Beckett-Iseman Oil Co. v. Backer

• Decision Date: 30 September 1915
• Citation: 165 Ky. 818,178 S.W. 1084
• Parties: BECKETT-ISEMAN OIL CO. v. BACKER.
• Court: Kentucky Court of Appeals

178 S.W. 1084

165 Ky. 818

BECKETT-ISEMAN OIL CO. v. BACKER.

Court of Appeals of Kentucky.

September 30, 1915

Appeal from Circuit Court, Wayne County.

Action by George E. Backer against the Beckett-Iseman Oil Company. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Kennedy & Kennedy, of Monticello, for appellant.

O. H Waddle & Son, of Somerset, and Harrison & Harrison, of Monticello, for appellee.

CLAY C.

On October 2, 1913, the widow and heirs of Carl Heavenrich executed to George E. Backer an oil and gas lease upon 1,408 acres of land lying in Wayne county, Ky. and Pickett county Tenn. By the terms of the lease, Backer was authorized, for the period of one year, to enter upon said property for the purpose of drilling wells and exploiting the same for oil and gas. In case either oil or gas was found, his rights under the contract were to continue so long as oil and gas could be produced in paying quantities. The lessee was given the privilege of erecting buildings, pipe lines, and all things necessary on the property for the proper development thereof. In consideration of the premises, the lessee agreed to deliver to the lessors one-tenth of all the oil produced from the leased premises, and also to pay the lessors $200 per year for the gas from each and every gas well drilled on the premises. During the latter part of the year 1913, the lessee took possession of the premises, and, after erecting and installing the necessary machinery, began the drilling of a well. Some time later he began negotiating with D. A Cunningham, the president of the Beckett-Iseman Oil & Gas Company, for the sale of the lease to that company. Claiming that the sale was consummated in January, 1914, for the price of $3,000, which the company agreed, but refused, to pay Backer brought this suit against the company to recover the purchase price. A trial before a jury resulted in a verdict and judgment for Backer. The company appeals.

The principal question presented for decision is whether or not the assignment of an oil and gas lease should be in writing, and whether or not the writings in evidence constitute a sufficient memorandum under the statute of frauds. It is well settled that oil and gas are minerals, and are a part of the realty, and a lease giving to the lessee the right to explore certain lands and remove therefrom the oil and gas is a contract for the transfer and sale of an interest in lands, and is required to be in writing. Thornton on the Law Relating to Oil and Gas, § 291; 20 Cyc. 215; Williamson et al. v. Jones, 39 W.Va. 231, 19 S.E. 436, 25 L. R. A. 222; Wilson v. Youst, 43 W.Va. 826, 28 S.E. 781, 39 L. R. A. 292; Riddle v. Brown, 20 Ala. 412, 56 Am. Dec. 202; Lear v. Chouteau, 23 Ill. 39; Huff v. McCauley, 53 Pa. 206, 91 Am. Dec. 203; Entwhistle v. Henke, 211 Ill. 273, 71 N.E. 990, 103 Am. St. Rep. 196; Ramage v. Wilson, 37 Ind.App. 532, 77 N.E. 368; Henry v. Colby, 3 Brewst. (Pa.) 171, cited in 10 Ann. Cas. 100. It is likewise the rule that, where the lease itself is required to be in writing, the assignment thereof must also be in writing; a parol assignment being within the statute of frauds. Chicago Attachment Co. v. Davis Sewing Machine Company, 142 Ill. 171, 31 N.E. 438, 15 L. R. A. 754; Durand v. Curtis, 57 N.Y. 11; Carter v. Hammett, 12 Barb. (N. Y.) 262; Briles v. Pace, 35 N.C. 279; Benton v. Schulte, 31 Minn. 312, 17 N.W. 621.

But it is insisted by plaintiff that, as Cunningham told the driller in charge to start the drilling, the company thereby took possession of the leased premises, which act on the company's part constituted a partial performance of the contract and took the case out of the statute. Whatever may be the rule in other jurisdictions, it is the settled law in this state that, with the exception of contracts not to be performed within a year, part performance will not take the case out of the statute, though a party may have equitable rights which he may enforce. Dant v. Head, 90 Ky. 255, 13 S.W. 1073, 12 Ky. Law Rep. 153, 29 Am. St. Rep. 369; Usher's Ex'r v. Flood, 83 Ky. 552; Id., 17 S.W. 132, 12 Ky. Law Rep. 721.

Since the assignment of the lease is required by the statute of frauds to be in writing, it remains to determine whether the writings in evidence are sufficient. On December 31, 1913, the company wrote plaintiff the following letter:

"Indiana, Pa., Dec. 31, 1913.

Mr Geo. E. Backer, Monticello, Ky.--Dear Sir: Our people were together yesterday and talked over your proposition on the 1,400 acres in Wayne county, which we have had some correspondence in regard to. If our people decide to take up the proposition, will you accept $3,000 cash in full, as soon as conditions are complied with? The value of a property of that kind is very much depreciated on account of its inaccessibility, the inconvenience and expense of operating, if a production was obtained on it, and the difficulty in getting efficient, reliable men to locate in a place of that kind, to look after the operations. It would make all the difference in the world if the property was located where it was more easily of access. If you will consider this proposition, we would be glad to hear from you at your convenience, and when the details were consummated we would want to put a man on the ground to remain during the drilling and completion of the well. Please let us hear from you as...