« PreviousContinue »
eevry gas well drilled on said premises ; , rentals alleged to be due under an oil and said payment to be made on each well
Reversed. within sixty days after each well is com- The facts are stated in the opinion. pleted, and to be paid yearly thereafter
Messrs. Neely & Lively for plaintiff in while it is a gas well,” interpreted in the light of all the facts and circumstances
Messrs. B. L. Butcher and Harry Shaw surrounding the parties, their relation to
for defendant in error. each other, the objects and purposes of entering into the contract, and what they subsequently did under the contract, mean Miller, P., delivered the opinion of the a gas well which, considering its location court: with reference to any market for gas, its In an action by lessor against lessee to capacity as a gas producer, can be profit- recover gas rentals alleged to have accrued ably operated as such, and not a well pro- to him from an alleged gas well drilled on ducing oil in large quantities and some gas, his land, under his lease, the covenant of and operated for many years by lessee as the lease relied on as the basis of his acan oil well, and without demand for gas tion is substantially as follows:
“In conrental by lessor.
sideration of the premises, the said party of Same rentals - use of gas.
2. The fact that some gas is found in the second part covenants and agrees, lst, one or more of the sands penetrated in to deliver to the credit of the first party, drilling such well, and is afterwards run his heirs or assigns, free of cost in the from the casing head into a gas line from pipe line ... one eighth ($) part of wells on an adjoining lease operated by the all oil produced and saved from the leased same lessee, and the gas from all utilized premises; and to pay three hundred ($300) in operating the wells on both properties, dollars per year for the gas from each and according to a custom prevailing among every gas well drilled on said premises; oil operators, does not render the lessee in said payment to be made on each well withsuch a lease liable to the lessor for annual gas rentals provided for in such lease.
in sixty days after well is completed, and
to be paid yearly thereafter while it is a (December 22, 1914.)
On the trial plaintiff obtained a verdict
and judgment for $2,669,13, and to that RROR to the Circuit Court for Marion judgment defendant obtained this writ of
County to review a judgment in plain error. tiff's favor in an action for the recovery of The lease is dated October 14, 1903. The see can, by reasonable effort, market or sell, consideration governs the conclusions of the gas with reasonable profit, but is also the courts. made to include wells which produce gas in In Hazel Green Oil & Gas Co. v. Collier, such quantities that the lessee can use it 130 Ky. 132, 110 S. W. 343 (rehearing deon the premises with reasonable profit. nied in 130 Ky. 139, 112 S. W. 1090), the There seems to be some disagreement be- sinking of a test well within one year, as tween that case and Taylor v. Peerless Ref. required by the terms of an oil and gas Co. 14 Ohio C. C. 315, 7 Ohio C. D. 368, lease, is held not to be sufficient to satisfy with respect to wells which produce gas in a clause providing for the extension of the quantities sufficient to be used on the prem- term of the lease if “wells are completed ises, the latter case holding that an oil. during said term.” The court says: “Readproducing well which gives off enough gas | ing these provisions of the lease together, to run boilers on the premises, but not we think it manifest that the writing draws enough to market, is not a gas well in the a distinction between the test well, which general sense in which it is used in a lease it provides for, and other wells. In other providing for the payment of a certain words, the expression, provided wells are rental for each gas well located on the completed during said term,' means that leased property. The latter case, however, other wells are to be completed during the does not make it clear just how much gas term, besides the test well, and that the was used on the premises, and it may be mere sinking of a test well during the term, that in this case there was not such a quan- without marketing the gas found in it, does tity that the lessee could be said to have not entitle the lessee to an extension of used it with reasonable protit, as prescribed the term.” in the definition in PRICHARD V. FREELAND In Federal Betterment Co. v. Blaes, 75 OIL Co.
