Batten v. Hope Natural Gas Co.
Batten v. Hope Natural Gas Co.
Opinion of the Court
John M. Batten conveyed to B. A. Batten 105 acres of land in fee, reserving a vendor’s lien to secure the unpaid purchase' money, and reserving also one-half the oil and gas. After the-conveyance, E. A. Batten executed to the Hope Natural Gas-Company a lease for oil and gas, as if he owned it all, to run for-ten years, and as long thereafter as oil or gas should be produced; and the lessee covenanted to complete a well within four months, or to pay $26.25 quarterly, in advance, for delay. The-purchase money not being paid when due, John M. Batten brought a suit to enforce his lien, and purchased the land at the judicial sale for less than the amount of his lien. On the 7th of February, 1908, the sale was confirmed, and a deed was executed to him on the 20th. Claiming that the rights of the-
The decree of the lower court is affirmed, Judges PoeeeN-bargeR, Millee and BobiNSON concurring in affirmance, Judge PoefeNBARGER for one reason, and Judges Miller and BobiN-SON for another. Judges BeaNNON and Williams dissent, and would reverse the decree.
Affirmed.
Concurring Opinion
Concurring Note by
Bound by the rule of stare decisis I agree, that a lessee of an ■oil lease executed by a vendee is not as a general rule a necessary party to a suit to enforce a vendor’s lien, and that a purchaser at the vendor’s suit would take good title unencumbered by the oil lease. But like most general rules this rule is not without its exceptions.
A vendor may by his subsequent acts and conduct ratify the lease, or waive his lien in favor of such lessee, or estop himself from asserting or enforcing it against such lessee.
In this case it appears that the vendor reserved one half of all the oil and gas. The bill in the vendor’s suit, and in which he became the purchaser, alleges that after the execution and delivery of his said deed the vendor, by a separate contract,
That such was the plaintiff’s own interpretation of his contract is plainly manifested, first, by his omission to make the lessee a party to his suit; second, by his prayer for a special receiver, to sequester the rents, and his acceptance of the rents paid by the lessee pendente lite into the receiver’s hands, and appropriated and applied by the decree on the vendor’s debt.
We think his contract and conduct amounts to a ratification and that he is concluded and estopped, now that he has acquired legal title to the land, from asserting rights inconsistent with his previous acts and conduct in reference to the lease. This conclusion I think fully supported by the following authorities cited by counsel for the appellee: 4 Am. & Eng. Dec. in Eq. 304 and note; Mann v. Peck, 45 W. Va. 18, 26; Bigelow on Estoppel, (5th ed:) 673 and 684; Town of Ansonia v. Cooper, 64 Conn. 536, 30 Atl. Rep. 760; Matter of Peaslee, 73 Hun. (N. Y.) 113. See, also, Platt on Leases 170, and cases cited particularly Doe dem Whitaker v. Hales, 7 Bing. 322; S. C. 5 Mo. & Pa. 132; also Jones on Landlord and Tenant, §25, page 32.
I would affirm the decree.
Concurring Opinion
(concurring) :
Our statutory vendor’s lien is not a reservation of title. It is
Not having been made a party to the former suit between Batten and Batten, to enforce the vendor’s lien, the interest of the lessee has not been extinguished. Its'lease has not been sold as it might have been in that case. The present bill treats the . lease as having been extinguished and obliterated by the decree and sale in the former suit and seeks cancellation thereof, not subjection to sale to satisfy the prior vendor’s lien. Batten, the purchaser at the judicial sale, does not recognize any right in the lessee to pay off -the balance of his debt to protect its term. Hence, it cannot be said the lessee has its day in court now. Batten docs not recognize its right to satisfy the lien by way of protection of its term. He looks upon the lessee not only as having'no right now as against his lien, but as never having had
Entertaining these views, 1 think the court properly dismissed plaintiff’s bill and would affirm the decree.
Dissenting Opinion
(dissenting) :
The facts are not disputed; and the record presents two purely legal questions, viz.: (1) Did the sale extinguish the lease; and (2) did the collection of the delay rentals, pending the litigation and their application to his debt, amount to a ratification of the lease by plaintiff, and estop him to deny the rights of the lessee thereunder?
Strictly speaking, an oil and gas lease is not a lease at all, although it is generally so called; it is only an irrevocable license to make exploration for those natural products, and gives right to possession of the surface only for purposes of exploring for, and producing the products, if found . After discovery and production, the right of the grantee to carry away and dispose of the product, which is a part of the very substance of the earth itself, becomes a vested right, determinable only by his failure to continue the production. Hence, there are many incidents belonging to the ordinary lease, growing out of the relation of landlord and tenant, which do not obtain in an oil and gas lease. But, there having been no entry upon the land for the purpose of exploration in this ease, the rights of defendant are certainly no greater than the rights of a tenant under an ordinary lease. ■ The lessee, had acquired no vested right to the
Between lessor and lessee there is privity of estate; the tenancy depends upon the estate of the landlord, and if his title fail it necessarily terminates the lease, because the lessor is no longer landlord; and it is an elemental principle that the lessor can confer on his lessee no greater right than he possessed himself. Defendant had constructive knowledge of the incumbrance upon the lessor’s title, and leased subject to the right of the vendor to enforce his lien. It must have known that the enforcement of the vendor’s right might result in the loss of title to the vendee, and consequently a termination of its lease, and it took that risk. If the tenant’s estate were not dependent on his landlord’s title, it would be possible for a mortgagor, or vendee of land subject to a vendor’s lien, to lease the land for a term of years and, by collecting the rent in advance, to materially affect, if not destroy, the value of the security. But, as early as 1778, it was held by the Court of Kings Bench, in Keech v. Hall, 1 Doug. 21, Lord Mansfield, delivering the opinion, that: “The mortgagor has no power, express or implied, to let leases, not subject to every circumstance of the mortgage.” In that case the mortgagee was permitted to treat the lessee as a trespasser and recover in ejectment. The same rule is applied in this country. “A mortgagor, or his grantee, can not make a lease of mortgaged premises which will give greater rights than he possesses, and that will interfere with the rights of the mortgagee to enter for conditions broken.” Taylor v. Adams, 115 Ill. 570.
