Alford v. Dennis

• Decision Date: 09 February 1918
• Docket Number: 21,262
• Citation: 170 P. 1005,102 Kan. 403
• Parties: T. T. ALFORD, Appellant, v. W. H. DENNIS et al., Partners, etc., et al., Appellees
• Court: Kansas Supreme Court

170 P. 1005

102 Kan. 403

T. T. ALFORD, Appellant, v. W. H. DENNIS et al., Partners, etc., et al., Appellees

No. 21,262

Supreme Court of Kansas

February 9, 1918

Decided January, 1918.

Appeal from Chautauqua district court; ALLISON T. AYRES, judge.

Reversed.

SYLLABUS

SYLLABUS BY THE COURT.

1.OIL AND GAS LEASE--Improvident Contract--Cancellation.Rule followed that equity will not cancel a contract which is merely a bad or improvident bargain.

2.SAME--Breach of Implied Covenant--Forfeiture.Rule followed that equity will not arbitrarily declare a forfeiture for breach of an implied covenant.

3.OIL AND GAS LEASE--Failure to Develop--Remedy in Damages--Prompt Development or Cancellation.A lease of two tracts of land 716 acres and 220 acres respectively, was made in 1902 to prospect for oil and gas, for a term of ten years and as much longer as gas or oil might be found in paying quantities, the lessees agreeing to pay royalties on all paying wells and binding themselves to commence operations within six months, and to complete three wells before January 1, 1904, "no other or additional expense shall be incurred under this lease," etc.The larger tract was developed and many wells were drilled thereon, but in nearly fourteen years nothing was done towards drilling or developing the smaller tract.Plaintiff succeeded to the ownership of the latter and brought suit to cancel the lease, alleging that there was an implied covenant to prospect and develop his tract as well as the other.No demand was made on the lessees to drill on the plaintiff's tract prior to the commencement of this action.Held, that the ordinary rule that equity will not relieve against an improvident bargain prevents an absolute forfeiture, that equity will not forfeit a contract for the mere breach of one of its implied covenants; but held, also, that the petition stated a cause of of action for some redress, either in damages, if such be ascertainable, or in the alternative that the lessees be required to drill and develop plaintiff's land within a reasonable time pursuant to their implied covenant, under penalty of forfeiture, following the doctrine announced in the fourth paragraph of the syllabus of Howerton v. Gas Co., 82 Kan. 367, 108 P. 813.

J. A. Ferrell, of Sedan, for the appellant.

W. H. Sproul, of Sedan, for the appellees.

OPINION

DAWSON, J.:

This is an equitable action to cancel an oil and gas lease of certain lands for failure to prospect and develop them.

In 1902, the grantor of the lease owned some 936 acres of land in two separate tracts, one of 220 acres and the other of 716 acres.The two tracts were about two miles apart.These lands were leased in one contract evidenced by one written instrument to the defendants for ten years and "as much longer as gas or oil may be found in paying quantities."The contract acknowledged receipt of one dollar as consideration, bound the lessees to pay certain royalties, and--

"It is mutually agreed that the parties of the second part shall begin operation under this lease within six months from the delivery hereof, and complete on or before the first day of January, 1904, three wells on the above described lands, no other or additional expense shall be incurred under this lease by the second party, and this lease shall be binding so long as second parties shall comply with their obligations hereunder, otherwise, this lease shall be null and void and no longer binding on either party."

As time passed, the plaintiff as one of the heirs of the grantor succeeded to the title to the 220 acres, and in 1916he commenced this action.His petition alleged, among other matters, that defendants had drilled twenty-five oil wells, gas wells, and dry holes on the larger and separate tract of 716 acres, and that defendants paid royalties on the paying wells thereon to the present owners thereof; but that in all the thirteen years or more since the lease was executed no drilling or development of any sort had ever been undertaken on the 220 acres now owned by him, nor any attempt at exploration or development thereof, nor any attempt made to take possession of that tract of land; that it was one of the implied covenants and the intention of the parties to the lease that his tract of land (as well as the other) should be drilled and explored for gas or oil and not held indefinitely without exploration; that in that community there had been three distinct "oil booms," in 1904-05, in 1912-13, and in 1915-16; that plaintiff had had several opportunities to lease his land to other parties for gas or oil development, one of whom offered him a dollar per acre if the unused lease of 1902 held by defendants was extinguished.Plaintiff further pleaded that defendants had wholly abandoned their rights under said lease to his land; that the lease had long expired; that some weeks prior to bringing his action he had demanded of defendants that they discharge the lease of record; that they failed to satisfy such demand; and that the lease constituted a cloud upon his title; and that he had no adequate remedy at law, etc.Plaintiff prayed for a cancellation of the lease so far as it affected his land, etc., and for such other relief as might be equitable and just.

Defendants' demurrer to this petition was sustained and plaintiff appeals.

Both tracts of land were covered by the one contract of lease.It was improvident for the owner to grant a lease of two large tracts of land for a long term on such meager specified requirements of exploration and development as those particularized in this contract, and without providing that a certain minimum of work should be done on each tract.But it is not the province of the courts to end a contract merely because it is a bad bargain.(Rose v. Lanyon,68 Kan. 126, 74 P. 625;Marble Company v. Ripley,77 U.S. 339, 356, 19 L.Ed. 955.)Plaintiff may...