Monarch Oil, Gas & Coal Co. v. Richardson

• Decision Date: 13 February 1907
• Citation: 99 S.W. 668,124 Ky. 602
• Parties: MONARCH OIL, GAS & COAL CO. v. RICHARDSON.
• Court: Kentucky Court of Appeals

99 S.W. 668

124 Ky. 602

MONARCH OIL, GAS & COAL CO. v. RICHARDSON.

Court of Appeals of Kentucky.

February 13, 1907

Appeal from Circuit Court, Wayne County.

"To be officially reported."

Action by J. R. Richardson against the Monarch Oil, Gas & Coal Company to cancel a coal, oil, gas, and mineral lease. From a judgment for plaintiff sustaining a demurrer to defendant's answer, defendant appeals. Reversed with directions to proceed in conformity with the opinion.

Joe Bertram, for appellant.

Harrison & Harrison, for appellee.

CARROLL C.

On October 10, 1898, appellee entered into a contract with Nelson & Ramsey, who assigned the contract to appellant. The material parts of the contract necessary to a consideration of the question involved in this litigation are as follows "In consideration of the mutual covenants and agreements herein contained, and the further sum of one dollar in hand paid, first party has granted and do hereby grant to second party, the exclusive right for the sole and only purposes of operating for coal, oil, gas, ores and other minerals, that certain tract of land [describing it]. * * * Terms of lease twenty years or so long as oil, gas, or any of the above substances are obtained in paying qualities. The party of the second part further covenants with the party of the first part that he will give the party of the first part the full equal pro rata share of onetenth of all the oil and minerals produced and saved on the above described property, the said one-tenth to be set aside in the pipe line when one is constructed, and should gas be found in paying quantities to justify party of the second part in marketing the same, the consideration in full to the party of the first part, instead of the one-tenth royalty, shall be five dollars per month for the gas from each well so long as it shall be sold therefrom second party to commence a well on the premises within one year from the date hereof, or pay thereafter an annual rental of sixteen dollars each payable annually. * * * It is further agreed that the party of the second part shall have the right at any time to surrender this lease to the party of the first part and thereby be fully discharged from any and all damages arising from any neglect or nonfulfillment of the foregoing contract." In 1906 appellee instituted this action for the purpose of having the contract canceled upon the ground that appellant had failed and refused to commence a well or explore, operate, or develop the premises leased for the production of any of the products mentioned in the contract alleging that the leased premises were located in the oil fields of Wayne county, adjacent to lands that had been operated and developed for the production of oil and gas which had been obtained and marketed in large and remunerative quantities to the great benefit and profit of the lessors thereof under leases and contracts similar in terms, conditions, and provisions to the contract here in question; that the contract was executed for the sole purpose and condition that the lessees should explore, operate, and develop the premises for the production of oil and other minerals mentioned, and that the failure of appellant to develop or attempt to develop the premises inflicted great and irreparable injury and damage on appellee, and is depriving him of profits and privileges that he would have received if the land had been developed in accordance with the spirit of the contract. He further averred that the appellant was insolvent, and that there was no other adequate remedy except to cancel the contract. Appellant, in its answer, after traversing the averments of the petition affirmatively averred that, under the contract, it had the right to commence a well on the premises within one year from the date of the lease, or pay thereafter an annual rental of $16, and that, although it had not commenced a well, it had paid the annual rental each year, the last payment being made in October, 1905, the next annual payment not being due until October, 1906, and that appellee had accepted each annual installment of rent. It further averred that it was...