Elk Fork Oil & Gas Co. v. Jennings

• Decision Date: 25 January 1898
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: ELK FORK OIL & GAS CO. et al. v. JENNINGS et al. JENNINGS et al. v. ELK FORK OIL & GAS CO. et al. FOSTER v. SAME.

84 F. 839

ELK FORK OIL & GAS CO. et al. v. JENNINGS et al. JENNINGS et al. v. ELK FORK OIL & GAS CO. et al. FOSTER v. SAME.

United States Circuit Court, D. West Virginia.

January 25, 1898

T. P Jacobs, Davit Sterrett, R. S. Gregory, and W. P. Hubbard, for Elk Fork Oil & Gas Company.

George C. Sturgiss and Caldwell & Caldwell, for E. H. Jennings and others.

B. M Ambler, A. Leo. Weil, and C. M. Thorp, for George E. Foster.

Before GOFF, Circuit Judge, and JACKSON, District Judge.

GOFF Circuit Judge.

The Elk Fork Oil & Gas Company, and certain parties in interest with that company, on the 19th day of March, 1897, filed a bill in equity in the circuit court of Tyler county, W. Va., against E. H. Jennings, James M. Guffey, R. H. Glatzau, and others in which suit on said day an injunction was issued restraining said defendants from taking possession of 1,077 acres of land situated in said county, claimed by the complainants in said cause for oil and gas purposes, under and by virtue of certain leases thereon made by the owners of said land. Such suit was, by due proceedings had, removed into this court. The complainants, on April 2, 1897, filed in this court an amended bill against the same defendants, and also against George E. Foster and others. On the 14th day of April, 1897, the complainants filed an amended and supplemental bill. On the 6th day of April, 1897, George E. Foster (who was named as a defendant in said amended bill, but who was not served with process until April 8, 1897, filed his bill against the Elk Fork Oil & Gas Company and others, and obtained from this court a restraining order against the complainants in said original and amended bill. It appears from the record that Foster, when he filed his bill, was aware of the fact that the questions raised by the same concerning what is known as the Hawkins lease of September 4, 1889, had been presented to the court by the amended bill filed on the 2nd day of April, 1897. When the amended and supplemental bill was filed on April 14, 1897, the Elk Fork Oil & Gas Company moved for an injunction against Foster, as prayed for in said bill, and also moved to dissolve the restraining order which had been awarded to Foster on the 6th day of April, 1897. The court, after hearing counsel on said motions, and duly considering the questions raised by the pleadings, ordered that the two suits should be heard together, and also that the bill filed by Foster should be treated as a cross bill in the suit brought by the original complainants. The court also at the same time appointed Charles W. Brockunier receiver, with instructions to drill wells on the 50 acres of land in controversy between Foster and the Elk Fork Oil & Gas Company, at such places and in such manner as he might deem best and proper, provided that the funds required for that purpose should be advanced by the parties in interest, with the understanding that the same should be returned from the production of the territory, should the same be sufficient; otherwise the party making such advances to lose the same. All parties to the controversy were enjoined from interfering with the receiver in the exercise of the rights conferred upon him by the order of the court. On the 17th day of April, 1897, the defendants Jennings, Guffey, and Glatzau filed their answer, and at the same time tendered their cross bill, which was duly filed. On the filing of their answer and cross bill the court appointed W. A. McCosh receiver so far as the oil and gas rights were concerned in the 100 acres of land claimed by the Elk Fork Oil & Gas Company known as the 'Wood Lease,' and also so far as the Tuttle lease was concerned, claimed by the same parties, the purpose and duties of such receiver being virtually the same as those theretofore given Receiver Brockunier. On April 30, 1897, the Elk Fork Oil & Gas Company filed their answer to said cross bill, and moved the court to discharge the receiver; the defendant Foster at the same time demurring to complainants' bill. On the 10th day of May, 1897, Foster filed an amended bill against the original complainants and certain others, lessors of part of the lands in controversy, and asked for and obtained from the court an order extending the powers of Receiver Brockunier over the land owned by Joshua Hawkins, T. G. Hawkins, Eli Wetzel, David Summers, and James Eddy. On the 19th day of June, 1897, the defendant Foster filed his answer to the complainants' bill.

