Kansas Natural Gas Company v. Board of County Commissioners of County of Neosho

• Decision Date: 09 March 1907
• Docket Number: 14,915,14,916
• Citation: 89 P. 750,75 Kan. 335
• Parties: THE KANSAS NATURAL GAS COMPANY v. THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF NEOSHO et al. THE KANSAS NATURAL GAS COMPANY v. THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF NEOSHO et al
• Court: Kansas Supreme Court

89 P. 750

75 Kan. 335

THE KANSAS NATURAL GAS COMPANY v. THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF NEOSHO et al.

THE KANSAS NATURAL GAS COMPANY v. THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF NEOSHO et al

Nos. 14,915, 14,916

Supreme Court of Kansas

March 9, 1907

Decided January, 1907.

Error from Neosho district court; LEANDER STILLWELL, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUSUS BY THE COURT.

1. MINES AND MINERALS--Oil-and-gas Lease--Rights of Lessee. An oil-and-gas lease conferring upon the lessee the right to "enter upon, operate for and procure oil and gas" upon land described, and containing no provisions indicating otherwise, grants a license to enter and explore, and, if oil or gas is found, the right to produce and sever it.

2. MINES AND MINERALS--Title to the Minerals. Until mineral of the kind described is actually produced and severed so that it becomes personalty the lessee has no title to any specific portion of it, but the legal title to, and the possession of, the entire mass and volume remain in the owner of the strata in which it is confined.

3. TAXATION--Minerals in Place. Chapter 244 of the Laws of 1897, relating to the taxation of separately owned mineral rights, has no application except when the right or title to minerals in place has been severed from the right or title to the remainder of the land and has become vested in a person other than the one having the right or title to the remainder of the land.

4. TAXATION--Same. When the statute applies the right or title to. minerals is taxed as realty.

John J Jones, and Eugene Mackey, for plaintiff in error; Jones & Finley, and Lee & Mackey, of counsel.

J. L. Denison, county attorney, for defendants in error; C. S. Denison, of counsel.

OPINION

BURCH, J.:

The plaintiff is the assignee of an oil-and-gas lease of land in Neosho county. The county officials undertook to tax separately from the land itself whatever mineral rights the lease created. Upon non-payment of the tax the treasurer was about to enforce collection by a sale of so much of the "mineral reserve" of the land described in the lease as might be necessary for the purpose, when the plaintiff brought suit to enjoin the sale and to annul the tax.

The instrument in question provides that in consideration of one dollar and the covenants of the parties the lessor leases to the lessee the exclusive right for ten years "to enter upon, operate for and procure oil and gas" upon the land described. The lessee agrees to deliver to the lessor one-tenth of the oil realized, or, at the lessor's option, to pay cash for it. On the discovery of gas the lessor is to have enough for domestic purposes free of charge. The lessee takes the remainder, including gas from oil-wells, and agrees to pay fifty dollars per year if gas is marketed from wells producing gas only. Wells are to be located in a way that will interfere as little as possible with the cultivation of the surface of the land. Provision is made for terminating the lessee's rights and for continuing them in force, and the terms of the contract are made binding upon the heirs, executors and assigns of the parties to it.

No oil- or gas-well has been drilled, and the mineral resources of the land, if any exist, are as yet entirely undeveloped.

The county officials proceeded under chapter 244 of the Laws of 1897, which in part reads:

"AN ACT to provide for the assessment and taxing of mineral reserves, or leases, or separately owned mineral or mineral rights, to the owner thereof, separately from the land, and providing penalties for its violation.

"Be it enacted by the Legislature of the State of Kansas:

"SECTION 1. That where the fee to the surface of any tract, parcel or lot of land is in any person or persons, natural or artificial, and the right or title to any minerals therein is in another, or in others, the right to such minerals shall be valued and listed separately from the fee of said land, in separate entries and descriptions, and such land itself, and said right to the minerals therein, shall be separately taxed to the owners thereof respectively. The register of deeds shall furnish to the county clerk, who shall furnish on the 1st day of March each year to each assessor where such mineral reserves exist and are a matter of record, a certified description of all such reserves; provided, that when such reserves or leases are not recorded within ninety days after execution they shall become void if not listed for taxation." (Gen. Stat. 1901, § 7583.)

The district court, ruling upon a demurrer to the petition, which disclosed fully all the facts, upheld the tax and refused an injunction against the proposed proceedings to enforce its collection. The plaintiff prosecutes error to this court.

The question involved depends for its solution upon the proper interpretation to be given the statute. The confusion of thought and inaccuracy of expression so frequently exhibited in legislative enactments are quite apparent in this one, and the precise purpose to be accomplished is somewhat difficult of discernment.

Land, of course, is an all-comprehensive term, and includes everything the elementary law-books say it includes. It may be composed in part of minerals, using the term "minerals" in the popular sense of those inorganic constituents of the earth's crust which are commonly obtained by mining, or other process for bringing them to the surface, for profit. The mineral and non-mineral portions of land are distinguishable and severable, both in legal theory and in fact, and separate property rights in each may coexist. Minerals in place are a part of the land itself, and while they are unsevered are treated as real estate.

The substantive provisions of the law are contained in that part of section 1 which ends with the first period. They clearly relate to land with the minerals of which it is in part composed in place. The "minerals therein" can mean none other than minerals imbedded in the earth as nature deposited them.

On the other hand, the act as clearly deals with severed titles. In common speech the non-mineral portion of land, the portion which covers and envelopes the minerals, is called "the surface" or "the land," and the proprietor of land who devests himself of title to the minerals which it contains is still spoken of as the owner of "the fee" or of "the surface" or of "the land." Minerals themselves are usually called by that name, and the person having a separate property in them alone is spoken of as owning the mineral or having the mineral rights in the land. So in the statute the "fee to the surface" and the "fee of said land" are set in opposition to "the right or title to any minerals therein."

It is contemplated that there shall be an estate consisting of what is left after the mineral rights have been carved out, and that there shall be an estate consisting of the mineral rights which have been segregated. The statute further contemplates that each estate must vest in a separate person. The respective proprietors are called "owners," and the estate in the minerals is nothing short of the right or title to the minerals themselves as they lie in the ground.

When such a state of affairs exists the statute regards the owner of the mineral rights as the proprietor of a distinct item of property which is taxable to him apart from that which is taxable to the owner of the tract, parcel or lot in which the minerals are located, and it makes provision for separate lists, entries, descriptions, valuations, etc. The right or title to the minerals, as the statute expresses it, is taxed as realty. The owner is charged with taxes according to the value of his interest,...