APPEAL from the Circuit Court of Wabash County; the Hon.
CHARLES T. RANDOLPH, Judge, presiding.
MR. CHIEF JUSTICE THOMPSON DELIVERED THE OPINION OF THE COURT:
Rehearing denied September 18, 1950.
This appeal was prosecuted to this court by John H. Greathouse, Julia Maxine Greathouse, Fred V. McGregor and Clara E. McGregor, defendants-appellants, from a decree of the circuit court of Wabash County, construing the effect of reservations in a deed made December 13, 1944, from plaintiffs-appellees, Raymond C. Hardy and Nancy Ethel Hardy to James T. Watson and Clara M. Watson, defendants below, but not appealing.
The complaint was filed January 19, 1949, and it is averred that the plaintiffs executed a warranty deed conveying certain realty, approximately forty acres, in Wabash County, Illinois, to James T. Watson and Clara M. Watson, reserving a certain interest in oil and gas produced thereon to themselves; that James T. Watson and Clara M. Watson, on May 5, 1945, by quitclaim deed, conveyed their interest in the same realty to Kenneth B. Watson and Anne D. Watson; that Kenneth B. Watson and Anne D. Watson, on October 18, 1946, by warranty deed, conveyed their interest in the same property to Fred V. McGregor and Clara E. McGregor; that Fred V. McGregor and Clara E. McGregor, on April 19, 1948, conveyed their interest in approximately one acre of the same property and subject to the reservations in plaintiffs, to John H. Greathouse; that Fred V. McGregor and Clara E. McGregor, fully understanding that they, by mesne conveyances from Raymond C. Hardy and Nancy Ethel Hardy, had the customary landowner's interest in only one half of the oil and minerals produced from the land, and that under the customs and practices of the business, would receive in royalties one eighth of one half of the oil and minerals produced from the land, or one sixteenth of the total quantity of oil and minerals produced from the land, and plaintiffs, Raymond C. Hardy and Nancy Ethel Hardy, fully understanding that they had a like equal interest in the oil and minerals produced from the land, did execute an oil-and-gas lease to the Illinois Mid-Continent Company, covering approximately 39 acres, being the same land described in the warranty deed, with the exception of one acre, which had been conveyed to John H. Greathouse.
The warranty deed out of which this controversy arose is as follows: "The Grantors, Raymond C. Hardy, and his wife, Nancy Ethel Hardy, of the City of Mt. Carmel, County of Wabash, State of Illinois, for the sum of One Dollar ($1.00) and other good and valuable considerations, hereby convey and warrant, except one-sixteenth (1/16) of all oils and minerals produced from the premises hereby conveyed which said grantors reserve unto themselves for fifteen years from the date of this conveyance, to James T. Watson and Clara M. Watson of the City of Mt. Carmel, County of Wabash, State of Illinois, as joint tenants and not as tenants in common, the following described real estate: The Northwest Quarter (1/4) of the Northeast Quarter (1/4) of Section Twenty-nine (29), Township One South, Range Thirteen (13) West, containing forty (40) acres, more or less.
"Situated in the County of Wabash, State of Illinois, hereby releasing and waiving all rights under and by virtue of the homestead exemption laws of the State of Illinois.
"Dated this 13th day of December, 1944."
Said deed was signed by Raymond C. Hardy and Nancy Ethel Hardy and witnessed and acknowledged before a notary public.
The various deeds made contained a reference to the reservation made in the original deed from plaintiffs. The Illinois Mid-Continent Company received from plaintiffs an oil-and-gas lease covering the entire tract, and on the same date, September 10, 1948, appellants, Fred V. McGregor and Clara E. McGregor, executed a similar lease to that company covering the tract, excepting the one acre previously conveyed to Greathouse. On December 31, 1948, defendants-appellants, John H. Greathouse and Julia Maxine Greathouse, his wife, executed an oil-and-gas lease to T.W. George, covering their one acre. Thereafter, a dispute arose as to the character and extent of the interest reserved by plaintiffs-appellees in the original deed as above set forth.
It appears that oil production is now going on, both on the Greathouse acre under the lease to T.W. George and on the remainder of the tract in wells of the Mid-Continent Oil Company.
The plaintiffs contend that the reservation made in their original deed was a reservation of one half of the oil and minerals under the tract conveyed, while the defendant T.W. George, as lessee of the one-acre tract from defendants Greathouse, denies that plaintiffs, by their reservation, have any interest in the realty, but have a right to receive one sixteenth of the production after severance from the realty; and it is contended that the lease from plaintiffs to the Mid-Continent Company was not effective to convey any interest whatever in the Greathouse one acre and in their answer prayed that it be set aside as to that one acre. For clarification, the answers of the defendants McGregor and Greathouse assert that the interest reserved by plaintiffs in their original deed was an interest in the realty and was of one sixteenth of the oil and minerals in place; that thereafter, under the oil-and-gas leases in effect upon the premises, plaintiffs are entitled to one sixteenth of one-eighth royalty to be paid by the lessees. The answer of defendant, Mid-Continent Company, admits the interest of plaintiffs in the oil and minerals is one half, but avers that interest is in the realty and that therefore the oil-and-gas lease held by it as lessee from plaintiffs is the senior and prior lease from the whole premises including the one acre owned by Greathouse and under lease from him and his wife to T.W. George.
Plaintiffs replied to these answers and on the hearing testimony was introduced on the question of the intentions of the parties. This testimony was later stricken and the court entered a decree substantially holding that the reservation contained in the deed from plaintiffs is not ambiguous; that by the reservation, plaintiffs have no interest in the oil and minerals in place or in their realty; that plaintiffs are entitled to one sixteenth of the production of oil and minerals after severance from the land during the term stated in the deed; that plaintiffs' signatures are not necessary on the oil-and-gas leases; that defendant Mid-Continent Company has no interest in the one acre owned by defendants Greathouse; that the interest of the various parties are: Plaintiffs have one-sixteenth interest in all oils and minerals produced from the entire tract, this being one half of the one-eighth royalty provided for in the leases to T.W. George and Mid-Continent Company; that T.W. George has seven-eighths working interest in the one acre owned by Greathouse; that Mid-Continent Company has seven-eighths working interest in the remainder of the tract owned by defendant McGregor; that defendant Greathouse is entitled to one half of the one-eighth royalty provided for by his lease to T.W. George, and that defendants McGregor are entitled to one half of the one-eighth royalty provided for in their lease to the Mid-Continent Company.
Defendants Fred V. and Clara E. McGregor and defendants John H. and Julia Maxine Greathouse appeal from that part of the decree which holds that plaintiffs-appellees have no interest in the oil and minerals in place or in the realty, and that plaintiffs-appellees are entitled to one sixteenth of the oil produced from the land or one half of the one-eighth royalty payable under the oil-and-gas leases on the premises.
The defendant Mid-Continent Company cross appeals from that part of the decree which holds plaintiffs-appellees reserved no interest in the realty and from that part which holds it has no interest in the oil ...