Allen v. Sylvania Corporation
| Decision Date | 13 March 1940 |
| Citation | 32 F. Supp. 96 |
| Parties | ALLEN et ux. v. SYLVANIA CORPORATION. |
| Court | U.S. District Court — Western District of New York |
Lauriston Walsh, of Corning, N. Y., for plaintiffs.
Annabel & Wightman, of Bath, N. Y., (W. Pitt Gifford, of Erie, Pa., of counsel), for defendant.
On June 22, 1934, the plaintiffs signed an oil and gas lease covering the farm where they lived in the town of Woodhull, Steuben County, New York. The lease gave the defendant the right to drill for oil and gas. It provided an annual rental of $1 an acre, a one-eighth royalty on all oil produced and $500 for each producing gas well. The lease was prepared by one Engstrom, defendant's representative, in the presence of the plaintiffs and was signed by the plaintiffs at the Allen farmhouse. Two copies were taken by Engstrom and one copy was left with the plaintiffs. Consideration of $1 was paid by Engstrom. Since that time the defendant has paid the land rentals provided in the lease in the total amount of about $700, all of which payments have been retained by the plaintiffs. No attempt or offer to return any part has been made. The defendants began to drill a well in October, 1937. It came in as a producing well on February 3, 1938. No attempt was made to repudiate the lease until after the completion of the well. The defendants have offered to pay the rentals accruing under the terms of the lease since the well came in but plaintiffs have refused to accept them. They sue here to set aside the lease on the ground that it was procured by fraud, and ask an accounting for the value of gas taken from the property. On the trial it developed that the title of the farm was in Jennie Allen. Whereupon defendant's motion to dismiss the complaint of John Allen was granted.
The claim of fraud is that Engstrom represented to the plaintiffs that he, in leasing the farm, was giving them one-eighth of any gas produced. It is further claimed that the signed lease was delivered to Engstrom on the condition that he would leave the same with one Frank Parks, who was a notary public in the Village of Woodhull, and in whom the plaintiffs had confidence, in order that he might subsequently read it over to them before they became bound by it. Concededly, the lease was never taken to Parks but was delivered to an officer of the defendant and signed by the defendant. The defendant denies that such representations were made, denies the conditional delivery and asserts the defense of laches and equitable estoppel on the ground that plaintiffs did not promptly disavow the lease on the discovery of the alleged fraud but allowed the defendant to proceed with and complete drilling operations.
In my opinion the testimony does not sustain the charge of fraud. The plaintiffs base the charge of fraud upon their own testimony and that of a son and daughter who were present when the lease was signed. All of these witnesses testified that Engstrom said that he was "giving an eighth", that he drew the lease on his own typewriter in the Allen farmhouse, and that he did not read the lease to the Allens nor did any of the Allen family read it. As far as the plaintiffs' testimony goes it does not appear that either of the plaintiffs knew the provisions of the lease, and particularly that part of the lease which dealt with what they were to receive in case gas was produced in paying quantities, until several years later and this in spite of the fact that they had a copy of the lease from the day it was signed by them. Even accepting the testimony as true that neither of the plaintiffs were able to read, we cannot lose sight of the fact that the son and daughter were present when the lease was signed and both exhibited some interest at that time in the royalty provision. The daughter was at least twenty years old and had just graduated from high school. The son was able to read. In the face of this I cannot accept the testimony of the plaintiffs t...
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