Brown v. Wilson

• Citation: 1916 OK 49,58 Okla. 392,160 P. 94
• Decision Date: 11 January 1916
• Docket Number: Case Number: 7370
• Parties: BROWN et al. v. WILSON et al.
• Court: Supreme Court of Oklahoma

1916 OK 49

160 P. 94

58 Okla. 392

BROWN et al. v. WILSON et al.

Case Number: 7370

Supreme Court of Oklahoma

Decided: January 11, 1916

Syllabus

¶0 1. OIL AND GAS--Lease--Construction--Forfeiture. Where an oil and gas lease was made, executed, and delivered for the consideration of $ 1 in hand paid the lessor, and the covenants and agreements thereinafter contained on the part of the lessee, and leased and let to him a certain tract of land for a term of ten years and as long thereafter as oil and gas or either were produced therefrom by the lessee, he to yield to the lessor certain royalties from the oil and gas produced, and where the lessee agreed to complete a well on the premises within four months from the date thereof or pay at the rate of $ 80 in advance for each three months such completion was delayed, held, that the $ 1 supported the four months period in which the lessee had to complete a well and supported no other stipulation in the lease; that the prospective royalties were the sole consideration for the execution of the lease on the part of the lessor; that the agreements on the part of the lessee to complete a well on the demised premises within four months or pay for delay conferred an option on the lessee to drill or pay; and that a failure to do either forfeited the lease at the option of the lessor, who thereafter was entitled to have the same judicially declared forfeited and canceled as a cloud upon his title.

2. SAME--Provisions as to Surrender. Where such lease reserves to the lessee and his assigns the right at any time after four months, on the payment of $ 1 and all payable obligations then due the lessor or his assigns, to surrender the lease, if not tested, for cancellation, held that, as said lease, construed as a whole, confers on the lessee an option to complete a well within four months or pay for delay and a further option to surrender at any time after four months, and thereby avoid doing both, it was voidable at the option of the lessor at any time after four months for lack of mutuality, in that it imposed no legal obligation on the lessee; that, as prospective royalties were the sole consideration for the execution of the lease on the part of the lessor, payment of which could be defeated by a surrender thereof by the lessee, the lease was nudum pactum; and that, as the same reserves to the lessee the right to surrender the lease at any time after four months before development, a corresponding right exists in the lessor to compel a surrender.

3. SAME--Rights of Parties--Delay Rental. Where said lease as to 80 acres of the demised premises was assigned to the S. S. Co., and where on July 17, 1914, $ 20 delay money fell due and payable thereon from the lessee to the lessor, assuming that the lessor and all parties in interest under the lease agreed to the substitution of said company as lessee of said 80 acres so assigned, evidence examined, and held, that said company defaulted in said payment, and that time was of the essence of the contract, that the court erred in refusing to so hold, and that said lease was forfeit as to the holding of said company under the lease, and to cancel the lease accordingly.

4. SAME. Where said lease as to 240 acres of the demised premises was assigned to W. and C., and where on April 17, 1914, $ 60 delay money fell due and payable thereon from them to the lessor, evidence examined, and held, that they defaulted in said payment, that time was of the essence of the contract, that the court erred in refusing to so hold, and that said lease was forfeit as to their holdings thereunder, and to cancel the same accordingly.

5. SAME--Forfeiture. Where the lessor after forfeiture incurred brought suit to have the same judicially declared and to clear his title and thereafter executed a second lease on the same premises and thereafter parted with his interest as lessor in the demised premises, evidence examined, and held, that the court erred in refusing to grant such relief to him and to all parties in interest under the second lease. Kane, C. J., and Thacker, J., dissenting.

Gubser & Means, Noffsinger & Broome, Sumner J. Lipscomb, Thomas H. Owen, and Joseph C. Stone, for plaintiffs in error.

Geo. S. Ramsey, Edgar A. De Meules, Malcolm E. Rosser, Robertson, Bailey, Nelson & Bailey, James L. Powell, S.W. Hayes, and J. R. Cottingham, for defendants in error.

TURNER, J.

