Heller v. Dailey

• Decision Date: 02 April 1902
• Citation: 28 Ind.App. 555,63 N.E. 490
• Parties: HELLER v. DAILEY et al.
• Court: Indiana Appellate Court

28 Ind.App. 555

63 N.E. 490

HELLER

v.DAILEY et al.¹

Appellate Court of Indiana, Division No. 1.

April 2, 1902.

Appeal from circuit court, Wells county; Jno. W. Headington, Special Judge.

Suit by Lemuel Heller against Michael Dailey and others. From a decree for defendants, plaintiff appeals. Modified.

Mock & Sons, for appellant. Dailey, Simmons & Dailey, Sharpe & Sturgis, and Mason & Mason, for appellees.

BLACK, J.

The appellant, Lemuel Heller, in March, 1899, sued the appellees, Michael Dailey, Frank Eddington, Orlando H. Britton, and Frederick E. Britton. There was another defendant, Frank L. Waring, whose death was suggested pending the proceedings in the court below, without substitution of a representative. The action was upon a written contract dated April 22, 1896, signed and acknowledged by the appellant and the appellees Dailey and Eddington, by the terms of which the appellant, of the first part, granted to the appellees Dailey and Eddington, of the second part, “all the oil and gas in and under” a certain tract of 80 acres of land, with the right to enter thereon at all times for the purpose of drilling and operating for oil or gas, to erect structures, lay pipes, etc., excepting and reservingto the appellant the one-sixth part of all oil produced and saved from said premises, to be delivered, etc.; “to have and to hold the above premises on the following conditions: If gas only is found, second party agrees to pay two hundred dollars each for the product of each well while the same is being used off the premises, and the first party to have gas free of cost to heat all stoves in dwelling houses and for domestic purposes during the same time. When first party shall request it, second party shall bury all oil and gas lines, and pay all damages to growing crops by reason of burying or removing said pipe lines or other operations. In case no well is completed within sixty days from this date, then this grant shall be null and void, unless second party shall pay the first party one dollar per day in advance for each day thereafter such completion is delayed. The second party shall have the right to use sufficient gas and oil or water to run all machinery for the operation of said wells, and also the right to move all its property at any time; and it is further agreed by the party of the second part that they shall drill a well at the rate of one well every sixty days after date, until five wells are completed. In case any well is not completed in said sixty days, as above provided for, parties of the second part shall pay one dollar per day in advance until said well is completed. It is understood between the parties to this agreement that all the conditions between the parties hereunto shall extend to their heirs, executors, and assigns.” It was alleged in the complaint that on the 22d of April, 1896, the appellee Eddington assigned in writing all has interest in the lease to the appellee Dailey, who on the 28th of the same month assigned in writing an undivided one-half interest therein to the defendant Waring; that on the 17th of June, 1896, the lease with these assignments was duly recorded, etc.; that Dailey and Waring assigned the lease to the Capitol Oil Company, which had since gone into the hands of a receiver and had become defunct; that the receiver sold and assigned the lease to the appellees Britton and Britton, “who accepted the same and took and now hold possession of the said lease and premises”; that pursuant to the lease the defendants drilled two wells in the premises within 120 days, “but have failed to either drill, complete or construct any other wells thereon or to pay the rental for the delay in the construction of the remaining three wells.” The amount of the “daily rental” alleged to have accrued under the lease on each of these three wells not drilled was averred, all of which, it was alleged, remained unpaid and due the appellant from the defendants, and judgment was demanded for the amount thereof. The answer of Britton and Britton was a general denial. Dailey and Eddington each filed an answer in seven paragraphs. The appellant relies for the reversal of the judgment upon alleged error in overruling his demurrers to the third, fourth, and fifth paragraphs, severally, of each of these answers, and in overruling his motion for a new trial.

