Updike v. Smith

• Decision Date: 20 January 1942
• Docket Number: No. 26401.,26401.
• Citation: 39 N.E.2d 325,378 Ill. 600
• Parties: UPDIKE et al. v. SMITH et al.
• Court: Illinois Supreme Court

378 Ill. 600

39 N.E.2d 325

UPDIKE et al.

v.SMITH et al.

No. 26401.

Supreme Court of Illinois.

Jan. 20, 1942.

Appeal from Circuit Court, Lawrence County; Blaine Huffman, judge.

Suit by Sylvester S. Updike and others against Mark Smith, Ohio Oil Company and others, for an adjudication that plaintiffs be found to be the owners in fee of oil and gas rights in certain lands, subject to oil lease of defendant last named, and for an accounting by defendant last named. From a decree dismissing the bill for want of equity, plaintiffs appeal.

Affirmed in part and reversed in part and remanded with directions.

Summer & Lewis, of Lawrenceville, for appellants.

Lackey & Lackey, of Lawrenceville, for appellees Mark Smith and others.

Fred W. Gee, of Lawrenceville, for appellee Ohio Oil Co.

FARTHING, Justice.

The plaintiffs, Sylvester S. Updike, Dora A. Bromley and Joanna Mefford, filed their complaint in the circuit court of Lawrence county, admitted the validity of oil leases held by the Ohio Oil Company and prayed that they be found to be the owners in fee simple of all the remaining oil and gas rights in and to the northwest quarter of the northwest quarter of section 36, township 5 north, range 13 west of the second principal meridian in Lawrence county, Illinois, and that the defendants, Mark Smith and Cassie Smith, be found to have no right, title or interest to the oil and gas rights in and under that land. Included was a prayer for an accounting from the defendant, the Ohio Oil Company, for all the oil produced since March 24, 1934, from 215 acres of land of which the 40 acres in question is a part. The chancellor heard the evidence and dismissed the bill for want of equity. The plaintiffs appealed directly to this court since a freehold is involved.

James Updike was the owner of 215 acres of land in Lawrence county. He died leaving as his heirs-at-law his widow, Nancy Updike, and five children, Sylvester S., Warner E., and J. B. Updike, Nora A. Bromley and Joanna Mefford. On February 12, 1906, and May 7, 1909, the heirs-at-law of James Updike executed oil and gas leases of the 215 acres, which leases were owned on January 2, 1912, by the Ohio Oil Company. That company drilled a number of wells on the whole farm, two of which were on the 40 acres in section 36 involved in this suit. On October 20, 1920, apparently after the death of Nancy Updike, the five children made voluntary partition of the 215 acres. Each received from his brothers and sisters a deed to an undivided four-fifths interest in a particular tract. In all these deeds the grantors reserved all their oil and gas rights. The northwest quarter of the northwest quarter of section 36 aforesaid, was conveyed to W. E. Updike and on March 14, 1928, he and his wife mortgaged and warranted it to the Citizens Banking Company of Lawrenceville to secure an indebtedness of $1,500. There was no reservation or exception of oil or gas underlying the mortgaged land. The mortgage was foreclosed and on March 5, 1934, Emerest Combs obtained a master's deed to the northwest quarter of the northwest quarter of section 36 aforesaid. March 24, 1934, Combs conveyed this 40-acre tract by warranty deed to the defendants, Mark Smith and Cassie Smith. Because of a dispute among the persons who claim to be owners of the royalty interest, the Ohio Oil Company admits it withheld payment of all oil royalties after May 1, 1934. The complaint alleges, and the answer of the Smiths admits, that on November 23, 1934, W. E. Updike made a deed which purported to convey all his oil and gas rights to his sisters and brothers, and that on that day J. B. Updike likewise deeded all his oil and gas rights to the two sisters and his remaining brother, Sylvester S. Updike. By their answer the Smiths say that although W. E. Updike may have made such a deed, he had no interest to convey in the oil and gas underlying the northwest quarter of the northwest quarter of section 36 aforesaid. By its answer the Ohio Oil Company admitted that from the sale of oil produced from the 215 acres which was leased and operated as a single unit it held $1,996.03 as royalty accrued after May 1, 1934. This it offered to pay to such persons as the court might direct.

By their complaint appellants alleged and they now contend that ‘the then owners of the entire fee simple estate in the land, in executing the said deeds, and reserving the oil and gas rights, interests and royalties, thereby severed the oil and gas rights, interests and royalties from said lands, and created separate and distinct interests and estates, in fee simple, in said lands.’ They say that when their brother, W. E. Updike, mortgaged the 40-acre tract he had received in the voluntary partition, he mortgaged only the surface estate and that therefore that estate alone passed by the master's deed to Combs. Combs could convey no more than he received, so appellants say the Smiths acquired the surface but did not acquire the severed oil and gas rights, interest and estate.

The children of James Updike were tenants in common of the 215 acres. By their conveyances of October 20, 1920, they partitioned the surface but remained tenants in common of the oil and gas. Subject to the leases assigned to the Ohio Oil Company, each owned an undivided one-fifth interest in the oil and gas rights in the 215 acres. When W. E. Updike executed a mortgage on the northwest quarter of the northwest quarter of section 36, he was the owner of the surface and one of the undivided one-fifth interests just mentioned.

In general, a landowner is entitled to the surface and all that is below it, and where he makes a deed that contains no reservation or exception and does not limit the estate conveyed, he conveys everything under the surface as well as the surface itself. 2 Devlin on Real Estate, 3d Ed., p. 1802; Richards v. Potter, Ky., 124 S.W. 850. His legal interest in the oil and gas is accessory to his legal interest in the land and will pass by a grant of the land, unless he expresses an intention to retain that interest. 1 Summers Oil and Gas, Perm.Ed., § 133, p. 324, and cases there cited. This court reviewed the cases from other jurisdictions, as well as our own, which involved oil and gas leases of indefinite duration, such as those held by the Ohio Oil Company in the case before us, in Transcontinental Oil Co. v. Emmerson, 298 Ill. 394, 402, 131 N.E. 645, 16 A.L.R. 507. The conclusion was that the better reasoning, and the majority holdings supported the rule that such an oil and gas lease conveys a freehold interest in the real estate to which it applies. See also Triger v. Carter Oil Co., 372 Ill. 182, 185, 23 N.E.2d 55, and 29 A.L.R. 586. Oil and gas in place in the earth can not be the subject of an ownership which is distinct from the soil because of their fugacious nature. They belong to the owner of the land so long as they remain under the land, and his grant to them to another is a grant only of such oil and gas as the grantee may find and take possession of, and no title to the oil and gas as such actually vests until it is found and reduced to possession to be used or marketed. Watford Oil & Gas Co. v. Shipman, 233 Ill. 9, 84 N.E. 53,122 Am.St.Rep. 144;Poe v. Ulrey, 233 Ill. 56, 84 N.E. 46; Triger v. Carter Oil...