Shannon v. Long

• Decision Date: 19 November 1912
• Parties: SHANNON ET AL. v. LONG.
• Court: Alabama Supreme Court

60 So. 273

180 Ala. 128

SHANNON ET AL. v. LONG.

Supreme Court of Alabama

November 19, 1912

Rehearing Denied Dec. 17, 1912.

Appeal from Circuit Court, Walker County; J. J. Curtis, Judge.

Action by P. M. Long, as executor, against J. S. Shannon and others. From a decree for complainant, defendants appeal. Affirmed.

Tillman Bradley & Morrow, of Birmingham, and D. A. McGregor, of Jasper, for appellants.

Bankhead & Bankhead, of Jasper, for appellee.

DE GRAFFENRIED, J.

While as a general rule, a court of equity disfavors forfeitures it will, when, by reason of the breach by the grantee or lessee of a condition subsequent in a conveyance or lease the conscience of the situation demands it, declare that a forfeiture has occurred, and cancel and hold for naught such conveyance or lease. This is especially true when the plain language of the instrument shows that it was the purpose of the parties to declare that the breach should operate as a forfeiture, and the situation of the parties is such that to uphold the instrument as still validly existing after the breach would be inequitable and unjust.

In the instant case, B. M. Long, the owner of about 100,000 acres of land, executed and delivered to Mrs. Matilda G. Houghton a lease conferring upon her the exclusive right to drill and operate for gas and petroleum oil upon said land. The lease was executed on the 23d day of May, 1901, and the lessor was to receive, as compensation for the above use of his land, one-eighth of the petroleum oil obtained from the land, $100 per annum for each gas well which produced gas in commercial quantities, and sufficient gas for domestic purposes in the lessor's dwelling houses without cost at the well. The lease contains the following stipulations: "Said party of the second part (Mrs. Houghton) agrees to commence operation within four months and pursue with diligence till completed, unavoidable delays and accidents excepted. This lease shall continue for 20 years or so long as oil or gas are produced in paying quantities. This lease and the license herein granted shall immediately upon the noncompletion of said well be null and void and not binding on either party. It is understood by and between the parties to this agreement that all conditions between the two parties shall extend to their heirs, executors, administrators and assigns."

The bill alleges that subsequent to the execution of the above lease Mrs. Houghton "began sinking a well on said land, prospecting for oil and gas, and after sinking one well a depth of something like 1,000 feet, she abandoned said well and began sinking another, and after sinking the second well about 1,200 feet she abandoned the same, and moved her drilling machinery away from said property and has not been upon said property since that time. The said Mrs. Matilda G. Houghton fully and completely abandoned said property and abandoned all prospecting upon said lands and has not attempted to do any prospecting or claimed any rights under said instrument for about nine years immediately preceding the filing of this bill." The bill further alleges that, since the discovery of gas in an adjoining county, "within the last few months the said Mrs. Houghton has set up her claim to the rights and privileges contained in said instrument, * * * and has transferred, or agreed to transfer, to W. R. Coleman and J. S. Shannon (the other respondents to the bill) some interest in said instrument or lease, together with the rights and privileges therein contained, and the said W. R. Coleman and J. S. Shannon are now claiming some rights under said instrument or lease." The bill prays, among other things, that a decree be rendered declaring said instrument forfeited or annulled.

It is plainly evident, if the allegations of the bill are true, that Mrs. Houghton, who was required by the terms of the lease to commence operations on the land within four months, when she failed, after sinking one well 1,000 feet and another well 1,200 feet, to find gas or oil, treated the well referred to in the above-quoted paragraph of the lease as "noncompleted," and that, when she removed her drilling machinery from the land and ceased operations under the terms of the lease, she treated the "noncompletion of the well" as having rendered the lease "null and void and not binding on either party."

The only way in which gas or petroleum oil can be obtained out of the earth is to drill a well for it, and when Mrs. Houghton agreed, in the lease, to commence operations within four months, the operations contemplated by the parties were the sinking of a well. The "said well," therefore, referred to in the lease, was a well which was to be begun while the lessee was on the property prospecting for oil or gas and which prospecting was, under the terms of the lease, to commence within four months after the execution and delivery of the lease, and by the "completion" of the well the parties plainly meant the discovery of oil or gas in commercial quantities. The lease, by its express terms, became "void" when the lessee failed to discover gas or oil while prospecting for the same as provided for in the lease, and the abandonment of the property by Mrs. Houghton after her failure to find gas or oil conclusively shows that she so understood the lease, and the failure of the lessor to require continuous operations under the lease also shows that he so understood its terms. 24 Cyc. 1372.

Ordinarily, the lessor only can avail himself of a forfeiture of a lease on the part of his tenant. Taylor's Landlord & Tenant, § 492. In the present case, however, as the finding of oil or gas by the tenant was problematical--a thing which could not be determined until a well was sunk--the option was given the tenant if the well was not completed, i. e., if oil or gas in commercial quantities was not found by sinking a well, to abandon operations upon the property and treat the lease as null and void and not binding upon her. This, under the allegations of the bill, Mrs. Houghton plainly did, and, when she did so, her rights under the lease, by the express terms of the lease, were at an end. In fact, as we have already said, by the express terms of the lease the noncompletion of a well avoided the lease.

Equity possesses ample powers, under the circumstances shown by this bill, to cancel the lease and to declare that by the acts of Mrs. Houghton it had been forfeited and that it is null and void. The lease is, under the facts set up in the bill, a void incumbrance upon the title to the land of appellee's testator, and, if the facts alleged are true, Mrs. Houghton's rights, under that lease, by her own acts, under the very terms of the lease, and by the language of the lease, were forfeited before the filing of the bill.

As we understand the bill, the appellee does not invoke the jurisdiction of the chancery court to forfeit the least, but only to declare that the lease, by the acts of Mrs. Houghton, has been forfeited, and to cancel the lease as a cloud upon the title of his testator to the land. This a court of equity has the power to do. Pendill et al. v. Union Min. Co., 64 Mich. 172, 31 N.W. 100; Torrent Fire Engine Co. No. 5 v. City of Mobile, 101 Ala. 563, 14 So. 557; Gardner v. Knight et al., 124 Ala. 273,

27 So. 298.

(2) In the case of Thorington v. City Council of Montgomery, 82 Ala. 591, 2 So. 513, this court, speaking of the jurisdiction of courts of equity to remove clouds from titles to real estate independent of sections 5443 et seq. of the Code of 1907, said, through Stone, C.J.: "It is settled in this state beyond further dispute that, to maintain a bill to remove or prevent a cloud on title, the complainant must be in the actual possession of the lands, and the bill, to be sufficient, must aver that fact." The rule thus declared through Chief Justice Stone was but a rule which had been previously declared and which has been repeatedly followed by this court. Jones v. De Graffenreid, 60 Ala. 145; Belcher et al. v Scruggs et al., 125 Ala. 337, 27 So. 839; Galloway, Trustee, v. Hendon, Guardian, 131 Ala. 280, 31 So. 603; Tarwater v. Going, 140 Ala. 273, 37 So. 330; Hardeman v. Donaghey, 170 Ala. 362, 54 So. 172. The above rule as to the necessity of an averment in the bill of actual possession refers, as a general rule, only to cases where the complainant is vested with the legal title. When the holder of an equitable title, only, to land, is out of possession, he cannot maintain an action of ejectment to oust the actual possessor of the land, and for that reason he is not required, upon a bill filed to remove a cloud from the title to such land, to allege possession in himself. 6 Am. & Eng. Ency. Law, 159, subd. "f"; 4...