Buck v. Cleveland

Houghton, J.: On the 28th day of May, 1884, one Hendrick was the owner of twenty acres of land in which were supposed to be deposits of talc, soapstone, iron pyrites and other valuable minerals, and on that day he entered into what was termed an “agreement” in writing with one Spaulding, whereby, in consideration of one dollar and the performance of the covenants expressed, he contracted and sold to Spaulding “ the exclusive right and privilege to prospect for, mine, dig and quarry for any and all kinds of minerals” (enumerating some of them), with the right to take away the same, together Avitli the right of ingress and egress upon the land for the purpose of so prospecting and mining and carrying away the material which he might find, together with a right to build shanties or buildings upon the property necessary in prospecting, mining or reducing such materials to commercial form. -Spaulding on his part agreed to pay to Hendrick twenty-five cents for every gross ton of commercial material Avhich he might take from the land, and to commence prospecting within sixty days, and to continue and work and put upon the market all such material as he might find for which there was a paying market, and to prosecute the work in a businesslike manner and to keep a true account of such material and pay the twenty-five cents per gross ton every thirty days. It was further provided that, in the event of Spaulding failing to pay or keep his agreement, Hendrick might at his option declare the contract at an end. The final clause declared that the obligations should be binding upon the heirs and assigns of the respective parties. Spaulding did not begin operations within the stipulated sixty days and in INovember, 1898, an agreement was entered into reducing — 876 — the price per ton from twenty-five cents to fifteen cents, and providing that operations should begin within three months. Operations were not begun within this time, but in March, 1900, the parties executed a further agreement whereby the default of Spaulding was forgiven and his rights under the “lease,” as it was then called, more clearly defined. There was a recital of the making of the contract of 1884, and the following provision was made: “ Said agreements or leases were intended and shall be construed and held to grant and convey to said Spaulding, his heirs and assigns, the sole and exclusive right and privilege forever, or so long as he or they shall perform all'the agreements therein contained on his or their part to be performed, to prospect for, mine, dig and quarry for any and all kinds of minerals, talc, soapstone, marble, pyrites of iron or any other valuable material, and take away all of the same which he or they may discover in or on the premises therein described and referred to,” all on condition that the covenants and agreements of Spaulding should be observed. In October, 1900, there was a further writing entered into between the parties in which it was recited that at different times the parties had entered into divers agreements or “ mining leases ” relating to the mining and raising of mineral ores and foregoing all past royalties and stipulating that Spaulding might raise and remove all ores and minerals free from any payments to the 10th day of October, 1901, thereafter to pay fifteen cents per gross ton. All these several agreements were signed by both parties, sealed and acknowledged and recorded in the county clerk’s office of the county in which the property was situated. On the 21st of March, 1904, Spaulding entered into “ an article of agreement or lease ” with one Roberts wherein it was recited that he was the owner of several mining leases made by Hendrick to himself and that Roberts was desirous of obtaining an interest in such leases and agreements, and, therefore, for a valuable consideration he (Spaulding) agreed “ to sub-lease all his interests in the above-mentioned leases ” to Roberts, he to pay all of Spaulding’s obligations to Hendrick and to pay to Spaulding $100 at the end of the first year in full of all royalties, and for all time thereafter fifteen cents per gross ton, not less than $250, however, for the second year, and not less than $500 for the third year and as much more as — 877 — the fifteen cents per gross ton might make it. Roberts was given the privilege to discontinue the lease at any time upon three months’ notice upon reconveying the same and paying up all past dues, and in case he should not keep his covenants Spaulding had the option on thirty days’ notice to cancel the lease himself. Roberts agreed to- diligently prosecute the work of mining and developing the mines in a businesslike manner and to so continue until the termination of his lease, keeping proper accounts of the product marketed. The instrument was declared to be binding upon the heirs and assigns of the respective parties and was duly acknowledged and recorded. In July following Roberts sold, assigned, released, granted and conveyed to these defendants all his right, title and interest in and to the aforesaid leases, agreements and conveyances from said Spaulding to himself. The defendants did not covenant or agree to perform or carry out any of the agreements and covenants which Roberts had made with Spaulding, but they did enter upon the premises and prospected and mined, and were in such possession at least until May, 1906. In September, 1904, Spaulding died intestate at Worcester, Mass., and it is claimed that one Blodget was appointed administrator