Love Petroleum Co. v. Atlantic Oil Producing Co.

• Decision Date: 19 March 1934
• Docket Number: 31061
• Citation: 153 So. 389,169 Miss. 259,152 So. 829
• Court: Mississippi Supreme Court
• Parties: LOVE PETROLEUM CO. v. ATLANTIC OIL PRODUCING CO. et al

152 So. 829

153 So. 389, 169 Miss. 259

LOVE PETROLEUM CO. v. ATLANTIC OIL PRODUCING CO. et al

No. 31061

Supreme Court of Mississippi

March 19, 1934

Division B

February 19, 1934

APPEAL from chancery court of Rankin county, HON. A. B. AMIS, SR. Chancellor.

Suit by Love Petroleum Company against the Atlantic Oil Producing Company and others. From an adverse decree, complainant appeals. Affirmed.

Suggestion of error overruled March 19, 1934.

Affirmed. Suggestion of error overruled.

Green Green & Jackson, of Jackson, for appellant.

The contract must be construed most strongly against the lessee and in favor of the lessor.

Elliott on Contracts, sec. 1508; 9 Cyc. 988; 6 R. C. L., Contracts sec. 241; Elliott on Contracts, sec. 1537; Twin Hills Gas Co. v. Bradford Oil Corporation, 264 F. 440; Rechard v. Cowley, 80 So. 419; Sparks v. Albin, 241 S.W. 321; Gentry v. Fitzgerald, 212 S.W. 39; 1 Thornton's Law of Oil and Gas (4 Ed.), 258, sec. 85.

If the conduct of the parties subsequent to a manifestation of intention indicates that all the parties placed a particular interpretation upon it, that meaning is adopted if a reasonable person could attach it to the manifestation.

Restatement of Law, Contracts, sec. 235, American Law Institute; Ramsey v. Brown, 77 Miss. 124, 25 So. 151, 78 Am. St. Rep. 520; Powell v. Russell, 88 Miss. 549, 41 So. 5; Spengler v. Stiles-Tull Lbr. Co., 94 Miss. 780, 48 So. 966, 19 Ann. Cas. 426; Town of Como v. Pointer, 87 Miss. 712, 40 So. 260; Jones v. Miss. Farms Co., 116 Miss. 295, 76 So. 880; Candler v. Cromwell, 101 Miss. 161, 57 So. 554; Hessig-Ellis Drug Co. v. Parks, 150 Miss. 322, 46 So. 435; Y. & M. V. R. Co. v. Lake View Traction Co., 100 Miss. 281, 56 So. 393.

If, however, the court should say that the terms of this contract are plain and unambiguous, such as that the intent of the parties by reason of the date of the instrument and that it should continue for five annual periods is certain, then there can be no construction at variance with these terms regardless of the conduct of the parties.

Wood v. Morath, 128 Miss. 143, 90 So. 714; Brown v. Powell, 130 Miss. 496, 94 So. 457; Bearmen v. Dux Oil & Gas Co., 166 P. 199.

The lease was terminated by the act of the lessee in failing to pay or tender the rental on or before March 12, 1932, no well having been commenced.

Chism v. Hollis, 152 Miss. 772, 118 So. 713; Hammons v. Flewellen, 48 S.W.2d 813; Texas Co. v. Davis, 113 Tex. 325, 254 S.W. 304, 255 S.W. 601; Humble Oil Co. v. Davis, 296 S.W. 285; Young v. Jones, 222 S.W. 691; Habermel v. Mong, 31 F.2d 822; Gillespie v. Bobo, 271 F. 641; 1 Thornton's Law of Oil and Gas (4 Ed.), p. 239, sec. 78-a; McGraw v. Pulling, Freeman's Chancery 357, at page 373; Burge v. Purser, 141 Miss. 163, 106 So. 770; Crenshaw-Gary Lbr. Co. v. Norton, 111 Miss. 720, 72 So. 140, L. R. A. 1916E, 1227-N; Erie Crawford Oil Co. v. Meek, 81 N.E. 518; Rechard v. Cowley, 80 So. 419; Sparks v. Albin, 241 S.W. 321; Ford v. Cochrane, 223 S.W. 1041; Abell v. Bishop, 284 P. 525.

