Union Oil & Gas Company v. Cross
| Citation | 220 Ky. 271 |
| Parties | Union Oil & Gas Company v. Cross, et al. |
| Decision Date | 24 June 1927 |
| Court | United States State Supreme Court — District of Kentucky |
1. Mines and Minerals. — Where owners of oil lands, after conveying undivided one-half interest in royalties to which they were entitled, gave second lease to a different lessee, but made no objection to first lessee's drilling, held, second lessee, who failed to assert his rights until after successful drilling by first lessee had no rights superior to first lessee, or his successors in interest.
2. Equity. — If circumstances are such as to show an intention on the part of a claimant to reserve a right of election to affirm or repudiate a contract according to the event thereof, and the delay is attributable to nothing other than a desire to await the event, and repudiate it if it turns out to be a bad contract, and to claim benefit if it turns out to be good, equity will not lend claimant any aid.
3. Equity. — Generally parties will be required to assert their rights within a shorter time, where the subject-matter of their contracts is subject to sudden and rapid increases or decreases in value.
Appeal from Johnson Circuit Court.
E.L. McDONALD, D.L. HAZELRIGG and HOLT, DUNCAN & HOLT for appellant.
O'REAR, FOWLER & WALLACE and WHEELER & WHEELER for appellee.
Reversing.
On May 19, 1916, M.H. Evans and his wife, Martha Evans, as party of the first part, in consideration of $1, executed a lease to A.C. Albin, party of the second part, whereby they granted and leased unto Albin all the oil and gas in and under a certain tract of land, containing 65 acres, together with the right to enter thereon at all times for the purpose of drilling and operating for oil or gas and to erect and maintain buildings and structures and lay pipe lines necessary for production and transportation of oil and gas; the first party to have one-eighth of all oil produced from the premises to be delivered in pipe line with which the second party connected his wells; and if gas was found in sufficient quantities to transport, the second party was to pay first party $100.00 annually for each well for gas so transported, and the first party was to have gas at well free of cost to heat and light one dwelling. Albin was to have and to hold the above premises for 10 years, or as long as gas and oil was found in paying quantities, on these conditions: In case no well was commenced within 12 months then the grant should be null and void, unless the second party should thereafter pay at the rate of 10 cents an acre for each year drilling was delayed, and a deposit to the credit of first party in any bank doing business in Blain, Ky., should be good payment for any money falling due; and in case no paying well was drilled on the premises within 10 years the grant should be void.
On November 9, 1916, Evans and wife conveyed the land with general warrant to Sherman Lyon, their son-in-law, in consideration of love and affection and their maintenance during their natural lives.
M.H. Evans having died, on December 2, 1917, Sherman Lyon, his wife, Lora Lyon, and Martha J. Evans, the widow of M.H. Evans, conveyed to the Southwest Petroleum Company, in consideration of $65.00 in hand paid, a one-half undivided right to their interest in all royalties owned, had, or reserved in the Albin lease.
On February 9, 1920, Sherman Lyon served notice on the Union Gas & Oil Company, to whom in the meantime the Albin lease had been transferred, notifying it to begin operations at once by actually drilling in good faith and to prosecute the work continuously until the premises were developed, and that, if it failed to do so within a reasonable time, "suit will be brought against you for the cancellation of said lease." The notice also was to the effect that Lyon would not accept further rentals on the lease, and that the bank had been notified to this effect.
No suit was brought, but on May 16, 1921, Lyon and wife and Mrs. Evans executed a lease on the premises to James E. Cross in consideration of $1 cash in hand paid. In this paper there are blanks left as to the date before which a well is to be put down or as to the rent to be paid if a well was not put down. But at the same time there was a written contract signed by all the parties setting out the lease and providing that, as there was a prior lease on the premises, it was agreed that, if the parties of the first part should succeed in having the prior lease canceled, as they therein undertook to do, immediately upon its cancellation by a judgment of a court of final jurisdiction, Cross would pay them the sum of $3,000.00 and would begin a well on the premises within 30 days thereafter. No suit was brought after this contract was made and nothing was done by Cross, except that Cross put up notice on the land stating that he was the owner of a valid oil and gas lease thereon and all parties were notified not to move any drilling rig thereon or trespass in any manner upon his rights under his lease. These notices were nailed on the gate posts where the road entered the land and at another point on the land. In December, 1921, the Union Gas & Oil Company, having notice that the lease had been made to Cross and of the notices which Cross had put up, moved one of its rigs upon the premises. Lyon and his family did not object. Cross knew what was going on and held his peace. In February, 1922, oil was struck, and other wells were afterwards put down by the company. On June 12, 1922, Cross brought this suit against the Union Gas & Oil Company, Sherman Lyon,...
To continue reading
Request your trial