of his estate, but the record contains no proof of that fact. Thereafter all the heirs at law of Spaulding and said alleged administrator, although not signing as such, joined in an instrument assigning, transferring and setting over to this plaintiff “all the leases of mining or quarrying rights” possessed by Spaulding at the time of his death, and this action was brought to recover the minimum royalties agreed to be paid by Roberts up to March 21, 1908. The theory of the plaintiff is that Spaulding had such an interest in the land or in the minerals contained in it severed from the surface of the soil as passed to his heirs on his dying intestate, and that Spaulding leased to Roberts, and the defendants having taken an assignment of such lease from Roberts and entered into possession are bound by the covenants which Roberts made, although they made no agreement to perform them. The theory of the defendants is that Spaulding had no interest in the land or minerals which could pass to his heirs or which amounted to anything more than an incorporeal right, giving him no right to — 878 — sub-lease and casting no obligation on the assignee of such lease to pay rent or perform any covenants, because he had no land with which the covenant could run. There is great confusion in the authorities, and the right or estate which Spaulding obtained from Hendrick is very difficult to define. It seems clear to me that Hendrick did not convey to him the minerals in the ground severed from the surface of the soil. The minerals were unknown and were supposed to be of different kinds, and the various instruments do not indicate any intent to sever a block of mineral of any particular kind or of all the kinds from the soil and separately convey it or them as such, notwithstanding the exclusive privilege or right to mine forever or as long as the covenants were performed. In Pennsylvania, where the doctrine of disseverance of’ minerals from the land itself is carried to its fullest extent as applied to coal in place, it is held that there must be a known mineral and a clear intent of the parties to make a severance to pass title to the mineral alone. (Denniston v. Haddock, 200 Penn. St. 426.) So, too, it is apparent that Spaulding obtained more than a mere incorporeal right in the land and more than a mere license to prospect and mine. His" right to prospect for, dig and carry away the minerals was exclusive and existed as long as minerals could be found in paying quantities and as long as he paid the stipulated rental or royalty. Besides he had the right to occupy the land itself for the purpose of mining and to erect buildings thereon. Hendrick did not have the right to terminate the lease except upon breach of condition, and, therefore, Spaulding’s tenancy was greater than at will or sufferance. The authorities in our State throw very little light upon the question. Following the Pennsylvania decisions the contract in Genet v. D. & H. C. Co. (122 N. Y. 505) was deemed by the Second Division of the Court of Appeals to be a conveyance of coal in place; but, upon a further consideration of the contract (136 N. Y. 593), this construction was repudiated, and it was held that the instrument was a simple executory contract for the mining of coal in a certain manner to be paid for at a certain price. It was held in Baker v. Hart (123 N. Y. 470) that an instrument termed a lease, which gave to the lessee the sole and exclusive right — 879 — of entering in and upon the lands of the lessor for the purpose of quarrying, cutting, crushing and removing stone for the term of ten years, but not to hold possession of any part of the said lands for any other purpose, gave the lessees no right of action for trespass against a stranger for quarrying stone because they had title to only such stone as they should quarry and remove within the specified term. In Moore v. Brown (139 N. Y. 127) it was held that one who ' had the right to mine upon State lands upon paying a royalty did not have such an estate in the land as entitled him to maintain ejectment. In the recent case of' White v. Miller (200 N. Y. 29) a reservation of “ all mines and minerals” was held .to work a disseverance from the soil of all minerals which could be mined, whether known or unknown. -That case turned, however, on the clear language of the reservation, and is of little aid in interpreting the contract in controversy. Petroleum oil and natural illuminating gas differ widely from other minerals in the ground. They cannot be blocked out and conveyed separately because of their wandering character. In a sense they cannot be owned until reduced to possession. In Wagner v. Mallory (169 N. Y. 501) the right to produce oil which had been given in lands was held not to pass by deed, and such right was declared to be a personal property right. A right to prospect for gas and to bore for oil upon the land of another is much more than a right to hunt in a field or to fish in a pond. Thousands of dollars may be expended in prospecting and the product may be worth hundreds of thousands of dollars, and it would seem that such right was entitled to some classification commensurate with its vast property interests. However, chapter 372 of the Laws of 1883 (now Gen. Constr. Law [Consol. Laws, chap. 22; Laws of 1909, chap. 27], § 39) declares oil wells to be personal property for all purposes except taxation. Prior to the statute it would appear that the courts recognized some kind of a right relating to real property in such a lease. (Eaton v. A. G. Co., 122 N. Y. 416; Allegany Oil Co. v. Bradford Oil Co., 21 Hun, 26; affd., 86 N. Y. 638; Alford v. Cobb, 35 Hun, 651; Shepherd v. MoCalmont Oil Co., 38 id. 37.) In Barnesdall v. Bradford Gas Co. (225 Penn. St. 338) a lease — 880 — for the sole purpose of mining and operating for oil, gas and other minerals, and of laying pipe lines and building tanks on a described tract of land was held to create a corporeal interest in the premises and not merely a license to enter and operate for oil and gas. In Consolidated Coal Co. v. Peers (150 111. 