[DOWNLOAD] "Homestake Exploration Corp. v. Schoregge" by Supreme Court of Montana * eBook PDF Kindle ePub Free

eBook details

Title: Homestake Exploration Corp. v. Schoregge
Author : Supreme Court of Montana
Release Date : January 28, 1928
Genre: Law,Books,Professional & Technical,
Pages : * pages
Size : 75 KB

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Oil and Gas Leases ? Net Proceeds Tax on Royalty Oil Payable, by Whom ? Ownership of Oil While in Ground ? Rights of Leases ? "Royalty" ? "Overriding Royalty" ? Definitions. Oil and Gas ? Ownership While in Ground ? Leases ? Nature of Rights of Lessee. 1. So long as petroleum and gas remain in the ground they are part of the land and belong to its owner while they remain there; and where he grants an oil and gas lease he does not convey the oil and gas in place or any interest therein, but the lessee is vested with a present property right in the premises, i.e., to search for oil and gas and to appropriate them as personal property if found, yielding the stipulated royalty; his right is to take a profit from the lessors land. Same ? Contract to Explore Land a Lease, not Option. 2. A contract under which a land owner grants to another the right to search for oil and gas in the land is a lease, not a mere option. Same ? "Royalty" ? "Overriding Royalty" ? Definitions. 3. The term "royalty" as understood in oil operations is the share of the product or profit paid by the lessee to the owner of the land as consideration for the privilege of producing the oil; while an "overriding royalty," usually provided for as a reservation in an assignment of a lease, is a given percentage of the gross production payable to some person other than the lessor or persons claiming under him. The owner of such a royalty has an interest in the lease which cannot be transferred or surrendered except with the same formalities necessary for a transfer of the lease, and the provision therefor is binding upon subsequent assignees of the lease, except innocent purchasers. Same ? Leases ? Royalty Oil ? When Lessee Liable for Payment of Net Proceeds Tax. 4. Where under the terms of a lease all the oil or gas found in the land is granted to the lessee on condition that he yield to the lessor a certain share of the oil produced as royalty or rental, complete title in all of the oil produced vests in the lessee upon its recovery; he is the owner of all of it, though required to turn over a portion of it to the lessor as rental, and liable for the net proceeds tax on all of it without deduction - Page 605 for the oil turned over as royalty oil or its equivalent in money; the same rule being applicable where the lessee operates under an assignment of a lease providing for an overriding royalty, which amounts to no more than an additional rental to be paid by the operator. Same ? Leases ? When Lessor Liable for Payment of Net Proceeds Tax on Royalty Oil. 5. Under an oil and gas lease whereby the lessor retained ownership of a specified per cent of the oil to be produced by the lessee and the latter was required to deliver to the lessor the per cent of oil reserved or its equivalent in money, title and ownership of such reserved portion are in the lessor, and he, and not the lessee, is liable for the net proceeds tax on such portion, since a tax may not be legally levied against a person for property he does not own. Same ? Divisible Interests in Oil Well ? Net Proceeds Tax Assessable to Each Owner. 6. Where several persons own separate divisible interests in a mine (or oil well) the interest of each is properly taxable to each under the statute providing for taxation of net proceeds of mines. (Distinguishing instant case from Northern P. Ry. Co. v. Musselshell County, 74 Mont. 81, containing language intimating that statute contemplates assessment to but one person.)