Kentucky West Virginia Gas Co. v. Preece

• Decision Date: 18 June 1935
• Citation: 260 Ky. 601,86 S.W.2d 163
• Parties: KENTUCKY WEST VIRGINIA GAS CO. v. PREECE et al.
• Court: Kentucky Court of Appeals

86 S.W.2d 163

260 Ky. 601

KENTUCKY WEST VIRGINIA GAS CO. v. PREECE et al.

Court of Appeals of Kentucky

June 18, 1935

Rehearing Denied Oct. 30, 1935.

Appeal from Circuit Court, Martin County.

Action by the Kentucky West Virginia Gas Company against Alex Preece and another, wherein defendants demurred. From a judgment sustaining the demurrer and dismissing the petition plaintiff appeals.

Reversed with directions.

Combs &amp Combs, of Prestonsburg, for appellant.

S. S Willis and John T. Diederich, both of Ashland, for appellees.

REES Justice.

This is an action to recover money alleged to have been paid under a mistake of law. The circuit court denied the plaintiff the relief sought by it and it has appealed.

On December 14, 1926, Alex Preece and his wife, Jane Preece, by two separate instruments leased to the Ivyton Oil & Gas Company and R. J. Graf the oil and gas rights in two tracts of land, one of 187 acres, owned by the wife, and the other of 12 acres, owned by the husband. The two leases were identical in terms and were for twenty years and as much longer as oil or gas was produced in paying quantities. The lessees agreed to pay to the lessors $300 per year for each gas well and one-eighth of the oil. They further agreed to commence a well on the land by January 1, 1927, or thereafter to pay the lessor at the rate of $1 per acre per annum payable each three months in advance until such well was completed or the lease was surrendered. The lease contained a surrender clause conditioned upon the payment of $1 and all accrued rentals and royalties. Shortly after the leases were executed, they were assigned by the lessees to the appellant, Kentucky West Virginia Gas Company.

On January 9, 1993, appellant availed itself of the surrender clause and then brought this action to recover the amount of rentals which it had paid. No well was drilled on either tract of land and the specified rentals were paid up to the date the lease was surrendered. The payments amounted to $60 on one of the leases and $935 on the other. In its petition the plaintiff alleged that by the leases executed December 14, 1926, the defendants warranted generally their title to all the oil and gas in and under the tracts of land described and that the lessees never drilled any wells on either of the tracts of land, but in lieu of drilling paid delay rentals as provided in the leases in the total amount of $995. It was further alleged that on April 14, 1890, the predecessors in title of the defendants sold and conveyed to one Arthur D. Bright, trustee, "all the coal, salt water, and minerals of every description, in, upon, and under 325 acres of land located on Rock House Fork in Martin County, Kentucky," which embraced all of the lands described in the two leases from the defendants to the Ivyton Oil & Gas Company and R. J. Graf; that the deed from defendants' predecessors in title to Arthur D. Bright, trustee, in addition to conveying the minerals therein described, "also granted and conveyed the full and complete rights and privileges of every kind for mining, manufacturing and transporting such coal, salt water and minerals on, through and over said premises, and in particular the right of exploring for and extracting the said minerals, and also with full rights to, from and over said premises by the construction and use of roads, tramways, railroads or otherwise for the purpose of exploring, extracting, storing, handling, manufacturing, refining, shipping or transporting all said minerals whether contained on the said premises or elsewhere." It was alleged that by this deed Arthur D. Bright, trustee, acquired title to all the oil and gas rights in the two tracts of land in question and that consequently the defendants had no title to the oil and gas rights in the land at the time they executed the leases to the Ivyton Oil & Gas Company and R. J. Graf.

The rights acquired by Arthur D. Bright, trustee, were subsequently conveyed to the Federal Gas, Oil & Coal Company, which leased the oil and gas rights to the Warfield Natural Gas Company on January 1, 1929, for a term of ten years or as long thereafter as oil or gas was produced in paying quantities.

When the defendants leased the land to the Ivyton Oil & Gas Company and R. J. Graf, the lessees employed a competent and experienced attorney of Salyersville to examine the title of the defendants to the oil and gas rights in the land and he reported that the mineral deed executed on April 14, 1890, by the defendants' predecessors in title to Arthur D. Bright, trustee, did not cover or embrace the oil and gas in the lands in question and that in his opinion the defendants were the owners of the oil and gas rights. The plaintiff continued to pay the delay rentals until it learned that the Warfield Natural Gas Company held a lease from the Federal Oil, Gas & Coal Company covering the same oil and gas rights when it sought further legal advice as to the validity of its leases. It was advised by its attorney that the deed to Arthur D. Bright, trustee, operated to pass the oil and gas rights in the lands described in the deed, which included the two tracts embraced in the two leases from the defendants, and that the defendants had no title to the oil and gas in the land when they executed the leases.

It alleged that it paid the delay rentals amounting to $995 by reason of mutual mistake on the part of the defendants and itself, both parties mutually believing at the time the payments were made that the defendants had good and marketable title to the oil and gas rights at the time they executed the leases. A demurrer to the petition was sustained and, the plaintiff having declined to plead further, its petition was dismissed.

The deed executed April 14, 1890, to Arthur D. Bright, trustee by the then owners of the fee undoubtedly conveyed the oil and gas along with all other minerals. The word "minerals" in a deed embraces oil and gas unless the language of the deed discloses an intention to exclude them. Scott v. Laws, 185 Ky. 440, 215 S.W. 81, 13 A. L. R. 369. In Hudson & Collins v. McGuire, 188 Ky. 712, 223 S.W. 1101, 17 A. L. R. 148, the deed there in controversy conveyed "all of the minerals (except stone coal), with necessary right of ways and privileges for prospecting, mining and smelting," and it was held that the words "mining and smelting" have no place in a grant of oil or gas rights or privileges, and their use, as well as the absence of suitable words to show that oil or gas was intended to be conveyed, rendered the deed sufficiently ambiguous to admit extrinsic evidence as to the intention of the parties to the instrument. It was stated in the course of the opinion that in the absence of restrictive words a conveyance of "minerals" will...