Garfield Oil Co. v. Champlin

• Citation: 189 P. 514,78 Okla. 91,1920 OK 12
• Decision Date: 13 January 1920
• Docket Number: 9326.
• Parties: GARFIELD OIL CO. v. CHAMPLIN ET AL.
• Court: Oklahoma Supreme Court

189 P. 514

78 Okla. 91, 1920 OK 12

GARFIELD OIL CO. v. CHAMPLIN ET AL.

No. 9326.

Supreme Court of Oklahoma

January 13, 1920

Rehearing Denied April 13, 1920.

Syllabus by the Court.

Under paragraph 3, § 4745, Rev. Laws 1910, the defendant may set forth in his answer as many grounds of defense, counterclaim set-off, and for relief, as he may have, whether they be such as have been heretofore denominated legal or equitable, or both. Each must be separately stated and numbered, and they must refer in an intelligible manner to the cause of action which they are intended to answer, and even if the defenses are inconsistent, unless expressly prohibited by statute they may still be united in one answer, and the pleader cannot be compelled to elect between such defenses.

Defendant alleged in its answer that on or about the 23d day of February, 1916, the date upon which plaintiffs' lease was executed, the Chanute Refining Company and B. A. Garber had procured leases upon a large number of tracts of land in Garfield county; that prior thereto oil and gas had not been discovered within many miles of said tracts of land; that the leases were obtained for the purpose of exploring said land for oil and gas; that the lands at that time had no value whatever for oil or gas mining purposes; that plaintiffs knew that said leases, and each of them, were secured to constitute a block of acreage sufficiently large to justify the expenditure of a large sum of money in prospecting said lands for oil and gas, and well knew that the lessee would not undertake to prospect said tract of land, or any part thereof, for oil and gas, unless a sufficient number of acres were included in said block to make the financial returns to the lessee sufficient in case oil or gas was discovered, to justify them in taking the chance of the great loss of time and money in case of failure upon their part to discover oil and gas; that plaintiffs executed said lease for the purpose of including the land therein described in the acreage to be contained in said block of acreage, in order to induce the lessee to prospect the same for oil and gas; that it was understood and agreed by and between the lessee and the plaintiffs, that should the lessee commence a well within six months on the said tracts of land, or any of them, in that event no rental should be due or paid under the lease, but that the commencing of said well should be in lieu of all rentals; that said lease was executed upon a printed form that at the time of its execution that portion of the printed lease providing for the completion of a well on the premises leased on or before a certain date, was inadvertently allowed and permitted to remain in said lease; that the blanks in said part of said printed lease were filled in, so that the printed portion of the lease required the lessee to complete a well on said premises on or before the 23d day of August, 1916; but that the true agreement and understanding of said parties was expressed, and intended to be expressed, by the last clause of the lease made in writing upon said printed form, which reads as follows, to wit: "Second party agrees to commence drilling a well within six months on the block of leases, of which this is a part." Held, that the answer stated facts sufficient to constitute a defense to the cause of action set forth in the amended petition of the plaintiffs, and that the trial court erred in sustaining the special demurrer thereto.

Oil and gas leases in this jurisdiction are construed strongly against the lessee and in favor of the lessor, and where its terms will permit it under the rules of law, such lease will be construed so as to promote development and prevent delay.

Where an oil and gas lease expressly provides that rights of parties shall terminate if no well be drilled within a fixed period, unless the lessee on or before that date shall pay or tender to the lessor a fixed sum, time is of the essence of the contract.

Under the decisions in this state, oil and gas, while in the earth, unlike solid minerals, are not subject to ownership distinct from the soil, and the grant of the oil therefore is a grant not of the oil that is in the ground, but of such a part as the grantee may find. An "unless" lease is subject to termination at the will of the lessee, which privilege may be exercised by a mere failure to pay the stipulated rental at the time due, upon the happening of which the lease automatically terminates, and the lessor cannot maintain an action against the lessee for rentals.

