Wiser Oil Company v. Conley

346 S.W.2d 718
CourtCourt of Appeals of Kentucky (pre-1976)
DecidedDecember 16, 1960
StatusPublished
Cited by32 cases

This text of 346 S.W.2d 718 (Wiser Oil Company v. Conley) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky (pre-1976) primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wiser Oil Company v. Conley, 346 S.W.2d 718 (Ky. 1960).

Opinion

STEWART, Judge.

The Wiser Oil Company and Petroleum Exploration, Inc. appeal from a judgment *720 of the Magoffin Circuit Court holding that they must pay T. J. Conley, the surface owner of a tract of land on which they have a lease for oil and gas, damages for the destruction of the surface and of the coal thereunder, said damages being caused by 'a new method of forcing oil from underground. They also appeal from a supplemental judgment holding that they are not entitled to use the surface of the leased premises for the production of oil from other tracts of land, in the absence of the express consent of Conley.

Appellants are equal co-lessees of the oil and gas rights located under the surface of 82.87 acres in Magoffin County. Their predecessor in title obtained the lease from appellee’s1 predecessors in title on March 10, 1917. Oil in paying quantities was found soon thereafter, but production from wells dug has diminished over the years to the point where further pumping by ordinary, conventional methods would be unprofitable. Appellants therefore proposed to increase output by the only profitable plan they could resort to, i. e., by “water flooding” the wells. When appellee ascertained their intentions in this respect, he instituted this action against them, asking an injunction against1 the use of such a method on his land and $20,000 for damages if appellants proceeded to carry out such a practice.

The lower court made these pertinent findings of fact: That the new process calls for drilling twelve water wells through appellee’s seam of coal under his land, which would require that a pillar of coal 200 feet square be left around each of the proposed wells; that these operations would cause substantial injury to the coal which is still owned by appellee and to the surface which he regularly farms; and that the water-flooding system was not in use in Kentucky at the time of the execution of the lease.

The judgment, dated August 11, 1958, recited that .appellants under their lease had the right to go upon the land, drill additional water injection and oil wells, build roads, pipe lines, electric lines and sludge pits, and install the machinery and equipment necessary for the production of oil by the new method. However, based upon the factual findings just mentioned, it was further adjudged that appellee would thereby suffer substantial injury, both to the surface of his land and to the coal underneath, for which he could thereafter recover damages. Since no loss had yet been sustained because the new plan had not been employed, appellee’s claim for damages was dismissed without prejudice. Both parties appealed from this judgment, but appellee’s appeal was never perfected.

Meanwhile, appellants moved on the premises and began production by the water-flooding arrangement. On October 24, 1958, appellants filed a supplemental counterclaim asking for a declaration of rights against appellee, whereby they sought the right to use the electric and water-pipe lines they had constructed on appellee’s property to bring in oil from other lands in the vicinity of the leasehold in controversy. On November 6, 1958, the trial court held there had been no specific grant of any right to utilize the surface of the leasehold for the development of other lands, and decreed appellants were not entitled to do so.

The lease agreement granted “all” the oil and gas in the tract involved herein, with the exclusive right to drill for these two minerals. There was also a right of way given over the land “for any purpose.” The landowner retained the right “to fully use and enjoy said premises for the purpose of tillage,” except such parts thereof as were devoted to the uses specifically mentioned in the lease. There was bestowed upon the holder of the lease the right “to use all means and appliances on or off these premises to secure and facilitate, the production of oil and gas.”

*721 It is the contention of appellants that since “all” of the oil was sold, they should have the right to extract it by any process that is feasible; and it is their further contention that their ownership of the oil gives them an implied right to avail themselves of as much of the surface and of the underlying coal as may be .required to withdraw it by the new plan, including space for new oil and water wells, roads, sludge pits, water and electric lines, or space for other purposes directly related to such an operation, and that they should not be held liable in damages for so using appellee’s property.

Appellants rely upon General Refractories Co. v. Swetman, 303 Ky. 319, 197 S.W.2d 769, 770, for the position taken by them, wherein it is stated: “Numerous authorities could be cited to the effect that, unless the conveyance itself repels the construction, one who owns the mineral rights in the tract of land by implication of lazv acquires the right to use as much of the surface as may be reasonably necessary for the beneficial and profitable operation of his mines.”

Appellee maintains, however, that when the oil and gas rights were sold in 1917 it was not contemplated that any process of producing oil would be employed other than the one then in normal use; and that it certainly was not at that time in the minds of the parties that such a novel plan of extracting this mineral, which would cause undreamed of destruction to the surface and to the underlying coal and which had never before been resorted to in Kentucky, should be employed without compensating the landowner for the damages done thereby.

It is our view the question raised is a new one in this state. Nevertheless, appellants assert that the case of Buchanan v. Watson, Ky., 290 S.W.2d 40, sustains their argument that they should not be held liable for any injuries to the surface or to the underlying coal in any of their operations under the water-flooding sys-tern. We do not agree. There is a vital difference between the terms and conditions of the mineral deed involved in the Buchanan case and the language embraced in the oil and gas lease under consideration here. The mineral deed contained an express waiver of damages which this Court stated was sufficiently broad to prohibit a recovery for any destruction from strip mining that might result to the surface. The waiver of damages condition was the controlling feature in the Buchanan case. On the other hand, the oil and gas lease has no such waiver provision and, furthermore, we do not believe such a provision can be read into it. There is no decision by this Court which might indicate what it would do where, as here, there is a virtual destruction of the surface, as well as considerable injury to the coal seam, by a new system of oil withdrawal where the owner or lessee of the oil and gas rights has no waiver of damages to rely upon.

There is a sound basis for the rule that a deed or lease of minerals carries with it the right to use as much of the surface, or other property, as may be reasonably necessary to exploit the minerals. We also are aware of the well-known concept that where the injury done to the property was of an anticipatory character, such a result would constitute damnum absque injuria.

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Bluebook (online)
346 S.W.2d 718, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wiser-oil-company-v-conley-kyctapphigh-1960.