Evans v. Consumers' Gas Trust Co.

• Decision Date: 18 December 1891
• Parties: EVANS v. CONSUMERS' GAS TRUST CO.
• Court: Indiana Supreme Court

29 N.E. 398

EVANS

v.CONSUMERS' GAS TRUST CO.¹

Supreme Court of Indiana.

Dec. 18, 1891.

Appeal from circuit court, Hamilton county; D. MOSS, Judge.

Action on a contract by James L. Evans, guardian, against the Consumers' Gas Trust Company for failure to sink certain gas-wells. Defendant had judgment on demurrer, and plaintiff assigns error. Reversed.

Shirts & Vestal, for appellant. W. P. Fishback and W. P. Kapes, for appellee.

MCBRIDE, J.

The complaint in this case is in eight paragraphs, each based on a separate written contract, which is made a part of the pleading. The several contracts, except the first, are alike, save as to the time within which they are to be performed. The circuit court sustained a separate demurrer to each paragraph, on the ground that it did not state facts sufficient to constitute a cause of action, and this ruling is assigned as error. Its correctness depends upon the construction to be placed upon the contracts which are the foundation of the action. The contract counted upon in the second paragraph, and which, as above stated, is precisely like those set out in all but the first paragraph, except as to the time of performance, is as follows: “This agreement, made and entered into this first day of December, A. D. 1887, by and between J. L. Evans, guardian of Frederick L. Evans, of the county of Hamilton, and the state of Indiana, of the first part, and Consumers Gas Trust Company, Indianapolis, Indiana, parties of the second part, witnesseth that the said parties of the first part, for the consideration of the covenants and agreements hereinafter mentioned, have granted, demised, and let unto the parties of the second part, their heirs or assigns, for the purpose and with the exclusive right of drilling and operating for petroleum and gas, all that certain tract of land situate in Noblesville township, Hamilton county, and state of Indiana, bounded and described as follows, to-wit: ‘Being the north half of the north-east quarter of the south-west quarter of section 25, township 19, range 4 east, containing twenty acres, be the same more or less,’-together with the right of using sufficient water therefrom necessary to the operation thereof, the right of way over said premises, the right to lay pipes to convey oil and gas produced on this territory, and the right to remove any machinery or fixtures placed on said premises by the party of the second part. The parties of the first part are to fully use and enjoy the said premises for the purpose of tillage, except such part as shall be necessary for said mining purposes. The party of the second part, his heirs or assigns, are to have and to hold the said premises for and during the term of ninety days from the date hereof, and as much longer as oil or gas is produced or found in paying quantities thereon. In consideration of said grant and demise the said parties of the second part agree to give or pay to the said parties of the first part the full, equal one-eighth part of all the petroleum or rock oil produced or found on the said premises, and to deliver the same, free of expense, into tanks or pipelines, to the credit of the first parties; and, should gas be found in sufficient quantities to justify marketing the same, the consideration in full to the parties of the first part shall be two hundred and fifty dollars per annum for the gas from each well so long as it shall be sold therefrom. It is further agreed that the parties of the second part shall complete a well on the above-described premises within ninety days from the date hereof, and in case of failure to complete such well within such time the parties of the second part agree to pay to the parties of the first part for such delay, a yearly rental of two hundred and fifty dollars on the premises herein leased from the time for completing such well as above specified until such well shall be completed. The said yearly rental, amounting to two hundred and fifty dollars, shall be deposited to the credit of the parties of the first part in the Citizens' Bank of Noblesville, or paid direct to said first parties. And a failure to complete such well, or to make such deposit or payment, as above or hereinafter mentioned, shall render this lease null and void and to remain without effect between the parties hereto. It is also provided that no wells shall be drilled upon - acres surrounding the present buildings on said premises, and that the parties of the first part may have gas to heat and light said buildings when there is a surplus of gas on said premises after enough to run machinery of second party. It is further agreed that the second parties shall pay all damages done to growing crops or otherwise by reason of said operations. The well to be tested and accepted or rejected within ten days after the completion of the same, and, if accepted, to be paid for annually in advance, as above provided; first parties to locate all wells. Should second party forfeit this lease; the county recorder is authorized, upon demand of the first parties, to release the same from record. All pipes and pipe-lines to be laid below plow-depth, so as not to interfere with tilling. It is understood betweeen the parties to this agreement that all the conditions between the parties hereunto shall extend to their heirs, executors, and assigns. In witness whereof,” etc.

The construction given to the contract by the appellee, and which seems to have been adopted by the court below, is thus stated by counsel: “Appellee contends that a proper construction of the leases gives it the option to avail itself of the benefits of the contract or not, as it pleases. If it fails to avail itself according to the terms of the contract, and within the time limited, the right to do so expires and the contract becomes a nullity.” Also, that the contracts are not properly leases, but “merely contracts between the parties for the doing of certain things and the payment of certain sums of money,” with the remarkable and peculiar feature for a contract that the entire failure of one party to perform not only forfeits his rights under it, but relieves him...