Gulf Refining Co. v. Stanford

Mississippi Supreme Court

Gulf Refining Co. v. Stanford

30 So. 2d 516, 202 Miss. 602, 173 A.L.R. 1099, 1947 Miss. LEXIS 321

CourtMississippi Supreme Court

DecidedMay 12, 1947

DocketNo. 36364.

StatusPublished

Cited by4 cases

This text of 30 So. 2d 516 (Gulf Refining Co. v. Stanford) is published on Counsel Stack Legal Research, covering Mississippi Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Gulf Refining Co. v. Stanford, 30 So. 2d 516, 202 Miss. 602, 173 A.L.R. 1099, 1947 Miss. LEXIS 321 (Mich. 1947).

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Opinions

Sydney Smith, O. J.,

delivered the opinion of the court.

In October 1932 W. J. Dantzler conveyed to Nelson Simmons the N% of NW!4 of Section 1, Township 1, Range 13, with, a reservation therein that “in the event of any minerals, oil or gas being found in the bounds of the land we are to share the profits equally. ’ ’ Dantzler after-wards conveyed or assigned a one half interest in this reservation to G. G. Stanford. On October 21,1937, Simmons executed the usual mineral lease to the appellant, authorizing it to explore for, bring to the surface, and utilize any oil that might be found in the land, for which privilege it agreed to deliver to Simmons one-eighth part of the oil produced by it from the land. It succeeded in producing oil from the land at an expense of something over $60,000 and had in its hands unpaid royalties due under the lease amounting to something over $3,600. This it paid into the registry of the Court below under a bill of interpleader, to which a number of persons were defendants who are said to claim a interest therein, prayed that they be cited to appear and assert their claims, if any, to this money and that the appellant be relieved from further responsibility there as to.

Dantzler having become non compos mentis, his guardian, McCormick, Stanford, and other defendants, filed cross-bills against the appellant in which they claimed that by the reservation in this deed, Dantzler reserved to himself a half interest in the oil in the land in place, and asserted a right in Dantzler and Stanford to the value of one-half of the oil produced by the appellant and prayed for an *617 accounting therefor. Demurrers by the appellant to these cross-bills were overruled, the Court thereby holding that the reservation in Dantzler’s deed to Simmons was of a one-half interest in the oil in place. The Gulf Defining Company, by permission of the Court below, brought the case to this Court.

This State is a member of that group of states which hold that minerals in place may be owned separately from the ownership of the soil in which they are embedded. Eeservations somewhat like the one here under consideration have been considered in decisions by the courts of some of the states belonging to this group, but the conflict and confusion therein is such that little help will be gained by resorting thereto; so we will proceed at once to construe this contract as we would any other submitted to us for that purpose.

"The word ‘profit’ is elastic, ambiguous and often properly used in more than one sense.” 50 C. J. 643. Its meaning in a written instrument is governed by the intention of the parties appearing therein and any accurate definition of it must always include the element of gain. When this deed was executed it was not known whether there was any oil in this land; its presence therein being thereafter discovered. While remaining in the land oil is of no use to any one and no profit or gain can be derived therefrom other than its sale in place, except in so far as the value of the land would be increased thereby. It is clearly not the intention of the parties to this deed that the grantor therein should share in any increased value of the land and the sale of oil in place is unusual, and, if made, must be for a purely speculative price. The intention of the parties to this deed, therefore, must have been to share equally in the gain from or use of the oil after it has been brought to the surface. The finding of the oil in land and bringing it to the surface is quite expensive, the incurring of which — ex vi termini — is included here in the word profits. The reservation does not provide how this expense is to be met, but it is com *618 mon knowledge that the landowner does not, and usually could not, himself provide the money therefor, the usual and almost universal method for finding oil and bringing it to the surface being for the landowner to authorize a person or corporation engaged in such business to find the oil and bring it to the surface, appropriating all that he produces thereby to himself except an agreed portion thereof reserved by an to be delivered, or its value paid, to the landowner and usually designated as a royalty. This is exactly what occurred here and was therefore within the contemplation of the reservation in the deed and since the appellees do not challenge the amount of the royalty here involved, they have no complaint thereat and Dantzler and Stanford are entitled only to receive one-fourth each thereof.

The appellees invoke, and rest their case on, that line of decisions based on Lord Coke’s oft quoted dictum in Coke on Lyttleton, Book 2, 4b, holding that a grant in terms of the “profits” of land will pass the land itself. But we have no such simple case here, but one wherein a grantor reserved from or lifted out of his grant an element of the property granted; thereby creating a new right in himself out of the subject of the grant, which reservation must be “ construed most strongly against the grantor and in favor of the grantee,” 26 C. J. S., Deeds, Sec. 140b, even without which it is clear that the word ‘ ‘ profits ’ ’ was not here used as the equivalent of the property from which the profits were to come. Of. Armstrong v. Bell, 199 Miss. 29, 24 So. (2d) 10; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 So. 4, 25 A. L. R. 748; State v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 So. 689.

