Shell Petroleum Corporation v. Hollow, 929.

• Decision Date: 28 May 1934
• Docket Number: No. 929.,929.
• Citation: 70 F.2d 811
• Parties: SHELL PETROLEUM CORPORATION et al. v. HOLLOW et al.
• Court: U.S. Court of Appeals — Tenth Circuit

70 F.2d 811 (1934)

SHELL PETROLEUM CORPORATION et al. v. HOLLOW et al.

No. 929.

Circuit Court of Appeals, Tenth Circuit.

April 11, 1934.

Rehearing Denied May 28, 1934.

John M. Holmes, of St. Louis, Mo. (Thompson, Mitchell, Thompson & Young, of St. Louis, Mo., on the brief), for appellants.

Thomas F. Shea, of Tulsa, Okl. (Harlan S. Trower, of Tulsa, Okl., and Charles G. Yankey, Harvey C. Osborne, John G. Sears, Jr., and Verne M. Laing, all of Wichita, Kan., on the brief), for appellees.

Before PHILLIPS, McDERMOTT, and BRATTON, Circuit Judges.

BRATTON, Circuit Judge.

This controversy involves conflicting claims to the mineral rights in one acre of land situated in the northeast corner of a described quarter section in Harvey county, Kan. Jacob H. Ediger, owner of the quarter section, joined by his wife, executed a deed in 1901 conveying the acre, being rectangular in shape and 10 rods by 16 rods in dimension, to School District No. 29. The deed contained the following provision: "Said real estate is deeded by this conveyance for and as a site for a public school building and grounds, and in case same shall cease to be so used and shall be abandoned as a site for a public school building and grounds, then this deed and conveyance shall be and become null and void, and the title to said real estate shall immediately revert to and said real estate shall at once become and remain the property of said grantors, their heirs and assigns."

A school building was erected on the site and a school conducted there until shortly before this suit was instituted, at which time the building was removed and use of the premises for the dedicated purpose ceased.

Ediger and wife conveyed the quarter section to A. M. Martens in 1903. The conveyance contained a covenant of warranty and made no reference to the area previously conveyed to the school district. In 1924 Martens and wife executed a deed with covenant of warranty, conveying a part of the land, that is, about forty acres, to Peter B. Martens; the land thus conveyed being described as follows: "Commencing at the NE corner of the SE ¼ of Section 19, Township 22 South, Range 3 West, thence South 67 rods, thence West 61½ rods, thence South 46½ rods, thence West 21½ rods, thence North 113½ rods, thence East 83 rods to the place of beginning." The tract so described included the school area and the conveyance contained this provision of exception or exclusion: "Excepting, however, and not included in this grant, one acre in the extreme NE corner of the SE¼ which has been deeded to School District No. 29."

In 1929 Peter B. Martens and wife executed an oil and gas lease with covenant of warranty to C. E. Kayser, in which the land embraced was described in the same language, with an exception or exclusion couched in identical phraseology as that contained in the deed just described. The lease, purporting to convey the oil and gas leasehold rights for a period of ten years, has through subsequent conveyances become the property of Shell Company.

A. M. Martens died. His sole heirs at law, conceiving that the mineral rights to the acre tract were vested in them, executed two oil and gas leases to F. H. Hollow, some joining in one and the remainder in the other. Both were dated April 30, 1932, and contained covenants of warranty. They purported to convey the mineral leasehold for a period of ten years. The several instruments were duly filed for record in Harvey county.

Shell Company entered into a contract with Mabee under which he began drilling a well on the land covered by the lease from Peter B. Martens and wife to Kayser, the well apparently being near the line of the school site. Hollow began preparations to drill a well on the school tract under the leases from the heirs of A. M. Martens. Plaintiffs thereupon instituted this suit in equity, alleging the execution of the several instruments and contending that they have and own the exclusive right to explore for and produce oil and gas on the acre tract; that the leases to defendant Hollow are without effect; that if he is permitted to drill the threatened well it will result in large quantities of oil worth several thousands of dollars being drained from under the premises covered by their lease estate. Other facts are alleged. They relate to a contract between Shell Company and the school district, made long prior to the abandonment of the premises for school purposes, but in view of the conclusion reached with respect to the decisive questions in the case, it is unnecessary to state or discuss them.

Plaintiffs prayed that the cloud on their title, created by the execution and recordation of the leases to defendant Hollow, be removed; that Hollow be enjoined from drilling on the premises; and for an accounting. Defendants interposed a joint and separate motion to dismiss in the nature of a demurrer, on the ground that the bill disclosed on its face that it presented no equity and that plaintiffs were not entitled to the relief sought. The motion was sustained and a decree entered dismissing the bill. The case is here on appeal.

The deed from Ediger and wife to the school district was in the nature of a dedication for the specified purpose, with provision for reversion upon termination of that use. It created an easement. School Dist. v. Barnes, 110 Kan. 25, 202 P. 849; School Dist. v. Fleak, 120 Kan. 570, 245 P. 150.

Counsel discuss at length and interestingly whether the instrument created a fee-simple estate on condition subsequent with the possibility of reverter, or an estate in determinable fee. It is unnecessary to determine that question because the common-law rule that the possibility of reverter is neither an alienable, assignable, or descendable estate has been abrogated by statute in Kansas.

"The term `heirs,' or other words of inheritance, shall not be necessary to create or convey an estate in fee simple; and every conveyance of real estate shall pass all the estate of the grantor therein, unless the intent to pass a less estate shall expressly appear or be necessarily implied in the terms of the grant." Section 67 — 202, Revised Statutes Kansas 1923.

"Any person claiming title to real estate may, notwithstanding there may be an adverse possession thereof, sell and convey his interest therein, in the same manner and with like effect as if he was in the actual possession thereof." Section 67 — 208, Id.

"In the construction of the statutes of this state the following rules shall be observed, unless such construction would be inconsistent with the manifest intent of the legislature or repugnant to the context of the statute: * * *

"Eighth. The word `land,' and the phrases `real estate' and `real property,' include lands, tenements and hereditaments, and all rights thereto and interest therein, equitable as well as legal." Section 77 — 201, Id.

It is settled law in the state of Kansas that these statutes constitute a liberal system under which any interest in land may be conveyed by deed. In Miller v. Miller, 91 Kan. 1, 136 P. 953, 954, L. R. A. 1915A, 671, Ann. Cas. 1917A, 918, it was said:

"The words `conveyances of land' mean, of course, the land itself in fee simple absolute. The words `any other estate or interest therein' include estates of freehold and less than freehold, of inheritance and not of inheritance, absolute and limited, present and future, vested and contingent, and any other kind a grantor may choose to invest consistent, of course, with public policy. * * *

"The Legislature of 1855 placed conveyances by deed on the same footing as wills so far as the creation of future estates was concerned; but, following the lead of the Legislatures of some of the older states, the Kansas Legislature of 1868 undertook not only to permit the granting of future estates but to abolish other common-law restrictions on alienation not suited to allodial tenures and modern conveyancing, and to make transfers of interests in land as free as possible. The concluding portion of section 3 of the act of 1868, quoted above, expressly abolishes the common-law ceremony of livery of seisin which stood as an...