Kachelmacher v. Laird

• Decision Date: 02 July 1915
• Docket Number: 14538
• Citation: 92 Ohio St. 324,110 N.E. 933
• Parties: Kachelmacher v. Laird Et Al.
• Court: Ohio Supreme Court

110 N.E. 933

92 Ohio St. 324

Kachelmacher v. Laird Et Al.

14538

Supreme Court of Ohio

July 2, 1915

Contracts-Implied covenants-Oil and gas lease-Written conditions control when-Forfeiture for delay in drilling-Defeated by payment and lease continued, when-Deposit in bank payment to lessor when-Effect of refusal to withdraw same.

1. There can be no implied covenants in a contract in relation

to any matter that is specifically covered by the written terms of the contract itself.

2. There being an express condition written in an oil and gas

lease as to the right of tile lessor to declare forfeiture thereof for delay in drilling the first well, no covenant authorizing forfeiture for such delay can be implied in direct opposition to the plain provisions of the written contract.

3. Where a lease of land for ten years for oil or gas purposes

provides that the lease shall be void if 110 well is drilled within four months from the date thereof unless the lessee shall pay the lessor the sum of fifty dollars for each and every year that the drilling of such well is delayed, payment of such sum by the lessee to the lessor, according to the terms and provisions of the lease, prevents forfeiture and continues the lease in force during the year for which such payment is made.

4. If such lease specifically provides that the amount to be paid for delay in drilling may be paid by the lessee to a bank named in the lease to the credit of the lessor, and payment is made in accordance with the terms of the lease, the lessor cannot avoid the effect of such payment by refusing to with- draw the sum from the bank to which it was paid by his direction.

When so paid said fund became the property of the lessor and can be lawfully paid to no one except upon his order.

The defendants in error, on the 14th day of April, 1910, executed and delivered to one S. S. Smith an oil and gas lease on their premises, consisting of about eight-tenths of an acre of land, which lease was, on May 10, 1910, assigned to the plaintiff in error. On March 4, 1911, the defendants in error filed their petition in the common pleas court of Perry county and sought an order requiring the plaintiff in error "to drill and develop plaintiff's said land; or that said lease may be cancelled and ordered surrendered up."

Upon hearing on appeal, in the court of appeals of Perry county, the conclusions of law were favorable to the lessors, the defendants in error, and decree was entered as prayed, upon the following finding of facts:

"1. On the fourteenth day of April, 1910, and ever since that date, the plaintiffs were the owners in fee simple of a tract of land in section 30, township 14, range 15, Coal township Perry county, Ohio, containing approximately eight-tenths (8/10) of an acre of land.

"2. That on the fourteenth day of April, 1910, the plaintiffs executed and delivered to one S. S. Smith an oil and gas lease on said real estate, a copy of which lease was attached to the petition and marked 'Exhibit A.'

"3. That on the third day of May, 1910, said Smith made a written assignment of said lease to the defendant, N. L. C. Kachelmacher. "4. That by the terms of said lease the plaintiffs granted to said Smith all the oil and gas in and under said tract of land and also said tract of land for the purpose of operating thereon for oil and gas; said grant to be for the term of ten (10) years from the date thereof and as much longer as oil or gas was found in paying quantities, not exceeding in the whole the term of twenty (20) years from the date thereof, the lessee yielding and paying to the lessors one-eighth (1/8) part or share of all the oil produced and saved from the premises, delivered into pipe lines to the lessors' credit and at the rate of two hundred dollars ($200.00) per year for each gas well when utilized off the premises and free use of gas for one dwelling house now on said premises, if found in paying quantities, lessors making their own connections for such gas at the well at their own risk and expense.

"5. That said lease contained the following provision:

"'Provided, however, that if a well be not completed on said premises within four months from the date hereof, unavoidable accidents excepted, then this lease and agreement shall be and become null and void unless the lessee, within each and every year after the expiration of the time above mentioned for the completion of a well, elects to and does pay the sum of fifty dollars ($50.00) until a well is completed thereon; if the lessee elects to pay, the same may be paid direct to the lessors or may be deposited to their credit at The Miners & Merchants Bank, Nelsonville, Ohio.'

"6. No well has been drilled by the defendant or by anyone else on said land so leased by the defendant.

"7. The defendant, in each of the years 1910, 1911, 1912 and 1913, deposited to the credit of the plaintiffs in The Miners & Merchants Bank of Nelsonville, Ohio, the sum of fifty dollars ($50.00), said respective sums being the payments provided for in said lease under the paragraph set forth in special finding No. 5, and notified the plaintiffs of such deposits, but plaintiffs did not draw these deposits.

"8. At the time the plaintiffs made the lease on the land described in the petition to S. S. Smith on April 14, 1910, no oil wells had been drilled in what is now known as the New Straitsville field in which plaintiffs' lands were located and that territory was what was known as 'wild cat' territory.

"At that time the first well in the field now known as Lawson well No. 1 was in process of drilling on the Lawson tract and distant about eighty-six and one-half (861) feet from plaintiff's land.

"9. An oil well in the the vicinity of plaintiffs' land must be drilled from 3000 to 3200 feet in depth and costs approximately ten thousand dollars ($10,-000'.00).

"10. At the time plaintiffs made the lease on the land in question to S. S. Smith, the territory in which plaintiffs' land was located and the territory now known as the New Straitsville field was 'wild cat' territory and except one well known as the Bessie well which was distant about 3000 to 4000 feet. from plaintiffs' land, there were no wells in what is now known as the New Straitsville field; there were no wells north, south or east of plaintiffs' land and excepting the Bessie well distant 3000 to 4000 feet to the west, the nearest well to the west was two miles distant.

"11. At the time plaintiffs made their lease to Smith the customary rental paid landowners in that territory for time that would elapse until wells were drilled, ranged from twenty-five cents to one dollar an acre a year.

"12. The territory in which plaintiffs' land is situated is what is known as the spotted field and dry holes are often found between and near to good producing wells.

"13. Considering the character and cost of the wells in that field, the nature and uncertainty of the sands and formations, reasonably conservative drilling would contemplate that one well should be drilled to approximately each fifteen to twenty acres of land.

"14. After plaintiffs made the lease in question to the defendant Smith the Lawson well No. 1 located eighty-six and one-half (864) feet east of plaintiffs' land and Lawson well No. 2, located 4384 feet east of plaintiffs land were both drilled in and were producing wells. The Moody well located On an acre of land carved out of the Lawson tract and which well was two hundred (200) feet east of plaintiffs' land and two hundred (200) feet distant from Lawson well No. 1, proved a dry hole. On the Wion tract of 105 acres, immediately west of the plaintiff's land, five wells were drilled. The first one being completed about December, 1910, the second in August, 1911, the third in February., 1912, the fourth in February, 1913, the fifth in July, 1913.

"Wion well No. 1 was distant about 152 feet from the Laird land started out with a production of ten barrels a day which gradually decreased until the well was abandoned. Wion well No. 2 started off at 110 barrels a day, then dropped to about 80 barrels for a month or six weeks and then gradually decreased to about eight barrels per day. This well was located 650 feet west of Wion well ...