Webb v. Croft

• Decision Date: 10 April 1926
• Docket Number: 26,581
• Citation: 120 Kan. 654,244 P. 1033
• Parties: FRANK WEBB, Appellee, v. JOHN CROFT, P. J. SONNER and E. D. BEDFORD, Partners as THE SONNER GAS AND SUPPLY COMPANY, Appellants
• Court: Kansas Supreme Court

244 P. 1033

120 Kan. 654

FRANK WEBB, Appellee, v. JOHN CROFT, P. J. SONNER and E. D. BEDFORD, Partners as THE SONNER GAS AND SUPPLY COMPANY, Appellants

No. 26,581

Supreme Court of Kansas

April 10, 1926

Decided January, 1926.

Appeal from Elk district court; ALLISON T. AYRES, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. MINES AND MINERALS--Oil and Gas Lease--Implied Covenant to Develop. A lease of land giving the exclusive right to the lessees to drill and operate for oil and gas thereon for a stipulated period and as long thereafter as either gas or oil is produced, for a cash consideration of $ 1 per acre, and providing that the lessor should have one-eighth of the oil produced and $ 200 per year for the gas produced from each well, and also gas for the dwelling house of the lessor; and further, that a well should be completed within one year from the date of the lease, or if not completed in that time the lessee should pay $ 1 an acre until completion: Held, that under the lease there is an implied covenant or condition that there will be reasonable development of the land and the drilling of such number of wells as the circumstances warrant, and as would ordinarily be required on such lands in order to afford protection to the rights of both parties to the lease.

2. SAME -- Sufficiency of Development -- Evidence. Upon the evidence it is held that the lessee had not made sufficient or such development as is required under the lease.

3. SAME--Failure to Develop--Remedy of Lessor. The remedy of a recovery of damages for the failure to develop not being adequate or practicable, it was competent for the court to decree further development by the lessee upon reasonable and just terms and conditions.

4. SAME -- Development by Order of Court -- Reasonableness of Order. The future development ordered by the court upon conditions prescribed for the same, examined and held not to be unreasonable or unjust.

E. L Foulke, James B. Nash and Roy H. Wasson, all of Wichita, for the appellants.

Clifford Sullivan, of Howard, for the appellee.

OPINION

JOHNSTON, C. J.:

In form this was an equitable action to quiet title. The question tried out was the respective rights of the lessor and lessee under an oil and gas lease, and the lessee has appealed from the judgment by which their rights were determined.

On February 16, 1916, Frank Webb and his wife executed a lease on several tracts of land amounting to 580 acres in the vicinity of Moline, to Richey and Kendall, for a cash consideration of $ 580. The term of the lease was five years from its date and "as long thereafter as oil or gas or either of them is produced from said land by the party of the second part, their heirs, administrators, executors, successors or assigns." In addition to the cash consideration it was stipulated that the lessor should have free of cost one-eighth of the oil produced on the premises and $ 200 per year for the gas produced from each well where only gas was found, and also gas for the lessor's dwelling house. There was a stipulation that the lessee should complete a well within twelve months from the date of the lease or pay to the lessor at the rate of $ 580 per year for each year of delay until drilling should be completed. There have been several assignments of the lease, and the rights under it have been duly acquired by the defendant, the Sonner Gas and Supply Company. There was no development on the premises until shortly before the expiration of the five-year period, but a producing gas well was drilled and was completed one day before the expiration of the lease. The rental of $ 1 an acre has been paid by the defendants and the royalty of $ 200 on the gas well was paid for the year following its completion, and a like amount each year since that time, so that nothing was due the lessor on the lease when the action was begun. It appears that in August, 1921, a producing well was drilled on other land about three-fourths of a mile from plaintiff's premises, and since that time a second oil well has been drilled a little more than three-fourths of a mile distant from the premises of plaintiff, and these wells are the only oil production in that vicinity. Aside from the gas well mentioned the defendant has two small gas wells in the vicinity, and with the gas derived from these wells and the one on plaintiff's land the defendants are supplying the residents of the city of Moline, under a franchise that has been granted to them. In order to furnish gas to meet this demand of the citizens of Moline, the defendants have found it necessary to buy gas from another gas company during the winter time. Defendants pleaded and claimed that greater development was not justified, as there was no market for gas in the vicinity of Moline except for so much as will meet the needs of the residents of that city, and that in order to be assured of a gas supply it is necessary for them to hold large tracts of land under lease, so that if the supply from the wells now in use should fail they may obtain gas from other wells, and that it is impracticable and against public policy to drill more wells and produce gas in any greater quantities than can be used under their franchise with the city of Moline.

The court found that defendants had drilled a producing gas well prior to the expiration of the five-year period named in the lease and had paid to plaintiff the $ 200 as royalty for the gas well for the year following February 16, 1921, and every year thereafter. It was further found that there was nothing due the plaintiff at the time the action was...