Simpson v. Buckner's Adm'R

• Citation: 247 Ky. 564
• Parties: Simpson et al. v. Buckner's Adm'r et al.
• Decision Date: 03 February 1933
• Court: United States State Supreme Court (Kentucky)

247 Ky. 564

Simpson et al. v. Buckner's Adm'r et al.

Court of Appeals of Kentucky.

Decided February 3, 1933.

1. Contracts. — Intention of parties, if ascertainable from instrument as whole, will be effectuated.

2. Mines and Minerals. — Lease for one year and as long thereafter as oil or gas was produced held not to terminate at end of year for nonproduction, where rental, also provided for, had been paid.

That lease provided that it was for term of one year and as long thereafter as oil or gas was produced did not work termination of lease for nonproduction within year, since lease further provided that the lessees should commence drilling within six months or pay lessors $90, which payment was to cover privilege of deferring commencement of a well for 12 months from date lease was executed, and there would be no reason for deferring the commencement of a well for 12 months if the lease expired in 12 months unless oil or gas had been produced.

Appeal from Ohio Circuit Court.

E.B. ANDERSON for appellants.

SANDIDGE & SANDIDGE for appellees.

OPINION OF THE COURT BY HOBSON, COMMISSIONER.

Affirming.

Appellant J.P. Simpson is the owner in fee simple of a tract of 90 acres of land in Ohio county. On April 23, 1929, he executed to Buckner, La Rue, and Buckner an oil and gas lease covering this land. By the first clause of the writing the lessor in consideration of $1 cash in hand paid, and "of the covenants and agreements hereinafter contained," granted to the lessees the land for the sole purpose of mining and operating for oil, gas, etc. Then follow these provisions:

"It is agreed that this lease shall remain in force for a term of one year from this date, and as long thereafter as oil or gas, or either of them is produced from said land by the lessee.

"In consideration of the premises the said lessee covenants and agrees:

"1st. To deliver to the credit of said lessor free of cost, in the pipe line to which he may connect his wells, the equal one-eighth part of all oil and gas produced and saved from the said leased premises. * * *

"3rd. To commence drilling well on said land within six months from date as above written in this agreement, or this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender the lessor, or to the lessor's credit in the Central Trust Co., Owensboro, Ky. or its successors, which shall continue as the depository regardless of changes in the ownership of said land, the sum of $90.00 in advance which shall operate as a rental and cover the privilege of deferring the commencement of a well for twelve months from date. In like manner and upon like payment or tenders the commencement of a well may be further deferred for like period of the same number of months successively and it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privileges granted to the date when said first rental is payable as aforesaid, but also the lessee option of extending that period aforesaid, and any and all other rights conferred.

"Should the first well drilled on above described land be a dry hole, then in that event, if a second well is not commenced on said land within twelve months from the expiration of the last rental period which rental has been paid, this lease shall terminate as to both parties."

The lessees paid Simpson the $1 and also paid him $90 in advance to cover the privilege of deferring the commencement of a well for the second six months, and before that period expired paid him $90 more covering the third six months. Before the second six months had expired on April 15, 1930, they began to put down a well on the land but had not struck oil or gas by the 23d. On the 24th of April, 1930, Simpson executed a similar lease to J.C. Ellis, and Ellis then moved a rig upon the premises and began to put down a well. Thereupon the lessees in the first suit brought an action to enjoin Ellis from operating on the land. He and Simpson then filed a suit against them to enjoin them from operating on the land. The two cases were heard together, and on final hearing the circuit court entered judgment in favor of the lessees in the first lease. Simpson and Ellis appeal.

It is earnestly insisted that by the terms of the lease it was to remain in force "for a term of one year from this date, and as long thereafter as oil or gas, or either of them are produced from said land by the lessee," and that as no oil or gas had been produced within the year the lease terminated. A...