land is in any person or persons, natural or artificial, and the right or title to any minerals therein is in another or in others, the right to such minerals shall be valued and listed separately from the fee of said land, in separate entries and descriptions, and such land itself and said right to the minerals therein shall be separately taxed to the owners thereof respectively. The register of deeds shall furnish to the county clerk, who shall furnish on the first day of March each year to each assessor where such mineral reserves exist and are a matter of record, a certified description of all such reserves: Provided, that when such reserves or leases are not recorded within ninety days after execution, they shall become void if not listed for taxation." This provision has been interpreted and its validity upheld. Mining Co. v. Crawford County, 71 Kan. 276, 80 Pac. 601; Gas Co. v. Neosho County, 75 Kan. 335, 89 Pac. 750. It is argued that the act was only intended to apply to solid minerals, such as coal, lead, and zinc, and that because of their peculiar attributes oil and gas are not capable of ownership in place and cannot have been within the legislative purpose. The terms of the act are broad enough to embrace minerals of every kind, and it is well settled that oil and gas, although fugitive fluids, are minerals. Zinc Co. v. Freeman, 69 Kan. 691, 76 Pac. 1130; Murray v. Allred, 100 Tenn. 100, 43 S. W. 355, 39 L. R. A. 249, 66 Am. St. Rep. 740. It has also been determined that, although oil and gas in place are a part of the realty, the stratum in which they are found is capable of severance, and by an appropriate writing the owner of the land may transfer the stratum containing oil and gas to another. Such party acquired an estate in and title to the stratum of oil and gas, and thereafter it becomes the subject of taxation, incumbrance, or conveyance. Kurt v. Lanyon, 72 Kan. 60, 82 Pac. 459; Moore v. Griffin, 72 Kan. 164, 83 Pac. 395, 4 L. R. A. (N. S.) 477; Barrett v. Coal Co., 70 Kan. 649, 79 Pac. 150; Chartiers' Block Coal Co. v. Mellon, 152 Pa. 286, 25 Atl. 597, 18 L. R. A. 702, 34 Am. St. Rep. 645. It being competent for an owner of land by contract or conveyance to sever an underlying layer or stratum of oil or gas from other parts of the land, and thus vest the title of the layer in another, there remains the question whether the writing executed by Henry Carbon is sufficient to accomplish a severance of the mineral from the remainder of the land. The ordinary agreement giving the lessee the right to enter and explore for oil and gas and to sever and own any that may be found, paying a royalty to the owner of the land, is a license, which does not operate as a severance of the minerals. In Gas Co. v. Neosho County, supra, the act providing for taxing separate mineral interests in lands was considered, and it was there pointed out that a lease of the type just mentioned grants no estate, gives no title, does not operate to sever the oil and gas from the land, and is therefore not separately taxable to the lessee. On the other hand, attention is called to another class of writings which do transfer an estate in the mineral and operate to sever the ownership of the oil and gas from the ownership of the surface. It will be observed that the lease in question gives more than a license, more than an incorporated hereditament. It "grants, conveys and warrants unto Robert Fleming, second party, his heirs, successors and assigns, all the oil, coal and gas in and under the following described premises." In connection with the grant, the right is given to enter and use the surface so far as may be necessary for the second party to avail himself of the use and benefit of the part conveyed. The consideration was a certain quantity of the coal and oil produced and a certain amount annually for each gas well used, together with gas sufficient to supply the residence of the grantor. In another paragraph of the instrument provision is made for the reconveyance of the premises by the second party; it being stipulated that if no well is drilled within 10 years he shall reconvey the property to the first party, and when this is done the instrument first made shall be null and void. There is also a provision that the first party reserves to himself oil and gas for his own use on the premises for domestic purposes. The language of the instrument is manifestly that of a grant and not of a license. It purports to convey all of the coal, oil, and gas underneath the tract of land, instead of a privilege or license to prospect for and to sever and own so much of it as the lessee might find. It transfers at once and makes him the owner of the minerals under this tract of land-a very different thing from giving him the right to prospect and to own only that which he finds and brings to the surface. The character of the instrument