Kan. 69, 88 Pac. 555, where a hole was No other cases have been found which at. drilled to the depth of 1,000 feet and then tempt to define the term in the general plugged up without being shot, it was held sense in which it is used in gas leases. In that a well had been drilled within the a few cases, however, questions have arisen terms of the oil and gas lease providing for as to what kind of wells will satisfy specitic the forfeiture of the lease "if at any time clauses in oil and gas leases referring to after a well or wells have been drilled, six the construction of wells. In these cases months shall elapse without any revenue the wording on the part of the leases under i being received by the lessors." E. L, D.
well in question, the only one drilled on uncontrolled, and uncontrollable, and final. the land, was begun soon after the date of ly die, like some great giant, of self-ex. the lease and completed about August, 1904, haustion, a total loss to all concerned. and thereafter and up to the date of this Surely neither of these extremes could have suit, August 24, 1911, it was operated as been contemplated. Manifestly the parties an oil well, having produced some fifteen contemplated a well having such a pressure thousand barrels of oil, one eighth of which and volume of gas, and considered with rewas delivered to the plaintiff lessor in ac- spect to its location, its proximity to the cordance with the covenants of the lease. market, as could be operated profitably,
Outside of his brother, who he says was and the gas utilized either on the leased a member of defendant corporation, but in premises, or disposed of commercially to what capacity he does not say, nor does it others. True, we decided in McGraw Oil & appear, and which he says was a year or Gas Co. v. Kennedy, 65 W. Va. 595, 28 two after the well was drilled, plaintiff L.R.A. (N.S.) 232, 64 S. E. 1019, with redoes not pretend to have ever mentioned spect to a lease for oil and gas for five the subject of gas rentals, until about the years “and as long thereafter as oil or gas, time of bringing this suit. He never pre- or either of them, is produced by the party sented any bill, or made any demand for of the second part,” that the lessor could the gas rental. He says that about two not forfeit it because he thought gas was years before giving his testimony on the not being produced in paying quantity, the trial at November term, 1912, he wrote the lessee claiming that it was, and being willdefendant company that he intended to ing to pay the stipulated sum for the well make a demand for this rental, but did not as a gas well. We held that it was for tell them he expected to demand pay for the lessee to say whether gas was being profive or six years back rent.
duced in paying quantities, acting in good The declaration has the common counts faith. . The ground of that decision was in assumpsit, without bill of particulars, that as the lessor got the price of the gas and a special count demands annual gas well, he ought not to be heard to complain, rentals alleged to have accrued to plaintiff if the lessee was willing to pay in good under said lease, beginning with the faith therefor, and to protect his lease for day of October, 1904, to and including the oil and gas from forfeiture.
day of October, 1910, at $300 per To the same effect is Lowther Oil Co. v. year, with interest on each of said pay- Miller-Sibley Oil Co. 53 W. Va. 501, 97 Am. ments from the day they became due re- St. Rep. 1027, 44 S. E. 433, 22 Mor. Min. spectively until paid, aggregating the sum Rep. 656. But in Carnegie Natural Gas of $2,100. The damage laid in the writ and Co. v. South Penn Oil Co. 56 W. Va. 402, declaration is $2,500.
49 S. E. 548, involving a co-operating conThe sole question presented on the trial tract, under which, if an oil well was de by pleadings and proofs, and by instruc-veloped by either, the oil company was to tions given and refused, and motion for a get the well, by paying the cost, and if a new trial, denied, is, what is a “gas well” gas well was developed, the gas company within the meaning of the contract and the should get it by paying the cost thereof, intendment of the parties?
we decided, in effect, that "gas well” in the One of the cardinal rules of construction, contract meant a well which developed gas where there is ambiguity or uncertainty in in paying quantities, not a mere pittance the meaning the words of the contract, of gas, or in a quantity that could not be is to take the instrument by its four cor- marketed and used profitably by the owner. ners and read and interpret it in the light In Roberts v. Ft. Wayne Gas Co. 40 Ind. of all the facts and circumstances sur App. 528, 82 N. E. 558, the lessor sued rounding the parties at the time of making lessee for gas rentals alleged to be due him the contract, their relation to each other, under a lease for oil and gas providing, if the objects and purposes of entering into "gas is found in sufficient quantities to the contract, and their actions and conduct market the same," the lessor should be paid at the time and subsequently, and the $100 per annum in advance for each gas things done under the contract in the execu- well drilled, and that operations, should be tion thereof.
