Thaxton v. Beard

• Decision Date: 21 December 1973
• Docket Number: No. 13285,13285
• Citation: 201 S.E.2d 298,157 W.Va. 381
• Court: West Virginia Supreme Court
• Parties: Otis R. THAXTON and Frances R. Thaxton v. Allen BEARD et al.

Page 298

201 S.E.2d 298

157 W.Va. 381

Otis R. THAXTON and Frances R. Thaxton v. Allen BEARD et al.

No. 13285.

Supreme Court of Appeals of West Virginia.

Submitted May 15, 1973.

Decided Dec. 21, 1973.

Syllabus by the Court

1. There must be a valid assessment in the first instance to support a deed from the Deputy Commissioner of Forfeited and Delinquent Lands as the result of a delinquent land sale.

2. Where a party stands by and sees another who, in good faith, deals with property inconsistent with the first person's interest and that person makes no objection, he is estopped to deny the validity of the action on the part of the second person; however, estoppel does not apply against one who is actually ignorant of his own rights in the property.

3. Strictly speaking, a cotenant or tenant in common cannot be a trespasser against his cotenant.

4. Where a tenant in common, claiming in good faith to be the sole owner of the oil and gas interest, leases the property to a third person, the nonconsenting cotenant may recognize the lease and receive his fractional interest in the royalty or reject the lease and receive his fractional part of the oil or gas produced, less his proportionate part of the cost of discovery and production.

George W. Stokes, H. D. Rollins and J. E. Litz, Charleston, for appellants.

Cunningham & Burgess, Bennett R. Burgess, St. Albans, for Harry L. Paxton.

Stone, Bowles, Kauffelt & McDavid, Paul N. Bowles and Roger W. Tompkins, II, Charleston, for Allen Beard, and others.

BERRY, Chief Justice:

The appellants, Otis R. Thaxton and Frances R. Thaxton, appeal from a final order of the Circuit Court of Kanawha County entered on October 11, 1972, wherein the court rejected the appellants' claim that they were entitled to a full royalty on their interest in a gas well drilled on their land in which they owned a 1/8th interest in the oil and gas. The court held that the appellants were only entitled to a royalty of 1/8 of 1/8 of 50.5/250 of the production of the well; the 50.5/250 being the ratio of the appellants' land to a larger tract included in a unitization agreement entered into by the owners of the other 7/8ths interest in the oil and gas on the 50.5 acres and the owners of the oil and gas in the surrounding land comprising the other 199.5 acres. This Court granted the appeal on December 4, 1972 and the case was submitted for decision on May 15, 1973 upon the arguments and briefs on behalf of the respective parties.

The appellants and one of the appellees, Harry L. Paxton, contended before the trial judge that they were the owners of record of the 1/8th interest in question in the oil and gas under the 50.5 acres. The parties stipulated as to certain facts concerning the title to the 1/8th interest. On August 31, 1921 F. W. Chandler and wife conveyed 60 acres of the original 63 acre tract to Robert Cavender reserving a 1/2 interest in the oil and gas. On December 13, 1921 Robert Cavender and wife conveyed 9 1/2 acres of the 60 acres to J. W. Bailey. On March 14, 1924 Robert Cavender and wife conveyed the remaining 50.5 acres and 1/2 oil and gas to D. S. Bailey. In 1937 D. S. Bailey and wife conveyed a 1/4th interest in the oil and gas to Columbian Carbon Company and a 1/8th interest to Loren W. O'Dell and Olive Culpepper. On March 5, 1943 D. S. Bailey and wife conveyed the 50.5 acres to E. C. Berry and on August 10, 1943 E. C. Berry conveyed the tract to the appellants. Thus, at this point in time the appellants owned the 50.5 acres and a 1/8th interest in the oil and gas; F. W. Chandler owned a 1/2 interest in the oil and gas; Columbian Carbon Company owned a 1/4th interest in the oil and gas; and Loren W. O'Dell and Olive Culpepper owned a 1/8th interest in the oil and gas.

In 1944 and 1945 the land books show that the appellants were assessed on the 50.5 acres 'less oil and gas'. However, in 1946, the land books assessed the appellants' interest as 50.5 acres 'less 7/8 oil and gas'. But in 1947 the land books indicate that their 1/8th interest in the oil and gas was sold to the state in 1945. From 1948 to 1969, the land books show the appellants were assessed for the 50.5 acres 'less oil and gas'. On November 10, 1970 the appellants paid the back taxes on their oil and gas interest from 1936 to 1970.

In 1944 and 1945 the land books incorrectly show an entry for 'D. S. Bailey and J. W. Bailey 63A, 1/4 oil and gas int. Tups. Ck.'. In fact, J. W. Bailey owned a 1/2 oil and gas interest in 9 1/2 acres which had originally been included in the 63 acres. D. S. Bailey no longer had any interest in any of the 63 acres.

