Adkins v. Adams
| Decision Date | 21 December 1945 |
| Docket Number | No. 8689.,8689. |
| Citation | 152 F.2d 489 |
| Parties | ADKINS et al. v. ADAMS et al. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Frank E. Trobaugh, of West Frankfurt, Ill., Moses Pulverman, of Benton, Ill., and Owen Rall and Tim G. Lowry, both of Chicago, Ill. (Eckert & Peterson, of Chicago, Ill., of counsel), for appellants.
Charles E. Feirich and John K. Feirich, both of Carbondale, Ill., J. G. Van Keuren, of Du Quoin, Ill., Thurlow G. Essington and Hamilton K. Beebe, both of Chicago, Ill., and Carter Harrison, of Benton, Ill., for appellees.
Before EVANS, MAJOR, and KERNER, Circuit Judges.
This appeal involves a controversy over the right to drill for oil upon a forty-acre tract of land in Franklin County, Ill. The complaint affirmatively shows the existence of diversity of citizenship and the requisite jurisdictional amount. By the complaint plaintiffs sought an adjudication that the right to the oil was in the plaintiff Adkins.
The case was tried by the court without a jury. The court made special findings of fact, rendered its conclusions of law thereon, and entered judgment that plaintiffs were entitled to the oil rights. To reverse the judgment, defendants appeal.
Our problem is whether the lessee in a lease under seal, dated January 1, 1909, executed by S. M. Boner and his wife to Wilmington Star Mining Co., in which, in consideration of $1 to them paid and the covenants and agreements therein contained to be kept and performed by the lessee, lessors have demised, leased and mine let "all the coal and other minerals or mineral substances contained in or underlying describing the land * * * together with the right to enter upon and into said premises and to dig, mine or remove said coal and other minerals or mineral substances, or any part thereof, at such time and in such manner as * * * lessee may elect * * *," became vested with the right to the oil underlying the land.
In the lease, the lessors granted so much of the land as might be necessary to be used for the proper and economical mining of the coal and other minerals. It also provided that all the rights and privileges granted therein, together with all tunnels and underground passages, might be used by the lessee for mining purposes until such time as all the coal in the lands which the lessee may desire to mine shall have been exhausted.
As a part of the consideration, the lessee was required within two years to commence the sinking of air shafts. The lease specified royalty payments on the coal, and in case any mineral other than coal was mined, then the usual and customary price paid therefor should be paid for such mineral when mined, and that in default of any payments, lessee should forfeit all its rights under the lease.
About $50,000 has been spent on the shafts and $175,000 to get ready for operations. More than 1,000,000 tons of coal have been mined from the No. 6 vein and lessors and their successors have been paid therefor as provided by the lease. Approximately one-half of the coal still remains to be mined. None of the No. 5 vein has yet been mined, although that vein is being mined in adjoining counties and plans have been made to mine that vein in the land in question.
On July 12, 1918, the lessors, "subject to a certain lease given by the grantors to the Wilmington Star Mining Co., together with the conditions named therein in said lease," conveyed the premises by warranty deed to H. M. Ragsdale. By mesne conveyances, defendant Adams acquired the title, subject to the lease herein involved.
About 1937 oil was discovered in Southern Illinois, and plaintiff, Old Ben Coal Corporation, assignee and successor to Wilmington, endeavored to have its properties developed for oil. More than 60 holes were drilled within two miles of the land described in the lease, only 12 of these wells produced oil and gas, but no well has been drilled on the 40 acres involved in this suit. February 11, 1943, Old Ben Corporation and E. S. Adkins entered into an oil and gas lease covering and including the 40-acre tract in question.
The essential findings of the court are these facts: That in 1909 when the lease was executed the parties to the lease were primarily interested in the mining of the coal and in protecting their interests in that field of development. It was not then known that oil, gas and other minerals or mineral substances, other than coal, underlay the premises in paying quantities or would ever become commercially desirable, and there were no facts existent justifying exploration, but the lessee would not have entered into the lease without control of all the mineral and mining rights, since at some future time a test for oil might be desirable and, if found, it might become desirable to drill wells. Lessors were willing to give and did give over the control of all mining on the premises as an inducement to obtain a favorable contract for the development of coal.
The conclusions of law were that the lease was valid; that there was no express covenant and no covenant could be implied under the facts and circumstances binding the lessee or its successors in title to explore for oil or gas within a reasonable time; that all rights arising under the lease were owned by plaintiffs Adkins and Old Ben Coal Corporation; and that Adkins was vested with the exclusive right to drill for, produce and market the oil and gas underlying or which might be produced from the premises.
The all important question in this case is whether a covenant to explore for oil within a reasonable time should be implied, although defendants also contend that the findings of fact are not sustained by the evidence. From our examination of the entire record, we think there was evidence supporting the findings, and since we cannot say that they are clearly erroneous, they must, on appeal, be accepted by us, Federal Rules of Civil Procedure, Rule 52 (a), 28 U.S.C.A. following section 723c; hence we proceed to consider the vital question whether the lease contains an implied covenant requiring the lessee to explore for oil with reasonable diligence.
Defendants insist that gas leases are construed strictly against the lessee; that where a landowner grants a lease for oil and gas purposes and the lessee agrees to pay therefor a share of the oil and gas produced, the principal consideration of the lessee is to pay the royalties; and that in such a situation there is an implied covenant that the lessee will act with promptness in drilling wells for the discovery and production of oil and gas or forfeit his right to do so. They rely principally upon Crain v. Pure Oil Co., 10 Cir., 25 F.2d 824; Daughetee v. Ohio Oil Co., 263 Ill. 518, 105 N.E. 308; Stoddard v. Illinois Improvement & Ballast Co., 275 Ill. 199, 113 N.E. 913; and Simpson v. Adkins, 386 Ill. 64, 53 N.E.2d 979.
On the other hand, plaintiffs contend that a covenant may not be implied on any subject where the written contract contains a specific provision in regard thereto.
A contract between parties dealing in oil and gas is...
To continue reading
Request your trial
-
Carter v. Certain-Teed Products Corp.
...this effect, Freeport Sulphur Co. v. American Sulphur Royalty Co., supra, 6 S.W.2d at page 1043, 60 A.L.R. at page 897; Adkins v. Adams, 7 Cir., 1945, 152 F.2d 489, 492; Frierson v. International Agricultural Corp., 1940, 24 Tenn.App. 616, 148 S.W.2d 27; Weatherly v. American Agricultural C......
-
Prudential Ins. Co. of America v. Sipula
...parties against subsequent contingency, which would have been advantageous to him, had he but foreseen it." See also Adkins v. Adams, 152 F.2d 489, 492 (7th Cir.1945). The agreement at issue stated that it "may be terminated" either by Prudential or Sipula "at any time." Thus, any express o......
-
Nance v. Donk Bros. Coal & Coke Co.
...96, 146 A.L.R. 871; Walter v. Sohio Petroleum Co., 402 Ill. 33, 83 N.E.2d 346; Shell Oil Co. v. Dye, 7 Cir., 135 F.2d 365; Adkins v. Adams, 7 Cir., 152 F.2d 489. Likewise, the habendum clause reading: 'Together with the right to mine and remove said coal and other mineral and the right to c......
-
Nicholson v. Tourtellotte, 1648-A
...'indispensable to effectuate the intention of the parties,' 4 Williston Contracts § 610B at 533 (3d ed. 1961); accord, Adkins v. Adams, 152 F.2d 489, 492 (7th Cir. 1945); Marini v. Ireland, 56 N.J. 130, 143, 265 A.2d 526, 533 (1970), or that it was omitted by reason of sheer inadvertence or......