Pittsburg Vitrified Paving & Building Brick Co. v. Bailey

• Citation: 76 Kan. 42,90 P. 803
• Parties: PITTSBURG VITRIFIED PAVING & BUILDING BRICK CO. v. BAILEY et ux.
• Decision Date: 08 June 1907
• Court: United States State Supreme Court of Kansas

90 P. 803

76 Kan. 42

PITTSBURG VITRIFIED PAVING & BUILDING BRICK CO. v. BAILEY et ux.

Supreme Court of Kansas

June 8, 1907

Syllabus by the Court.

B. and wife, owners of certain lands, entered into a written contract with a corporation, which by its terms granted to the corporation, in consideration of $1 and the agreements made by the company, the privilege of entering upon the land for a term of 10 years and boring gas or oil wells, etc and, in the event of the discovery of oil or gas in paying quantities, conveyed the title to such products for a specified royalty. The company agreed to complete a well within two years or to pay a rental of 25 cents per acre until a well should be completed on the premises. The contract also provided that the term might be extended indefinitely by the discovery of oil or gas on the premises or so long as either should be produced in paying quantities and the rental be paid thereon; also, that the company had the right to surrender the contract at any time, and be thereby discharged from all liability for the nonfulfillment thereof. Held such contract is not, strictly speaking, a lease of the premises, but constitutes a sale by B. and wife to the company of an option to exercise or not to exercise the privilege granted, as the company might choose.

Such contract is not void for want of mutuality. It is of the essence of an option contract that it is not mutual. The purchaser pays his money or does what he agrees to do for the privilege of choosing, whether or not he will perform or claim performance of the contract, and for the consideration received the seller parts with his right of choice.

Where certain terms of a contract are ambiguous, but such terms have been construed and acted upon by the parties interested such construction will be adopted, even though the language used may more strongly suggest another construction.

The amount paid at the execution of the contract and the rental thereafter paid is a sufficient consideration to support the contract in its entirety.

The agreed statement of facts entitles the defendant below to a judgment in its favor.

Error from District Court, Montgomery County; Thos. J. Flannelly, Judge.

Action by Samuel Bailey and Emma Bailey against the Pittsburg Vitrified Paving & Building Brick Company. Judgment for plaintiffs, and defendant brings error. Reversed and remanded.

This action was brought in the district court of Montgomery county to set aside an oil and gas lease executed by the Baileys to the brick company on 160 acres of land in that county. The case was tried upon the pleadings and an agreed statement of facts, and, the judgment being adverse to the brick company it comes here for a review of the legal questions involved. The contract involved in this action is as follows: “This agreement, made this 4th day of September, 1902, between Samuel Bailey and Emma B. Bailey, his wife, as party of the first part, and the Pittsburg Vitrified Paving & Building Brick Co., as party of the second part, witnesseth: That said party of the first part, in consideration of one dollar, receipt of which is by first party hereby acknowledged, and of the agreements hereinafter mentioned, has leased and let to the party of the second part, for the purpose and with the whole and exclusive right of drilling and operating for oil and gas, the following described land in Montgomery county, Kansas, to wit: The N. E. ¼ of Sec. eight (8) Twp. thirty-three (33), range sixteen (16) being a total of 160 acres more or less, together with right of way over the premises to the places of operation, right to lay pipes to convey water, oil and gas and to remove any machinery and fixtures placed on the premises by second party; party of the second part to have and to hold said premises for and during the term of 10 years from date hereof and as much longer as gas or oil shall be found in paying quantity or the rental paid thereon. The party of first part shall fully use and enjoy said premises for farming and all other purposes except such parts as may be necessary for purposes aforesaid, but no well shall occupy more than one half acre. All oil or gas shall belong to second party, provided, however, that second party shall deliver in tanks at the wells of the first party (⅛) one-eighth of all oil produced on these premises and pay the market price in cash for the same if the first party so desire and ($60) sixty dollars per year for each gas well producing five million or less cubic feet per day, and $100 per annum for each well exceeding that production, while and so long as gas shall be sold therefrom; gas and oil to second party free of cost for operating purposes upon said premises and vicinity and to first party free of cost for household use on the premises. No gas to be piped out of the county. No well shall be drilled within 300 feet of present buildings, without consent of first party. And pipe lines will be laid within 50 feet of residence on the above-described land as soon as gas can be procured, and without cost to first party, but in the event free gas furnished the rental will not be paid by second party. It is further agreed that the party of the first part shall have the right to case and own any well abandoned by second party. Second party agrees to complete a well on the premises within two years from date hereof, reasonably unavoidable delays and accidents excepted, or in default thereof pay to first party a yearly rental of 25c per acre for further delay from the time above specified for completing well until such well shall be completed; said rental shall be paid direct to first party on the first day of the 7th month after the date of this lease. A failure to complete such well or make such payments shall render this lease null and void. It is further agreed that second party shall have the right at any time to surrender this lease, and shall be thereby fully discharged from all damages and claims arising from...