In May 1950 Harry L. Paxton received a deed from the Deputy Commissioner of Forfeited and Delinquent Lands for Kanawha County which conveyed 1/4th of the oil and gas underlying the 9 1/2 acre tract which had been conveyed to J. W. Bailey in 1921 by Robert Cavender and his wife and 1/4th of the oil and gas underlying the 50.5 acres 'being the same real estate sold to the State of West Virginia in the year 1946 for the non-payment of taxes in the year 1945 in the name of D. S. Bailey and J. W. Bailey'. As a result of this conveyance, the appellee Paxton contends that he lawfully and properly purchased the disputed 1/8th interest in the 50.5 acres from the state and that the appellants do not own the 1/8th interest under which they are claiming.

On January 13, 1967 Harry L. Paxton leased a number of tracts of land to Allen Beard, one of the appellees, who was an oil and gas operator. The lease purported to convey 8/8ths of the oil and gas on the 50.5 acres. In October or November of 1967 the Big B Drilling Company entered upon the appellants' land and began drilling. The Big B Drilling Company was wholly owned and operated by Allen Beard. On April 10, 1968 the 'Declaration of Unitization and Consolidation for a Drilling Unit', which was specifically provided for in the lease, was properly recorded. The appellants admit they knew the well was being drilled on their property in 1967, but Otis Thaxton, not having paid the taxes on the 1/8th oil and gas interest, thought that Harry Paxton, an appellee, owned all of the oil and gas on the property. Moreover, Cooper Shields, who was employed by Allen Beard, visited Otis Thaxton in early 1967 and asked about leasing his land but Thaxton replied he didn't own the oil and gas rights. Otis Thaxton also admitted in his deposition that he knew the well was producing but he did not take any action until 1970 when he paid the back taxes of his 1/8th interest and then brought an action in the Circuit Court of Kanawha County to recover royalties on the gas produced.

The case was submitted to a special judge, the circuit court judge having been disqualified, and the special judge held that the 1/8th interest of the appellants was not assessed in 1945 or from 1947 to 1969, and, therefore, title to that interest forfeited to the state. However, the court also held that the 1945 assessment 'Bailey, D.S. & J.W. 63A, 1/4 oil and gas int. Tups. Ck.' was invalid because this single entry combined two separate tracts of land owned by two different people. Moreover, D. S. Bailey no longer had any interest whatsoever in the 63 acre tract. The appellee Paxton claims he acquired the 1/8th interest in the 50.5 acres when he received the deed from the Deputy Commissioner of Forfeited and Delinquent Lands after the assessment in the names of D. S. Bailey and J. W. Bailey in 1945 was not paid and was forfeited to the state. However, as previously noted, neither J. W. Bailey nor D. S. Bailey owned the 1/8th interest in the oil and gas in the 50.5 acre tract of land.

Thus, the court held the appellants had the right to redeem the 1/8th interest in the oil and gas which they did in 1970, but the court further held that the appellants were estopped from denying the validity of the lease of Paxton with Beard and the unitization agreement involving the 250 acres. The court held that the appellants were to be paid royalties as if they had signed the lease, which was subject to the unitization agreement, and as a result were entitled to 1/8th of 1/8th of 50.5/250 of the production of the well. The well had produced about $127,000 worth of gas at a cost of about $137,000.

The appellants contend that since they did not sign the lease or the unitization agreement, they were entitled to the full royalty of their interest in the oil and gas in the 50.5 acre tract on which the gas well in question was drilled. Thus, they contend they are entitled to 1/8th of 1/8th of the production of the well.

Allen Beard filed an answer alleging that the appellants were estopped from asserting any claim against him, and he also filed a cross-claim against the appellee, Harry L. Paxton, based on a provision of his lease with Paxton.

A considerable portion of the briefs of the parties deals with the title to the 1/8th interest in the oil and gas under the 50.5 acre tract of land involved in this case. This question was properly disposed of by the trial court when it found and entered judgment that the appellants were owners of the tract of land involved here containing 50.5 acres less 7/8ths of the oil and gas therein. The deed from the Deputy Commissioners of Forfeited and Delinquent Lands to the appellee Harry L. Paxton was based on a void assessment. The assessment combined two separate tracts of land owned by two different people, D. S. Bailey and J. W. Bailey, and neither owned the 1/8th oil and gas interest in the 50.5 acre tract of land. There must be a valid assessment in order to support a deed from the Deputy Commissioner of Forfeited and Delinquent Lands as the result of delinquent land sales. Male v. Moore, 70 W.Va. 448, 74 S.E. 685; Collins v. Reger, 62...