Advance Oil Company v. Hunt

• Decision Date: 29 May 1917
• Docket Number: 9,594
• Parties: ADVANCE OIL COMPANY v. HUNT ET AL
• Court: Indiana Appellate Court

116 N.E. 340

66 Ind.App. 228

ADVANCE OIL COMPANY v. HUNT ET AL

No. 9,594

Court of Appeals of Indiana

May 29, 1917

Rehearing denied October 24, 1917. Transfer denied December 18, 1917.

From Sullivan Circuit Court; William H. Bridwell, Judge.

Action by the Advance Oil Company against Arthur E. Hunt and others. From a judgment for defendants, the plaintiff appeals.

Affirmed.

John C Chaney, Allison G. McNabb, Merrill Moores and Howard W Adams, for appellant.

Charles D. Hunt and Gilbert W. Gambill, for appellees

OPINION

FELT, J.

This is a suit by the appellant, Advance Oil Company, against Arthur E. Hunt, Nora R. Hunt, W. K. White, D. L. Newton, Fred Moore, James L. Williams, John Graham, and Jacob Price, to enjoin them from entering upon certain real estate in Sullivan county, Indiana, for the purpose of exploring for gas and oil.

To the complaint in one paragraph, all the appellees filed answer in general denial. Appellees Hunt and Hunt also filed a separate answer in six paragraphs. Appellant filed a reply in general denial to the second, third, fourth, fifth, and sixth paragraphs of the special answer of Hunt and Hunt. On request the court made a special finding of facts, and stated its conclusions of law thereon, which were against appellant. Appellant excepted to the conclusions of law, the court overruled its motion for a new trial, and rendered judgment on the conclusions of law, dissolving the temporary restraining order previously issued against appellees, and adjudged that appellant take nothing by its action and that appellees recover costs.

The only errors assigned and not waived are that the court erred in overruling appellant's demurrer for insufficient facts to the fourth paragraph of the special answer of appellees Arthur E. and Nora R. Hunt, and error in the conclusions of law stated on the special finding of facts. Illinois Surety Co. v. Frankfort Heating Co. (1912), 178 Ind. 208, 210, 97 N.E. 158; Western Ins. Co. v. Ashby (1913), 53 Ind.App. 518, 520, 102 N.E. 45; Chicago, etc., R. Co. v. Dinius (1913), 180 Ind. 596, 626, 103 N.E. 652; Teeple v. State, ex rel. (1908), 171 Ind. 268, 271, 86 N.E. 49; Howard v. Adkins (1906), 167 Ind. 184, 186, 78 N.E. 665.

The substance of the finding of facts so far as material to the questions presented is: That on August 20, 1913, appellees Hunt and Hunt, who are husband and wife, executed to J. W. Hunt, trustee, an oil and gas lease on 92 1/2 acres of real estate; that by assignment appellant became the owner of such lease which demised to the lessee, his successor and assigns, for the sole and only purpose of mining and operating for oil and gas, and of laying pipe lines, constructing tanks, buildings, and other structures thereon to take care of said products--

"all that certain tract of land situate in the township of Hamilton, County of Sullivan, and the State of Indiana, bounded and described as follows, to wit: (Here the land is described.) * * * It is agreed that this lease shall remain in force for the term of one year from this date, and as long thereafter as oil and gas or either of them is produced therefrom by the party of the second part, his successors or assigns.

"In consideration of the premises the said party of the second part covenants and agrees:

"1st. To deliver to the credit of the first parties their heirs or assigns, free of cost, in the pipe line to which he may connect his wells, the equal one-sixth part of all oil produced and saved from the leased premises.

"2nd. To pay to the first party Two Hundred Dollars each year in advance for the gas from each well where gas only is found, while the same is being used off the premises; and the first parties to have gas free of cost to heat and light one dwelling house on said premises during the same time.

"The party of the second part agrees to complete a well on said premises within three months from the date thereof, or pay at the rate of twenty-five cents per acre in advance for each additional three months such completion is delayed from the time above mentioned for the completion of such well until a well is completed. The above rental shall be paid to the first part in person or to the credit of the first part at the Sullivan State Bank of Sullivan, Indiana, and it is agreed that the completion of such well shall be and operate as a full liquidation of all rent under this provision during the remainder of this lease."

