Smith County Oil Co. v. Board of Supervisors

Prior to January 1, 1944, the appellant Smith County Oil Company owned the oil, gas and other minerals under the 19,086 acres of land in Simpson County, the subject of this controversy, with full rights of ingress and egress for the discovery and recovery of said oil, gas and minerals. All other rights and estates in said land were, and still are, owned by the South Mississippi Land Company. On April 15, 1944, the Smith County Oil Company leased to the Hunt Oil Company for said land all the said oil, gas and minerals, the principal provision of said lease being as follows: "Lessor in consideration of ten dollars ($10.00) in hand paid, and of the royalties herein provided and of the agreement of the Lessee herein contained, hereby grants, leases and lets exclusively unto Lessee for the purpose of investigating, exploring, prospecting, drilling and mining for and producing oil, gas and all other minerals, laying pipe lines, building roads, tanks, power stations, telephone lines and other structures thereon to produce, save, take *Page 23 care of, treat, transport and own said products and housing its employees, the following described land in Simpson County, Mississippi, to wit:" describing them. The additional consideration by way of royalties was to be one eighth of the oil produced, giving the lessee the right to pay the said one eighth in money from time to time as the oil was produced. It will thus be seen that the exclusive right to explore for and to take the oil and other minerals and the exclusive possession for that purpose was vested in the lessee. What was left to the lessor, the Smith County Oil Company, and all that was left, was either (1) the ownership of the entire interest in the oils and other minerals in place under the surface, or else (2) the ownership of an eighth interest therein, or else simply a royalty of an undivided one eighth when, but not until, discovered and raised to the surface. It is not necessary here to decide which of these three results was produced, for if either of the first two, then what the lessor had left was oils and minerals under the surface where it could not be inspected and after inspection estimated and appraised, indeed no man knows whether there are any oil or minerals under said land. If all that appellant had left was a royalty in the minerals when produced this does not become assessable ad valorem until produced and brought to rest upon the surface. All this was decided in Gulf Refining Co. v. Stone, 197 Miss. 713, 21 So.2d 19, and we see no reason to add further to what was said there, except to call attention to the fact that we there also said that a mineral lease, such as we have here, is assessable ad valorem, but not including the oil and gas as a separate item of valuation; and that enough was also there said to indicate that the method by which to assess a lease such as is here presented, which gives the lessee the sole right to the surface use, is to assess the lease as an entirety to the owner thereof, instead of attempting to split it into fractional parts as was attempted here, and this without regard to *Page 24 the question whether such a lease does or does not give to the lessee any present ownership in the minerals in place and which may or may not be under the surface. It is enough that the lessee has the exclusive right to the use of the surface as an adjunct to his mineral rights, and that the surface may be seen and the surface rights appraised; in addition to which the State will get its severance tax if and when oil is found and produced. If the lessee does not obtain the exclusive surface rights, and the lessor retains in part such surface rights, — if there is or may be hereafter any such a lease, — a different and a more difficult question would be presented, which we will not approach until it is squarely before us. It follows that the attempted assessment against appellant of "One-eighth interest in oil, gas and mineral rights," in said lands was without authority, and the trial court should have so held. Reversed, and judgment here for appellant.