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Shell Oil Co. v. Dye

April 30, 1943

SHELL OIL CO.
v.
DYE ET AL.



Appeal from the District Court of the United States for the Eastern District of Illinois; Walter C. Lindley, Judge.

Author: Major

Before EVANS, MAJOR, and KERNER, Circuit Judges.

MAJOR, Circuit Judge.

This is an appeal from a decree entered by the District Court June 19, 1942, and an order entered June 11, 1942, in favor of plaintiff, in an action seeking to restrain defendants from interfering with plaintiff in drilling and exploring for oil and gas, and to restrain defendants from drilling or attempting to drill or produce oil and gas from a certain described ten acre tract of land situated in Franklin County, Illinois, and for other relief. Both plaintiff and defendants claim to be the owners of a valid oil and gas lease covering the tract in suit.

On July 24, 1905, the tract was owned in fee simple by W. D. Dunning, who on that date, together with his wife, executed two warranty deeds of conveyance, the first to Benton Coal Company, an Illinois corporation, and the second to T. M. McKemie (sometimes designated as Thomas M. McKemie). The former conveyed "all the coal and other minerals in, on and under (the tract in suit)." This conveyance contained certain provisions, such as the right to mine and remove said coal and other minerals without liability for damage to the surface, the right to make underground passages or entries to and from adjacent mines, the right of the grantee to take and use as much of the surface as deemed necessary for the purpose of erecting, maintaining and operating hoisting, air, pumping and escape shafts, and with the right for any railroad necessary or required to carry said coal and other minerals to market, the surface so taken to be paid for at the rate of $50 per acre.

The second deed by Dunning and wife conveyed to T. M. McKemie the following described real estate (the tract in suit), and contained the following provision: "This deed is made subject to a deed of same date, conveying coal and mineral rights with surface privileges to the Benton Coal Company." Plaintiff's primary claim to title is predicated upon mesne conveyances of "all the coal and other minerals" conveyed to the Benton Coal Company. There appears no reason to describe these various conveyances. Defendants claim title by mesne conveyances of the property conveyed to Thomas M. McKemie. As will hereafter appear, it seems material to describe these conveyances.

Thomas M. McKemie and his wife Lou on October 7, 1921, conveyed and quit claimed to Lou McKemie the tract in suit, subject "to all deeds of conveyances heretofore made conveying the coal, oil and gas and other minerals underlying any or all of the above described pieces of real estate." On December 6, 1927, Lou McKemie and Thomas M. McKemie, her husband, conveyed the same tract to Charles McKemie, their son, which conveyance contained the following provision: "And excepting from all lands above conveyed the coal, oil, gas and other minerals, together with certain mining rights and surface privileges as heretofore conveyed." Lou McKemie died in 1936. On September 19, 1939, Charles F. McKemie and his wife made an agreement to convey said tract to Myrlen Dye (one of the defendants), which agreement recited: "Subject, however, to a prior conveyance of the coal, etc., underlying same as set forth in prior conveyances thereof, together with surface privileges as contained in said deed." On April 24, 1941, Charles F. McKemie and his wife, in conformity with said agreement, conveyed the tract to Myrlen Dye and Medda Dye (another defendant), as husband and wife, which conveyance contained the same provision as set forth in the agreement to convey. On June 27, 1940, Thomas M. McKemie and all the children of Lou McKemie, deceased, and their respective spouses, leased the tract in suit for oil and gas drilling and production to E. S. Adkins, which lease was subsequently assigned to plaintiff. On April 25, 1941, Myrlen Dye and Medda Dye, his wife, leased the oil and gas underlying said tract to defendants Dee M. Margrave and Charley Pollack, who subsequently assigned various interests in the oil and gas to other defendants in the suit.

Plaintiff's contention, designated as its primary claim to title and sustained by the lower court, is that its predecessor, Benton Coal Company, by reason of the conveyance of July 24, 1905, acquired title to the oil and gas. On the other hand, defendants contend to the contrary and urge that title to the oil and gas remained in Dunning and passed by the latter's conveyance to Thomas M. McKemie. The solution of these opposing contentions depends entirely upon the construction to be placed upon the grant, "all the coal and other minerals in, on and under (the tract in suit)." More specifically, did the words "other minerals" include the oil?

