Sanderson v. City of Scranton , 105 Pa. 469 ( 1884 )

Mr. Justice Clark

delivered the opinion of the court, April 7, 1884.

The single question which arises upon the case stated, is whether the instrument of writing, bearing date the 10th day of May, 1875, between George Sanderson and the devisees of Charles Robb, deceased, of the one part, and John Jermyn, of the other part, is a lease, properly so called, or virtually a sale of the minerals in place. What is termed a mineral lease is frequently found to be an actual sale of a portion of the land; it differs from an ordinary lease in this, that although both convey an interest in land, the latter merely.conveys the right’ to its temporary use and occupation, whilst the former conveys absolutely a portion of the land itself. It is one of the essential properties of a lease that its duration shall be for a determinate period, shorter than the duration of the estate of the lessor, hence the estate demised is called a “ term,” and necessarily implies a reversion. If the entire interest of the lessor is conveyed, in the whole' or a portion of his land, the conveyance cannot therefore be properly regarded as a demise, but as an assignment.

Upon examination of this instrument we find that the lease is not of the mine, with its approaches and appliances, and the right to use, occupy and operate the same, but it is a lease of “ all the coal beneath the surface of the tract,” with the right “ to mine the coal and remove the same.”

The maximum quantity to be mined and removed in each year is unlimited, but the minimum average quantity is fixed and certain, and that minimum quantity must be “paid for” in each year “whether mined or not.” Provision is made for delays which may be caused from “faults” found, casualties, want of adequate transportation, strikes of employees, &c., but these hindrances are only to afford temporary excuse for nonpayment ; the rule of the contract is that 65,000 tons of coal shall be paid for in each year, “ whether mined or not.” The duration of the interest is not for any determinate period of time; it is not for years, for life, or at will; “the true meaning of the lease,” as expressed therein, “is to make it perpetual until all the coal under the tract of land herein described is mined,” that is to say, it is a lease of the coal until no coal remains. In what respect then, does this transaction lack the essential qualities of an actual sale ? The language of this lease is in most respects similar to that referred to in the case of Scranton v. Phillips, 13 Norris, 15, which was “ of all the coal in and under said lot and other lands for and during the term and period of time, as shall be required therefor, to mine and remove all said coal.” The further stipulations bear a close analogy to the contract now before us. In delivering the opinion of the court in Scranton v. Phillips, the present chief justice says: “Although called a lease it was virtually a sale of all the coal, with unlimited time to remove it, with the right at their election to yield it up, after the expiration of ten years,” &c. It is certainly true that a lease, properly so called, always conveys au interest in land, and in tills respect it is to be distinguished from a mere license: 11 Casey, 287; but where that which purports to he a lease conveys the whole interest of the lessor, it differs in no respect from a sale: Palmer v. Edwards, 1 Doug., 187; note, 2 Black. Com., 317. When the purposes and objects of this instrument are perfected the coal will be exhausted and the lessor can have nothing by the reversion. It is true, in general, that Jermyn covenanted to pay monthly for the coal, as it was mined, at the rate of twenty-five cents per ton, but he also agreed to pay monthly for a certain quantity whether it was mined or not, and the legal obligation to pay continued -when all mining operations should cease. It cannot be said that Jermyn owned only the coal which he mined and paid for; it is true the payments were to be according to the yield of the mine, but the consideration of the contract depended upon the quantity of coal which the mine, upon measurement, might be found to contain, and that measurement was made as the mining progressed. The mere fact that the indenture contains a reservation of rent, with the right of distress, will not change its legal operation and effect.

We are of opinion, therefore, that there was such a severance of the surface from the underlying strata, as created a divided ownership in these distinct portions of the land. It is the duty of the assessors in the several counties to take an account in the form directed by law, of all houses, lands, &e., and to assess and value the same at the rate or price for which they would sell, at a bona fide sale, after full public notice. Land has an indefinite extent, upwards as well as downwards, but the law recognizes horizontal divisions of land. A severance of the surface from the underlying strata may be created, either by reservation or express grant; after severance a mineral right is an independent interest in land, it forms a distinct possession, is held upon a distinct title and is as much the subject of sale, devise or inheritance, and of separate taxation as the surface land: Caldwell v. Copeland, 1 Wright, 427.

A mineral right is taxable as land ; the owner of the surface and of the mine are each taxable, according to tlie value of their respective interests; where there is a divided ownership there must be a divided taxation: Logan v. Washington Co., 5 Casey, 373.

The owner of surface land can no more be held for the tax upon the mineral strata, after a severance, than can the owner of the mine be held for the taxes upon the surface. The case is certainly not free from doubt; the paper purports to be a lease; provides for a forfeiture upon violation of its conditions ; the price of the coal is denominated rent and the remedy for its collection is by distress. Yet the considerations we have stated have forced us to the conclusion that it was an actual sale, rather than a mere demise of the coal. The provision made for the payment by Jermyn, of all “government imposts, United States, state, county, and local taxes upon the coal mined under the lease, without recourse or claim on the parties of the first part,=to refund any part of the same,” is, we think, not important in the determination of this question. The mined, coal is admittedly the property of Jermyn or his assigns, and why provision was made for the payment of the taxes upon it is as difficult to explain, upon one hypothesis as it is upon the other. It follows without stating it that the purchasers of the coal in place must pay the taxes upon it; to avoid uncertainty, however, as to the discharge of such burdens as then were, or thereafter might be, imposed upon the coal mined, this clause was doubtless inserted; in the event of a distress levied for the rent, this provision might become important in connection with the clause of forfeiture, contained in the contract. The interest of John Jermyn under the contract, before suit brought, was assigned to the Delaware, Lackawanna and Western Railroad Company, and tho president, managers and company of the Delaware and Hudson Canal Company; subject to their title, the land and the agreement had been conveyed and assigned to the defendants below. The former, we think, aro liable to taxation for the coal, the latter for the surface according to the valuation of each, respectively.

The judgment is therefore reversed, and judgment is now entered for the defendant below, on the ease stated, with costs.