Gillespie v. Fulton Oil & Gas Co.

• Decision Date: 26 October 1908
• Citation: 86 N.E. 219,236 Ill. 188
• Court: Illinois Supreme Court
• Parties: GILLESPIE et al. v. FULTON OIL & GAS CO. et al.

236 Ill. 188

86 N.E. 219

GILLESPIE et al.

v.FULTON OIL & GAS CO. et al.

Supreme Court of Illinois.

Oct. 26, 1908.

Appeal from Appellate Court, Fourth District, on Appeal from Circuit Court, Crawford County; E. E. Newlin, Judge.

Suit by E. N. Gillespie, trustee, and others, against the Fulton Oil & Gas Company and others. From a judgment of the Appellate Court affirming a decree dismissing the bill for want of equity, plaintiffs appeal. Reversed and remanded.

George B. Gillespie and A. M. Fitzgerald (Charles Gibbs Carter, Hamlin, Gillespie & Fitzgerald, and Callahan, Jones & Lowe, of counsel), for appellants.

George W. Jones, for appellees.

E. N. Gillespie, trustee, filed a bill in the circuit court of Crawford county against the Fulton Oil & Gas Company, S. C. Bowman, T. N. Rogers, and Walter Hennig, praying for an injunction, an accounting, the appointment of a receiver, and the cancellation of certain oil and gas leases executed by S. C. Bowman and wife to Rogers and by him assigned to Walter Henning. All of the defendants below answered the bill, and, replications having been filed, the cause was heard by the court upon the bill, answers, replications, and proofs submitted in open court. The circuit court found the issues for the defendants, and dismissed the complainant's bill for want of equity. This is an appeal from a judgment of the Appellate Court for the Fourth District affirming the decree of the circuit court.

In his amended bill, upon which the cause was heard, appellant alleges that on the 17th day of May, 1905, appellee S. C. Bowman, then being the owner in fee of the west side of the N. W. 1/4 of the N. E. 1/4 and the N. E. 1/4 of the N. W. 1/4 of section 11, township 8 N., of range 14 W., executed a lease in writing, commonly called an ‘oil and gas lease,’ to T. E. Pierce for said premises, for the purpose of being drilled and operated for oil and gas, for a term of five years from the date thereof, and as much longer as gas or oil should be found in paying quantities on said premises, and that such lease was duly assigned for a valuable consideration, in writing, on the 14th day of October, 1905, by T. E. Pierce to appellant, Gillespie, in trust, for the joint benefit of himself and others, and that said lease, together with the assignment thereof, was duly recorded in the recorder's office of Crawford county, state of Illinois, on the 15th day of June, 1906. The bill recites the several provisions of the lease according to their legal effect, and makes reference to a copy of the lease, which is attached to the bill

‘In consideration of the sum of one dollar,

‘In consideration of the sum of one dollar, the receipt of which is hereby acknowledged, S. C. Bowman, party of the first part, hereby grant and lease unto T. E. Pierce, parties of the second part, all the oil and gas in and under the following described premises: All that lot of land situated in the township of _____ in _____ county, state of Illinois, described as follows, to-wit: West side of N. W. of N. E. 1/4 of Sec. 11, T. 8, R. 14, west; and N. E. 1/4 of N. W. 1/4 of Sec. 11, T. 8, R. 14, west, all in Crawford county, Illinois, containing fifty acres, more or less, together with the right to enter thereon at all times for the purpose of drilling and operating for oil and gas, and to erect and maintain all buildings and structures and lay pipes necessary for the production and transportation of oil and gas. To have and to hold the above described premises for five years from the date hereof, and as much longer as oil or gas is found in paying quantities on said premises, on the following conditions:

