Crawford v. The Bellevue and Glenfield Natural Gas Company

• Decision Date: 08 November 1897
• Docket Number: 79
• Citation: 183 Pa. 227,38 A. 595
• Parties: J. M. Crawford Jr., Devisee of J. M. Crawford, Appellant, v. The Bellevue and Glenfield Natural Gas Company
• Court: Pennsylvania Supreme Court

38 A. 595

183 Pa. 227

J. M. Crawford Jr., Devisee of J. M. Crawford, Appellant, v. The Bellevue and Glenfield Natural Gas Company

No. 79

Supreme Court of Pennsylvania

November 8, 1897

Argued October 27, 1897

Appeal, No. 79, Oct. T., 1897, by plaintiff, from judgment of C.P. No. 1, Allegheny Co., March Term, 1896, No. 24, on verdict for defendant. Affirmed.

Assumpsit to recover royalties alleged to be due under an oil and gas lease. Before STOWE, P.J.

The facts appear by the charge of the court, which was as follows:

The first matter that calls for your consideration is what is the real meaning of this lease, and in what relation do the parties stand to each other as to their rights under it in reference to this well? As you already well understand, this is a lease of property by Mr. Crawford to Mr. Dimmick -- and I may say, in a general way, the defendants stand in Dimmick's shoes -- by which the defendants or Dimmick had a right to bore certain gas or oil wells on the property belonging to Mr. Crawford; all wells to be located by the consent of both parties: "to have and to hold the said premises until the said party of the second part for and during the term of one year from this date," and then giving the said party the exclusive right to drill. Dimmick had the absolute right to hold possession of that property and to explore it according to the terms of the lease for a year. That was fixed; it did not make any difference, so far as I can discover from the lease, whether he discovered any oil or not, he had a year under the terms and provisions of the lease with reference to the location of the well to explore it, and see what he could do, by investigating it by any means he saw fit, by putting down wells. That right was to be exclusive; nobody else was to have the right during that year. Up to this point it was simply tentative, Dimmick was to have this right to go on for a year and investigate and see what he could make out of it, and the practical way of doing that, I presume, was to put wells down. But the wells were expected to produce either oil or gas, and of course while Mr. Dimmick had the right to investigate, it is not to be supposed that he was to have the product of these wells, gas or oil, for nothing. So they go further and say "It is further agreed that should a paying production of oil or gas be found on said land by second party within the term of one year, then the first party agrees to extend this lease from year to year so long as said production continues." So far Dimmick had the right to investigate and to do that he had to put money into the ground by boring wells. If there was a paying production, all Mr. Crawford would have had to do when the year was up would be to say: "Get out of this," and the wells would be his. Of course, no reasonable man would make an arrangement of that kind, and so the next provision is that if oil is found in paying quantities Dimmick was to have the right to extend the lease from time to time as long as the said production continues. Otherwise he would have been perfectly at the mercy of Crawford; as soon as the year was up Crawford could have said: "You have no further right here," and he could take the land just as it was, with the wells upon it producing gas or oil, and to meet that emergency this provision was put in. Then there is a provision that operations shall be commenced within ten days, which is immaterial. "The second party hereby agrees, in further consideration for this lease, to deliver unto the said party of the first part the full one eighth of all oil he may produce and save from said land, to be delivered in pipe line free of charge to first party." That is, in case there was a production of oil, Crawford was to have that as his rent; he was to have one eighth of the product of the well or wells that might be located upon the ground. "It is further agreed that if gas is obtained in paying quantities and marketed the consideration in full to the first party shall be $250, every six months," etc., to be paid to Mellon's bank in thirty days while the sale of the gas continues. Those are the terms of this lease. Gas was to be obtained in paying quantities, and Dimmick or his lessees were to be the judges of that, of course. It was to be marketed; they were the parties that were to do the marketing, it was for them to say when it was marketed; and then so long as they chose to continue to sell gas from that well they would have to pay rent, and no longer. The second party also agrees that the first party may use gas delivered free of charge for domestic purposes, at the farm house of himself and his son. "In case gas is found sufficient for domestic purposes of the first party and not sufficient for marketable purposes the second party agrees to leave said well for the use of the said party so that a small pipe may be put in." If any gas was found such as would suit the purpose of Crawford under that provision Dimmick or his lessees or agents were to leave it; they were not to destroy the well; they were not to block it up; they were not to do anything that would interfere with the production of gas that might come from that well, but they were to allow it to be there so that it might be used by Crawford for domestic purposes. That seems to bring us to this conclusion: The agreement was that Mr. Dimmick was to have the right for one year to make explorations, put down wells; if gas were found (I need not refer to the oil, there was no oil), in paying quantities and Dimmick or his assignee saw fit to use it for marketable purposes then they were to pay $500 a year, and if there was not enough such as that the party saw fit to dispose of or to make use of for marketable purposes, then they were to leave the well so that Mr. Crawford could have the use of it for his domestic purposes.

It is admitted in this case that the defendant was the assignee of Dimmick; it stood in his shoes with reference to this contract; it owed the same duties to Mr. Crawford and had the same right, so far as Crawford was concerned, under this lease that Mr. Dimmick had. It was bound to know what was in this lease, and it took it subject to all the terms. It used the gas; it turned it into its lines; it marketed it more or less, whatever the quantity was. It did not say, as it would have a right to say, this thing won't pay, and then cut off the connections. I apprehend under this lease it could have done that whenever it saw fit, whenever it chose not to market the gas, be it much or little, that went to the lines it could have done so; but it continued here until this suit was brought, and even later, to take whatever gas was there and use it for marketable purposes; it sold it in connection with gas coming from other wells. That does not necessarily make it liable. Prima facie it does. Without anything else in the case it would be bound to pay this rent under the contract, because it has chosen to use this gas. The presumption is (which we would take as conclusive in a case like this) that it considered it in paying quantities...