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HIGHLAND v. COMMONWEALTH (04/18/60)

April 18, 1960

HIGHLAND
v.
COMMONWEALTH, APPELLANT.



Appeals, Nos. 246, 247, 249, 250, 252, 257 and 284, Jan. T., 1959, from decree of Court of Common Pleas of Clearfield County, Nov. T., 1957, No. 366, in case of Cecil B. Highland, Jr., Trustee of the Penfield Coal & Coke Company et al. v. Commonwealth of Pennsylvania et al. Decree reversed; reargument refused June 27, 1960.

COUNSEL

S. C. Pugliese, with him Paul B. Griener and Carl A. Belin, for appellants.

Robert V. Maine, for appellant.

John A. Metz, Jr., with him Dan P.Arnold, B. R. Coppolo, Joseph B. Mitinger, and Chaplin & Arnold, and Driscoll, Gregory & Coppolo, and Metz, Cook, Hanna & Kelly, for appellants.

F. Cortez Bell, Jr., with him Richard Bennett Gordon, and Bell, Silberblatt & Swoope, for appellant.

Robert C. Derrick, Assistant Attorney General, with him Eugene G. Kitko, John Sullivan, Deputy Attorney General, and Anne X. Alpern, Attorney General, for Commonwealth, appellant.

Joseph J. Lee, with him Clarence R. Kramer, for appellees.

William H. Eckert, for interested person, under Rule 46.

Before Jones, C.j., Bell, Musmanno, Jones, Cohen and Bok, JJ.

Author: Jones

[ 400 Pa. Page 264]

OPINION BY MR. JUSTICE BENJAMIN R. JONES.

The basic issue presented by these seven appeals concerns the ownership of the right to the natural gas underlying four parcels - approximately 3784 acres -

[ 400 Pa. Page 265]

    of land situated in Huston Township, Clearfield County. The determination of this issue rests largely upon the construction and interpretation of the provisions of seven deeds and an examination of several judicial proceedings which resulted in the execution of two of these deeds.

On June 25, 1900, I. F. Richey et al., trustees of the Caledonia Coal Company, conveyed, inter alia, to one N. T. Arnold these four parcels of land - herein known as Parcels 1, 2, 3 and 4*fn* - said parcels being described as "tracts", "parcels" or "pieces" of land. In addition to these four parcels of land, this deed (herein termed the Richey deed) purported to convey: (1) "All the coal, coal oil, fire clay and other minerals of every kind and character in, upon and under" 15 described tracts of land; (2) "All the coal, coal oil, fire clay and other minerals of whatever nature or character" under 8 described tracts of land; (3) several other tracts of land. At the end of the descriptive portions of this deed the following appeared: "It is the intention of [Richey et al.] to convey... all the land, coal, coal oil, fire clay, natural gas, and other minerals and all rights vested in [Richey et al.] [under a certain prior deed].... Together with the right and privilege of entering upon such lands as are not conveyed... and taking away said coal, coal oil, natural gas, fire clay and other minerals of every kind and character... and to do... such... things thereon in such manner as may be necessary in the judgment of [Arnold] to successfully mine and take away said coal, coal oil, natural gas, fire clay and other minerals,...." (Emphasis supplied). It is conceded by all parties to this litigation that, by the Richey deed -

[ 400 Pa. Page 266]

    the common source of title of all the present litigants ... , title to all the natural gas rights under these four parcels of land became vested in Arnold.