The complainants in their amended bill alleged that one L. B Hill, during the months of December, 1896, and January, 1897, leased from certain persons in Tyler county, W. Va., for oil and gas purposes, certain tracts of land, making in the aggregate 1,077 acres; that soon thereafter, under said leases, the complainants took possession of said lands, located a well on the 100-acre track leased by Warren and James Wood, and drilled the same to completion, in pursuance of the terms of said lease; that about the 16th of March, 1897, the complainants heard that the defendants Jennings Guffey, and Glatzau claimed the right to drill on the land covered by the lease from Warren and James Wood; that they had contracted for the erection of a derrick thereon, and were endeavoring to oust the complainants from the possession of the same; that they (the complainants) then secured the restraining order in the proceedings instituted in the circuit court of Tyler county; that about that time said defendants served notice on the complainants forbidding them to operate for oil on the Wood land, and claiming title to the oil and gas rights thereof, under a lease made to one William Johnston in September, 1889, by Lyman Wood, the father of Warren and James Wood. It was also alleged by complainants that on September 4, 1889, Lyman Wood made an oil and gas lease on 200 acres of land then owned by him, of which the 100 acres leased to complainants by Warren and James Wood is a part, to William Johnston; that on November 14, 1889, the said William Johnston assigned to C. G. Dickson, D. C. Gruntz, and Julius McCormick thirteen-eighteenths of his holdings in a certain block of leases (which included the lease of Lyman Wood to him), and that on March 19, 1897, Johnston, McCormick, Gruntz, and Dickson's executors assigned said leases to one John Stealey, who on the same day assigned a one-third interest in the same to one L. E. Smith, and that on March 20, 1897, Stealey and Smith assigned to George E. Foster an interest in the said leases, which also included certain leases made by Eliza and B. F. Hawkins, and James Eddy, to the said Johnston in the year 1889, the lands covered by the same being a part of the 1,077 acres claimed by the complainants under the leases executed to L. B. Hill, before mentioned. Complainants also averred that the defendants had no rights under any of the leases so made to William Johnston in 1889, because the same were, each and all of them, void, and that, therefore, all such rights as had theretofore existed under them had long before become forfeited; that Johnston, and those claiming under him, had made default in the stipulation contained therein to complete a well within one year from the date of said leases, respectively, in Ellsworth, Meade, Lincoln, or Union districts, unavoidable accidents excepted; that neither Johnston, nor any one claiming under him, had ever drilled a well upon any of the lands covered by the complainants' leases, and that no development in fact had been made under any of the leases so given to Johnston; that certain parties, claiming under other and subsequent leases from the owners of the land, had drilled two wells within Ellsworth district, but, finding no oil, they had dismantled their rig, and had abandoned all of the territory so tested and leased to Johnston; that neither Johnston nor any one else ever paid to Lyman Wood the sum of 10 cents per acre per annum on account of the payment provided for in the leases made by him to Johnston, nor was any sum paid to any of the lessors of the other leases, nor was any such amount ever tendered until after oil was produced on the Wood land by complainants, when the defendant Johnston tendered to Warren Wood, James Wood, and other lessors of Johnston certain sums of money alleged to represent the payments provided for in the leases to him, which tender complainants allege was an admission on the part of Johnston of his failure to comply with his contract requiring the drilling of a well within one year from the date of the leases; that Warren Wood, James Wood, and the other lessors to Johnston, being well aware of his failure to drill a well as required, and to make the payments provided for, as also of his abandonment of the property described therein, had repeatedly declared the forfeiture of said leases; that the leasing of the land by Warren and James Wood to Hill was such a declaration of forfeiture, and that the refusal of the lessors to accept the tender of 10 cents per acre, before mentioned, was also such a declaration, and that Johnston and those claiming under him had years before recognized such forfeiture by refusing to proceed with the drilling of wells, unless the owners of the different tracts of land would grant new leases on the same, which in a number of instances had been done for the purpose of securing development; that the said Johnston, in the fall of 1889, obtained many leases in Tyler county, aggregating thousands of acres, which were all of the same character as the one made by Lyman Wood, and that all of them have been abandoned and forfeited on account of the facts before mentioned; that the land leased to Johnston by Lyman Wood is now owned by Warren and James Wood, his sons, and that when they leased the same to Hill t...