¶1 On June 17, 1912, John S. Ruhl and Lena, his wife, being the owners and in possession of the land therein described, made, executed, and delivered to M. S. Wilson an oil and gas mining lease, which was duly recorded, the pertinent part of which reads:

"* * * That the said parties of the first part, for and in consideration of the sum of one dollar in hand, well and truly paid by the said party of the second part, the receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the party of the second part, to be paid, kept, and performed, have granted, demised, leased, and let and by these presents do * * * grant, demise, lease, and let unto the second party, his heirs, successors, or assigns, for the sole and only purpose of mining and operating for oil and gas: * * * The southeast quarter (1/4) of section fifteen and the southwest quarter (1/4) of section fourteen (14), both in township 14 N., of range 16 E., containing three hundred and twenty (320) acres, more or less. * * *

"It is agreed that this lease shall remain in full force for the term of ten years from this date, and as long thereafter as oil or gas, or either of them, is produced therefrom by the party of the second part, his heirs, successors or assigns.

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

"First. To deliver to the credit of the first parties, their heirs and assigns, free of cost, in tank or the pipe line to which he may connect his wells, the equal one-eighth (1/8) part of all oil produced and saved from the leased premises. * * *

"The party of the second part agrees to complete a well on said premises within four months from the date hereof, or pay at the rate of eighty ($ 80.00) dollars in advance, for each additional three (3) 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 parties in person or to the credit of the first parties at the First National Bank of Boynton, Okla., 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 the term of this lease. * * *

"The party of the second part shall have the right at any time to remove all machinery and fixtures placed on said premises, including the right to draw and remove casing.

"The party of the second part, his heirs and assigns, shall have the right at any time after 4 mos. on the payment of one dollar and all payable obligations then due to the parties of the first part, their heirs and assigns, to surrender this lease, if not tested, for cancellation, after which all payment and liabilities thereafter to accrue under and by virtue of its terms shall cease and determine.

"All covenants and agreements herein set forth between the parties hereto shall extend to their successor, heirs, executors, administrators and assigns. * * *"

¶2 Thereafter C. B. Wilson and D. A. Cameron became and now are the assignees of the southwest quarter of section 15; the Seven Sands Oil & Gas Company, the assignee of the east half of the southwest quarter of section 14; John A. Sheppard, the assignee of an undivided half interest in the west half of the southwest quarter of said section; and said Wilson and Cameron, the assignee of the remaining undivided one-half interest therein, all of whom will be hereinafter called lessees. Thereafter, to wit, on August 29, 1914, said Ruhl and wife made, executed, and delivered a second lease of the same land to one Leidecker, and later parted with their interest therein as lessors to one Humphreys, who later acquired the lease and thereafter conveyed his entire interest in the property to the plaintiffs in error, who, later, leased the entire 320 acres to John A. Sheppard, one of their number, and who is the same Sheppard who also owns, but who claims no interest in, an undivided 80 acres contained in the first lease, as stated. Prior to the execution of the lease to Leidecker, to wit, on August 1, 1914, John S. Ruhl and wife brought suit to establish, as a matter of record, the forfeiture of the lease of June 17, 1912, and to cancel the same upon the ground that the same was unilateral, unperformed, optional as to the lessee and his assigns, and therefore optional as to the lessor, and that there was default in the payment of the rentals or delay money on the part of the lessees. Pending this suit, Cameron and Wilson, without leave, on September 3, 1914, entered and took possession of the southwest quarter of section 15 and thereupon erected a rig and commenced to drill a well, and thereafter struck oil in paying quantities, whereupon they brought suit to cancel the second lease as a cloud upon their title and to restrain plaintiffs in error from claiming thereunder and from interfering with their possession. Before being restrained, however, plaintiffs in error took possession of the well and thereafter enjoined defendants in error, or those claiming under the first lease, from interfering with their possession. After issue joined, the two cases were consolidated, and there was trial to the court and general judgment for defendants in error, sustaining the validity of the first lease and clearing the title of all parties in interest thereunder as prayed, to reverse which it is assigned that the same is contrary to the law and the evidence. No well was ever commenced nor possession yielded of the demised premises to the lessees under the...