An "unless lease" automatically terminates as to any rights of the lessee thereunder upon default of the lessee in failing either to drill a well or to pay the delay rentals provided in the contract.

Epperson v. Helbron, 145 Ark. 566, 225 S.W. 345; 15 A. L. R. 597; Ohio Oil Co. v. Detamore, 165 Ind. 243, 73 N.E. 906; Dill v. Fraze, 169 Ind. 53, 79 N.E. 971; LeRosen v. North Central Tex. Oil Co., 126 So. 442; McNamer Realty Co. v. Sunburst Oil & Gas Co., 96 Mont. 332, 247 P. 166; Abell v. Bishop, 284 P. 525; Meek v. Cooney, 5 Ohio C. C. (N. S.) 266, 26 Ohio C. C. 553; Frank Oil Co. v. Belleview Gas & Oil Co., 29 Okla. 719, 119 P. 260; McKinley v. Feagins, 82 Okla. 193, 198 P. 997; Jones v. Murphy, 253 S.W. 634; Young v. McIllhenny, 116 S.W. 728; Chi.-Okla. Oil & Gas Co. v. Shertzer, 105 Okla. 111, 231 P. 877; Sparks v. Albin, 195 Ky. 52, 241 S.W. 321; Union Gas & Oil Co. v. Indian Tex. Petroleum Co., 202 Ky. 236, 259 S.W. 57; Risch v. Burch, 175 Ind. 621, 95 N.E. 123; Weiss v. Claborn, 219 S.W. 884; Gillespie v. Bobo, 271 F. 641; McLaughlin v. Brock, 225 S.W. 575; Garfield Oil Co. v. Champlin, 103 Okla. 209, 229 P. 824; Ireland v. Chatman, 87 Okla. 223, 209 P. 408; Hitson v. Gilman, 220 S.W. 140; N.W. Oil & Gas Co. v. Branine, 71 Okla. 107, 175 P. 533, 3 A. L. R. 344; Skien v. Injunction Oil & Gas Co., 80 Okla. 41, 193 P. 988; Duffield v. Michaels, 42 C. C. A. 649, 203 F. 820; Rosson v. Bennett, 294 S.W. 660; Lovenberg v. Henry, 140 S.W. 1079.

There was no payment or tender of payment prior to March 12, 1932, to extend the lease upon that date and the lease was by its provisions terminated.

Adkins v. Huntington Development Co., 168 S.E. 266; Garfield Oil Co. v. Champlin, 189 P. 515, 78 Okla. 91; Eastern Oil Co. v. Smith, 195 P. 773; Milner v. McGuire, 230 S.W. 421; Ireland v. Chatman, 209 P. 408.

Unless the lessor waives it, a tender of the rental to be good and to prevent a termination, or forfeiture of the lease, must be in actual money.

Guant v. Ala. Bound Oil & Gas Co., 281 F. 653; Milner v. McGuire, 230 S.W. 421; Ireland v. Chatman, 209 P. 408.

The check in question has never been cashed and there is no showing that it has ever been delivered, in fact, to anyone for the lessor or for the lessor's benefit.

Chapple et al. v. Kansas Vitrified Brick Co., 70 P. 666; Sparks v. Albin, 241 S.W. 323; 2 Thornton's Law of Oil & Gas (4 Ed.), p. 1644, sec. 878; Smith v. Root, 66 W.Va. 633, 66 S.E. 1005; Puritan Oil Co. v. Myers, 39 Ind.App. 695, 80 N.E. 851; Dorman Farms Co. v. Stewart, 157 Ark. 194, 247 S.W. 778; Jenkins v. Williams, 191 Ky. 165, 229 S.W. 94; Monarch Gas Co. v. Roy, 81 W.Va. 723, 95 S.E. 789; Epperson v. Helbron, 145 Ark. 566, 225 S.W. 345, 15 A. L. R. 597; Dill v. Fraze, 169 Ind. 53, 79 N.E. 971; Thomas v. Standard Development Co., 224 P. 870; Stephenson v. Stitz, 255 S.W. 812; New State Oil & Gas Co. v. Dunn, 182 P. 514; Kies v. Williams, 228 S.W. 40; Shaffer v. Marks, 241 F. 139; Williard v. Campbell, 11 P.2d 782, 91 Mont. 493; Boatman v. Andre, 12 P.2d 370; Thornton Law of Oil & Gas (4 Ed.), p. 445.