is indicated to some extent by the fact that the grant, together with the accompanying rights and privileges, were extended to the heirs, successors, and assigns of the grantee. Then there is the reservation of oil and gas for domestic purposes, by which the grantor proceeds on the theory that he is taking back something out of that which was granted and which would have passed to the grantee but for the reservation. The name by which the writing is designated is not a matter of great consequence, as what is called a "lease" may as effectually transfer the minerals underneath a tract of land as a more formal instrument of conveyance. A severance, such as the statute in question contemplates, may be made by an exception or reservation in a deed, or by an express grant in any other instrument. In Sanderson v. Scranton, 105 Pa. 469, where there was an agreement by an owner leasing all of the coal under the surface of land and providing that a certain quantity should be mined by the lessee each year, that monthly payments should be made by the lessee in proportion to the quantity mined, and extending the rights and privileges conferred by the lease to the heirs, executors, administrators, and assigns, it was held "that this agreement was not merely a license or lease to mine coal to become the lessee's when mined, but it operated as such a severance of the surface and subjacent strata, and a sale or assignment of the coal in place, as would relieve the owner of the surface from responsibility for taxes levied upon the coal." See, also, Peterson v. Hall, 57 W. Va. 535, 50 S. E. 603. We see no difference in applying the act to the cases such as this, where the underlying strata of land have become vested in different owners. Counsel for appellant says the lease or reserve must be taxed, if at all, as personal property, and suggest difficulties in determining the situs of such property. It is the interests or estates severed and created which are to be taxed, and not the instrument creating the separate interests. In Gas Co. v. Neosho County, supra, it was demonstrated that the mineral rights carved out, and which were to be subject to taxation, were to be treated as realty, and not as personal property. It was said: "It is contemplated that there shall be an estate consisting of what is left after the mineral rights have been carved out, and that there shall be an estate consisting of the mineral rights which have been segregated. The statute further contemplates that each state must vest in a separate person. The respective proprietors are called 'owners,' and the estate in the mineral is nothing short of the right or title to the minerals themselves as they lie in the ground." In Mining Co. v. Crawford County, supra, it was suggested that there would be difficulty in enforcing the act and in the assessment of such segregated property; but the suggestion was met by saying that the value of such property might be ascertained and the assessment made under the general rules governing the assessment of real property. As it is the interest in the land, and not the instrument, which transfers the interest that is taxed, the indefiniteness which counsel see in the act largely disappears. The lease does not become void by the mere failure to record it, but only when there is the additional delinquency of omitting to list it for taxation. If it is recorded as the statute enjoins, the taxing officer has an opportunity to find and assess the property conveyed by it, and if the owners omit to record the lease, and further omit to list it, and thus bring it to the attention of the taxing officials within the time fixed for listing property, the lease then becomes void and may be so declared by the court at the instance of any interested party. As the owner of the interest in question failed to record the lease within the prescribed time, and also failed to list the property for taxation, the lease was a nullity, and the judgment of the trial court deciding that it was void will be affirmed. All the Justices concurring. Section 2.-Covenants and Conditions in Oil and Gas Leases. 1906. HEADLEY v. HOOPENGARNER ET AL. SUPREME COURT OF APPEALS OF WEST VIRGINIA. BILL by Mansfield Headley against H. L. Hoopengarner and others. Decree for plaintiff, and defendant the Colonial Oil Company and others appeal. Reversed and remanded. SANDERS, J.