Wilson v. Mitchell

• Decision Date: 24 June 1932
• Citation: 53 S.W.2d 175,245 Ky. 55
• Parties: WILSON et al. v. MITCHELL et al.
• Court: Kentucky Court of Appeals

53 S.W.2d 175

245 Ky. 55

WILSON et al. v. MITCHELL et al.

Court of Appeals of Kentucky

June 24, 1932

Rehearing Denied Oct. 28, 1932.

Appeal from Circuit Court, Hart County.

Action by B. F. Wilson and another against J. H. Mitchell and others. From a judgment dismissing the petition, plaintiffs appeal.

Reversed with directions.

C. B Larimore and Dowling & Baird, all of Munfordville, Rodes &amp Harlin, of Bowling Green, and N. B. Hunt, of Henderson, for appellants.

John E Richardson, of Glasgow, Faurest & Faurest, of Elizabethtown, J. E. Tarrant, of Louisville, and C. E. Nichols, of Munfordville, for appellees.

J. P. Harrison, of Owensboro, amicus curiae.

REES J.

The appellees, J. B. Ferrin and Alice T. Payton, are the joint owners of a 97-acre tract of land in Hart county. On July 17, 1930, they executed and delivered to B. F. Wilson an oil and gas lease on their farm which provided that the lease should remain in force for a term of five years from its date and as long thereafter as oil and gas or either of them should be produced from the leased premises by the lessee. The lessors were to receive one-eighth of all the oil and gas produced. The lease also contained these provisions: "If no well be commenced on said land or said block on or before the first day of November 1930, this lease shall terminate as to both parties unless the lessee on or before that date shall pay or tender the lessor *** the sum of twenty five cents per acre per quarter, payable quarterly, which shall operate as a rental and cover the privilege of deferring the commencement of a well for twelve months from date. In like manner and upon like payment or tenders the commencement of a well may be further deferred for like period of the same number of months successively. *** Should the first well drilled on the above described land be a dry hole, then in that event, if a second well is not commenced on said land within twelve months from the expiration of the last rental period, which rental has been paid, this lease shall terminate as to both parties, unless the lessee on or before the expiration of said twelve months shall resume the payment of rentals in the same amount and in the same manner as hereinafter provided. And it is agreed that upon the resumption of payment of rentals as above provided by the last preceding paragraph hereof governing the payment of rentals and the effect thereof, shall continue just in force as though there had been no interruptions in the rental payments. *** It is agreed that the drilling of a well on said block of 1000 acres more or less pays the rental for the first year from date of said lease. This block is to be known as the W. C. Payton block."

When B. F. Wilson went to the home of Ferrin and Mrs. Payton to obtain the lease he was accompanied by his son, J. C. Wilson, and W. E. Payton, the son of appellee Alice T. Payton. W. E. Payton owned a 100-acre tract of land about one-half mile from the Ferrin-Payton tract. W. E. Payton had theretofore on the same day executed and delivered to Wilson a lease on his 100-acre tract of land, and it was stated in his lease that the block was to be known as the W. E. Payton block. The clause in the Ferrin-Payton lease, "this block is to be known as the W. C. Payton block," was written by B. F. Wilson's son, J. C. Wilson. It was intended that the blocked acreage of which the Ferrin-Payton land was to form a part should be known as the W. E. Payton block, but J. C. Wilson, in writing the description of the block in the lease, by mistake, wrote "W. C. Payton" instead of "W. E. Payton." The leased tract of land is described in the lease with particularity, but the only description of the block of which it was to form a part is that contained in the excerpts from the lease heretofore quoted. The lease was lodged for record in the office of the clerk of the Hart county court on September 22, 1930.

On October 28, 1930, an assignee of B. F. Wilson began drilling operations on the W. E. Payton tract of 100 acres. No well was commenced on the Ferrin-Payton tract, nor were any rentals paid or tendered to the lessors of that tract on or before November 1, 1930. On November 21, 1930, Ferrin and Mrs. Payton executed a lease to J. H. Mitchell on the land which had been leased to Wilson on July 17, 1930. On the same day Mitchell assigned a one-half undivided interest in the lease to appellee John E. Richardson; Richardson assigned part of his interest to appellee T. G. Yancey; and Yancey assigned part of his interest to appellee C.J. Breeding. Mitchell, Richardson, Yancey, and Breeding commenced drilling on the Ferrin-Payton farm on November 24, 1930, and soon thereafter completed three producing wells. The well which had been commenced on the W. E. Payton farm on October 28, 1930, was completed some time in November and was a producing well.

On November 29, 1930, B. F. Wilson brought this action in the Hart circuit court, in which he sought to have the lease executed to him on July 17, 1930, declared valid and to have the lease executed to J. H. Mitchell on November 21, 1930, declared invalid. The action was based on the theory that the commencement of a well on the W. E. Payton farm on October 28, 1930, relieved the plaintiff of the duty of drilling on the Ferrin-Payton farm or paying rental on or before November 1, 1930. The circuit court held the Wilson lease invalid and the Mitchell lease valid and dismissed Wilson's petition. Wilson has appealed.

J. H. Mitchell had both actual and constructive notice of Wilson's lease on the Ferrin-Payton farm and of its terms before he took the top lease on November 21, 1930. He had examined the records in the county clerk's office and found a number of recorded leases to Wilson on tracts of land contiguous to and in the vicinity of the Ferrin-Payton tract. In each of these leases it was stated that the land leased was part of the block of 1,000 acres known as the W. E. Payton block. The lease in question was the only one which referred to the W. C. Payton block. When he was negotiating with Ferrin for a top lease, Ferrin informed him that his land was a part of a 1,000-acre tract. Ferrin refused to execute the top lease until Mitchell convinced him that the Wilson lease had expired by reason of Wilson's failure to commence drilling on the land on or before November 1, 1930, and to pay or tender the lessors the rental stipulated in the lease.

On the trial of the case parol evidence was offered by the plaintiff to show what lands constituted the 1,000-acre block referred to in the lease. It was shown that eleven contiguous tracts of land, including the W. E. Payton tract of 100 acres and the Ferrin-Payton tract of 97 acres, had been selected by Wilson to constitute the block to be known as the W. E. Payton block, and Ferrin testified that he knew before the lease to Wilson was executed what farms were to be included and that if a well was commenced on or before November 1, 1930, on any farm within the block, the payment of rentals on his land would be postponed one year from the date of the lease. Mrs. Payton testified that she knew when she executed the lease to Wilson that her land was to form part of a 1,000-acre block, but she did not inquire and was not informed at the time what other lands were included. Later she learned that certain farms in the vicinity, including that of her son W. E. Payton, where drilling was commenced on October 28, 1930, composed the block referred to in the lease signed by her, and she was satisfied with the block thus formed.

It is appellees' contention on this appeal that the Wilson lease on the Ferrin-Payton farm expired on November 1,...