Rowe v. Atlas Oil Co.

• Decision Date: 05 April 1920
• Docket Number: 23607
• Citation: 147 La. 37,84 So. 485
• Court: Louisiana Supreme Court
• Parties: ROWE v. ATLAS OIL CO. et al

84 So. 485

147 La. 37

ROWE v. ATLAS OIL CO. et al

No. 23607

Supreme Court of Louisiana

April 5, 1920

Rehearing Denied May 3, 1920

Appeal from First Judicial District Court, Parish of Caddo; R. D Webb, Judge.

Suit by W. H. Rowe against the Atlas Oil Company and others, begun as an action for slander of title and converted into an action against the Consolidated Progressive Oil Corporation and another, to declare null ab initio, or in the alternative to declare forfeited an instrument purporting to be an oil and gas lease. From a judgment for plaintiff, defendants appeal.

Affirmed.

Wilkinson Lewis & Wilkinson, of Shreveport, for appellants.

Foster, Looney & Wilkinson, of Shreveport (Thigpen & Herold, of Shreveport, of counsel), for appellee.

OPINION

O'NIELL, J.

This suit was commenced against the Atlas Oil Company, said to be represented by N. C. McGowen, and against the Consolidated Progressive Oil Corporation, as an action for slander of title. Learning that the mineral rights alleged to have been claimed by the Atlas Oil Company were claimed by N. C. McGowen individually, and that the Atlas Oil Company did not claim any interest in the property, plaintiff, by supplemental petition, made McGowen a party defendant. Thereafter, by another supplemental petition, plaintiff converted the suit into an action to declare null ab initio, or, in the alternative, to declare forfeited, an instrument purporting to be an oil and gas lease, and another instrument purporting to be a renewal thereof, claimed by the defendants, Consolidated Progressive Oil Corporation and N. C. McGowen, as transferees by mesne conveyances from the original lessee, A. E. Wilder. The cause of nullity alleged by plaintiff was that the landowners, as lessors, did not receive any consideration, that the lessee did not incur any obligation, and that what purported to be obligations, in the original instrument and in the so-called renewal or extension thereof, depended upon potestative conditions. The cause for demanding a forfeiture and annullment of the contracts, if they should be held to have been originally valid, was alleged to be that the original lessee, A. E. Wilder, and his alleged transferees, had failed to perform either of the two alternative obligations, either to begin the drilling of a well on the land within the time specified, or to pay the sum stipulated for preventing a forfeiture.

The defendants, answering the petition and supplemental petitions, denied that there was a want of mutuality of obligations in either the original contract of lease or in the extension or renewal thereof, admitted that drilling of a well was not commenced within the time specified, but averred that payment of the sum specified, to prevent a forfeiture, was made in time to prevent the forfeiture of the lease; and they denied that the payment should have been made in advance, or on or before any specified date, or before demand therefor. Defendants pleaded, as an estoppel, that G. T. Shaw, the landowner from whom plaintiff acquired his mineral lease, stood by and saw the defendant Consolidated Progressive Oil Corporation spend large sums of money, drilling wells and developing the wild-cat territory, in which Shaw's land was situated, into one of the most productive oil fields in the country; that the defendant Consolidated Progressive Oil Corporation drilled a well on a tract of land adjacent to the land in question, which well proved the oil-producing value of the territory; and that the well was drilled at the request of Shaw, and upon his promise and assurance that he would recognize as valid all leases held by the Consolidated Progressive Oil Corporation on his lands.

On the issues thus presented, judgment was rendered in favor of plaintiff, annulling, as far as it affected the land leased to plaintiff, the Wilder lease, dated the 27th of July, 1916, and claimed by the defendants, and declaring plaintiff the owner of the mineral rights under and by virtue of his lease from G. T. Shaw, dated the 16th of January, 1916.

There is no dispute about the main facts of the case. On the 27th of July, 1916, F. T. and J. H. King, who then owned the land, in undeveloped territory, leased to A. E. Wilder, for mining exploration and development, the N.W. 1/4 of section 30 in T. 21 Bos. & P. N.R. 7 W., and the E. 1/2 of N. E. 1/4 of section 26 in T. 21 Bos. & P. N.R. 8 W., all said to contain 210 acres, more or less. No cash or other consideration was given by Wilder for the lease. The only stipulation having the appearance of an obligation on his part was that he should, within six months, commence drilling a well either on the leased premises or on another of the tracts of land on which he expected to acquire leases, within five miles from the town of Homer, and prosecute the drilling with due diligence to the depth of 2,600 feet, unless oil or gas should be found in paying quantities at less depth. The apparent obligation, however, was coupled with the stipulation merely that, in the event of the lessee's "failing to do so," all of his rights under the agreement should cease and determine; and it was also stipulated that the lessee might remove from the land any structures placed there at any time. It was further stipulated that, on completion of a well within five miles from Homer, the lessee or his heirs or assigns should, within a year from the date of completion of the well, begin drilling a well on the land described in the contract, and prosecute the drilling with due diligence to a depth of 2,600 feet or until completed; and that, in the event of his failing to do so, all of his rights under the agreement should cease and determine. It was stipulated that, if the first well to be drilled on the leased land should be a producer, the lessee should "reasonably well develop the said property," and that, if the first well to be drilled on the leased land should be a dry hole, the lessee should, within six months after completing the dry hole, commence drilling another well on the leased premises; and that, in the event of his failing to do so his rights under the agreement should cease. It was stipulated that, if the contemplated operations should result in the production of oil or gas in paying quantities, the lessee should pay to the grantors, as royalty, one-eighth of all oil produced and saved from the leased premises, and $ 200 per annum for each gas well from which gas should be either used or sold. The stipulation most pertinent to this suit was as follows, viz.:

"It is especially understood and agreed that the said Wilder may prevent the forfeiture of this lease at the expiration of the said one-year period as provided in paragraphs two and three [referring to the period of one year from the date of completion of a well within five miles from Homer], on paying to the grantors the sum of one dollar per acre, and thereupon the said lease and transfer, with all of the rights hereunder, shall be extended for a period of one year from the expiration of said one-year period, with all the rights and privileges and subject to all of the conditions herein specified, and may so extend said lease and transfer for a period of three years, on the payment of said sum per acre annually."

The grantors declared in the instrument that they accepted the stipulations as a valuable and sufficient consideration for the rights therein transferred, including the right of extension, and that the lease should remain in force as long as oil or gas could be produced from the land in paying quantities.

On the 21st of November, 1916, F. T. and J. H. King sold to G. T Shaw...