Rawlings v. Armel

• Decision Date: 11 February 1905
• Docket Number: 13,950
• Parties: R. C. RAWLINGS et al v. JOHN H. ARMEL et al
• Court: Kansas Supreme Court

79 P. 683

70 Kan. 778

R. C. RAWLINGS et al v. JOHN H. ARMEL et al

No. 13,950

Supreme Court of Kansas

February 11, 1905

Decided January, 1905.

Error from Allen district court; OSCAR FOUST, judge.

STATEMENT.

THE plaintiff executed and delivered to the Kansas & Texas Oil, Gas and Pipe-line Company a gas and oil lease of his land, certain provisions of which, material to this controversy, are as follow:

"That the party of the first part, for and in consideration of the covenants and agreements hereinafter contained, to be performed and kept by the said second party, does hereby lease and let unto the party of the second part the exclusive right for two years from date hereof to enter upon and operate for and to procure oil and gas upon the following-described premises, situated in Allen county Kansas, to wit: . . .

"The party of the second part agrees to deliver to the party of the first part one-eighth (1/8) of the oil realized from said premises in tanks at the well, without cost to him, or pay the market price therefor in cash, at the option of the first party.

"If oil or gas is found on these premises all rights, benefits and obligations secured hereby shall continue so long as either can be procured in paying quantities and said second party is operating all oil-wells.

"If gas is found in any well or wells, first party is to have on demand sufficient gas for his own use on said farm of which said premises are a part and for the use of his tenants free and the second party is to have the remainder, and shall pay the first party therefor one hundred and fifty dollars ($ 150) per year for each well that does not yield over one million cubic feet of gas per day and for each additional one hundred thousand feet of gas that such well shall produce per day said second party shall pay to the said first party fifteen dollars ($ 15) per annum, the same to be paid annually in advance, whether the same be used or not. . . .

"In case no oil- or gas-well be drilled within thirty days from the 21st day of May, 1902, on said premises, all rights and obligations under this contract shall cease, at the option of the first party, unless the second party shall pay to the first party the sum of fifty dollars ($ 50) on or before twelve o'clock on June 20, 1902, it being hereby agreed that such payment shall entitle the second party to an extension of thirty days to the time limit to begin drilling as above set forth.

"The party of the second part further agrees to be operating wells on each tract of land herein described on which oil or gas is found in paying quantities within two years from this date and to continue to operate the same until said wells are exhausted. And to pay as rental of said lands for the uses herein specified until said wells are so operated the sum of one dollar ($ 1) per acre per annum after six months from the 21st day of May, 1902, for each piece of land in which wells have not been drilled and operated, same to be paid in advance each year.

"Second party agrees to drill not less than six (6) wells on said premises within eight months from date hereof, if oil is found in paying quantities. . . .

"The party of the second part shall have the right at any time after two years, if oil or gas is not found in paying quantities, to terminate this lease by notice in writing, surrendering the lease, and, if the same has been recorded in the office of the register of deeds of Allen county, by releasing the same of record, and shall thereafter be relieved from further obligations and liabilities under the same. . . .

"Upon the failure of the second party to comply with any of the conditions, covenants and agreements herein contained, this lease shall at once become null and void at the election of the said first party. And in that event said second party shall forfeit the right to remove any of the pipes, pipe-lines, machinery and structures necessary for the production, preservation and transportation of oil and gas produced on said premises, placed thereon by said second party, and the same shall become the property of said first party."

Written agreements for several extensions of time in which to commence drilling were made upon cash considerations. The first extension was made under the terms of the lease itself; all others were made as the result of negotiations between the parties. The contracts for these extensions recited that they were given for extensions of time to begin drilling operations. None of them purported to affect or modify any other provision of the lease. The last one is as follows:

"FIELD OFFICE K. & T. OIL, GAS AND PIPE-LINE CO.

"To J. H. Armel, Dr. No. 27. To amount of account as per bill and statement. September 19th, 1902. In consideration of the payment of $ 37.50, receipt of which is hereby acknowledged, extension of time to begin drilling for oil and gas under lease dated May 21st, 1902, is granted. This further extension of 15 days being from Sept. 19th to Oct. 4th, it being understood that unless a well is actually commenced by noon of Oct. 4th, 1902, said lease shall be subject to forfeiture at my option, as by the original terms of the same, and this extension shall not be construed to be in conflict with or alter any of the original agreements excepting as to time to commence drilling. Received from the K. & T. Oil, Gas and Pipe-line Co. $ 37.50 in full payment of above account.

(Signed) J. H. ARMEL."

Before noon of October 4 the lessee commenced drilling, and proceeded to sink two dry holes. About November 26 it pulled the casing from these holes, plugged them, ceased all further exploratory efforts, removed all material, machinery and tools from the land, and left the premises. On January 3 the lessor notified the lessee that the lease was forfeited for a failure to comply with its conditions. Later he demanded a return of the lease and a release of the premises to him. Subsequently to February 19, 1903, the lessee assigned the lease to the defendants Rawlings, Rosenthal, Light, and Breyfogle. On February 28, 1903, the lessor notified the assignees of the lease that it was null and void. No rent was either paid or tendered prior to March 17, 1903, and on that day the lessor commenced an action against the lessee and its assignees to forfeit and cancel the lease, alleging abandonment and non-payment of rent as grounds for relief. On the trial the parties gave testimony in explanation of their conduct, and officers of the lessee testified that it was not the intention of the lessee to abandon the land. A tender of rent at the rate of one dollar per acre for a year was shown to have been made by the assignees of the lease on March 28. The district court found all the allegations of the plaintiff's petition to be true, and rendered a judgment canceling the lease.

The following assignments of error affecting the judgment are made in this court:

"(1) That the court erred in refusing to admit testimony offered by defendants, to wit:

"'Q. Now, during the time of those payments, as near as you can Mr. Martin, you may simply state to the court what the understanding was between you and Mr. Armel as to what the purport of those extensions were.'

"(2) That the court erred in refusing to allow the following question to be answered, to wit:

"'Q. Now, did subsequent drilling, or has subsequent drilling, since that time, indicated whether or not the probability was there is oil between those two wells?'

"(3) That the court erred in refusing to allow the following questions to be answered, to wit:

"'Q. State to the court whether or not you, in your actions, had any thought or intention of abandoning the Armel land.'

"Q. State to the court whether or not the K. & T. company (meaning the Kansas & Texas Oil, Gas and Pipe-line Company) up...