commenced and four wells completed within Literally speaking, perhaps, a gas well four months from date, or all paid for after is any well which produces gas. But it that time, and that if lessee should fail to cannot be supposed that the parties to this perform such work or to pay the rental, lease meant a well which produced gas in he should in lieu thereof, and in full for such quantity that when ignited it should damages for his default, pay annually durburn like a mere taper on the sacred altar, ing the term $100, for each of such wells. or, as sometimes happens, should send up. The lessee drilled the four wells within the ward a screaming, hissing shaft of flame, 'time prescribed, and for a time produced. gas in paying quantities. He also drilled wells producing gas on an adjoining lease an oil well. When the gas wells ceased to operated by defendant, and the gas from produce gas in paying quantities he stopped this line used in operating the wells on paying the annual rentals therefor, but be both leases, regardless of whether the gas cause the oil well continued to produce oil, from plaintiff's lease escaped to and was did not surrender the lease. The appellate consumed on the adjoining lease, or vice court held that it was necessary for plain-versa, defendant should be required to pay tiff to aver and prove that the gas wells the gas rentals for all the years covered by continued to produce gas in paying quan- the declaration. We cannot bring ourselves tities for the period for which rental was to the conclusion that this is a just or claimed; that the lease sued on was a lease reasonable interpretation of the contract. to take the profit from land, and when the We find little in the adjudged cases throwprofit became exhausted the liability to pay ing light upon this question.
There is the consideration therefor was abrogated. much evidence in the record showing and Citing numerous cases from Indiana, Penn- tending to show a custom prevailing in this sylvania, and Ohio.
state not to charge the lessee with gas when Indiana Natural Gas & Oil Co. v. Wil produced in small quantities along with oil, helm, 44 Ind. App. 100, 86 N. E. 86, was and used for operating the well on the preman action for gas rentals under a lease pro- ises, unless the contract specifically providing that if gas was found in sufficient vides otherwise. In Wright v. Warrior Run quantities to market, lessor's compensation Coal Co. 182 Pa. 514, 38 Atl. 491, 19 Mor. should be a certain sum per well. The com- Min. Rep. 102, it was decided, that under plaint charged that gas was found in suffi. the custom which prevails in the anthracite cient quantities to be marketed, and to be coal region, coal used by a lessee in the piped away to market, and that there were operation of the furnaces of the mine is not good markets within 10 miles, and others subject to royalties, unless provision is farther away, where gas could have been made therefor in the lease, and we think delivered and sold at a profit to defendant. this rule ought to be made applicable to The jury were properly instructed, so the the production of oil and gas under an appellate court held, that in order to re- oil and gas lease. Applying this rule in cover plaintiff must, by his evidence, affirm the case in hand, what are the facts disatively answer the question: “Did said | closed by the record ? It is not alleged nor wells, or either of them, produce gas in proven that defendant ever sold a foot of sufficient quantities to enable the defend-gas or reaped any profit from the gas proant (appellant) to pipe the same away duced from the well. The evidence is overto market therefor, and realize therefrom whelming that when the well in question and thereon a fair, reasonable, and just was drilled, in 1904, there was practically profit, everything considered ?"
no market for gas in the vicinity of this Now, while the lease in that case pro- well, and there was absolutely no market vided for payment of gas rentals if gas for gas produced from wells of its caliber. were found in suflicient quantities to mar. Not a witness swears that defendant by ket,-a provision not in terms contained in proper effort could have sold this gas locally the lease involved here,--was not the plain- or to the large gas companies engaged in tiff here bound to allege and prove that piping and marketing gas commercially. gas was produced in such quantities, con- A well was drilled on an adjoining tract sidering the time, place, circumstances, and about the same time, by another company, conditions referred to, that defendant did producing oil and about the same quantity or could by reasonable effort have marketed, of gas from the same sands, and one of the sold, or used the gas, with some reasonable owners of that well swears its operation as profit? We think this must have been a gas well was not even considered; that contemplated by the parties when they made there was no market for the gas produced their contract. And as to plaintiff, we from such wells in that vicinity. Besides, have him admitting on cross-examination, defendant company about the same time that his understanding, at the time, was drilled other wells on the Michael lease adthat a gas well meant one that would be joining plaintiff's land and got gas along profitable to operate.
