . . hereby grants unto Carnegie Natural Gas Company . . . . its heirs and assigns all the oil and gas in and under the following described premises, together with the right of ingress and egress at all times, for the purpose of drilling and operating for oil and gas and to conduct all operations and lay all pipes necessary for the production and transportation of same, reserving, however, to first parties the equal one-eighth part of all oil produced and saved from the premises, to be delivered in the pipe lines to the credit of first parties free of charge." Here follows a description of the land, containing ten acres more or less. The agreement then proceeds: " To have and to hold the above premises unto the party of the second part its heirs and assigns, for and during the term of ten years, or such part of said term as second party may consider it valuable for oil and gas purposes, and comply with the terms hereinafter mentioned, and as long thereafter as oil or gas is produced in paying quantities." Then follows the clause upon the construction of which (as no oil was found) the case turns: " If gas only is found, second party agrees to pay at the rate of Three Hundred $ 300 Dollars each year, payable quarterly in advance, for the product of each well while the same is being used off the premises." The agreement then provides that, if " no well is commenced on the premises within twelve months from this date, then this grant shall at once become null and void as to both parties, provided that second party may prevent such forfeiture from quarter to quarter and no longer, by paying to the first party in advance or within ten days thereafter at the rate of Three $ 3 Dollars per acre, annually, until such well is commenced." The only other clause of the agreement that need be noticed is as follows: " It is further agreed that the second party shall, by paying all moneys due, have the right to surrender this grant at any time to the first parties and thereafter be fully discharged from any and all claims whatsoever arising from any neglect or non-fulfillment of the foregoing contract."

It appears that within twelve months the defendant began drilling a well on the land, which, upon completion, it connected with its line, and, on November 8, 1908, began using gas off the premises. The installments due, for the three successive quarters, beginning November 8, 1908, were each paid in advance, as stipulated in the agreement. On August 2, 1909, which was just before the beginning of the fourth quarter, the well was disconnected and the plaintiffs notified to that effect, and, on November 27, 1909, the well was plugged, the casing removed therefrom, and the pipe line from the well to the main line was removed. It is conceded that the defendant did not formally surrender, nor has it yet surrendered, the grant, but the well and line were never reconnected. The defendant's evidence tended to show that the reason for the disconnection and abandonment of the well was that it was not producing gas in the line.

This action was brought, in December, 1910, for the six quarterly installments beginning August 8, 1909, amounting in all to $ 450. By direction of the court, the jury rendered a verdict for the plaintiffs for the full amount of their claim, and from the judgment thereon this appeal was taken by the defendant.

The agreement between the parties was, neither in terms nor by the name they gave it, a lease of land for the purpose of exploring, drilling, and operating for oil and gas, but expressly and in apt terms was a grant of all the oil and gas in and under the described premises, to which was added the incidental right of ingress and egress for the purpose of drilling, operating, removing, etc. Oil and gas in and under land, being minerals, are part of the realty, which notwithstanding their migratory nature, may be severed in title from the surface by conveyance so as to vest in the grantee the mineral estate, as fully as it was before vested in the owner of the land: Stoughton's App., 88 Pa. 198; Blakley v. Marshall, 174 Pa. 425; Marshall v. Mellon, 179 Pa. 371; McIntosh v. Ropp, 233 Pa. 497, 512. In one of the latest cases on the subject it was said: " That there can be a severance of the minerals from the surface so as to create a separate estate in each, is too well settled to need the citation of authorities. This rule is as old as the common law and is of universal application in this country. It adds value to property and makes it possible for the owner of the soil to sell and convey the underlying mineral estate, frequently for a large consideration, while he retains the surface for agricultural and other purposes. Such a beneficial rule of property should not be cut down or impaired by refinements and distinctions intended to defeat rather than widen its scope and purpose:" Hyde v. Rainey, 233 Pa. 540. Viewing the instrument under consideration in the light of these general principles, we are led to the conclusion that, as between the parties, it was in legal effect, and was actually intended to be, a conveyance of the oil and gas in and under the described land, whereby the title to them, the legal ownership of them, in place, was transferred from the grantor to the grantee. The language of the habendum does not militate against this conclusion, but rather strengthens it, because it provides that the grantee is to have and to hold the premises not only for the term of ten years, but as long thereafter as oil or gas is produced in paying quantities: Kingsley v. Coal & Iron Co., 144 Pa. 613 at 613-628. While the consideration presently payable was a small sum, it was...

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