Kumberg v. Kumberg

• Decision Date: 04 February 1983
• Docket Number: No. 54246,54246
• Parties: Harold KUMBERG, Bob Kumberg and Frank Kumberg, Appellants, v. Carl KUMBERG, et al., Appellees and Cross-Appellants.
• Court: Kansas Supreme Court

Page 823

659 P.2d 823

232 Kan. 692

Harold KUMBERG, Bob Kumberg and Frank Kumberg, Appellants, v. Carl KUMBERG, et al., Appellees and Cross-Appellants.

No. 54246.

Supreme Court of Kansas.

Feb. 4, 1983.

Syllabus by the Court

1. The primary function of a court in the interpretation of a will is to ascertain the testator's intent as derived from the four corners of the will.

2. A "royalty interest" refers to the right to share in the production of oil and gas at severance. It is personal property. A "mineral interest" refers to oil and gas in place. It is a real property interest.

3. There must be at least two parties to a contract. It is not possible for an individual, simply by his own mental operations, to enter into a contract with himself, or with himself and others, even though he acts in different capacities.

4. One who takes an assignment of a void contract acquires nothing thereby.

5. A cotenancy is an association compelled by interest; it exists where there is multiple ownership and a unity of possession or right of possession of the property.

6. An issue is res judicata only when there is a concurrence of four conditions: (1) identity in the things sued for, (2) identity of the cause of action, (3) identity of persons and parties to the action, and (4) identity in the quality of the persons for or against whom the claim is made.

7. In an action seeking determination of the interests of the plaintiffs in gas produced by the owner of the fee, upon examining the evidence and the will which creates plaintiffs' interests, it is held: The plaintiffs have no ownership in the minerals in place; they own no mineral interests; their interest in the income from production constitutes personal, not real, property. Where the owner of the fee in both the surface and the mineral estate drilled a producing gas well without the consent of the plaintiff income beneficiaries, the trial court did not err in hearing evidence of the market value of oil and gas leases in the area and in awarding plaintiffs 1/5 each of 78% of 3/16 of total production, computed pursuant to the applicable provisions of the Uniform Principal and Income Act, K.S.A. 58-901 et seq.

W. Luke Chapin, of Chapin, Penny & Goering, Medicine Lodge, argued the cause and was on briefs for appellants and cross-appellees.

Steven C. Day, of Turner & Boisseau, Chartered, Wichita, argued the cause, and Christopher Randall and Hal D. Meltzer, Wichita, the same firm, were on brief for appellees and cross-appellants.

MILLER, Justice.

This is another chapter in a continuing controversy between the surviving brothers and sister of Herman Kumberg, deceased. At issue here is the interest of the brothers and sister in a producing gas well. Plaintiffs and appellants are Harold Kumberg, Bob Kumberg and Frank Kumberg; defendants and appellees are Carl Kumberg, individually and doing business as Gunner Oil Company, Beatrice Kumberg, Gunner Oil Company, a corporation, and Central States Gas Company, a corporation. We will first state the background facts and then discuss the issues presented.

Herman Kumberg owned a quarter section of land in Pratt County, Kansas, and eighty acres in Barber County, Kansas, at the time of his death on August 16, 1970. His will, dated July 22, 1969, was admitted to probate and record in the Probate Court of Barber County on September 9, 1970. Herman disposed of his Kansas real estate by the fourth paragraph of his will, which reads:

"FOURTH: I declare that I am possessed of an interest in land in the State of Kansas. I hereby give, devise and bequeath to my brother, CARL KUMBERG, all of my interest in any land in the State of Kansas; but I direct my brother, CARL, to divide the net profits from my share of such land among the survivors of my brothers and sister, including my brother CARL."

An order of final settlement was entered in the Probate Court of Barber County on August 11, 1972, in which the court construed the quoted paragraph of the will as follows:

"[T]he court finds that fee title to the real estate above-described [the quarter section in Pratt County and the 80 acres in Barber County] was devised and bequeathed by the decedent to Carl Kumberg and vested in him at the time of the decedent's death. The court further finds that by the terms of the Will, the decedent directed Carl Kumberg, his heirs and assigns to divide the net profits derived from said real estate above-described among the survivors of the decedent's brothers and sister, namely, Frank Kumberg, Bob Kumberg, Harold Kumberg, Carl Kumberg and Beatrice Kumberg, and the court finds that upon the death of one or more of the surviving brothers or sister, the net profits from said described real estate shall continue to be divided among the survivors until the death of all brothers and sister and the division of profits shall thereupon and forever cease and terminate."

