Rutland Sav. Bank of Rutland, Vt., v. Steele
| Decision Date | 11 July 1942 |
| Docket Number | 35612. |
| Citation | 127 P.2d 471,155 Kan. 667 |
| Parties | RUTLAND SAV. BANK OF RUTLAND, VT., v. STEELE. |
| Court | Kansas Supreme Court |
Rehearing Denied Sept. 14, 1942.
Syllabus by the Court.
A written offer to purchase, and contract for sale of, stated quantity of land, with reservation to vendor of half of all oil and gas rights and option in purchaser to purchase such reserved interest at stated price per acre, and purchaser's deed, conveying half interest in all minerals under land to vendor, with reservation to purchaser of option to repurchase such interest, reserved to vendor half interest in all oil and gas in place under entire tract sold, not half of such tract, so as to require purchaser, exercising his option, to pay specified price per acre for entire tract, not half of such amount.
In interpreting instruments providing for sale and repurchase of oil and gas rights under certain land, principal and primary question is what parties thereto intended.
There is no occasion for court to invoke custom or usage as aid to interpretation of unambiguous instruments.
The terms of instrument, not its name, determine its nature and character.
The word "royalty" ordinarily means landowner's share in oil or gas actually produced from land, and does not include perpetual interest in oil or gas in the ground.
Ordinarily interest in oil produced, which landowner receives in consideration for grant of authority to lessee to develop and operate, is called "royalty," and remaining interest of lessee therein is called "working interest", but neither of such interests is oil and gas in place.
In action for declaratory judgment, determining parties' rights under instruments providing for sale and repurchase of oil and gas rights, and recovery of money due under such instruments, where answer sought adjudication of question whether defendant must pay plaintiff amount exceeding that previously tendered by defendant in order to exercise his option to repurchase such rights and parties' stipulation requested adjudication, under Declaratory Judgment Act "or other proper proceedings," of question whether defendant remained indebted to plaintiff in amount prayed for, defendant is in no position to complain of money judgment against him on appeal. Gen.St.1935, 60-3127 60-3129.
1. The cardinal principle or test to be applied in the interpretation of a written instrument is the intention of the parties.
2. The terms of an instrument and not its name determine its nature and character.
3. While the word "royalty" is, at times, otherwise employed, it is, in its ordinary meaning, the landowner's share in oil or gas actually produced and does not include a perpetual interest in oil or gas in the ground.
4. Three written instruments, involving the sale of 1,560 acres of land, with reservation by the landowner of an undivided one-half interest in and to the oil and gas rights thereunder, and an option to the buyer to purchase all or any part of the interest reserved by the owner, in not less than 80-acre units, at the price of $5 per acre examined and held:
5. In view of the facts narrated in the opinion the trial court did not err, after interpreting the written instruments, by granting further relief, in the same action, in the form of a money judgment.
Appeal from District Court, Sedgwick County, Division No. 3; Grover Pierpont, Judge.
Action by the Rutland Savings Bank of Rutland, Vt., against Robert Steele for a declaratory judgment, determining the parties' rights under instruments providing for sale and repurchase of oil and gas rights, and recovery of money due under such instruments. From an order overruling defendant's motion for judgment on the pleadings and the parties' stipulation, and a money judgment for plaintiff, defendant appeals.
Kenneth W. Wagner, of Topeka (George B. Collins and Wm. F. Pielsticker, both of Wichita, on the brief), for appellant.
A. V. Roberts, of Wichita (Paul W. Schmidt and Verne Roberts, both of Wichita, on the brief), for appellee.
This action was instituted by the Rutland Savings Bank of Rutland, Vermont, against Robert Steele, for the purpose of obtaining an adjudication of the rights of the parties under the terms of certain written instruments which provided for the sale and repurchase of oil and gas rights under 1,560 acres of land situated in Rooks and Phillips counties. Judgment was for plaintiff, and defendant appeals.
Defendant appeals from the order overruling his motion for judgment on the pleadings and stipulation entered into by the parties and from the money judgment rendered against him.
It is conceded by both parties that the first and primary controversy lies in the interpretation of the written instruments. In that respect the proceeding was intended to have been instituted pursuant to the Declaratory Judgment Act. G.S.1935, 60-3127, 60-3132. In other respects the proceeding is in the nature of an action for the recovery of money alleged to be due under the terms and provisions of the written instruments. In the petition plaintiff pleaded the instruments involved, asked for an interpretation thereof and also prayed for a money judgment in the specific amount it claimed to be due and payable by defendant. The defendant filed an answer in which he admitted the execution of the instruments and that an actual controversy existed with respect to theirs interpretation and sought an adjudication of the further question whether he was required to pay an amount to plaintiff in excess of the amount he previously had tendered in order to be entitled to exercise an option to repurchase the oil and gas rights involved. In the reply plaintiff denied the correctness of the interpretation placed upon the instruments by defendant and again asked for a money judgment as prayed for in its petition.
The pertinent portion of the stipulation consisted in an admission of the execution and delivery of the written instruments, that defendants had tendered $3,900 to plaintiff which plaintiff had refused to accept and that the instant action was instituted for the purpose of obtaining an adjudication, under the Declaratory Judgment Act or under other proper proceedings, of the question whether defendant was indebted to plaintiff in the sum of $3,900 in addition to the amount of $3,900 previously tendered. In other words it was admitted an adjudication was sought with respect to the question whether defendant, in order to be able to exercise his option to repurchase, was required to pay plaintiff $7,800 or $3,900.
Three instruments are involved. The first is defendant's offer to purchase from the plaintiff. In that offer he expressed the desire to purchase from plaintiff 1,560 acres of land in Rooks and Phillips counties. In that offer to purchase the land was enclosed the following pertinent provision:
(Emphasis supplied.)
The second instrument involved was the contract of sale of the land from plaintiff to defendant. The portion of that contract, not in dispute as to its meaning, disclosed another party held an oil and gas lease on a one-half section of that land. The contract of...
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...and Gas Corp., 183 Kan. 568, 331 P.2d 577; Skelly Oil Co. v. Cities Service Oil Co., 160 Kan. 226, 160 P.2d 246; Rutland Savings Bank v. Steele, 155 Kan. 667, 127 P.2d 741. The landowner's royalty interest is not a share of the producer's cost of production. It is not a share of an amount t......
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