with oil in some of them, particularly No. It is contended, however, that as the 5, which they say was much stronger in evidence shows the well was inclosed by a
well on plaintiff's land, and casing head, the gas confined, and turned | which they made the greatest effort to disinto a circuit line, and connected with other 'pose of as a gas well to the gas companies,
but without success; that these gas com- | NEW JERSEY COURT OF ERRORS panies declined to take gas from wells pro
AND APPEALS. ducing gas along with oil. There is some evidence that by using an extra string of
EMMA J. CORDUAN, Appt., casing in a well producing oil and gas
LEONARD J. McCLOUD. from different sands, the gas and oil can be kept separate, but that the casing is
(- N. J. — 93 Atl. 724.) very expensive, and unless the well is of such caliber as to be profitable, and there Trial jury good faith of tender of is a market for it, the operator would not marriage. be justified in incurring the expense of put- 1. A tender of performance of a promise ting in a double line of iron casing.
of marriage must be made in good faith, But it is contended that defendant con
and if, in any view of the testimony, the nected up this well by a circuit pipe line good faith of the tender is questionable, with the gas wells on the Michael lease, and
then it is a question of fact for the jury.
Breach of promise influence of inten. used gas from the Prichard well to operate
tion. the wells on the Michael lease, and burned
2. In an action for breach of promise to it in a couple of houses on the Michael land. marry, an unequivocal intention on defendNow the facts are that gas from the wells ant's part not to perform his contract may on the Michael lease was first piped to the be inferred from his conduct. Prichard well in 1905, and used to clean Same - time for action. out that well, and to run the tools for a 3. Where no time of performance of a fishing job defendant had on hand at that marriage contract is fixed, an action for
breach thereof may be brought after a well. After the work of cleaning out the
reasonable time. well and the fishing job had been completed, Contract to marry — necessity of writthat well was connected to the pipe line
ing. that had brought the gas from the other 4. It is presumed that a marriage conwells, and all run together for the mutual tract, where no time is fixed, is not intendbenefit of both leases, and the testimony of ed to be performed more than a year after defendant shows, or tends to show, that its making, and therefore it does not fall
within the statute of frauds, requiring a the wells on the Michael lease, so joined promise not to be performed within a year up, produced more gas than the well on the to be in writing; and, as such a contract is Prichard, and that in fact the Prichard possible of performance within a year, a jury well got more gas from the Michael lease would have a right to infer that the defendthan it got from the Prichard, and that, fact he permitted five years to elapse with
ant did not intend to perform it, when in therefore, defendant got no kind of profit, out having done so. from the gas from the Prichard, as it had Breach of promise defense tender. gas enough from the Michael lease to
5. Defendant's offer of mariage after operate the wells on that property.
breach is, as a rule, no defense. But the strongest phase of the case in Same - termination of contract. favor of defendant is, that the well was 6. An offer on the part of the defendant operated not as a gas well, but as an oil to fulfil the promise of marriage after his well. There is little evidence that anyone answer or in open court, is not a defense
refusal to do so, or a renewed offer in his connected with the property ever thought, unless it is made bona fide, and unless, also, of treating it as a gas well, until the oil the plaintiff has not signified an intention production had run so low as to bring small to regard the contract as at an end. These returns to lessor or lessee, and gas had questions are questions of fact, and are
for the jury. more into demand.
Then it was, after seven years of operating the well as (Black, Terhune, and Williams, JJ., disan oil well, plaintiff seems to have con
sent.) ceived the notion that his well was also
(March 1, 1915.) a gas well, and that he ought to have the
Head notes by WALKER, C. back gas rental, as well as the oil royalty; wherefore his suit.
Note. Promise of marriage as within We do not think a case has been made
statutes of frauds as to contracts not
to be performed within a year. entitling plaintiff to the gas rental, and we are of opinion to reverse the judgment whether a promise of marriage is within
Most of the authorities on the question and remand the case for a new trial.
the statute of frauds as to contracts not
to be performed within a year have simply Petition for rehearing denied April 20, applied the general rule as to the construc1915.
tion of this clause of the statute of frauds.
A as would
granted by the Hudson County Circuit fulfil defendant's engagement. of the Supreme Court in an action brought 38 Cyc. 166, 167; 21 Enc. Pl. & Pr. 554; to recover damages for breach of a promise Kaufman v. Bush, 69 N. J. L. 645, 56 Atl. of marriage. Reversed.
291, 15 Am. Neg. Rep. 137; Hayward v. The facts are stated in the opinion.
