Thiessen v. Weber

• Decision Date: 06 July 1929
• Docket Number: 28,802
• Parties: HANS H. THIESSEN, Appellant, v. H. C. WEBER, W. G. OBINS, MARK WEBER, THE ALCORN OIL COMPANY, THE MARLAND PRODUCTION COMPANY, THE MARLAND PRODUCTS COMPANY, THE NEW ROYALTY COMPANY, THE LAND OWNERS ROYALTY TRUST and THE UNITED ROYALTY COMPANY, Appellees
• Court: Kansas Supreme Court

278 P. 770

128 Kan. 556

HANS H. THIESSEN, Appellant, v. H. C. WEBER, W. G. OBINS, MARK WEBER, THE ALCORN OIL COMPANY, THE MARLAND PRODUCTION COMPANY, THE MARLAND PRODUCTS COMPANY, THE NEW ROYALTY COMPANY, THE LAND OWNERS ROYALTY TRUST and THE UNITED ROYALTY COMPANY, Appellees

No. 28,802

Supreme Court of Kansas

July 6, 1929

Decided July, 1929.

Appeal from Sumner district court; LAFAYETTE H. FINNEY, judge.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

MINES AND MINERALS--Action to Cancel Lease--Necessity of All Royalty Holders Joining. The owner of real property executed an oil-and-gas lease thereon. Later he sold a portion of his royalty interest in the oil and gas. Later he brought an action to cancel the lease by reason of the lessee's failure reasonably to develop the leased premises. Before bringing the action he had endeavored to get the holders of the other royalty interests to join with him in the action but they declined to do so. Held, the fact that one or more of the owners of royalty interests did not desire the lease canceled did not prevent plaintiff from maintaining the action to the extent of his interest.

W. L. Cunningham, D. Arthur Walker and Fred G. Leach, all of Arkansas City, for the appellant.

William H. Zwick, of Ponca City, Okla., for the appellees.

OPINION

HARVEY, J.:

This is an action to forfeit and cancel an oil-and-gas lease for breach of the implied covenant reasonably to develop it. It was tried to the court, who made findings of fact and rendered judgment for defendants. Plaintiff has appealed.

Plaintiff was the owner of a quarter section of land in Sumner county. On March 10, 1923, he executed an oil-and-gas lease on this land to R. H. Stewart for a term of five years, and as long thereafter as oil or gas should be produced from the land. The lease contained a provision that if the lessor owned a less interest in the land than the entire undivided fee simple estate therein, the royalties and rentals should be paid the lessor only in the proportion which his interest bears to the whole undivided fee. The lease contained the further provision:

"If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors, or assigns. . . ."

R. H. Stewart assigned the lease, so far as it pertained to the west half of the quarter section, to H. C. Weber, W. G. Obins and Mark Weber, but neither Stewart nor these assignees have ever made any effort to develop this part of the leased premises for oil or gas. R. H. Stewart assigned the lease, in so far as it pertains to the east half of the quarter section, to the Alcorn Oil Company, which thereafter assigned it to the Marland Oil Company, and thereafter assigned it to the Marland Products Company, one of the defendants herein. This company is a successor in interest, by a reorganization or change of name, of the Marland Oil Company. The Marland Oil Company had leases on other land adjoining this 80 acres on the north and east, and sometime in 1924 drilled a well, which is located about 300 feet east and 300 feet south of the northeast corner of this 80 acres. This proved to be a gas well which, to the time of the trial in this case, had produced gas of the value of $ 54,842.86 at the well. In December, 1924, plaintiff executed a written agreement with the Marland Oil Company by which he waived and released his right to demand the drilling of a well on his land to offset the gas well above mentioned if the oil company would drill a well in the southwest corner of the 80 acres of land, which it agreed to do, and later did do. This well was completed in May, 1925, and to the time of the trial of this case had produced 66,116.77 barrels of oil. Neither the Marland Oil Company nor its successor, the Marland Products Company, did any more developing on plaintiff's land. Since May, 1925, a well was drilled at a point 300 feet east and 300 feet north of the northeast corner of plaintiff's land, which proved to be a gas well, and also a well was drilled 300 feet west and 300 feet north of the northeast corner of plaintiff's land, which proved to be an oil well. Plaintiff has never waived nor released his right to demand the drilling of a well on his land to offset these two wells.

