Smith v. Root et als.
| Decision Date | 25 January 1910 |
| Citation | 66 W.Va. 633 |
| Parties | Smith v. Root et als. |
| Court | West Virginia Supreme Court |
1. Mixes and Minerals Oil Leases Action by Senior Lessee Enjoining Removal of Oil Jurisdiction of Equity.
Equity has jurisdiction of a suit brought by the senior lessee in an oil lease against his lessor and a junior lessee of the same land from the same lessor, for the purpose of enjoining the removal of the oil from the leased premises and for specific execution of his lease; and, in such a suit, the court can settle the conflicting claims of the lessees, and grant such relief to either claimant as the pleadings and proof may warrant. (p. G35).
2. Same Oil and Oas Lease Construction.
An oil and gas lease giving the lessee the right, for the period of ten years, to explore for oil and gas, and providing that if a well is not completed on the leased premises within three months from the date of the lease the lessee shall pay to the lessor, in advance, a quarterly cash rental for each additional three months the completion of a well is delayed, is an executory contract and vests no title in the lessee to the oil and gas in place. (p. 635).
3. Same.
Such a contract contemplates development of the leased premises within a reasonable time, and the lessee may lose his rights thereunder before the expiration of the ten years by abandonment of the lease, notwithstanding there is no forfeiture clause in the contract. (pp. 637, 638).
4. Same Oil and Gas Lease Abandonment by Lessee Intention.
If the lessee has not actually entered upon the land, the relinquishment of his right to do so, or his abandonment, becomes purely a question of his intention, and may be established by proof of such facts and circumstances as evince a voluntary waiver of his rights. (p. 639).
5. Same Oil and Gas Lease Abandonment by Lessee Evidence.
A case in which the evidence proves a voluntary abandonment of the lease by the lessee. (p. 640).
Appeal from Circuit Court, Roane County.
Bill by H. L. Smith against C. M. Root and others. Judgment of dismissal, and plaintiff appeals.
Affirmed.
John B. Chapman, V. B. Archer and Geo. F. Cunningham, for appellant,
Thos. P. Ryan, A. D. Follett, and Van Winkle & Ambler, for appellees.
This is an appeal from a decree of the circuit court of Roane county, pronounced on the 29th day of August, 1907, dissolving an injunction which had previously been awarded to plaintiff, and dismissing his bill upon a hearing of the cause.
The suit grows out of conflicting oil and gas leases executed by Mrs. D. M. Hall and C. J. Hall, her husband, on a tract of 106 acres of land in Roane county. The plaintiff claims under a contract executed by the Halls to Lee Goff and A. S. Heck, bearing date February 29, 1904, and the defendants claim under a contract made by said Halls to S. L. Thornily, dated June 27, 1905. Both contracts were duly recorded, the first on May 4, 1904, and the second on August 7, 1905.
The object of the suit is to enjoin the defendants from operating on said land and from removing and disposing of the oil produced from the wells drilled by them on the premises in controversy, and to have the second lease cancelled as constituting a cloud upon plaintiff's title. Defendants demurred to the bill and also filed a cross-bill answer averring an abandonment of the first lease by Goff and Heck, the original lessees under whom plaintiff claims, and praying for a cancellation of that lease as constituting a cloud upon their title. The demurrer to the bill raises the question of the jurisdiction of the court. It is hardly necessary to discuss this question, because it has been frequently held by this Court, and the question apparently settled, that a court of equity has jurisdiction of such a suit. In the present case it has jurisdiction on two grounds: first, to prevent waste, that is, the extraction and removal of the oil from the land; second, for specific enforcement of the lease contract; and, having jurisdiction, the court will administer complete relief. Williamson v. Jones, 43 W. Va. 562; Crawford v. Ritchey, Id. 252; Eclipse Oil Co. v. South Venn Oil Co., 47 Id. 84; Urpman v. Lowther Oil Co., 53 Id. 501; Carney v. Barnes, 56 Id. 581; Starn v. Huffman, 62 Id. 422; Eastern Oil Co. v. Coulehan, 65 Id. 531.
The lease to Goff and Heck was to remain in force for ten years, and as much longer as either oil or gas should be produced. The lessees were to deliver to the credit of the lessors free of costs in the pipe-line one-eighth part of all the oil, and were to pay $200 a year for every gas well the product from which should be marketed and used off the premises. The lease contract contained also the following provision:
About the same time Goff and Heck procured oil and gas leases upon other tracts of land in the same neighborhood, some of which were contiguous to the Hall tract. Shortly after obtaining these leases Goff and Heck, and others, procured a charter and organized the Lucky Oil & Gas Company. Goff and Heck assigned to it all the working interest in said leases, except one-eighth which they retained for themselves. The contract of assignment provided that the Lucky Oil & Gas Company was to pay the rentals thereafter to become due, and was to carry Goff and Heck for the full one-eighth interest free of cost to them, and bound said corporation to drill at least one test well on the territory covered by the leases, and gave it the privilege of drilling other wells on the premises. It further provided "that all surrenders and forfeitures of said leases, or any of them, shall be to said first parties," that is, to Goff and Heck; and that "in no event shall any or either of said leases be forfeited or surrendered by the said second party to. the original lessors or their assignee or grantee or any person or persons for them."
The first two quarterly rentals falling due on the Hall land were paid by the Lucky Oil & Gas Company. When the third became due, to-wit, on November 29, 1904, it was not paid, but Goff and Heck applied to the Halls for an extension of the time without payment of the rent, which was refused. No well was ever drilled on the Hall land by anyone claiming under this lease; but the Lucky Oil & Gas Company did, in the summer and fall of 1904, drill a well on the Donohue tract of land adjoining the Hall tract. It was completed just prior to the time the third quarterly rental on the Hall tract became due, and proved to be a dry well. In the drilling of this well the company had exhausted its capital. It then ceased to do business and immediately surrendered its charter. The casing was removed from the dry well and the machinery and casing belonging to the company were sold and the proceeds applied to the payment of its debts. Nothing further was done toward the discovery of oil or gas until in the early part of the year 1906, when the defendants began operations on the Hall land tinder the lease to Thornily, made June 27, 1905. Defendants completed their first well June 28, 1906, and their second well September 26, 1906, both of which produced oil. They began to drill the third well on October 25, 1906, but were enjoined by order of court in this suit before the well was completed. The injunction order was later modified so as to permit the completion of this well which also proved to be an oil producing well. All three of these wells are on the Hall tract. The plaintiff, Smith, claims the exclusive right to the oil and gas in the Hall tract and in a number of other tracts in its vicinity by assignment from Goff and Heck made on the 6th of February, 1906. At the time of this assignment to Smith five quarterly rentals were past due on the Hall lease to Goff and Heck, and on the day after the assignment Goff and Heck deposited to the credit of the Halls in the Eoane County Bank $132.50 to pay these back rentals. This money is now in the bank.
The vital question in the case is whether, or not, the Goff and Heck lease had been voluntarily abandoned, or their rights thereunder relinquished by them before June 27, 1905, at which time the Halls made the second lease to Thornily, the lease under which defendants claim. It is true, as counsel for appellant contends, that there is no express forfeiture clause in the contract, but this does not prevent the lessees from voluntarily abandoning the lease. The contract expressly gave them the right to surrender the lease at any time, upon the payment to the lessor of one dollar. This provision in the contract was evidently intended for the benefit of the lessee and to avoid the payment of any further cash...
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