In the third paragraph of each answer it was pleaded, in substance, that before the expiration of 180 days from the execution of the lease, and when it was owned by Dailey and Waring, and when no rent was due upon it, by mutual consent and agreement between the appellant and Dailey and Waring, the lease was surrendered by them to the appellant, and he, in consideration of the surrender, released the parties to the lease and their assigns from the payment of rent thereafter. In the fourth paragraph of each of the answers the pleader alleged, in substance, that at a designated time, when no rent was due, the owners of the lease, Dailey and Waring, accepted a proposition of the lessor that, if Dailey and Waring would assign it to the Capitol Oil Company, he would accept that company for and instead of the lessees and Waring, and would release them from any further obligation under the lease; and that the owners of the lease did assign it to the company, which then and there took possession of the premises under the lease. In the fifth paragraph of the answer of Dailey he alleged that before the completion of the second well, in 1896, he was about to sell the lease to the Capitol Oil Company, and was negotiating with Dye, agent for that company, for such sale; that Dailey in company with Dye, called upon the appellant, and Dailey informed the appellant of such negotiation, and that such sale would be made if satisfactory to appellant, and if he would discharge Dailey, Eddington, and Waring from liability accruing under the lease thereafter, whereupon appellant informed Dye and Dailey that he would be glad if such sale would be made, and that he would release said defendants from all liability under the lease; that in pursuance of said agreement said defendants did sell and assign the lease to the Capitol Oil Company; that Dailey would not have sold and assigned the lease but for the appellant's promise and agreement to discharge him from liability under the lease; that in pursuance to said sale the company took possession of the premises and the oil well thereon, and drilled and constructed an additional oil well thereon, and operated said wells and produced oil therefrom, and paid appellant a share of oil produced from the wells as rental and royalty according to the terms of the lease, which rental and royalty the appellant accepted; and that at the time of such sale to the company there was no rental or other liability due in favor of the appellant against Dailey under the lease, and all rentals and other sums under the lease up to that time had been fully paid. In the fifth paragraph of Eddington's answer he alleged an agreement and promise of the appellant, prior to 180 days from the date of the lease, that, if the lease were sold and assigned to Dye, the appellant would discharge the lessees and Waring from liability and rentals thereafter accruing; that, pursuant to that agreement, the owners of the lease sold and assigned the lease to Dye, and surrendered to him the possession of “the same”; and that neither of “said defendants have since said date owned any interest in said lease.” It may not be wholly irrelevant to remark that in each of these answers the first paragraph was a general denial and the second an answer of payment; that a demurrer to the sixth paragraph of each answer was sustained; and that the seventh paragraph of each answer, to which no demurrer was addressed, was in substance like the fifth paragraph of the separate answer of Eddington, above mentioned, except that the assignment was represented as having been made to the Capitol Oil Company.

In cases involving contracts relating to the finding and taking of oil and gas from land, it is not always easy to state or to apply legal definitions. We must seek for practical results, not inconsistent with the principles of law relating to analogous matters, but maintaining, so far as may be, the rights of parties to contract with reference to their own property. By the terms of this contract the landowner “grants” to Dailey and Eddington “all the oil and gas in and under” the land, with the right to enter upon the land at all times for the purpose of drilling and operating for oil or gas, and to erect and maintain all buildings and structures and to lay all pipes necessary for the protection and transportation of the oil or gas taken from the land, excepting and reserving a certain portion of the oil produced. No other interest in the land is transferred, the right of the landowner to cultivate the soil being recognized. The contract is not in the form of a lease of the land, or any portion of it, for years or for life or in perpetuity, with an accompanying right, as an incident of the letting, of taking the oil and gas beneath the surface. Where a thing is mentioned in the premises of a deed as the thing granted, and another thing is mentioned as the thing granted in the habendum, unless that which is newly so mentioned is impliedly mentioned in the premises it will not pass. Elph. Interp. Deeds, 212, 213. The grant is not limited to any period of time, though, as in the case of a grant of the coal in certain land, it would cease to be operative whenever it should be found that no oil or gas was beneath the soil, or none that could be taken with benefit; whereas a lease of land, properly so called, would continue in force according to its provisions until the end of the term. The contract is in effect a grant of the right to take all the oil and gas that may be found and taken by making wells as prescribed upon the particular tract of land, with...