No appeal was taken from that order.

Two years later an action which we shall refer to as Kumberg I was commenced in the District Court of Barber County. This first dispute concerned the profits from agricultural production on the land Carl inherited from Herman. The Court of Appeals later described that proceeding as follows:

"In 1974 a dispute arose among the brothers. Carl had possession of the land and was paying the other brothers such amount as he deemed proper. An action was filed by plaintiffs [Harold, Bob and Frank Kumberg] against Carl and the sister, Beatrice, seeking an accounting and the appointment of a trustee. A journal entry of judgment was entered on July 1, 1974, in which the district court made the following finding:

'That One-third crop rent is the customary rental arrangement in the area in question; that the term "net profits" as used in the Will of Herman Kumberg, deceased, must have referred to "net rentals" .... that a one-third crop rental arrangement is interpreted by the Court to include receipts for wheat, wheat pasture, Government payments, feed ground, and any other income from the premises, including oil and gas lease bonuses and rentals ....'

"The court retained jurisdiction for such further orders as might be necessary or desirable. This judgment was not appealed." Kumberg v. Kumberg, 5 Kan.App.2d 640, 641, 623 P.2d 510 (1981).

The next proceeding, Kumberg II, from which the foregoing quotation was taken, was filed by Harold, Bob and Frank Kumberg against Carl Kumberg on March 15, 1979. This dispute concerned the proper division among the Kumbergs of oil and gas royalties and the landowners' overriding royalties from an existing oil and gas lease on the land which is the subject of the present lawsuit. In its opinion affirming the trial court, the Court of Appeals said:

"The action giving rise to this appeal was filed by the plaintiffs on March 15, 1979. Although originally broader in scope, the case was finally submitted to the trial court on the single issue of whether or not oil and gas royalties and landowners' overriding royalties are 'net profits' within the meaning of the term as used in Herman's will. The trial court ruled on June 19, 1979, that oil and gas royalties were included within the 'net profits' provision of Herman's will and were to be distributed under the applicable provisions of the Uniform Principal and Income Act, K.S.A. 58-901 et seq. There is now a gas-producing well on the land.

....

"The nature of an oil and gas royalty interest is defined in Shepard, Executrix v. John Hancock Mutual Life Ins. Co., 189 Kan. 125, 130, 368 P.2d 19 (1962), as follows:

" '[T]he term "royalty" has reference to a right to share in production of oil and gas at severance; it is personal property, and does not include a perpetual interest in the oil, gas ... in and under the land.'

"The effect of the trial court's ruling was not to create a life estate in the land, as asserted by defendant, and thus it is not contrary to the 1972 order of final settlement in the probate court which decreed defendant to be the owner in fee simple. Simply stated, the court held only that Herman, by the terms of his will, had given a lifetime interest to his brothers and sisters in the net profits from the land, which included oil and gas royalties.

"The Uniform Principal and Income Act was adopted in this state in 1951. It was last amended in 1965 (K.S.A. 58-901 et seq.), and the rights of the parties in this case were all acquired since this amendment. Its general scope and purpose was explained in Pederson v. Russell State Bank, Executor, 206 Kan. 718, 721, 481 P.2d 986 (1971), as follows:

" 'Its broad purpose is to provide rules for the guidance of fiduciaries to determine what is principal and what is income, to determine who is entitled to the principal and who is entitled to the income, and to determine the allocation of expenses to each.'

"The act defines an 'income beneficiary' as the person to whom income is presently payable or for whom it is accumulated for distribution as income, and it defines 'remainderman' as the person entitled to principal. K.S.A. 58-901. It defines 'income' as the return in money or property derived from the use of principal, including receipts from the disposition of natural resources as provided in K.S.A. 58-909 of the act, and it defines 'principal' as including royalties and other receipts from the disposition of natural resources as provided also in K.S.A. 58-909. K.S.A. 58-903.

"It then provides for the distribution of royalties as follows:

" '58-909. Disposition of natural resources. (a) If any part of the principal consists of a right to receive royalties, overriding or limited royalties, working interests, production payments, net profit interest, or other interests in minerals or other natural resources in, on or under land, the receipts from taking the natural resources from the land shall be allocated as follows:

....

" '(3) If received as a royalty ... receipts ... shall be apportioned on a yearly basis in...