The court does not declare a pure forfeiture but simply finds that the contract has been terminated and is therefore null and void under its own terms.

Young v. Jones, 222 S.W. 691; Gillespie v. Bobo, 271 F. 641; Hammonds v. Flewellen, 48 S.W.2d 813.

The tender of payment here not only was insufficient, but under the universal weight of authority the tender has failed herein for the reason that it has not been kept good.

Smith v. Williams-Brooke Co., 111 Miss. 393, 71 So. 648; Frank v. Pickens, 69 Ala. 369; Smith v. Phillips, 47 Wis. 202, 2 N.W. 285; Collier v. White, 67 Miss. 133, 6 So. 618.

It is true that this is the general rule of construction of contracts such as leased between landlord and tenant. However, we submit that the facts in this case come within the exceptions to the general rule, that an oil and gas lease is construed in favor of the lessor and against the lessee, as pointed out by the weight of authority; in fact, by practically every case construing a gas and oil lease.

Thornton Law of Oil and Gas (4 Ed.), p. 445; Thomas v. Standard Development Co., 224 P. 870; Stephenson v. Stitz, 225 S.W. 812; Boatman v. Andre, 12 P.2d 370; New State Oil & Gas Co. v. Dunn, 182 P. 514; Kies v. Williams, 228 S.W. 40; Shaffer v. Marks, 241 F. 139; Williard v. Campbell, 11 P.2d 782, 91 Mont. 493.

Alexander, Alexander & Satterfield, of Jackson, for appellees.

There has been no forfeiture of the lease by failure of the lessees or their assigns to develop the same.

Thompson Oil & Gas, p. 599; Montfort v. Lanyon, 72 P. 784; Link v. States Oil Corp., 229 S.W. 693; Thuss Texas Oil & Gas, sec. 58, p. 83; Corsicana Petroleum Co. v. Owens, 110 Tex. 568, 222 S.W. 154; Frost v. Thomas, 238 S.W. 305; Texas Co. v. Davis, 113 Tex. 321, 254 S.W. 304, 255 S.W. 601.

The lease permitted rental payments at any time during the month of March.

Link v. States Oil Corporation, 229 S.W. 693; Bailey v. Williams, 223 S.W. 311; Gillespie v. Fulton Oil & Gas Co., 86 N.E. 226; Rhodes v. Mound City Gas, Coal & Oil Co., 104 P. 851; Blodgett v. Lanyon Zinc Co., 120 F. 898; Warren Oil & Gas Co. v. Gilliam, 207 S.W. 698.

All of counsel's cases assume the existence of an ambiguity. Until there is in fact an inconsistency between two positive statements, which results in an ambiguity, we submit that cases dealing with the rule of construction are not applicable. In the instant case the lessor did not say two inconsistent things, he stated in effect that the lessee could pay rentals on any day during March. Since no particular day was stated, neither we nor the appellant can furnish a definite date. If appellant has the right to select the twelfth, the appellees have the same right to select any other day.

Both the acts of the lessor and of its agent, the depository bank, constitute a waiver of rental payment.

Thornton Oil & Gas, secs. 182, 183; White v. Daniels, 220 S.W. 161; Lieber v. Ouachita Natural Gas & Oil Co., 95 So. 538; Summers, Oil & Gas, p. 504; Mills, Oil & Gas, sec. 94; Leonard v. Burch-Everett Co., 72 So. 749.

Though it was unnecessary to make further tender, the payment actually made to lessor and retained by him, constitutes a waiver even though then past due.

Ohio Valley Oil & Gas Co. v. Irvine, 192 Ky. 766.

It is fundamental that a tender having been refused for one reason is a waiver of all other grounds for refusal.

Bowers, Law of Waiver, p. 56; Mills, Law of Oil & Gas, sec. 92, p. 142; Thuss, Texas Oil & Gas, sec. 62, p. 87; Milner v. McGuire, 230 S.W. 421; Summers, Oil and Gas, p. 356, sec. 112.

Argued orally by Forrest B. Jackson, for appellant.

Ethridge P. J., Griffith J. delivered the...