On the same date as the Richey deed, Arnold and his wife made a conveyance to John Byrne, trustee for one Frank Byrne and one Frank Smith, the said John Byrne being empowered to explore for "coal and other minerals" and "to mine, take and carry away the same", to sell or lease the said lands and mineral rights, to pay the taxes and protect the "lands and minerals" and to mortgage the "lands, coal and minerals" to secure [Arnold] the purchase money or develop the property. Under the provisions of this deed (herein termed the Byrne deed) Arnold and his wife conveyed: "All the coal, fire clay, limestone, iron ore and other minerals" in and under certain land in Huston Township, Clearfield County, said land being described by metes and bounds. In the Byrne deed between the descriptive and habendum clauses appeared the following: "TOGETHER with all and singular the ways, water, water courses, mining rights, minerals, rights of way, rights, liberties, privileges, and appurtenances whatsoever thereunto belonging or in any way appertaining and the reversions, remainders, rents, issues and profits thereof, and all the estate, right, title, interest, property, claim and demand of [Arnold]... in law, equity or otherwise howsoever, of and to the same and every part thereof with the right and privilege of entering upon said land and taking away said coal, fire clay, iron-ore, lime-stone and other minerals hereby conveyed and to erect such structures, ways, buildings, railways and shafts thereon both up and down, to cut and fill the surface wherever needed for railways for such purposes, and to dig ditches and channels for waste water and to do those and such other things thereon in such manner as may be necessary in the Judgment of [John Byrne] and to carefully mine and

[ 400 Pa. Page 267]

    take away such coal, fire clay, lime stone, iron ore and other minerals or any of them from the lands aforesaid." (Emphasis supplied). In this deed Parcels 1 and 4 constitute the overlying land.

On July 30, 1900, Arnold and his wife conveyed by deed (herein termed the Hall-Kaul deed) to one J. K. P. Hall and one Andrew Kaul "all the coal, iron ore, lime stone, fire clay and other minerals" under a certain tract of land, "All the Coal, Coal Oil, and other minerals of every kind and Character" under another tract of land; "All the Coal, Coal Oil and all other minerals of every kind and character" under several other tracts of land; "All the coal, fire clay, iron-ore and other minerals" under another separate tract of land and "All the coal, and minerals" under still another separate tract of land. Following the descriptive clauses in this deed appeared the following: "TOGETHER with right and privilege of entering upon said lands and taking away said coal, coal oil, fireclay and other minerals of every kind and character, and to erect such structures, ways, buildings, tramways and shafts thereon both up and down, to cut and fill the surface wherever needed for railways for such purposes, and to dig ditches and channels for waste water, and to do those and such other things thereon in such manner as may be necessary in the Judgment of [Hall-Kaul], to successfully mine and take away said coal, iron ore, fire clay and other minerals or any of them from the lands aforesaid." (Emphasis supplied). This deed includes the overlying land known as Parcels 2 and 3.

All the rights conveyed in the Byrne and Hall-Kaul deeds have now, by subsequent conveyances, become vested in the present appellants known as the New

[ 400 Pa. Page 268]

Shawmut group,*fn1 a group which now claims all the natural gas rights under the four parcels of land.

Arnold died August 4, 1906, a resident of Elk County. Under his will - dated February 4, 1901 - he gave his entire estate to certain trustees to hold, initially, for the benefit of his wife and three children and, ultimately, of the Methodist Episcopal Church. Under this will Arnold gave no authority to his executors to deal with his realty and instructed his trustees, inter alia: "Neither shall any property be sold or leased for the production of coal, oil, gas or minerals without the written consent and approval of each and every Trustee, of whom there shall not be less than three capable of transacting business at all times".*fn2

At the time of his death Arnold was heavily indebted. At the instance of creditors, the Orphans' Court of Elk County on February 10, 1909 directed his executors to seek court permission for the sale of Arnold's realty for the payment of debts. On February 26, 1909, the executors petitioned that court for permission to sell, at private sale, all Arnold's realty in Elk County for $48,000 for the payment of his debts and for authority to raise $152,000 from Arnold's realty situated in Clearfield County (as described in Schedule "C" attached to the petition) "for the purpose of paying the balance of the debts which are liens against the real estate of [Arnold]". In Schedule "C" were metes and bounds descriptions prefaced: "Surface only". On that same date the Orphans' Court of Elk County authorized the sale of Arnold's Elk County property for $48,000 and authorized the executors to raise $152,000 from Arnold's Clearfield County realty. On March 8,

[ 400 Pa. Page 2691909]

the executors asked the Orphans' Court of Clearfield County for permission "To sell all of said land situate in [Clearfield County] described in Schedule "C" for $152,000 and that court granted such permission. On May 27, 1909 the executors reported to that court the sale at private sale of all Arnold's real estate in Clearfield County for $152,000 to one B. F. Thompson and that court confirmed the sale.

