Larch v. Silman

Maxwell, Judge: This is a suit for discovery and an accounting. The circuit court of Eoane county having overruled a demurrer to the bill the question of the sufficiency of the bill is certified here. It appears from the bill that on the 3rd day of June, 1907, Minnie C. Larch and husband conveyed to J. R. King, L. V. *207 Koontz and H. G. Young one-balf of tbe oil and one-balf of the income from tbe gas in and underlying a tract of 53 acres of land, more or less, in said county. In addition to tbe said grant, the instrument of conveyance contains tbe following paragraph: . “And it is further agreed and understood between tbe parties hereto that if said premises is not operated under tbe present lease now on said land all of tbe operative rights belong to tbe parties of tbe second part, or their assigns, by giving to tbe owners of said real estate tbe one-sixteenth of oil produced and saved from tbe leased premises and one hundred dollars per year for each and every gas well tbe product of which is used and marketed off of said premises, without liability for damage other than to growing crops.” Some time between tbe date of said deed and tbe 24th day of March, 1926, J. K. King died intestate survived by bis widow, Delya King, and two infant children, Eugene C. King and Maxine King. On tbe last mentioned date Mrs. King instituted a summary proceeding in tbe said circuit court for tbe purpose of selling or leasing tbe oil and gas interest of her infant children in tbe said tract of land. That case reached this Court and is reported in 103 W. Va. page 227. While the said proceeding was pending in tbe circuit court, to-wit, on tbe 26th day of March, 1926, Mrs. Larch and her husband conveyed to the plaintiff, Thomas P. Kyan, one-half of all their right, title and interest in and to the oil and gas within and underlying the said tract of land. Within the period of the pendency of said case in this Court, to-wit, on the 12th day of July, 1926, the said Minnie C. Larch and husband and the said Thomas P. Kyan and wife leased unto Peter Silman, defendant, all of their right, title and interest in and to all of the oil and gas in and under the above mentioned tract of land, together with operating privileges, on the basis of one-eighth oil and gas royalty. The said lease contains these further provisions: “And, whereas, there is now pending in the ■Supreme Court of Appeals of this state, a suit, wherein Delya King Guardian, etc., is plaintiff and said Minnie C. Larch and others are defendants', which has for its object, among other things, *208 the ascertainment of tbe interest which the said Lessors have in said land, now in case a producing oil or gas well be completed on said land under this lease before it is determined the exact amount of interest which the Lessors may have in said land, oil, gas or gasoline, then said Lessors are not to be paid their said just proportion thereof until their said interest is determined in said suit or otherwise, but the same is to be held by lessee until said interest is determined by suit, compromise or otherwise. One half of all moneys payable hereunder shall be paid to said Minnie C. Larch and the other one-half shall be paid to said Thos. P. Ryan. Said payments shall be made each thirty days after the said interest of the Lessors is determined, as aforesaid.” It is further alleged in the bill that the effect of the above quoted paragraph of the deed of June 3, 1907, executed by Minnie C. Larch and husband to J. R. King and his associates was to lease to the said grantees “the remaining one-half of the oil within and underlying said land, and the gas therein” but that the said grantees long ago abandoned their rights under the said quoted paragraph and that they never undertook to drill any well for oil and gas purposes on the said land, and further, it is alleged that the said “oil and gas lease * * * has been for many years last passed absolutely void * * The bill further alleges that subsequent to the execution to him of the lease aforesaid the said Peter Silman caused a well to be drilled on the said land and that plaintiffs are informed and believe that the said well produces gas in large and paying quantities, and that the said product has been marketed continuously from the time of the completion of the well to the date of the institution of this suit. Further, that the plaintiffs are without information as to the quantity of gas that has been produced from said well and that the said Silman has declined and refused to account to them for their royalty of the gas thus, produced as provided in the said contract of lease. They therefore pray for disclosure as to the amount of said production and for an accounting as to the *209 royalty to wbicb they assert they are entitled under tbe lease aforesaid. In onr opinion tbe demurrer to tbis bill ought to have been sustained. Tbe first ground for tbis conclusion is tbe absence of necessary parties. Tbe widow and beirs of J. R. King should have been before tbe court; also L. V. Koonts and H. Gr. Young. Their rights under tbe above quoted paragraph from tbe deed of June 3, 1907, are involved in tbis suit. As already noted, tbe bill contains allegations with reference to tbe rights of tbe said parties under tbe said paragraph and undertakes to define those rights. Of course, tbe widow and beirs of tbe deceased grantee and tbe two surviving grantees should be before tbe court when their property rights are thus involved. Authority need not be cited for tbe fundamental proposition that as a general rule all persons whose rights will be affected bjr a decree in a chancery suit are necessary parties to such suit. Another reason why tbe bill is not good on demurrer lies in tbe absence of allegations in tbe bill that tbe interest of the lessors under tbe lease aforesaid in tbe property therein described has been determind by suit or otherwise. Under tbe express terms of tbe said quoted provision of said lease, the lessors “are not to be paid their said just proportion” until tbe extent of their said interest is determined. And until such determination is made tbe portion of tbe lessors “is to be held by lessee.” In failing to allege that such determination has been made, tbe bill does not make a showing on which tbe lessee can be required to make an accounting at tbis time. So far as is disclosed by tbe bill, tbe suit is premature. It is further urged in support of tbe demurrer to tbe bill that inasmuch as tbe prayer of tbe bill is for both discovery and relief, and tbe object, — a mere money recovery, — being primarily of legal cognizance, tbe allegations of tbe bill are not sufficient to show the necessity for tbe discovery sought by tbe complainants. Tbis point is not well taken. It is true tbe bill contains no specific allegation of tbe indispensability of tbe discovery, but to meet the rule requiring that tbe necessity for discovery be shown by tbe bill, it is not necessary that tbe bill in terms allege tbe indispensability of tbe *210 discovery, but the requirements of the rule are met if the bill sets forth facts from which the materiality and indispensability of the discovery clearly appear. Dudley v. Niswander, 65 W. Va. 461, 466. In matters of accounting where the facts alleged show necessity for discovery there is unquestioned equitable jurisdiction. “Equity has jurisdiction of a suit for an accounting, when there is a privity of contract between the parties, even though the accounts be all on one side, when the bill prays for a discovery and alleges facts which show that a discovery is essential to the establishment of plaintiff’s rights.” Belcher v. Big Four Coal & Coke Co., 68 W. Va. 716. For the reasons above set forth we reverse the decree of the circuit court, sustain the demurrer to the bill with leave to the plaintiffs to amend the same, and remand the cause for further proceedings therein. Reversed and remanded.