-This is a suit in equity, brought in the circuit court of Tyler county by Mansfield Headley against H. L. Hoopengarner and others. Upon a final hearing the court below decreed for the plaintiff, and from this decree an appeal has been allowed. * * * It is contended by plaintiff's counsel that there is no implied covenant of warranty in an oil and gas lease. This is based upon the theory that the lease from the Headley heirs to Hoopengarner, Wharton, and Karnes & Co. was a sale of the oil in place, and passed a fee-simple estate, and not merely a lease or rental contract. If this claim were correct, and had it been a grant of the oil in place, creating an estate in fee, then the authorities unanimously hold that there is no implied covenant of warranty, but that such covenant must be expressed in the deed; but, also, on the other hand, if the title passes an estate for years, with a reversion to the lessor, then there need be no express warranty of title or for peaceable and quiet enjoyment of the demised premises, but such covenant is implied in law. Where the lease contains such language as the one we have here, which says, "have granted, demised, leased, and let, and by these presents does demise, grant, lease, and let, unto the party of the second part," it is universally held that there is an implied covenant of title for quiet and peaceable enjoyment for the purposes of the lease, when there is no statute restricting or qualifying the meaning of such words. This is not an open question in this state. In the case of Knotts et al. v. McGregor, 47 W. Va. 566, 35 S. E. 899, this is held to be the law, wherein it is said: "In a lease for oil and gas, there is an implied covenant of right of entry and quiet enjoyment for the purposes of the lease." "With respect to estates less than freehold, covenants for title were from the earliest times implied, not only from the words of leasing, 'such as "demisi," "concessi," or the like,' but even from the relation of landlord and tenant; and such is the law at the present day, unless where, as in some of the United States, it has been altered by legisRawle on Covenants (5th Ed.) § 272. * lation." * * Now, then, we find that in a conveyance of an estate less than a fee, as for a term of years, that a covenant of warranty of title and for quiet and peaceable enjoyment is implied. Then the question is, does the lease convey a fee-simple estate, or an estate for years? This is the ordinary oil and gas lease, with a reversion to the grantors, for the purpose of mining and operating for oil and gas, laying pipe lines, building tanks, stations, and structures thereon, and, in consideration thereof, to pay as royalty a one-eighth part of all the oil produced and saved from the leased premises. While we have some cases which may be construed to hold that the ordinary oil lease, investing the lessee with the right to remove all the oil in place in the premises in consideration of a certain stipulated royalty, is, in legal effect, a sale of a portion of the land, yet these cases do not conform to many others, which treat such contracts only as leases, and a conveyance for a term of years, and not to pass an estate in fee. We do not think the lease in question can be so construed as to be other than a contract which passes only an estate for years. "A lease is a contract for the possession and profits of lands and tenements on the one side, and the recompense or rents on the other, or, in other words, a conveyance to a person for life, years, or at will, in consideration of a rent or other recompense." 18 Am. & Eng. Ency. Law (2d Ed.) 597. And a lease is defined to be, by Blackstone, properly a conveyance of lands or tenements in consideration of rent or other recompense, made for life, for years, or at will, but always for a less time than the lessor hath in the premises, because, if it be for the whole interest, it is more properly an assignment than a lease. In fact, there is no difficulty in determining the requisites of a lease. There is no difference of opinion as to that. The definitions are uniform, but the difficulty is in always determining whether or not the particular paper or contract falls within the definition. Applying the definition to the contract here, and we find that it falls clearly within the true meaning of the word lease. It conveyed an estate less than the lessor had in the premises; it was to remain in force for the term of three years from its date, and as long thereafter as oil or gas, or either of them, was produced from the premises by the lessees; it contained the usual words essential to its operation, which are, "grant, lease and let"; it gives to the lessees the right to the possession of the lands for oil and gas operations, with the profits derived therefrom; and, on the other hand, the lessor is to be recompensed by his receiving a certain part of the production as royalty. It cannot be said that the provision in the lease, which says that it shall remain in force as long after three years as oil and gas, or either, is produced by the lessee, can be so construed as to detract from it the essentials of a lease, and make it such a conveyance as to pass the whole estate to the lessor. This is an optional provision, and there is a clause in the lease reserving unto the lessees the right to surrender the lease for cancellation at any time. Therefore Thomas |