Blakley v. Marshall

Opinion by Mr. Chief Justice Stebbett, No question is raised in this case stated as to the validity of [428] the lease under which the oil in question was produced; nor, is there any question as to the title of the lessors to the leased premises. By their informal deed of November, 1890, Andrew Blakley and wife granted and conveyed to Isaac E. Blakley and Louisa Blakley, the plaintiffs, a life estate in the land, with remainder in fee to their children, and appointed said life tenants trustees for their said children : Habendum, “ to them the said Isaac Blakley and Louisa his wife, for and during their life and no longer, and as trustees and in trust for their said children, them heirs and assigns forever, subject to the life estate of said Isaac E. Blakley and Louisa his wife ; and in case of the death of Isaac E. Blakley, Louisa Blakley, his wife .... shall only be trustee and have control of the above mentioned property so long as she remains his widow.” Acting for themselves in their own right as tenants for life, and also as trustees for those in remainder, the plaintiffs executed the lease to N. B. Duncan “for the purpose of operating and drilling for petroleum and gas,” for the term of fifteen years from August 10, 1894, “and so long thereafter as oil and gas can be produced in paying quantities.” It was obviously necessary, as well as to the interest of both the tenants for life and the remainder-men, that they should thus unite in the lease, because no practical oil operator would undertake the development of supposed oil territory on the faith of a lease from life tenants only, and for the further and more important reason that, if not promptly developed and worked, the land would soon have been drained of its oil through wells on adjoining lands. The leased premises proved to be productive, and the oil in question represents the lessors’ royalty under the lease. As life tenants of the premises, plaintiffs claimed the oil as their individual property free and discharged from any trust or confidence whatsoever. The defendant is a trustee, appointed by the court below, to receive the lessors’ share of the oil produced under the lease, invest the proceeds, and pay the interest annually realized therefrom to the plaintiffs during their joint lives and the life of the survivor, and, at the death of the latter, to pay the principal to the remainder-men entitled thereto. In support of plaintiffs’ claim to the whole of the royalty, etc., much stress was laid on the doctrine of waste; but we fail [429] to see that it has any application whatever to the facts of this case. It is conceded that the oil was produced under the lease made by plaintiffs, in them own right as life tenants, and as trustees for those in remainder; and, as appears by the opinion of the court, their action as trustees for the remainder-men was with its sanction and approval. It is difficult to see on what principle the cestui que trust should be excluded from participation in the royalty that accrued during the existence of the life estate. Assuming, for sake of illustration, that they had been of full age and sui juris, and instead of being parties, through their trustees to an oil lease, they and the tenants for life had united in a conveyance in fee of part of the land, could it in the absence of any agreement on the subject, be successfully claimed that the life tenants were entitled to the purchase money? We think not. There is no difference, in principle, between the • two cases. As was held in Stoughton’s Appeal, 88 Pa. 201, and other cases in same line, oil in place is a mineral, and being a mineral it is part of the realty. An oil lease, investing the lessee with the right to remove all the oil in place, in the premises, in consideration of his giving the lessors a certain per centum thereof, is in legal effect a sale of a portion of the land and the proceeds represents the respective interests of the lessors in the premises. If there be life tenants and remainder-men, the former are entitled to the enjoyment of the fund (i. e. interest thereon) during life, and at the death of the survivor the corpus of the fund should go to the remainder-men. This is as nearly a just and equitable distribution as can be made. It is in accord with the conclusion reached by the learned president of the court below; and there appears to be no reason why the judgment should be either reversed or modified. We are all of opinion that it should be affirmed. Judgment affirmed.