344) an instrument under seal giving the so-called lessee sole and exclusive right to mine coal on certain lands was held to create an interest in land and not to be a mere license. To the same effect is McDonald v. Hendrix (57 Ind. 513). In Gaston v. Plum (14 Conn. 343) an instrument giving a party' the right to dig or mine on a specified tract of land for a specified period was held to be more than a mere license and to create an interest in the real properly. In Heywood v. Fulmer (158 Ind. 658) a receipt for a specified sum of money paid “for the exclusive right to all gravel and sand for the year above named and excluding all other parties from said premises,” specifying the sand bar, was held to be a lease for the specified time and not a mere license to take sand. In Indiana Hatural Gas Company v. Hinton (159 Ind. 398) and in Barton v. Forest Oil Company (204 Penn. St. 349) assignees of gas and oil leases, who went into possession under assignments, were held to be liable without personal agreement therefor, to pay the stipulated rent or royalties on the ground that the leases were such interest in the land that a covenant to pay the rent followed upon transfer and entry thereunder. A feature of some of the above cases is that the land itself was leased for the sole purpose of prospecting, digging, extracting and taking away whatever should be found. Such is a fair interpretation of the lease under consideration. By simply transposing its provisions it appears plainly that Hendrick leased the entire twenty-acre tract of land to Spaulding for the purpose of prospecting for and digging and carrying away such minerals as he might find. By the subsequent paper which they executed between themselves they injected into the original contract the words “ grant and convey,” but this was with reference to the right to prospect only. This, however, did not amount to a conveyance of the land or of the minerals in place. By the various papers which they executed they described the original writing as a “ lease.” Spaulding was given — 881 — the right to erect such buildings or shanties as he might see fit on any part of the twenty acres and to pass over or dig up any part of it. Manifestly Hendrick understood he was giving and Spaulding believed he was getting some kind of interest in the land greater than a mere personal right to hunt for minerals therein but not title to the land or to the minerals severed therefrom. In effect, as I view it, Hendrick leased to Spaulding the twenty acres described for the purpose of prospecting for minerals thereon and digging and carrying away such as he might find. It is unimportant that the right to prospect and dig is first spoken of in the instrument. The whole instrument illuminated by the subsequent writings shows that he intended to lease the twenty acres for the purpose specified. This created the relation of landlord and tenant notwithstanding the fact that the rent was regulated by the number of tons of minerals which should be extracted. (Gilmore v. Ontario Iron Co., 22 Hun, 391; affd., 86 N. Y. 455 ; Barry v. Smith, 1 Misc. Rep. 240 ; affd., 69 Hun, 88.) My conclusion is that Spaulding had such an interest in the land that he could sub-lease to Roberts and that the instrument he executed to Roberts was a lease and not a conveyance, and that the defendants by taking an assignment of such lease and going into possession bound themselves to pay the rent which he had agreed to pay as long as they remained in possession although they entered into no personal agreement so to do. But although Spaulding held more than a license and more than an incorporeal right in the property he did not hold an estate of inheritance which would pass to his heirs on his death. At most, it was simply a chattel real (Brown v. Beecher, 120 Penn. St. 590) and as such would go to his administrator, he having died intestate. (Despard v. Churchill, 53 N. Y. 192; Real Prop. Law [Gen. Laws, chap. 46; Laws of 1896, chap. 547], § 23; now Real Prop. Law [Consol. Laws, chap. 50; Laws of 1909, chap. 52], § 33 ; Code Civ. Proc. § 2712.) The plaintiff failed to prove that Blodget, who described himself as administrator in the assignment to him, had in fact been appointed as such. He, therefore, failed to prove his right to enforce collection against these defendants. — 882 — Recovery was had for $500 minimum rent in each of the years 1907 and 1908. The defendants claimed that the lease was terminated in 1906, and hence that in any event the recovery is for $1,000 too much. It is unnecessary to consider that question in view of the fact that the judgment must he reversed for the reason pointed out. The judgment should be reversed and a new trial granted, with costs to the appellant to abide the event. Sewell, J., concurred; Smith, P. J., concurred in result on the ground that the liability, if any, is to the administrator of Spaulding; Kellogg, J., concurred in result in opinion.