The opinion
DisNet,
dissenting: I agree with the majority opinion that the assignments as to wells Nos. 1, 6, 9, and 10 convey such economic interest as to cause application of depletion principles. Those instances are obviously covered by Thomas v. Perkins, 301 U. S. 655 , because in that case the owner of a depletable interest retained, in his assignment, a portion thereof. I am impelled, however, to dissent, in so far as concerns the remainder of the “oil payments” involved. They are not all of precisely the same character. Contracts Nos. 3, 7, and 8 were received in consideration of drilling done, while contracts Nos. 2,4, and 5 were purchased. The majority opinion is in error, it seems to me, in concluding that there was any conveyance of more than a right to receive money in contracts Nos. 2, 3, 4, 5, 7, and 8. Contract No. 2 plainly assigns “the sum of Twenty Seven Hundred ($2700.00) Dollars”; contract No. 3 assigns “the sum of Thirty Five Thousand ($35000.00) Dollars”; contract No. 4, after reciting that the transferor is the owner of “the last seventeen thousand seven hundred dollars, ($17,700.00), out of twenty thousand dollars, ($20,000.00)”, assigns *1230 “all of the herein above described property”; contract No. 7 provides that the transferee shall receive for drilling, etc., “the sum of Thirty Two Thousand Five Hundred ($32,500.00) Dollars”; and contract No. 8 provides that the transferee shall receive for drilling, etc., “the sum of ThiRtt Five TiiousaNd ($35000.00) Dollars.” Each of the above contracts, of course, provides in addition that the money shall be paid out of oil produced “until” the sum named is received, with the exceptions of Nos. 4 and 7, which merely convey the right to receive the money out of a specified interest in the first oil produced. In the case of contract No. 5, the majority opinion is unable to find an assignment of an interest in the oil in place. There the assignment is merely of an undivided one-third interest in an oil payment to be paid out of a certain interest in the first oil produced.
I am unable to find in any of these instances a conveyance of the oil in place or connected with a transfer of any interest in the lease or fee. I therefore do not believe that a depletable interest was conveyed. Reliance is placed by the majority opinion upon Palmer v. Bender, 287 U. S. 551 ; Thomas v. Perkins, supra, which cites Helvering v. Twin Bell Oil Syndicate, 293 U. S. 312 ; and Anderson v. Helvering, 310 U. S. 404 . In each of those cases there was considered the question of an assignment, or reservation, of mineral rights by one who owned an undoubtedly depletable interest. In Palmer v. Bender , the transferor owned oil and gas leases. In Thomas v. Perkins , the same is true. In Helvering v. Twin Bell Oil Syndicate , the taxpayer was the assignee of a lease and obligated to pay royalties of one-fourth of the oil. The Court held that its depletable interest did not include the royalties. In Anderson v. Helvering, the transferor owned royalty interests, fee interests, and deferred oil payments, all of which it conveyed “without reservation” and under a contract “to sell all of its right, title and interest of whatsoever nature”, the transferee to pay partly in cash and partly from proceeds from oil and gas produced from the properties and from the sale of fee title to land conveyed. It was there held that no depletable interest was retained by the transferor. The decision is placed upon the ground that in addition to a reservation of rights against oil or gas to be produced, there was a reservation of an interest in or a lien upon the fee.
It thus appears that none of the above authorities involved a situation analogous to that involved herein in contracts Nos. 2, 3,4, 5,7, and 8. Except for the Anderson case, the above authorities are, in fact, a pronouncement of the same idea — that the transferor, owner of the de-pletable interest, did not intend to convey, and was therefore held not to convey, such depletable interest, to a certain degree. The matter turns on the original ownership of the depletable interest and intent of the parties as to conveying same, the contract in each case being ex- *1231 a mined for such, intent. Where one owns a depletable interest in oil and gas in connection with ownership of a fee or lease, it is easy logic to deduce that in a conveyance providing that be should be paid out of such oil and gas, he to that extent did not intend to convey and did not convey such oil and gas. But it seems to me that such cases offer no analogy or authority in situations such as here presented, where the assignee receives a right which is plainly and primarily that of collecting money. In terms, in most of the instances here involved and applied, his connection with the oil and gas under the land is to last only until he is paid. His right would clearly, I think, in case of a contest between the holders of different interests, such as lien holders, secured creditors, etc., in a bankruptcy proceeding, be held to be only by way of security for the payment of his money and not to possess the dignity of any greater interest. A lien or mortgage does not, I take it, confer a depletable economic interest upon the holder thereof. In such cases and in the cases here involved the extraction of oil does not, in fact, affect the right of the holder of the “oil payment” proportionately with the extraction. The holder of a $10,000 “oil payment”, for example, has a right to recover the entire amount thereof and that right remains even though, for example, a million barrels of oil has been taken from the ground. The owner of the fee or lease has had his rights depleted by such million barrels of oil, yet the owner of the $10,000 oil payment, if for any reason he has failed to secure payment, still has the right to receive the entire $10,000 — so long as the well produces. In other words, his rights are cut off, not by extraction or “depletion”, but by the end of production from the well or tract of land. Obviously, the actual decrease in production does not affect him in the same manner or to the same extent that it does the owner of the fee or lease. I think, therefore, that he should not be placed in the same position as the owner of such fee or lease, and that as to him a fair and simple workable rule is to allow the collection of the money, which is his right, without taxation, until he has recovered his base.
The majority opinion stresses the language in the Anderson case, and in Palmer v. Bender, to the effect that too much weight should not be attached to the words of conveyance. I do not think it follows from this language in interpreting a reservation in an assignment made by the holder of a depletable interest that an assignee, such as those herein involved, should be held to have received a depletable interest without some actual conveyance of an interest in the oil itself which will actually be diminished or depleted by extraction of oil, in the same manner as that of the holder of the fee or lease. Depletion is intended to prevent taxation of capital. Indeed the Anderson case is ample authority that the form of conveyance must have attention *1232 and may serve to affirm or deny tbe passage of a depletable interest, for tbe Court assigns, as its particular reason for holding that a depletable interest passed, tbe fact that in addition to language which might not have passed a depletable interest under Thomas v. Perkins, supra, the instruments also provided for a lien upon and right to payment from proceeds of the fee estate. It thus appears that, in the consideration of this question of the passage of a depletable interest, the intent of the parties is to be gathered from the language used, and all of it. When this is done, I find no facts in the above citations from the Supreme Court of the United States parallel to the situation here presented sufficient to indicate that the holder of a right to receive, not oil subject to uncertainty of production, but a certain amount of money, but with payment limited from oil or gas produced, suffers the same actual depletion as does the holder of a fee or lease, or to indicate that in such cases depletion offers a simpler or more workable rule than the application of the money payments received against the base.