Syllabus
by the Court.
1. A
lease for the purpose of operating for oil and gas for the
period of five years, and so much longer as oil or gas is
found in paying quantities, on no other consideration than
prospective oil royalty and gas rental, vests no present
title in the lessee except the mere right of exploration; but
the title thereto, both as to the period of five years and
the time thereafter, remains inchoate and contingent on the
finding, under the explorations provided for in such lease
oil and gas in paying quantities.
2. The
completion of a nonproductive well, though at great expense
vests no title in the lessee.
3. Such lease must be construed as a whole, and, if
there is no provision therein contained requiring and boring
of another well after the first unsuccessful attempt is
completed and abandoned, the least becomes invalid, and of no
binding force as to any of its provisions.
Appeal
from circuit court, Ritchie county; Thomas P. Jacobs, Judge.
Bill by
Amos Steelsmith against James Gartlan and others. Decree for
defendants, and plaintiff appeals. Reversed.
DENT
J.
On the
30th day of August, 1889, Knotts and Garber obtained a lease
for oil purposes covering the land in controversy in this
suit, without other consideration than one-eight of the oil
produced and $200 per annum for each paying gas well, with
the stipulation that the lessees should complete a well
within one year from the date of the lease; and the failure
to do so rendered the lease null and void unless the lessees
should pay 25 cents per acre from and after the time above
specified for the completion of said well, when such payment
should operative to extend the time for five years. This
lease David McGregor considered forfeited, and refused to
accept the rent therefor, or continue the same in force. If
the conditions had been performed by payment of rent accepted
by the lessor, it would have expired the 30th of August
1895, no well having been drilled by Knotts and Garber. On
the 10th day of February, 1895, Matilda McGregor, as devise
and executor of David McGregor, then deceased, executed the
following lease to James Gartlan, to wit:
"An
agreement, made the 11th day of February, A. D. 1895,
between Matilda McGregor, of the district of Grant, county
of Ritchie, and state of West Virginia, lessor, and James
Gartlan, of Pittsburg, Pennsylvania, lessee. witnesseth:
That the lessor, in consideration of one dollar, the
receipt of which is hereby acknowledged, and of other valuable considerations, do hereby demise and
grant unto the lessee, his heirs or assigns, all the oil
and gas in and under the following described tract of land,
and also the said tract of land, for the purpose and with
the exclusive right of operating thereof for said gas and
oil, together with the right of way, the right to lay pipes
over and use water from said premises, and also the right
to remove at any time all property placed thereon by the
lessee, which tract of land is situated in the district of
Grant, county of Ritchie, and state of West Virginia, and
is bounded and described as follows, to wit: North by lands
of Andrew Douglass and B. & O. Railroad, east by lands of
Andrew Douglass and Jacob Hatfield, south by lands of A. M.
Douglass and others, containing one hundred and twenty-two
acres, more or less; to have and to hold the same unto the
lessee, his heirs and assigns, for the term and period of
five years from the date hereof, and so much longer as oil
or gas is found in paying quantities thereon, yielding and
paying to the lessor the one-eighth 1/8 part of all the oil
produced and saved from the premises, delivered free of
expense into tanks or pipe lines to the lessor's
credit; and, should any well produce gas in sufficient
quantities to justify marketing, the lessor shall be paid
at the rate of two hundred dollars per year for such well
so long as the gas therefrom is sold, lessor to have gas
for domestic use on the premises free, she making her own
connections. Second party covenants and agrees to locate
all wells so as to interfere as little as possible with the
cultivated portion of the farm, and to pay all damages to
growing crops by reason of operations. No well to be
drilled on this lease within five hundred feet of the
buildings as now located, without the consent of both
parties. In case no well shall be completed on the
above-described premises within one month from the date
hereof, this lease shall become null and void, and without
any further effect whatever, unless the lessee shall pay
for further delay at the rate of fifty dollars per month in
advance thereafter until a well shall be completed. Such
payment may be made in hand or by deposit to the
lessor's credit in Second National Bank of Parkersburg.
If above-mentioned well produces 20 barrels of
oil per day for the first 30 days after completion, the
lessee agrees to drill 2 more wells on the above-mentioned
premises within a year from the completion of the
above-mentioned well; provided that the second well drilled
produces 20 barrels of oil per day for the first 30 days
after completion. If second well does not produce 20
barrels per day for first 30 days after completion, then it
shall be optional with the lessee to drill and their well.
All wells shall be served with the best known means to
produce the greatest quantity of oil. A failure to comply
with any of the conditions of this lease shall render the
same null and void, and of no effect. It
is agreed further than second party shall have the right at
any time to surrender this lease to first party for
cancellation, after which all payments and liabilities to
accrue under and by virtue of its terms shall cease and
determine, and the lease become absolutely null and void.
It is understood that all the terms and conditions between
the parties hereto shall extend and apply to their
respective heirs, executors, administrators, and assigns.
In witness whereof, the said parties have hereunto set
their hands and seals the day and year first above written.
Matilda McGregor. [Seal.] Matilda McGregor, Executrix.
[Seal.] ___ ___. [Seal.] James Gartlan. [Seal.]
"Sealed
and delivered in presence of ___ ___."
Gartlan
with the assistance of others, put down a test hole about
1,800 feet by April following, but, finding neither gas nor
oil in paying quantities, removed the derrick and tools,
pulled the casing, and plugged the hole, and left and the
premises. At the same time he surrendered a number of other
leases, but through his agent, parks, asked permission of
Mrs. McGregor to retain the lease under consideration for a
short time. During the time the test was made the lessee paid
Mrs. McGregor three monthly payments of $50 each, as
stipulated, because of delay in completion of the first well.
He then discontinued such payments, and entirely abandoned
and ceased further operations for oil and gas on the
premises. Mrs. McGregor, according to her testimony, before
he stopped operations insisted that he should go deeper, and
make a more thorough test, even being willing to
part with a further portion of her interest in the result, if
successful, if he would consent to do so. But, claiming that
he had made a full test, he refused her request. Gartlan had
taken a man by the name of Hays in with him. On the 17th of
September, 1896, Mrs. McGregor wrote them the following
letter: "Cairo, W. Va., Sept. 17, 1896. Mess. Hays and
Gartlan-Gentlemen: As you have abandoned the lease given you
by me on our farm, and shown by your actions that you did not
intend to operate it any further, I would ask you kindly to
send it to me with a release deed, as I am now ready to lease
again. Please give this your earliest attention, and oblige,
M. McGregor." Getting no reply from this, she wrote
another letter to a Mr. Parks, who had acted as agent for
Gartlan, to wit: "Cairo, W. Va., Sept. 28, 1896. Mr.
Parks-Sir; I wrote a letter some time ago to Mr. Gartlan and
your uncle, asking them kindly to send me the lease that they
have been holding on my place. You know you only asked me to
hold it for them to make up their minds on what they intended
to do; and they have shown, by abandoning the lease, that
they did not intend to operate it, so I think they ought to
send me the lease at once, so I could be making something out
of it, as life is too short for me to let than amount of land
lie idle, and not be making even the taxes off it. Now,
please take this in consideration, and act on this at once,
as you know I mean business. ...
