Logan Natural Gas & Fuel Co. v. Great Southern Gas & Oil Co.

• Decision Date: 21 December 1903
• Docket Number: 1,205.
• Citation: 126 F. 623
• Parties: LOGAN NATURAL GAS & FUEL CO. v. GREAT SOUTHERN GAS & OIL CO.
• Court: U.S. Court of Appeals — Sixth Circuit

126 F. 623

LOGAN NATURAL GAS & FUEL CO. v. GREAT SOUTHERN GAS & OIL CO.

No. 1,205.

United States Court of Appeals, Sixth Circuit.

December 21, 1903

The bill in this case was filed by the appellee, who claims certain rights as assignee of two leases given by Noah Conrad and Anna E. Sheets, respectively, on May 4, 1898, to one Carr, conferring the exclusive right to operate on the lands described therein for gas and oil, against the appellant, who claims, as assignee, similar rights under leases executed by the same lessors on April 12, 1894, to the Fairfield Gas &amp Oil Company, which last-mentioned leases, as the bill states had been abandoned by the appellant at the time when the leases under which the appellee claims were executed. The bill alleges that the appellee took possession of said lands and that the appellant has since invaded the possession under claim of right acquired by its said leases, and is erecting a derrick and beginning a well for the purpose of taking the oil and gas in said lands, and intends to prosecute its said purpose. The relief prayed is that the appellant may be enjoined from further acts of trespass, and that the cloud upon the appellee's title created by the appellant's claims under the earlier leases may be removed. The appellant answered the bill denying that its said leases had been abandoned, claiming them to be in full force, denying that the appellee had at any time been in possession of the lands but admitting that the appellant had taken possession and was preparing and intending to operate thereon for taking the oil and gas, justifying itself under its leases. The bill was sustained at the hearing upon the pleadings and proofs in the Circuit Court, the presiding judge being of opinion that the lessee in the leases of 1894 had forfeited its claims thereunder by neglecting for so long a time to enter upon the performance of its own obligations under it, and a decree was entered granting the relief prayed.

M. A. Daugherty and Lawrence T. Neal, for appellant.

F. D. Turner and F. A. Durban, for appellee.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS Circuit Judge, having made the preceding statement of the case, .

The decisive question in this controversy is the one upon which the decree of the Circuit Court was turned; that is to say, the question whether the lessors in the leases to Carr, in 1898, had at that time the lawful right to grant the leases by reason of the abandonment or forfeiture of the former leases to the Fairfield Oil & Gas Company by the lessee therein.

The original leases to the Fairfield Oil & Gas Company were alike in all substantial particulars, and purported to grant the lands described to the lessee for the purpose only of operating thereon to obtain the oil and gas supposed to be contained therein, 'so long as oil and gas shall be found in paying quantities on said described lands, or the said second party, or his heirs or assignees, continue to operate a pipe line through the same. ' The consideration of the grant was that the lessee should deliver to the lessor one-eighth of all the oil found on the premises and delivered into tank or pipe line, and should give the lessor 'first mortgage bonds' in the amount of $2 and interest at 4 per cent. per acre for the number of acres leased, to be paid out of the net profits of the lessee in the business in which it was engaged, which bonds contained a reservation of the right to the lessee to throw up its leases and cancel the bonds, and the further agreement on the part of the lessee that if gas should be found it would furnish it to the lessor at his residence free of cost. No other time was stated in the leases for the termination of the grant than as above stated, and no time for the commencement and continuance of the contemplated operations on the part of the lessee was stipulated for in the terms of the contract. Neither the immediate lessee nor its assigns ever took possession or any steps toward the exploration of, or operating upon, the lands for oil or gas for more than four years after those leases were made, although it was frequently urged by the lessors to do so. One or more 'dividends' out of the profits of the company were declared to the lessors as contemplated by the bonds, but the latter declined or neglected to take them. Then, on May 4, 1898, the lessors made the leases to Carr, which were assigned to the appellee, as above stated.

The appellant contends that leases such as those to the Fairfield Oil & Gas Company are held by the Supreme Court of Ohio to grant an interest or estate in the land, and not...