Murdock-West Co. v. Logan Et Al.

• Decision Date: 02 February 1904
• Docket Number: 7999
• Parties: Murdock-West Co. v. Logan Et Al.
• Court: Ohio Supreme Court

69 N.E. 984

69 Ohio St. 514

Murdock-West Co. v. Logan Et Al.

No. 7999

Supreme Court of Ohio

February 2, 1904

Oil and gas lease - For certain time or as long as oil found in paying quantities - Conditions of lease ambiguous - Question of rent payment - Interpretation of contracts - Damages - Lessor and lessee.

1. An oil lease for and during the term of sixty days from the date thereof "and as much longer thereafter as oil or gas shall be found in paying quantities," contained the following language: "The drilling of one well to be commenced on these premises within sixty days from the execution of this lease, unavoidable delay excepted, and in case of failure to commence drilling of a well within such time as herein specified, the parties of the second part agree to pay the parties of the first part, for such delay the sum of fifty dollars per month from the time limited for completing such well, payable by check in advance or directly to the party of the first part, and the parties of the first part agree to accept such sum as full consideration and payment for such delay until one well shall be completed unless this lease is surrendered before said payment is due. It is hereby expressly agreed that a failure to commence, prosecute and complete the drilling of any well or wells or to pay any rental hereinbefore mentioned within the time limited for the same shall render this lease null and void." This language is ambiguous, and whether the payment of fifty dollars per month as therein stipulated may be construed as payment of rent, thereby extending the term of the lease, as claimed by the lessees, or whether it must be construed as a payment of liquidated damages for delay, as is claimed by the plaintiffs, is not decided; but on the hypothesis that the term was extended for sixty days in addition to the original term, the lessees could not hold over longer than such additional time unless they actually found and produced oil in paying quantities within that time. A finding of indications of oil or the existence of conditions which rendered it probable that oil in paying quantities would be found if the well were operated in a certain way, is not sufficient of itself to extend the term of the lease.

2. The stipulation in the lease that the term shall continue "as much longer thereafter as oil or gas shall be found in paying quantities," requires that oil or gas shall be actually discovered and produced in paying quantities within the term.

3. Upon the hypothesis that the payment of fifty dollars per month under the stipulations of the lease, was payment of rent, the failure of the lessees to pay fifty dollars for the month from April 22, 1900, to May 22, 1900, rendered their lease null and void from and after April 22, 1900.

The plaintiff in error, a partnership, is a lessee from John Lightner and wife under a lease for operating and drilling for petroleum oil and gas, dated May 23, 1900; and this suit was instituted by the plaintiff in error to enjoin the defendants in error from operating under a prior lease for like purposes, dated December 22, 1899. The court of common pleas granted a perpetual injunction as prayed for, against the defendants in error. On appeal, the circuit court found for the defendants, making a special finding of facts, and entered a decree thereon for the defendants. Other facts appear in the opinion.

Messrs McConica & Dwiggins; Mr. C. C. Middleswart and Mr. M. R Paterson, for plaintiffs in error.

Mr. A. D. Follett; Mr. A. Leo. Weil and Mr. Charles M. Thorp, for defendants in error.

DAVIS J.

The lease to the defendants in error, also defendants below contained the following clause: "The parties of the second part, or their assigns, to have and to hold the said premises, for the said purpose only, for and during the term of sixty (60) days from the date thereof, and as much longer thereafter as oil or gas shall be found in paying quantities." The defendants did not commence to drill a well on the leased lands within sixty days from the date thereof and therefore no oil or gas was found within that time; so that if the rights of the defendants were to be determined solely by that clause, their lease expired on the twenty-second day of February, 1900. But the defendants claim that the term of their lease was extended to April 22, 1900, and that within that time oil in paying quantities was found which entitles them to a continuance of the lease thereafter so long as oil or gas shall be produced in paying quantities. The basis of this contention is the principle that when a lessee holds over after the expiration of the term of the lease, the lessor has the option to treat him as a trespasser or as a tenant under the terms of the original lease. The lessor, John Lightner, in this instance accepted...