“A lease made by a mortgagor subsequent to his giving his mortgage is of no validity as against the mortgagee; as to him the tenant is a trespasser, not entitled to notice to quit or to way going crops.” Howell v. Schenk, 24 N. J. L. 89.
So far as it affects the question under consideration, the rights of a vendor, holding a lien for the purchase money, are not essentially different from those of a mortgagee; and it is well settled that a lease by the mortgagee is terminated by redemption ; and, vice versa, a lease by the mortgagor, subsequent
This question was decided by the supreme court of California in a very able and lucid opinion delivered by Justice Meld in McDermott v. Burke, reported in 16 California reports. The law is so well stated by that distinguished jurist that I quote his language at some length. At page 589 of the report he says: “A mortgagor cannot make a lease which will bind his mortgagee, where the lessee at the time had notice of the mortgage, either actual or constructive. The interest of the lessee in such case is dependent for its duration, except as limited by the terms of the lease, upon the enforcement' of the mortgage. So long as the mortgage remains unenforced, the lease is valid against the mortgagor, and in this State against the mortgagee; but with its enforcement the leasehold interest is determined. There is no privity of contract or of estate between the purchaser upon the decree of sale and the tenant. The purchaser may, therefore, treat the tenant as an occupant without right, and maintain ejectment for the premises. He cannot, for the want of such privity, count upon the lease, and sue for the rent or the value of the use and occupation. The relation between the purchaser and tenant is that of owner and trespasser until some agreement, express or implied, is made between them with reference to the occupation. Until then, both are equally free from any contract obligations to each other.”
The following cases are also in point, viz: Simers v. Saltus, 3 Denio (N. Y.) 314; Burr v. Stenton, 53 Barb. (N. Y.) 377; Taylor v. Adams, 115 Ill. 570; Smyrnia B. & L. Ass’n. v. Worden, 5 Houst. (Del.) 508; Haven v. Adams, 4 Allen (Mass.) 80; Howell v. Schenk, 24 N. J. L. 89; Kennett v. Plummer, 38 Mo. 142; Teal v. Walker, 111 U. S. 242; Eussum v. Wanser, 53 Md. 92; Hill v. Jordon, 30 Me. 267.
It would seem to follow, almost as a matter of course, that, if the lease is terminated by the sale, there would be no occasion to make the lessee a party to the foreclosure proceeding; certainly not when he is not in possession. Downard v. Groff, 40 Iowa 597. Being privy to his lessor, he is as much bound by the decree against his landlord as if he had been made a party,
The collection of the rental, pending foreclosure suit, was not inconsistent with plaintiffs present contention, as I shall presently point out. Therefore, there was no defense that defendant could make, and consequently no reason to make- it a party. In Chapman v. Railroad Co., 18 W. Va. 184, it is stated in point 1 of the syllabus that: “The general rule is, that when proceedings are had to sell the fee in land, it is not necessary to make the lessee of the land a party to the suit.” In the case of Taylor v. Adams, 115 Ill. 570, it was expressly held that it was not necessary to make a subsequent lessee of the mortgagor’s grantee a party to a foreclosure bill. And in 9 Enc. PI. & Pr. 345, the general rule is stated thus: “The foreclosure proceeding terminates the lease, and it is therefore not necessary to bring the lessee into the suit as a party in order to cut of his interests.” Hence, if the tenant were in possession the purchaser might be put to a separate action against him in order to get possession. But here defendant never had possession.
Did the collecting of the rent accruing before sale, by the receiver of the court, at the instance of the plaintiff, amount to an implied agreement to extend the lease, and is plaintiff thereby estopped to deny its validity? I do not think so. Plaintiff did not cause the Hope Hatural Gas Company to take the lease, and has done nothing to jeopardize its interests, except to enforce his lien. He claimed no interest in the delay rentals, other than as a creditor of the lessor. He did nothing to induce the belief that, by the payment of rentals pending litigation, the lease would be extended. Defendant had bound itself to $ay
The last quarterly rental becoming due before the confirmation of the sale, was for the quarter ending April 11, 1908, and was paid to the receiver on the 28th of the preceding December.. The sale of the land was made on the 30th of December, 1907, confirmed on the 7th of February, and a deed was made to plaintiff on the 20th of February, 1908. Counsel for defendant insist that, inasmuch as plaintiff received - the rental for a quarter which did not end until after confirmation of the sale, there was, therefore, an implied promise to continue the lease. But plaintiff could only be affected by what he received after, not before, he became the purchaser; only his conduct after he became owner of the land could have misled the lessee. It does
I think the court erred in denying the relief prayed for, and that the decree appealed from ought to be reversed, and a decree entered here giving plaintiff relief.
I agree with Judge Williams.
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