That on February 28, 1914, appellees Hunt and Hunt served a written notice on the lessee in which it was recited that when the lease was executed, and at the date of such notice, three oil wells were located within 250 feet of the north line of the leased premises aforesaid, which wells were being pumped and operated for oil, and that there were two gas wells within 200 feet of said line. Appellant was thereby notified to begin drilling, within thirty days from receipt of such notice, enough wells on said real estate to protect the same from being drained of oil and gas by the wells on adjoining lands, and that if it did not do so the aforesaid lease must be returned to the lessors, and on failure to so begin operations within thirty days said lease would be forfeited and become null and void.

The court also found that such gas and oil wells were on the adjoining land as stated in the notice, and that the lessees knew thereof, and that the same were being operated, but said lessees failed to "offset" such wells by drilling on the lands so leased from Hunt and Hunt as aforesaid; that the consideration for the execution of said lease was not the one dollar named therein, nor the twenty-five cents per acre mentioned, but was the development of the premises for the production of oil and gas and the rents and royalties to be derived therefrom if oil and gas should be produced by such development; that rents were paid on said lease on November 20, 1913, and on February 20, 1914, and no other rentals were paid; that in March, 1914, the lessee drilled a well on said land about a fourth of a mile from the north line thereof, which proved to be a "dry hole," and was plugged the following April; that thereupon the lessee moved its drilling rig to the Stratton farm about one-fourth of a mile from such "dry hole" where two wells were drilled, in which oil and gas were found in paying quantities, but not marketed; that the rig which was used in drilling the first well on the Stratton farm had been idle for thirty days when the notice was given; that appellant moved all its tools, appliances and property from the Hunt land in April, 1914, and has not since that time placed any such tools or property on the leased premises, or attempted to drill thereon; that since the execution of said lease other producing wells have been drilled and are operated on adjoining lands; that appellant intended to return to the Hunt farm at some time within the year from the date of the lease and to again drill thereon for oil and gas, immediately southeast of the wells heretofore mentioned as being within 200 feet of said north line; that by so leaving said premises it was not intended to abandon the Hunt farm, but to hold the same at the pleasure of the lessee, and, if it saw fit to do so, to return and drill thereon.

On June 19, 1914, appellees Hunt and Hunt executed a second lease on said real estate to appellees White, Newton, and Moore, for like purposes, who employed appellees Williams, Graham and Price to drill oil and gas wells thereon; that on June 19, 1914, said persons entered upon the land and began the erection of a rig to be used in drilling an oil and gas well, and continued their work until June 22, 1914, when a restraining order was served upon them and work was estopped pending the result of this litigation.

The court stated its conclusions of law as follows: (1) The temporary restraining order heretofore issued in this cause should be dissolved. (2) The plaintiff is not entitled to any relief by way of injunction. (3) The law is with the defendants and they are entitled to recover costs.

Appellant excepted both jointly and severally to the conclusions of law and has assigned separate error as to the second and third conclusions only. Appellee contends that no question is presented by such assignments, because no error is based on the first conclusion, and its correctness is thereby conceded.

The decisions relied on are cases where several conclusions of law were excepted to in gross, some of which were either conceded or found to be correct, in which event no reversible error was shown. Maynard v. Waidlich (1900), 156 Ind. 562, 565, 60 N.E. 348.

Here the appellant reserved a separate exception to each conclusion of law, and has assigned separate error as to the second and third only. If the court erred in either of such conclusions, it is cause for reversal, unless it affirmatively appears from the record that the error was harmless to appellant. Elliott, App. Proc. §§ 783, 786, 787, 789, 793; Schrage v. McCoy, (1901), 28 Ind.App. 434, 63 N.E. 50.

Appellant contends in substance that under the terms of its lease and the facts found by the court there was no forfeiture or abandonment of the lease; that the term of the lease was one year, and the court finds that the same had not been abandoned; that injunction is the proper remedy to protect the rights of the holder of such lease, and the court erred in its conclusions of law denying such relief.

Appellee contends that, under the facts of this case and the law applicable to such leases, development is the controlling consideration; that, under the implied obligation resting on appellant to properly develop the leased premises according to such obligation and in conformity with the notice given appell...