There are two reasons why we have seen fit to set forth the various mesne conveyances from Dunning to defendants: (1) It is urged by plaintiff that Thomas M. McKemie, by making his conveyance of October 7, 1921, to Lou McKemie subject "to all deeds of conveyances heretofore made conveying the coal, oil, and gas and other minerals," recognized that such estate did not pass by the conveyance of July 24, 1905, from Dunning to him but that it passed to the Benton Coal Company by Dunning's deed of the same date containing the grant "all the coal and other minerals"; and (2) plaintiff claims title not only by reason of Dunning's grant to the Benton Coal Company but by reason of the oil and gas lease of June 27, 1940, by thomas M. McKemie and the children of Lou McKemie, deceased, to E. S. Adkins, later assigned to plaintiff. In this connection, it is argued that defendants, being subsequent grantees and privies in title with Charles McKemie, grantee in the deed from Thomas M. McKemie and Lou McKemie, are estopped to dispute the grant in the deed to Charles McKemie which excepted therefrom "the coal, oil and gas and other minerals."

Defendants moved for dismissal on jurisdictional grounds, on the theory that the Supreme Court of Illinois had not decided whether a grant of "coal and other minerals" included oil. Predicated upon this premise, it is contended that under the pronouncement of Thompson v. Magnolia Petroleum Co. et al., 309 U.S. 478, 60 S. Ct. 628, 84 L. Ed. 876, the lower court was not at liberty to try the cause and should have dismissed the complaint so that the parties could have litigated the controversy in the state courts. We think this contention is not tenable. While it is true the Supreme Court of Illinois has not construed a conveyance containing the exact verbiage as that here involved, it has construed words of a grant so closely and directly related that there is left little, if any, room for doubt as to the law of Illinois. Furthermore, we do not think the pronouncement in the Magnolia case means that a federal court should refuse to assume jurisdiction merely because a question is presented which varies only slightly from that decided by a state court.

On the merits of the motion to dismiss the complaint, we need not enter upon an extended discussion. Any doubt which has heretofore existed in Illinois as to the scope of a grant which includes "mineral" has been laid to rest by two recent opinions of the Supreme Court, namely, Jilek et al. v. Chicago, Wilmington & Franklin Coal Company, 382 Ill. 241, 47 N.E.2d 96, and Shell Oil Co., Inc., et al. v. Moore et al., Ill. sup., 48 N.E.2d 400, decided March 16, 1943 (not yet published [in State Reports]). Defendants' effort to distinguish the Jilek case is not impressive. The Moore case was decided subsequent to the filing of the briefs in the instant case. It is true the facts in neither of those cases are precisely the same as those here involved. Both opinions, however, deal with numerous questions concerning conveyances as they relate to surface and mineral rights. It would unduly prolong this opinion and perhaps serve no useful purpose to discuss or quote at length from the pronouncements of the Illinois court. It is sufficient, we think, to refer to certain holdings which we regard as decisive of the construction which we must place upon the grant, "all the coal and other minerals."

In the Jilek case, [382 Ill. 241, 47 N.E.2d 98], the court decided, "Oil and gas, by the overwhelming weight of authority, are minerals [citing cases]" and that they constitute an estate separate from that of the surface when included in a grant which characterizes them as a mineral. This pronouncement was reaffirmed in the Moore case and a rule of interpretation invoked to the effect that the intention of the parties is to be gathered from the entire instrument and "that every word and clause within the instrument should be construed, and if possible, given effect." Also in the Moore case, the court had before it a deed which reserved "the right to mine and remove all the coal and other minerals," and held that the oil and gas were thereby reserved. This holding would be wholly decisive of the instant question, except in that case there was other language in the deed which supported the construction which the court gave to the reserving language. However, a study of the opinion makes it certain, so we think, that the court would have reached the same conclusion if there had been nothing before it except the reservation.

As bearing upon the intention of the parties, defendants emphasize that certain easements relating to the mining of coal were enumerated in the deed, without including comparable easements for the drilling and operation of oil wells. As pointed out in the Jilek case, however, concerning similar specified easements relative to the mining of coal, the grant carried certain implied easements and those enumerated were merely in addition thereto.

Defendants also attempt to invoke the doctrine of "ejusdem generis" and cite a number of Illinois cases in its support. It is argued that "other minerals" should be construed to mean minerals of like kind as coal. It is pointed out that coal is a solid mineral, fixed and confined to one place, while oil is not solid and not so fixed and confined. The fallacy of this argument is that it is predicated upon a single physical characteristic to the exclusion of all others. On the other hand, coal and oil have some characteristics in common. They are each primarily used for fuel. From a chemical standpoint, they are quite similar, each being a hydrocarbon. Furthermore, there is no enumeration of particular minerals in the granting clause involved, from which the general term "and all other minerals" could draw its character. In other words, the naming of one particular object - coal - is not an enumeration. ...


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