Trimble. v. Hope Natural Gas Co., (No. 7338)

• Decision Date: 28 March 1933
• Docket Number: (No. 7338)
• Citation: 113 W.Va. 839
• Court: West Virginia Supreme Court
• Parties: Hoffman Trimble et al. v. Hope Natural Gas Company

113 W.Va. 839

Hoffman Trimble et al.

v.Hope Natural Gas Company

(No. 7338)

Supreme Court of Appeals of West Virginia.

Submitted March 7, 1933.

Decided March 28, 1933.

(Rehearing denied June 9, 1933)

1. Specific Performance

The fact that the lessor under an oil and gas lease has accepted a quarterly delay rental does not estop him from bringing a suit within the quarter covered by said rental against the lessee to require specific performance of the implied covenant to protect the estate from drainage, where the bill contains allegations to the effect that said lessee is actually draining gas in large quantities from the property covered by the lease through wells owned and operated by said lessee on contiguous properties.

2. Mines and Minerals

A delay rental is in lieu of development not an excuse for destruction by fraudulent drainage of the oil and gas estate.

Litz, Judge, absent.

Appeal from Circuit Court, Barbour County.

Suit by Hoffman Trimble and others against the Hope Natural Gas Company. From a decree dismissing the bill, plaintiffs appeal.

Reversed and remanded.

Smith & Smith, for appellants.

Kemble White, A. F. McCue, and Harold M. Garrett, for appellee.

Woods, Judge:

This suit was brought against the Hope Natural Gas Company, assignee of an oil and gas lease, executed March 23, 1925, by plaintiffs to one Chidister, for the purpose of requiring said company to properly develop and to properly protect the 156 acre tract, covered by the lease, from unlawful drainage.

The lease was for a term of five years and as long thereafter as oil and gas or either of them should be produced by the lessee. The lessors were to be paid 1/8 of the money received for "sale of said gas, it being understood that the price at which the same is sold shall be 14c per 1, 000 cubic feet." Lessee, beginning May 25, 1925, was required to pay $58.50 quarterly "as a carrying rent" for the three months following the date of said payment, until a well was completed. The lessee was given right to surrender the lease at any time, providing rents and royalties had been paid, and be released from fulfillment of the covenants.

The original bill was filed at March Rules 1928, and in 1930, after the proof had been taken, plaintiffs were permitted to file an amended and supplemental bill, which was drawn in conformity with the proof, as plaintiffs conceived it.

At the time of the filing of the original bill the Hope Natural Gas Company was the owner and operator of two wells which are alleged to be draining the gas from under plaintiffs' land one the Morrison well, completed February, 1927, and the other the Nutter well, completed October of the same year. Some time in 1928, and after the filing of the original bill herein, the defendant company drilled a well on plaintiffs' property, which well, the amended and supplemental bill alleges, was not properly completed, and that if it had been properly completed, would produce many times its present output.

In regard to the issue of drainage, the original bill alleges that defendant is the owner of the lease of the Nutter 65 acres, which adjoins plaintiffs' land; that a well was com- pleted thereon in October, 1927, which well produced gas at the rate of over one million cubic feet of gas a day; that said well had a rock pressure of 1500 pounds, to the square inch; that it still produces gas in paying quantities; that said well is 391 feet from plaintiffs' line; that a well was drilled in February, 1927, on the Morrison farm, which adjoins plaintiffs' 156 acres; that this well produced three hundred thousand feet a day, had a rock pressure of 1500 pounds, and is still producing gas in paying quantities, and is situate 400 feet from plaintiffs' farm; that the rock pressure of the wells in the Benson field is very high; that plaintiffs' 156 acres is in the center of this gas field; that Benson sand is very porous; that gas is very elusive in character, and by reason of the nature of the sand, is being drained through the adjoining wells; that it is in reality being depleted through the Morrison and Nutter wells; that, in addition to an implied covenant to develop fully, there is another covenant to protect the gas estate from drainage; that defendant has not protected plaintiffs' property; that the gas estate is being destroyed in volume and pressure depleted; that defendant is developing property in the Benson field to suit its own interests; that there is implied covenant to protect against drainage; that defendant has acted fraudulently in law and fact in failing to drill said land and to protect said premises from drainage through wells on adjoining, coterminous and neighboring lands in the production of oil and gas in which defendant had and has an interest as lessee, and by reason of such fraudulent conduct, the pressure of the gas within said land is thereby being constantly reduced and therefore gradually destroyed and the gas removed and depleted; that compensation for such injury is not accurately ascertainable; that refusal to drill, etc., is a fraud upon plaintiffs' interests, and deprives plaintiffs of royalties to which they are rightfully entitled; that the injury and damage is a continuing one; that no evidence can be produced as to the exact amount of drainage through such adjoining wells, other than that which is conjectural and speculative and that there is no way of ascertaining how long before the gas wells upon lands adjoining will destroy the value of plaintiffs' said gas estate by drainage by reduction of the rock pressure thereof, etc.

The circuit court gave effect to the provision which provided for the payment of rental in lieu of drilling and decided that inasmuch as the rental had been paid and accepted by the plaintiff for the period in which the suit was brought, the plaintiff had no right of action at the time such suit was instituted by him. This action on the part of the court, according to the opinion filed as a part of the dismissal decretal order, was based on the case of Carper v. United Fuel Gas Company, 78 W. Va 433, 89 S. E. 12, 14. This court held in United Fuel Gas Company v. Smith, 93 W. Va 646, 117 S. E. 900, that there is always implied in every oil and gas lease a covenant to drill the number of wells reasonably necessary to develop the property and prevent drainage by operations on adjoining lands. The plaintiffs set up in the bill the facts that they had refrained from leasing the land for a score of years for the purpose of finding some one who would immediately develop it by drilling. When it was leased to the defendant, a provision was inserted that the lessors were to have one-eighth of the gas at 14c per thousand cubic feet. By this provision they in fact became partners in the development of the lease. The provision in the lease in regard to the payment of the rental was merely for the delay in drilling. The Nutter well and the Morrison well within 400 feet and 391 feet, respectively, of plaintiffs' land had been drilled and were in possession of the defendant at the time of the suit, According to the allegations in the bill, the defendant gas company is draining plaintiffs' land of its gas by means of the Nutter and Morrison wells; and the plaintiffs, due to defendant's inaction, are losing their gas, and the right to oneeighth of the gas produced at 14c per thousand feet. The onus of this suit is for protection from this drainage by the defendant. We have held that equity has jurisdiction at the suit of the lessor against lessee on covenants broken to enforce a specific performance of the terms and provisions of a lease of land for oil and gas...