On May 31, 1909 Arnold's executors made a conveyance to B. F. Thompson. By its provisions, this deed (herein termed the Arnold Executors' deed) conveyed, inter alia, to Thompson the "Surface only" of certain tracts of land in Clearfield County described by "metes and bounds", descriptions inclusive of Parcels 1, 2, 3, and 4. This deed conveyed items of realty numbered I-IX, inclusive, and the following prefatory language appeared before "metes and bounds" descriptions of several of the items: Item I, "All the coal, coal oil, fire clay, and other minerals of every kind and character in, upon and under the following described tracts of land": Item II, "All the minerals, coal, fire clay, iron ore, oil, gas and other kinds whatsoever... in, upon and under" certain described land: Item III, "The undivided 2/5ths interest in all the coal, coal oil, fire clay and other minerals of every kind and character in, upon and under" certain described tracts of land. Items VI, VII, VIII and IX, which included Parcels 1, 2, 3 and 4, were prefaced "Surface only". Between the descriptive and habendum clauses appeared: "Together with the right and privilege of entering upon such lands as are not conveyed and being described herein and taking away said coal, coal oil, natural gas, fire clay and other minerals of every kind and character, and to erect such structures, ways, buildings, railways, and shafts thereon both up and down, to cut and fill the surface wherever needed for railways for such purposes and to dig ditches and channels

[ 400 Pa. Page 270]

    for waste water, and to do these and such other things thereon in such manner as may be necessary in the judgment of [Thompson], to successfully mine and take away said coal, coal oil, natural gas, fire clay and other minerals, or any part of them from the lands aforesaid without liability for damages which may be incurred to the surface of the said lands, or anything thereon or thereunder; and with the right to use such timber as was reserved to [Arnold] or in him in anyway vested; so fully as the same were granted and conveyed to [Arnold], and so far as [Arnold] was seized at the time of his death." (Emphasis supplied). The Arnold group of claimants*fn3 contend that the Arnold Executors' deed did not convey any of the natural gas rights under Parcels 1, 2, 3 and 4.

On February 23, 1910, Thompson and his wife conveyed to Penfield Coal & Coke Company (herein called Penfield), interests in certain realty, Items IV, V, VI and VII of which conveyances are presently relevant. This deed (herein termed the Thompson-Penfield deed) conveyed: "All of the surface of all that certain tract of land situate in Huston Township, Clearfield County..." of Items IV to VII, inclusive, - covering Parcels 1, 2, 3 and 4 - and the pertinent descriptions in that deed correspond exactly with the pertinent descriptions in the Arnold Executors' deed. In this deed between the descriptive and the habendum clauses appears: "TOGETHER with the right and privilege of entering upon the lands hereinabove described and taking away said coal, coal oil, natural gas, fire clay and other minerals of every kind and character, and to erect such structures,

[ 400 Pa. Page 271]

    ways, buildings, railways and shafts thereon, both up and down, to cut and fill the surface wherever needed for railways for such purpose, and to dig ditches and channels for waste water, and to do these and such other things thereon in such manner as may be necessary in the judgment of the said party of the second part, its successors and assigns, to successfully mine and take away said coal, coal oil, natural gas, fire clay and other minerals or any part of them, from the lands aforesaid, without liability for damages which may be incurred to the surface of the said lands or anything thereon or thereunder; and with the right to sue such timber as was reserved to [Arnold] or in him in any way vested as fully as the same were granted and conveyed to [Arnold], and so far as [Arnold] was seized at the time of his death." (Emphasis supplied).

