Young v. Forest Oil Co.

• Decision Date: 30 December 1899
• Docket Number: 184
• Citation: 45 A. 121,194 Pa. 243
• Parties: Andrew B. Young. v. Forest Oil Company et al., Appellants
• Court: Pennsylvania Supreme Court

45 A. 121

194 Pa. 243

Andrew B. Young. v. Forest Oil Company et al., Appellants

No. 184

Supreme Court of Pennsylvania

December 30, 1899

Argued November 6, 1899

Appeal No. 184, Oct. T., 1899, by defendants, from decree of C.P No. 2, Allegheny Co., Oct. T., 1898, No. 678, on bill in equity. Reversed. DEAN, J., dissents.

Bill in equity for forfeiture of an oil lease or in the alternative for the specific performance of covenants contained in the lease, by sinking additional wells.

FRAZER J., found the facts to be as follows:

1. On and before October 21, 1889, the plaintiff was the owner of fifty three acres of land situate in Robinson township, Allegheny county, subject only to a dower interest of his mother, Mary Young, until her death, which occurred on January 7, 1892. On October 21, 1889, the plaintiff and his mother leased the said premises for oil and gas purposes to T.J. Vandergrift, the lessee, to hold the premises for and during the time herein limited and specified, and as much longer as gas or oil is found or produced in paying quantities, and the rental or royalty is paid as herein agreed upon, the lessee to pay an annual rent of $500 for each gas well of sufficient capacity to justify marketing its product, and deliver the plaintiff in tanks one sixth of all oil produced from the premises. It was further provided in the lease that all abandoned wells to be securely plugged by the lessee, "or (at the option of the first parties) be surrendered to the first parties for their sole and absolute use."

2. Numerous assignments of interest in said lease have been made since its execution by the Youngs to Vandergrift, the different owners and the time during which they held as shown by the transfers being as follows: T.J. Vandergrift, from October 21, 1889, to October 14, 1890; T.J. Vandergrift, Geo. H. Ahrens, H.W. Ddell, Cyrus Underwood, G.W. Sill and T.E. Murphy from October 14, 1890, to October 21, 1891; Geo. H. Ahrens, H.W. Odell, G.W. Sill, S.S. Henne and J.A. Cadwallader from October 21, 1891, to January 16, 1896; Geo. H. Ahrens, G.W. Sill, S.S. Henne, J.A. Cadwallader and H.M. Cochran from January 16, 1896, to August 22, 1896; Geo. H. Ahrens, G.W. Sill, S.S. Henne, H.M. Cochran and M.A.W. Cadwallader from August 22, 1896, to August 28, 1897; Geo. H. Ahrens, G.W. Sill, H.M. Cochran and S.S. Henne from August 28, 1897, to September 1, 1897; Geo. H. Ahrens, G.W. Sill, H.M. Cochran and H.W. Odell from September 1, 1897, to January 26, 1898, and the Forest Oil Company from January 26, 1898, to the present time.

3. Under the lease five wells have been drilled on the premises, known and designated respectively as Nos. 1, 2, 3, 4 and 5, No. 1 being located on the northwest corner of the farm 224 feet from Frank Schuler's line. This well was completed in 1890 and produced oil at an average rate of 150 barrels an hour for the first thirty days; its output gradually decreased until January, 1891, when its production, after being cleaned out, was twenty-five barrels per day, and it has continued to decrease in production until at this time it is only producing one half barrel per day. Immediately after the completion of well No. 1, wells Nos. 2, 3 and 4 were drilled, and each produced oil for a time, and were abandoned in the latter part of 1892 on account of their small output, their production at the time of abandonment being as follows: Wells Nos. 2 and 3 each one fourth barrel daily, and well No. 4 one half barrel per day; well No. 5 located 252 feet west of plaintiff's east line and nearly midway between his north and south lines was drilled in 1896 through both the 100 foot and fourth sands without obtaining either oil or gas.

4. The district in which plaintiff's farm is situated is known as the Forest Grove Oil Field, and in all wells drilled in that field oil is obtained from what is known as the 100 foot sand, except in one well known as the Sarah J. Phillips No. 3, in which the oil is obtained from what is known as fourth sand, this sand being found about feet below the 100 foot; the Phillips No. 3 is about 1,000 feet south of the southwest corner of plaintiff's farm, and about 2,000 feet southwest of his well No. 5.

5. Wells have been drilled on all farms adjoining the plaintiff's farm, and in every instance oil has been obtained except in the well known as Parsonage Oil Company No. 1, which is a gas well, and plaintiff's No. 5 well which produced neither oil nor gas; the production of the wells on plaintiff's and adjoining farms from the discovery of oil in 1890 until June, 1899, is approximately as follows:

A.B. Young

farm 4 wells, 150,000 barrels.