Where a party leases a tract of land for the sole and only purpose of mining and operating for oil and gas, the laying of pipe lines, and of building tanks, towers, stations, and structures thereon to produce, save, and take care of said products, the lessee contracting to deliver to the credit of the lessor, free of cost, in the pipe line to which they may connect their wells, the equal one-eighth part of all oil produced and saved from the leased premises, and to pay $250 each year in advance for the gas from each well where gas only is found, while the same is being used off the premises, at the rate of $50 per year for the time during which said gas shall be used, and the lease containing the following provision: "If no well be completed on said land on or before the 23d day of August, 1916, this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor, or to the lessor's credit in the First National Bank at Medford, Okl., or its successors, which shall continue as the depository regardless of changes in the ownership of said land, the sum of $80, which shall operate as a rental and cover the privilege of deferring the completion of a well for six months from said date. In like manner, and upon like payments or tenders, the completion of a well may be further deferred for like periods of the same number of months successively; and it is understood and agreed that the consideration first recited herein, the down payment, covers, not only the privilege granted to the date when said first rental is payable as aforesaid, but also the lessee's option of extending that period as aforesaid, and any and all other rights conferred. If, while this lease is in force and prior to the discovery of oil or gas on said leased land, there shall be drilled on adjacent land and within 200 feet of any line of said leased land, a well producing as much as 25 barrels of oil per day for 30 consecutive days, the lessee will, with reasonable diligence, begin and prosecute the drilling of a well on said leased land in a faithful effort to find and produce oil in paying quantities. * * * Second party agrees to commence drilling a well within six months on the block of leases, of which this is a part." Held, that this provision did not bind the lessee to pay any rent for the land, or for delay in commencing to operate for oil and gas; said grant or lease amounting to an option, preventing the lessor, after receiving the consideration for the first six months from leasing and entering during such time, the lessee having the option, by continuing to pay such half-yearly payments, to continue such option by such succeeding payments, it not appearing that the lessor had any direct interest in the drilling of any wells to be commenced within six months on the block of leases of which this lease was a part.

Mere ignorance of the contents of a lease by one who becomes a party thereto is not sufficient to excuse noncompliance therewith. The lessee is bound by its terms, and where, under the terms of an "unless" lease, the lease terminated if a well was not completed in six months from the date thereof, or rentals paid as therein provided, the failure to complete a well, or pay the rentals within the time stipulated, automatically terminated the lease.

Error from District Court, Garfield County; James B. Cullison, Judge.

Suit by H. H. Champlin and others against the Garfield Oil Company to cancel an oil and gas lease. Judgment for plaintiffs, and defendant brings error. Reversed in part, affirmed in part, and remanded.

Under Rev.Laws 1910, § 4745, 12 Okl.St.Ann. § 272, par. 3, defendant may set forth in his answer as many grounds of defense, counterclaim, set-off, and for relief as he may have, whether they be such as have been heretofore denominated legal, or equitable, or both, and which must be separately stated and numbered, and must refer to an intelligible manner to the cause of action which they are intended to answer, and even if defenses are inconsistent, unless expressly prohibited by statute, they may still be united in one answer.

M. C. Garber and Ralph W. Garrett, both of Enid, Edw. H. Chandler, Farrer L. McCain, and Summers Hardy, all of Tulsa, and Jos. C. Stone, Chas. A. Moon, and Francis Stewart, all of Muskogee, for plaintiff in error.

H. G. McKeever and W. L. Moore, both of Enid, and Burford, Miley, Hoffman & Burford, of Oklahoma City, for defendants in error.

PITCHFORD J.

In the court below defendants in error were plaintiffs; plaintiff in error was defendant. For convenience the parties will be designated as they appeared in the trial court. This is an action by the plaintiffs to cancel an oil and gas lease given by the plaintiffs George Beggs and Abbie N. Beggs to the Chanute Refining Company, on the 23d day of February, 1916 which lease was assigned by the Chanute Refining Company to the defendant Garfield Oil Company for alleged failure upon the part of the defendant to complete a well or pay rentals on or before the 23d day of August, 1916. The plaintiff Champlin claims to be the owner of an oil and gas lease from the plaintiffs George Beggs and Abbie N. Beggs, to the premises in...