Derrickheim Co. v. Brown

• Decision Date: 01 October 1982
• Citation: 451 A.2d 477,305 Pa.Super. 173
• Parties: DERRICKHEIM COMPANY, a Pennsylvania Corporation, v. Richard L. BROWN and Mary E. Brown, his wife and Arthur J. Sumoske, Jr. and Karen L. Sumoske, his wife, Appellants. Richard L. BROWN, Mary E. Brown, Arthur J. Sumoske, Jr. and Karen L. Sumoske, Appellants, v. Frank F. WEBER a/k/a Frank Weber and any and all of his Unknown Heirs, Devisees, Representatives and Assigns and The Derrickheim Company.
• Court: Pennsylvania Superior Court

451 A.2d 477

305 Pa.Super. 173

DERRICKHEIM COMPANY, a Pennsylvania Corporation, v. Richard L. BROWN and Mary E. Brown, his wife and Arthur J.

Sumoske, Jr. and Karen L. Sumoske, his wife, Appellants. Richard L. BROWN, Mary E. Brown, Arthur J. Sumoske, Jr. and Karen L. Sumoske, Appellants, v. Frank F. WEBER a/k/a Frank Weber and any and all of his

Unknown Heirs, Devisees, Representatives and Assigns and The Derrickheim Company.

Superior Court of Pennsylvania.

October 1, 1982

Argued Nov. 12, 1980.

John A. Burkhiser, Oil City, for appellants.

John A. Metz, Jr., Pittsburgh for Derrickheim, appellee (at No 70) and Weber, appellees (at No. 71).

Before CAVANAUGH, WATKINS and HOFFMAN, JJ.

CAVANAUGH Judge:

This appeal was taken from orders entered following a non-jury trial on two consolidated actions to quiet title involving a 120 acre tract of land in Venango County, Pennsylvania. For the reasons discussed below, we reverse the orders of the lower court.

Briefly stated, the facts are as follows. Prior to December, 1942 the property in question was owned by Frank Weber. In December, 1942, the Treasurer of Venango County sold the property to the Commonwealth of Pennsylvania for non-payment of taxes. Notice of the sale, however, was not given to Frank Weber as required by law. In September, 1946, the Commonwealth conveyed the property to George and Martha Holliday. In June, 1953, Richard and Mary Brown, appellants herein, entered into an agreement of sale to purchase the property from the Hollidays. The agreement stipulated that a deed would not be executed until the full purchase price was paid. On July 26, 1969, the Browns, as equitable owners of the property, leased the oil and gas rights in the property to Derrickheim Company, appellee herein. The lease was to extend "for a term of four (4) years ... and as much longer as oil and gas is produced in paying quantities." The Browns were to receive as royalties one-eighth of all oil produced from the land, delivered free of expense into tanks or pipelines to the Browns' credit. The lease agreement also gave Derrickheim an option to purchase the property for $6,000 anytime during the primary lease term of four years.

Derrickheim commenced drilling operations on the premises but in September 1969, shortly before completion of the drilling process, it learned of the defect in the tax sale. The drilling process was completed on September 25, 1969, but, due to the uncertain state of the title, Derrickheim at that point ceased operations at the site and capped the well. Derrickheim requested that the Browns bring an action to quiet title against the heirs of Frank Weber but the Browns failed to do so. Between September of 1969 and the filing of the instant suit in June, 1978, Derrickheim continued to mow the area around the well site but it never began active operation of the well.

In September, 1973, following the expiration of the primary lease term of four years, the Browns notified Derrickheim that the lease had expired or, in the alternative, had been forfeited. Derrickheim responded by denying that the lease had terminated and asserting that it was still a valid agreement. Neither party took any further action on the matter for over four years. In June, 1977, the Browns finally obtained legal title to the property from the estate of George Holliday. In October, 1977, Arthur and Karen Sumoske entered into an agreement of sale with the Browns to purchase the property. It was this event which precipitated the filing of the instant actions.

Derrickheim filed the first complaint in June, 1978, seeking a determination of the validity of the oil and gas lease entered into between Derrickheim and the Browns in July, 1969. The Browns and the Sumoskes filed a second action seeking to terminate whatever interest the heirs of Frank Weber might have had in the property due to the lack of notice of the tax sale, and also seeking to have the oil and gas lease declared terminated.

With regard to the interest of the heirs of Frank Weber, the lower court entered an order on June 15, 1979, directing the heirs of Frank Weber to file an action of ejectment within thirty days or forever be barred from asserting any right or interest in the land. No such action was filed and the court therefore stated in its final order that the heirs of Frank Weber were forever barred from asserting any right, title or interest in the land. No one has appealed from that portion of the order and therefore we will not address it.

With regard to the lease, the lower court found that the oil and gas lease was still a valid instrument and it stipulated in the order that the terms of the lease would take effect on the date of the order. The Browns and Sumoskes were barred from asserting any right, title or interest in the land which was inconsistent with the interest of Derrickheim under the terms of the lease. The Browns and Sumoskes have appealed from this determination.

In ruling as it did, the lower court agreed with Derrickheim's contention that upon learning of the cloud on the title, it was "prudent and proper" for Derrickheim to suspend operations...