Foster v. Elk Fork Oil & Gas Co.

• Decision Date: 01 November 1898
• Docket Number: 262.
• Citation: 90 F. 178
• Parties: FOSTER et al. v. ELK FORK OIL & GAS CO. et al.
• Court: U.S. Court of Appeals — Fourth Circuit

90 F. 178

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

No. 262.

United States Court of Appeals, Fourth Circuit.

November 1, 1898

A. Leo Weil (Caldwell & Caldwell, on the brief), for appellants.

W. P Hubbard and Thomas P. Jacobs (David Sterrett, on the brief) for appellees.

Appeal from the Circuit Court of the United States for the District of West Virginia.

This was a suit in equity by the Elk Fork Oil & Gas Company and others against George E. Foster and others to enjoin interference by defendants with the operations of complainants under certain oil leases. From a decree for complainants, defendants appeal.

Before SIMONTON, Circuit Judge, and MORRIS and BRAWLEY, District Judges.

SIMONTON Circuit Judge.

This case comes up on appeal from the circuit court of the United States for the district of West Virginia. The pleadings are voluminous. They consist of an original, an amended, and a supplemental bill by the Elk Fork Oil & Gas Company et al the appellees, answers of appellants J. M. Guffey, E. H. Jennings et al., cross bill of J. M. Guffey, E. H. Jennings et al., answers thereto, original and amended bill by George E. Foster, treated as a cross bill, and answers thereto. The conclusion reached does not require any further discussion of the pleadings. The object of the writ was by injunction to protect the complainants in the possession of certain oil wells which they had drilled and were operating under recent leases from the landowners, and to restrain the defendants from asserting rights which the defendants claimed under prior leases from the landowners to William Johnston, which the complainants charged had been abandoned, and were of no validity, for the reasons that from 1889 to the institution of the suit, in March, 1897, neither Johnston nor his assignees had ever entered upon or made any search for oil or gas on any of the tracts in possession of the complainants. One William Johnston, in the year 1889, procured from a large number of farmers about 175 leases of land lying in four districts in Tyler county, W.Va., covering about 20,000 acres. The districts are named 'Ellsworth,' 'Lincoln,' 'Union,' and 'Meade.' Each contract or lease was several, covering separate tracts of land; the parties stipulating and contracting each for himself. They were all in the same form, containing the same provisions, covenants, and stipulations. Each of them, as will be seen, provided for the digging within a year of one well in the district of Ellsworth, Lincoln, Union, or Meade. Within the year, Johnston dug a well within one of these districts to a great depth, some 2,000 feet. It proved to be a dry well. It produced neither oil nor gas. After that effort, no well whatever was dug within either or any of these four districts under any of these contracts with Johnston. Wells were dug within these districts, under new contracts, by Johnston or his assignees. Wells were dug in this county, outside of these district, by Johnston. The appellees have acquired, under recent leases, the right of taking oil and gas from some of the lands mentioned in the old Johnston leases. The issues in the case grew out of the conflicting claims of appellees, who hold under recent leases, and appellants, who hold under Johnston. The question in the case is, are these Johnston leases of 1889 valid and subsisting, or have he and those under him lost all right thereunder? The court below held that the leases were no longer valid and subsisting, and that neither Johnston nor those claiming under him had any rights thereunder. In its decree it put its conclusion upon the ground of abandonment on the part of Johnston. An appeal was taken and allowed, and the questions are here on assignments of error.

The contract to be construed was entered into by the lessor in consideration of the covenants and agreements hereinafter mentioned, and for the purpose and with the exclusive right in the lessee of drilling and operating for petroleum and gas. The term is for 10 years, and as much longer as oil or gas is found in paying quantities. The covenants and agreements, the consideration of the lease, are: The lessee to give to the lessor the full equal one-eighth of all the petroleum oil obtained or produced on the leased premises and to deliver the same in tanks or pipe lines to the credit of the lessor. If gas is obtained in sufficient quantities to utilize, the consideration in full to the lessor shall be $100 per annum for each gas well drilled on the premises, if these be sufficient pressure to guaranty the laying of a pipe line to convey to market, payable 90 days after the line is laid. Then follows a grant by the lessor to the lessee of the use of water from the premises leased necessary to operation thereon, the right of way over and across the premises to the place of operating, with the exclusive right to lay pipes and convey oil and gas from the letten premises as well as the adjoining farms, and the right to remove any machinery or fixtures placed by the lessee on the premises. All damages to the growing crop by laying of pipes to be paid by lessee. Ten acres around the buildings are not to be operated by lessee, unless the lessor decides to have same drilled. The lessor to have the use of gas for domestic purposes, after the boilers on the premises are supplied. Every one of these covenants, the consideration for the lease, evidently and clearly contemplates active operation upon the demised premises. The lease contains this provision, fixing the time when the operation must begin: 'One well to be completed within one year, in Ellsworth, Meade, Lincoln, or Union district from the date hereof, unavoidable accidents excepted. ' In case of failure to complete operations on a well within such time, the lessee agrees to pay the lessor for such delay 10 cents per acre per annum after the time for completing the well as specified; the lessor agreeing to accept this sum as full payment for the yearly delay, until...