Rich v. Doneghey

• Citation: 1918 OK 689,177 P. 86,71 Okla. 204
• Decision Date: 03 December 1918
• Docket Number: Case Number: 8480
• Parties: RICH v. DONEGHEY et al.
• Court: Supreme Court of Oklahoma

1918 OK 689

177 P. 86

71 Okla. 204

RICH v. DONEGHEY et al.

Case Number: 8480

Supreme Court of Oklahoma

Decided: December 3, 1918

Syllabus

¶0 1. Oil and Gas--Lease--Consideration--Termination--Mutuality--Surrender--"Tenancy at Will."

The owners of a tract of 60 acres of land executed an instrument, denominated an oil and gas lease, by the terms of which they granted, demised, leased, and let the same to another, his heirs, executors, administrators, and assigns, for the sole and only purpose of mining and operating for oil and gas, and of laying pipe lines, and of building tanks, power stations, and structures thereon, to procure and take care of said products. The grant was for a term of five years from date and as long thereafter as oil or gas, or either of them, was produced by said party. The instrument recited a consideration of $ 1 paid by the lessee to the lessors. The lessee agreed to deliver to lessors one-eighth of the oil produced and saved from the premises; to pay certain stipulated sum per annum for each gas well, and for gas utilized from each oil well. The lessee further agreed to complete a well on said premises within six months, or pay at the rate of $ 15 for each additional month such completion was delayed. The instrument contained the further provision that the lessee should have the right at any time, on payment of $ 1 to the lessors, to surrender the lease for cancellation, after which all payments and liabilities thereafter to accrue under and by virtue of its terms should cease and determine. In an action by the owners of the land to cancel the instrument and remove same as a cloud on their title commenced prior to the expiration of the term of five years. it appearing that no well had been commenced, but that the lessee had made timely payments or tender of all sums stipulated to be paid for delay in completing a well, held, (a) that the consideration recited in the face of the instrument is sufficient to support the grant of the exclusive right to occupy the land and explore the same for oil and gas and to take and remove such as may be found therein for the entire term specified, and also the right of the lessee, on compliance with the conditions expressed, to terminate the same; (b) that the agreement is not void for the want of mutuality; (c) that, although no well had been commenced on the premises, the lessors had not the option to refuse timely tender of payments for delay in completing a well and terminate the grant, or to compel a surrender thereof; (d) that the instrument does not create a tenancy at will within the operation of the rule that an estate at the will of one party is equally at the will of the other.

2. Case Overruled.

Brown v. Wilson, 58 Okla. 392, 160 P. 94, L. R. A. 1917B, 1184, on the questions herein decided, is overruled.

Owen, J., dissenting.

Error from District Court, Pontotoc County; Geo. C. Crump, Judge.

Action by M. P. Doneghey and others against Fred S. Rich. Judgment for plaintiffs, and defendant brings error. Reversed and remanded.

West, Sherman & Davidson, for plaintiff in error.

Prichard & Allen, for defendants in error.

MILEY, J.

¶1 This action was commenced in the court below on the 9th day of September, 1915, by defendants in error as plaintiffs therein, to cancel and remove, as a cloud upon their title to a certain tract of 60 acres of land an oil and gas lease which they had executed thereon and delivered to the plaintiff in error, defendant below, on the 20th day of December, 1914. There was judgment for the plaintiffs, to reverse which this proceeding in error was prosecuted. The pertinent provisions of the lease are as follows:

"Agreement, made and entered into the 29th day of December, 1914, by and between M. P. Doneghey and Sallie Doneghey, of Ada, Okla., party of the first part, lessors, and Fred S. Rich, of Oil City, Pa., party of the second part, lessees,

"Witnesseth, that the said party of the first part, for and in consideration of the sum of one dollar to them in hand well and truly paid by the said party of the second part and receipt of which is hereby acknowledged, and of the covenants and agreements hereinafter contained on the part of the party of the second part to be paid, kept and performed, have granted, demised, leased, and let, and by these presents do grant, demise, lease, and let, unto the said second party, his heirs, executors, administrators, successors, or assigns, for the sole and only purpose of mining and operating for oil and gas, and for laying pipe lines, and of building tanks, powers, stations, and structures thereon, to procure and take care of said products, all that certain tract of land situated in the county of Pontotoc, state of Oklahoma, described as follows, to wit: The south half (1/2) of the northwest quarter (N. W. 1/4) of the northwest quarter (N. W. 1/4) of the northwest quarter (N. W. 1/4) of section 28, township 4 north, range 6 east of the Indian base and meridian, and containing sixty (60) acres, more or less.