Reversed and remanded.

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Sydney Smith, O. J.,

delivered the opinion of the court.

In October 1932 W. J. Dantzler conveyed to Nelson Simmons the N% of NW!4 of Section 1, Township 1, Range 13, with, a reservation therein that “in the event of any minerals, oil or gas being found in the bounds of the land we are to share the profits equally. ’ ’ Dantzler after-wards conveyed or assigned a one half interest in this reservation to G. G. Stanford. On October 21,1937, Simmons executed the usual mineral lease to the appellant, authorizing it to explore for, bring to the surface, and utilize any oil that might be found in the land, for which privilege it agreed to deliver to Simmons one-eighth part of the oil produced by it from the land. It succeeded in producing oil from the land at an expense of something over $60,000 and had in its hands unpaid royalties due under the lease amounting to something over $3,600. This it paid into the registry of the Court below under a bill of interpleader, to which a number of persons were defendants who are said to claim a interest therein, prayed that they be cited to appear and assert their claims, if any, to this money and that the appellant be relieved from further responsibility there as to.

Dantzler having become non compos mentis, his guardian, McCormick, Stanford, and other defendants, filed cross-bills against the appellant in which they claimed that by the reservation in this deed, Dantzler reserved to himself a half interest in the oil in the land in place, and asserted a right in Dantzler and Stanford to the value of one-half of the oil produced by the appellant and prayed for an *617 accounting therefor. Demurrers by the appellant to these cross-bills were overruled, the Court thereby holding that the reservation in Dantzler’s deed to Simmons was of a one-half interest in the oil in place. The Gulf Defining Company, by permission of the Court below, brought the case to this Court.

This State is a member of that group of states which hold that minerals in place may be owned separately from the ownership of the soil in which they are embedded. Eeservations somewhat like the one here under consideration have been considered in decisions by the courts of some of the states belonging to this group, but the conflict and confusion therein is such that little help will be gained by resorting thereto; so we will proceed at once to construe this contract as we would any other submitted to us for that purpose.

"The word ‘profit’ is elastic, ambiguous and often properly used in more than one sense.” 50 C. J. 643. Its meaning in a written instrument is governed by the intention of the parties appearing therein and any accurate definition of it must always include the element of gain. When this deed was executed it was not known whether there was any oil in this land; its presence therein being thereafter discovered. While remaining in the land oil is of no use to any one and no profit or gain can be derived therefrom other than its sale in place, except in so far as the value of the land would be increased thereby. It is clearly not the intention of the parties to this deed that the grantor therein should share in any increased value of the land and the sale of oil in place is unusual, and, if made, must be for a purely speculative price. The intention of the parties to this deed, therefore, must have been to share equally in the gain from or use of the oil after it has been brought to the surface. The finding of the oil in land and bringing it to the surface is quite expensive, the incurring of which — ex vi termini — is included here in the word profits. The reservation does not provide how this expense is to be met, but it is com *618 mon knowledge that the landowner does not, and usually could not, himself provide the money therefor, the usual and almost universal method for finding oil and bringing it to the surface being for the landowner to authorize a person or corporation engaged in such business to find the oil and bring it to the surface, appropriating all that he produces thereby to himself except an agreed portion thereof reserved by an to be delivered, or its value paid, to the landowner and usually designated as a royalty. This is exactly what occurred here and was therefore within the contemplation of the reservation in the deed and since the appellees do not challenge the amount of the royalty here involved, they have no complaint thereat and Dantzler and Stanford are entitled only to receive one-fourth each thereof.

The appellees invoke, and rest their case on, that line of decisions based on Lord Coke’s oft quoted dictum in Coke on Lyttleton, Book 2, 4b, holding that a grant in terms of the “profits” of land will pass the land itself. But we have no such simple case here, but one wherein a grantor reserved from or lifted out of his grant an element of the property granted; thereby creating a new right in himself out of the subject of the grant, which reservation must be “ construed most strongly against the grantor and in favor of the grantee,” 26 C. J. S., Deeds, Sec. 140b, even without which it is clear that the word ‘ ‘ profits ’ ’ was not here used as the equivalent of the property from which the profits were to come. Of. Armstrong v. Bell, 199 Miss. 29, 24 So. (2d) 10; Hattiesburg Grocery Co. v. Robertson, 126 Miss. 34, 88 So. 4, 25 A. L. R. 748; State v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 So. 689.

Reversed and remanded.

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30 So. 2d 516, 202 Miss. 602, 173 A.L.R. 1099, 1947 Miss. LEXIS 321, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gulf-refining-co-v-stanford-miss-1947.

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