‘Second parties shall, within twelve months from the date hereof, drill a test well upon said premises. If gas is found in sufficient quantities to transport, second parties agree to pay first parties the sum of $100 per year for the gas produced from each well from which gas is transported, payable annually, when a market is found for the gas, and first parties to have gas, free of cost, to heat and light one dwelling house, to be transported at first party's cost. If oil is found in paying quantities the first party shall have oneeighth part of all oil produced and saved from said premises, to be delivered in the pipe line with which second parties shall connect their wells. The party of the first part grants the further privilege to the party of the second part of the right of way over and across said premises to the place of operating, together with the exclusive right to lay pipe lines to convey oil and gas, the right to remove any machinery and fixtures placed on said premises by them, doing the least possible damage to said premises; and the party of the first part reserves the right to use and enjoy said premises for the purpose of tillage and all purposes not inconsistent with the objects and purpose of this lease, except such part as may be necessary for the purpose above specified. The second parties to lay all pipes deep enough under the ground so as not to interfere with the cultivation of the soil. Second party hereby agrees to pay any damage done to growing crops by the laying pipes and to leave the tiling in as good order as the same is found. In case no well is completed on said premises within twelve months from this date, the parties of the second part shall pay the party of the first part a rental of twenty-five cents per acre per year, to be paid annually, counting from the expiration of said twelve months. It is further agreed that in case no paying well is completed on said premises within five years from the date hereof, this grant shall be null and void without further agreement of the parties hereto. No well shall be drilled within two hundred feet of any dwelling house without a written permit from the first party. The second party shall have the right to use sufficient gas and water to run all machinery for operating said wells and the right to remove all its property at any time, but without interference with first party's water supply. Upon the abandonment by second party of the premises, or upon the expiration of the rights and privileges of the second parties under the provisions hereof, the second party agrees to execute full release to party of first part. The parties of second part hereby agree to complete test well in _____ county, Illinois, on or before the _____ 190 _, or forfeit all rights under this lease. It is understood between the parties of this agreement that all conditions between the parties hereunto shall extend to their heirs, executors, administrations, successors and assigns.

‘In witness whereof the parties hereunto have set their hands and seals this 17th day of May, 1905.

‘S. C. Bowman. [Seal.]

‘T. E. Pierce. [Seal.]’

‘Witness: T. E. Pierce.’

The following is a copy of the assignment of the lease as set out in the amended bill: ‘This agreement, made and entered into this 14th day of October, 1905, by and between T. E. Pierce, _____, Ill., first party, and E. N. Gillespie, of Freeport, Pa., of the second party, witnesseth: That the said party of the first part, for and in consideration of the sum of one dollar and other consideration to him in hand paid by the party of the second part, has sold, transferred and assigned and set over all his right, title, interest and claim on the within lease. In witness whereof the party of the first part has set his hand and seal the day and year above mentioned or written. T. E. Pierce.’ A certificate of acknowledgment of a notary public appears on this instrument.

After averring that appellant had kept and performed all of the covenants in said lease, and that he was able and willing to go on in good faith with the prompt performance of all of the covenants in said lease to be by him performed, the bill charges that on the 20th of August, 1906, without the consent or authority of appellant or any one interested with him in said lease, and in violation of appellant's rights under his leases, appellee S. C. Bowman pretended to lease said premises for oil and gas to T. N. Rogers, which said lease to Rogers was duly recorded in the recorder's office of Crawford county on August 31, 1906, which said pretended lease to T. N. Rogers the bill avers was taken with notice and knowledge of the prior lease given to T. E. Plerce and by him assigned to appellant. The bill alleges that on December[236 Ill. 194]19, 1906, after the filing of the original bill herein, a second lease from said Bowman to said T. N. Rogers was filed for record; that said second lease was acknowledged September 8, 1906, and is in all respects similar to the first lease, except in the first lease there was an agreement that Bowman, the lessor, would stand between the said lessee and his assigns and Pierce and pay all costs of any litigation that might be instituted on account of appellant's lease; that the second lease made to appellee Rogers omitted this indeminity clause, but the same agreement was made by a separate writing; that the first lease made to Rogers was by him assigned to the Fulton Oil & Gas Company, and the second lease to Rogers was assigned to Walter Hennig. The amended bill charges that the said Walter Henning, either on his own account or on behalf of the Fulton Oil & Gas Company, conspired with said Bowman to injure and defraud the said complainant by wrongfully taking possession of the premises, and boring and completing thereon a producing oil well of great value, from which large quantities of oil have been taken, and that said appellees are about to drill other wells on the premises, and have done, and are doing, irreparable damage to the premises and to the estate of appellant and his associates by depriving them of the oil and gas on said premises, which appellant claims he is entitled to; that appellee Bowman refuses to permit the appellant and his associates to go upon the premises and to operate for oil and gas under said lease. The...