On April 14, 1911, Arnold's trustees gave a quitclaim deed to Penfield which recited, inter alia: "AND WHEREAS owing to certain alleged informalities in the descriptions of the lands hereinafter set forth, it is the desire of the Estate of the said N. T. Arnold to cure any and all defects or alleged defects in the Deed from the said Executors to the said B. F. Thompson above mentioned so as to vest all the estate of the said N. T. Arnold in said lands in the party of the second part hereto." This deed (herein termed the Penfield-Quitclaim deed) purported to "release and quitclaim to [Penfield] all the interest of [Arnold] in those certain pieces, parcels and tracts of land situate in [Huston Township, Clearfield County]" and contained four descriptions by "metes and bounds" of Parcels 1, 2, 3 and 4. A comparison of the Arnold Executors' and the Thompson-Penfield deeds with the Penfield Quitclaim deed reveals certain variations. The latter deed contains a description of four tracts of land which are Items IV, V, VI and VII of the Thompson-Penfield deed and Items VI, VII, VIII and IX of the Arnold

[ 400 Pa. Page 272]

    owns in fee...."; (3) that Commonwealth of Pennsylvania, Department of Forests and Waters "is desirous of acquiring the said surface lands and has offered to pay therefor the sum of $2.90 per acre or a total of $10,974.61". The U.S. Court directed the property be advertised for sale, the sale was held and was later confirmed by that court. On July 22, 1931, Smith, as receiver, by a deed (herein called Commonwealth deed) conveyed Parcels 1, 2, 3 and 4 to the Commonwealth, and the Commonwealth has for over 28 years been in possession of said parcels.

It is Penfield's contention that, by virtue of the Arnold Executors' deed, the Thompson-Penfield deed and the Penfield Quitclaim deed, it became vested with all Arnold's rights to the natural gas under the instant land and that, by the Commonwealth deed, it conveyed to the Commonwealth only the surface and not the gas rights thereunder. On the other hand, the Commonwealth contends that not only did Penfield receive Arnold's natural gas rights under the instant land, but that, by the Commonwealth deed, Penfield conveyed all such natural gas rights to the Commonwealth.

On December 31, 1957 - 26 years subsequent to the Commonwealth deed - Cecil B. Highland, Jr., appointed by the Court of Common Pleas of Clearfield County as trustee for Penfield for the purpose, inter alia, of ascertaining the amount of land, minerals, gas and oil rights, if any, still owned by Penfield, and E. C. Metzner to whom Highland, with the court's permission, had granted an oil and gas lease, instituted in the Court of Common Pleas of Clearfield County an action to quiet title. This action was originally instituted only against the Commonwealth of Pennsylvania; on the instance of the Commonwealth, all of the present appellants, with the exception of the New York State Natural Gas Company which intervened, were joined

[ 400 Pa. Page 274]

    as defendants in this action. The court of Common Pleas of Clearfield County found that Highland, trustee, and Metzner, i.e., the Penfield claimants, had title to all the natural gas rights under the land in controversy. Exceptions taken to this decree nisi were dismissed and a final decree entered from which these seven appeals were taken.

In summary, there are four separate groups which claim title to the natural gas rights under Parcels 1, 2, 3 and 4; (1) the Shawmut group which claims such title by virtue of the Byrne and Hall-Kaul deeds; (2) the Arnold group which takes the position that neither Arnold, by the Byrne or Hall-Kaul deeds, nor his executors, by the Arnold Executors' deed, nor his trustees, by the Penfield Quitclaim deed, relinquished Arnold's title to the natural gas rights and that such title still remains in the Arnold group; (3) the Penfield group which rests its title on the Arnold Executors', the Thompson-Penfield and Penfield Quitclaim deeds and denies any divestiture of such title by the Commonwealth deed; (4) the Commonwealth of Pennsylvania which claims title by virtue of the Commonwealth deed.

Since, as hereinbefore stated, all parties concede that Arnold, by virtue of the Richey deed, received full title to all the natural gas rights, our initial inquiry is whether Arnold's title, either before or after his death, was conveyed to any third person or persons.

The Byrne and Hall Kaul Deeds

Upon these two deeds the Shawmut group rests its claim and contends that the parties in both deeds - Arnold and wife, grantors, and Byrne, Hall and Kaul, grantees - fully intended to effect thereby a conveyance of the natural gas rights by the ...


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