"It is agreed that this lease shall remain in force for a term of five years from this date, and as long thereafter as oil or gas or either of them, is produced from said land by the party of the second part, his heirs, administrators, executors, successors or assigns.

"In consideration of the premises, the said party of the second part covenants and agrees:

"First. To deliver to the credit of the first parties, their heirs or assigns, free of cost, in the pipe line to which the wells may be connected, the equal one-eighth part of all oil produced and saved from the leased premises.

"Second. To pay the first party two hundred and no-100 dollars each year in advance for the gas from each well where gas only is found, while the same is being used off the premises, and the first parties to have gas free of cost from any such well for four stoves and twelve inside lights in the principal dwelling house on said land during the same time, at their own risk, by making their own connections with the well.

"Third. To pay the first party for gas produced from any oil well and used off the premises at the rate of fifty dollars per year for the time during which such gas shall be used, said payments to be made each three months in advance.

"The party of the second part agrees to complete a well on said premises within six months from the date hereof, or pay at the rate of fifteen and no-100 dollars for each additional month such completion is delayed from the time above mentioned for the completion of such well until a well is completed; and it is agreed that the completion of such well shall be and operate as a full liquidation of all rent under this provision during the remainder of the term of the lease. * * *

"All payments which may fall due under the lease may be made directly to M. P. Doneghey, of Ada, Okla., or deposited to his credit in Oklahoma State Bank, of Ada, Okla.

"The party of the second part, its successors or assigns, shall have the right at any time, on the payment of one dollar to the parties of the first part, their heirs or assigns, to surrender this lease for cancellation, after which all payments and liabilities thereafter to accrue under and by virtue of its terms shall cease and determine; provided, this surrender clause, and the option therein reserved to the lessee, shall cease and become absolutely inoperative immediately and concurrently with the institution of any suit in any court of law or equity by the lessee to enforce this lease, or any of its terms, or to recover possession of the leased land or any part thereof, against or from the lessor, his heirs, executors, administrators, successors, or assigns, or any other person or persons. All covenants and agreements herein set forth between the parties hereto shall extend to their successors, heirs, executors, administrators, and assigns."

¶2 In his brief the plaintiff in error states the issues made by the pleadings as follows:

"The petition of the plaintiffs, after setting forth the execution and delivery of the lease, alleges:

"'That said defendant has wholly failed, neglected, and refused to comply with any of the terms, covenants, agreements, and conditions of said lease contract in this, that said defendant has made no start or effort to commence a well on said premises, nor has done or performed any act showing any intention on his part to commence said well; neither has said defendant made payment for the delay in completion of such well, as provided in said contract. That the defendant has never entered upon, nor taken possession of, said premises, but has wholly abandoned the same, and made default of his right, title, or interest to and in said premises.

"'* * * That said lease contract provides that the party of the second part, the defendant herein, shall have the right, at any time, on the payment of one dollar to the parties of the first part, the plaintiffs herein, to surrender this lease for cancellation, after which all payments and liabilities under and by virtue of its terms shall cease and determine; that heretofore, to wit, on the 1st day of September, 1915, the plaintiffs herein sent by registered letter the one dollar provided by said lease to the defendant, with the written request that the said defendant should release of record said contract; that on the 8th day of September, 1915, the said defendant refused to release of record said contract.

"'Plaintiffs further allege that wells have been sunk on lands adjacent to plaintiffs' said lands, and oil or gas produced in said wells, and gas is being extracted from under the adjacent land, and that it is necessary for plaintiffs to have their said land mined and operated to conserve the oil and gas contained in and under their said land; * * * that plaintiffs will suffer great and irreparable damage and loss by reason of oil and gas being extracted from their said lands through wells now in operation on adjacent land.'

"It is alleged

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