McKown Heirs

farm 4 wells, 135,000 barrels.

Eliza McElherron

farm 5 wells, 44,000 barrels.

Sarah J. Phillips

farm 4 wells, 52,000 barrels.

Frank Schuler

farm 4 wells, 100,000 barrels.

Forest Grove church lot

1 wells, 43,000 barrels.

A.M. & M.E. Young

farm 4 wells, 24,000 barrels.

6. The defendant company, the present holder of the lease, has refused to drill additional wells on plaintiff's land, contending that this land has been sufficiently developed and that the probabilities of getting a well with a production sufficient to pay drilling and operating expenses and a reasonable profit are not sufficient to warrant the expense.

7. The land in the neighborhood of plaintiff's farm has been drilled as follows:

A.B. Young

farm one well to every 10 3/5 acres

Jno. McKown's Heirs

farm one well to every 10 acres

Eliza McElherron

farm one well to every 11 acres

Jno. & Anna Young

farm one well to every 12 acres

Frank Schuler

farm one well to every 11 5/6 acres

Philip Magnus

farm one well to every 16 2/3 acres

Sarah J. Phillips

farm one well to every 17 acres

D.K. Ewing

farm one well to every 34 acres

Parsonage Lot

four wells to five acres

School house Lot

one well to five acres

Church Lot

one well to three acres

8. The nature of the sand from which oil is produced determines the extent or the area which a well will drain. A well producing from a coarse and pebbly sand will drain from a greater distance than one producing from a hard and compact sand.

9. The sand from which oil is obtained in the Forest Grove Oil Field is of a loose coarse nature, and wells producing from that sand will draw for a distance of 500 feet.

10. The plaintiff can, were it not for the lease held by defendants, lease his said farm in its present condition for oil and gas purposes and have the east portion thereof tested by having drilled thereon one or more wells.

The court entered the alternative decree prayed for in the bill.

Error assigned was the decree of the court.

Decree reversed, and bill directed to be dismissed with costs.

J. McF. Carpenter, with him George J. Wolf and R.W. Cummins, for appellants. -- The demurrer should have been sustained; the action, so far as it relates to the Forest Oil Company, is an action of ejectment; the liability for damages, if any, is not joint, but several; the decree requiring additional drilling can operate only against the present tenant in possession, and the bill is palpably multifarious, both in respect to parties and purposes: Hoch v. Bass, 133 Pa. 328; Kitchen v. Smith, 101 Pa. 452; Duke v. Hague, 107 Pa. 57; Venture Oil Co. v. Fretts, 152 Pa. 451.

It may be said that equity will interfere to stay waste. This is true, but it will not interfere to oust a party who acquired an unquestioned legal right to enter and, pursuant thereto, entered and remains in possession, claiming title and right of possession: Warner v. Bennett, 31 Conn. 468.

A court of equity does not lend its aid to divest an estate for the breach of a condition subsequent: Livingston v. Tompkins, 4 Johns. Ch. 415; Copper Mining Co. v. Ormsby, 47 Vt. 713.

While the original lessee is liable on his contract for a breach occurring at any time, the assignee is only liable for a breach occurring during his tenancy: Bradford Oil Co. v. Blair, 113 Pa. 83; Washington Nat. Gas Co. v. Johnson, 123 Pa. 576.

The rule prevailing in equity is that to enable a lessor to declare and enforce a forfeiture, the right to do so must be distinctly reserved; the proof of the happening of the event upon which it is to be exercised must be clear; the right must be exercised promptly, and the result of enforcing the forfeiture must not be unconscionable: Thompson v. Christie, 138 Pa. 230.

M.A. Woodward, for appellee. -- A maintenance of the grant, while ignoring, rejecting and defeating the very purpose of the grant, and the consideration upon which it is granted, is beyond question a perverse and fraudulent use of the same, and a condition of things wherein a court of equity alone has the power to give adequate and complete relief, and it is fully armed to do so: Kleppner v. Lemon, 176 Pa. 502; McKnight v. Manufacturers' Natural Gas Co., 146 Pa. 185.

The bill is not multifarious: 1 Daniell's Chancery Pleading and Practice, p. 334.

Before STERRETT, C.J., GREEN, McCOLLUM, MITCHELL, DEAN, FELL and BROWN, JJ.

OPINION

MR. JUSTICE MITCHELL:

This is a bill by the lessor of oil land to declare a forfeiture of the lease for failure to develop the land and for damages for draining it from wells on neighboring leaseholds, or in the alternative for a decree of specific performance of the implied covenant,...