In December, 1924, plaintiff executed a royalty conveyance to the New Royalty Company for an undivided one-fourth of the oil, gas and minerals under the quarter section of land. It was "subject to the terms" of the lease which plaintiff had executed to Stewart, and provided that the original terms of the lease should not be extended without the written consent of the New Royalty Company, and in the event the lease "for any reason becomes canceled or forfeited," then an undivided one-fourth of the leased interest and future rentals and bonuses should belong to the New Royalty Company. In April, 1925, plaintiff executed a similar royalty conveyance for an undivided one-eighth interest in the oil and gas under this quarter section to The United Royalty Company, and in May, 1925, plaintiff executed a similar royalty conveyance for an undivided one-eighth interest in the oil and gas under this quarter section to the Land Owners Royalty Trust.

This action was filed in July, 1928. Prior to bringing the action plaintiff had requested the other owners of royalty interests to join with him as plaintiff in the action, but they had not agreed to do so. He named as defendants the lessees and the owners of the royalty interests. The defendants Weber, Obins and Weber, assignees of the lease on the west half of the quarter section, made default. The Marland Products Company, the assignee of the lease on the east half of the quarter section, answered and "specifically denies that this plaintiff can maintain this action for the reason that there is a defect of parties plaintiff, in that said plaintiff does not own the entire undivided fee in and to the oil, gas and mineral rights." The answer contained other matters in opposition to plaintiff's right to cancellation of the lease. The defendant, the New Royalty Company, answered to the same effect and objected to the cancellation of the lease in so far as it was concerned. The defendants, the United Royalty Company and the Land Owners Royalty Trust, answered, setting up their interests as royalty owners, but joined with the plaintiff's request for the cancellation of the leases.

The trial court found that in no event should the plaintiff be given a cancellation of the lease so far as it refers to a tract 600 feet by 600 feet in the southwest corner of the east half of the quarter section, where the defendant, the Marland Products Company, had drilled a well, which was then producing; this area to be extended, if need be, on the showing that more area is required conveniently to operate the well. As to the remaining portion of the lease, the court found--

". . . that there has been a breach of the implied covenant to develop the land, and that the extent and amount of the damages sustained are so indefinite and uncertain that they cannot be justly estimated, and that the plaintiff has no adequate remedy at law."

The court denied plaintiff any relief, however, upon the ground that the cause "may not be maintained by the plaintiff without the joinder or consent of all of the royalty holders." The judgment entered was without prejudice to a future action in which all the royalty owners would join.

When the action was brought, and when it was tried, the plaintiff was the owner of an undivided one-half of the royalty interest to the oil and gas in place in the entire quarter section. The United Royalty Company was the owner of an undivided one-eighth of such royalty interest, the Land Owners Royalty Trust was the owner of an undivided one-eighth of such royalty interest, and the New Royalty Company was the owner of an undivided one-fourth of such royalty. The owners of three-fourths of the royalty interests prayed for a cancellation of the lease, while the owner of one-fourth of the royalty interests was objecting to such cancellation.

The sole question presented to us is: Can one or more tenants in common, less than the whole number, maintain an action against a lessee to cancel and forfeit the lease, in so far as their interests are concerned, for a breach of an implied covenant properly to develop the lease, where one tenant in common has waived the breach or is willing to do so?

We first note that the implied covenant reasonably to develop a lease is as much a part of the lease as though provisions to that effect were expressly stated in the lease. (See La France v. Kashishian, [Cal.] 269 P. 655; Brewster v. Lanyon Zinc Co., 140 F. 801, and authorities cited therein.)

The lease contained several provisions with respect to the interests of the parties to the lease less than the whole and specifically provided that the privilege of either party to assign, in whole or in part, was expressly allowed, and that the covenants thereof should extend to the assignees. By the terms of the lease, therefore, the interests of the parties to the instrument were recognized as being divisible, and it was further provided, by the express terms of the lease, that its covenants should extend to such assignees. Appellees concede that by these provisions of the lease its covenants with reference to the payment of rent and royalties were stipulated to be divisible in character, but argue that such divisibility does not extend to an action to cancel the lease. The wording of the lease does not make this distinction. It would seem, therefore, that by the terms of the lease the right of the assignee of the...