North Jersey Street R. Co. 74 N. J. L. 678,
8 L.R.A. (N.S.) 1062, 65 Atl. 737; Laragay Messrs. William D. Edwards, and Wil
v. East Jersey Pipe Co. 77 N. J. L. 516, 72 liam G. McLoughlin, with Messrs. Ed.
Atl. 57; Western Electrical Instrument Co. wards & Smith, for appellant:
v. Benecke, 82 N. J. L. 445, 82 Atl. 878, Upon the evidence as to the alleged “ten. Ann. Cas. 1913D, 11; Arrowsmith v. Van der” of marriage by the defendant on the Harlingen, 1 N. J. L. 26; Shotwell v. Dennevening of January 15, 1913, a question of man, 1 N. J. L. 174; 28 Am. & Eng. Enc. fact was presented which the trial court Law, 31; Nantz v. Lober, 1 Duv. 304; Potts had no right to withdraw from the jury, I v. Plaisted, 30 Mich. 149; McPherson v. In 20 Cyc. 206, it is said generally with the time the English statute was passed reference to this clause of the statute: “A were not actionable at law; but that, neververbal contract which is susceptible of com- theless, at an early day after actions on plete fulfilment within one year is not void such contracts became cognizable in courts under the statute of frauds because it is of law, the defense of the statute of frauds merely not likely or merely not expected to was interposed under that clause of the be performed within that time, or even statute which denies the right of action upbecause it is probable that it will not be on any agreement made upon consideration so performed. The question is not what of marriage unless the agreement is in the probable, expected, or actual perform- writing, and, though it was held that such ance of the contract may be, but whether, clause related only to agreements for maraccording to the reasonable interpretation riage settlements, there seems to have been of its terms, it requires that it should not no doubt in the minds of the judges that be performed within the year.
The promises to marry were within the general contingency upon which the performance of purview of the statute. the contract depends must be such as, in Also in Derby v. Phelps, 2 N. H. 515, it the ordinary course of nature, is likely to was held that a contract to marry which occur within a year.”
was not to be performed till the expiration Under this general rule, the agreements of about five years was within the statute in most of the cases have been held not to of frauds. The court said that had the be within the statute, and the court was agreement been that the contract should not called upon to decide whether a contract be fulfilled on a certain event which might to marry was in its nature such as to come or might not have happened within a year, within the statute of frauds if it was not but which in fact did not happen till after to be performed within a year. In the few a year, the agreement would not have been cases in which the latter question has within the statute; but that such was not arisen, the courts have disagreed.
the tenor of the agreement. It was said On the one hand, it has been held that also that such contracts cannot be “taken a contract to marry, not to be performed out of the statute by the circumstance within one year, is within that clause of that when the original statute of frauds the statute of frauds providing that no ac- passed under Charles the II., these contion shall be brought upon an agreement tracts were not sued at law, but were that is not to be performed within one year merely the subject of proceedings to from its making, unless in writing. Nichols compel a performance of them in the ecclev. Weaver, 7 Kan, 373.
siastical courts. For numerous kinds of And in Ullman v. Meyer, 10 Fed. 241, 10 contracts, not then in use and not then Abb. N. C. 281, it was held that a contract prosecuted in the common-law courts, have to marry, to be performed more than a since had birth under the new exigencies year after it was made, was within the stat- and improvements of society, and are all ute of frauds in New York; and it was brought to the test of the general provi. held also that such contracts were not taken sions of the statute." out of the statute by reason of the fact that, The weight of authority, it was said in in the clause of the statute referring to Barge v. Haslam, 63 Neb. 296, 88 N. W. 516, agreements made upon consideration of mar. affirmed on rehearing in 65 Neb. 659, 91 riage, there was an exception of mutual N. W. 528, seems in favor of the proposi. promise to marry, the exception being held tion that mutual promises to marry are to refer only to the clause in which it was within the inhibition of the provision of found.
the statute of frauds avoiding contracts In Ullman v. Meyer, supra, the court unless in writing which by their terms said that as an original proposition it might are not to be performed within a year. On be debated whether the statute of frauds a later appeal, 69 Neb. 644, 96 N. W. 245, was ever intended to apply to agreements the court, without deciding whether the into marry; that they were agreements of a structions of the trial court were correct private and confidential nature, which at that a contract to marry, to be performed