"A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon."

The following authorities also support the views herein expressed: Shipley v. Carroll, 45 Ill. 285; Clarke v. Johnson, 54 Ill. 296; McCormick v. Holmes, 41 Kan. 265, 21 Pac. 108; Ingham v. Primrose, 7 C. B. N. S. 82, 28 L. J. C. P. N. S. 294; Kinyon v. Wohlford, 17 Minn. 239 (Gil. 215.) 10 Am. Rep. 165.

It follows that the court did not err in refusing to give the instructions requested by the defendant Yoachum, and that the verdict of the jury and the judgment of the trial court must be sustained.

The judgment of the lower court should be affirmed.

By the Court: It is so ordered.

LAVERY et al. v. MID-CONTINENT OIL
DEVELOPMENT CO.

No. 6282-Opinion Filed Jan. 16, 1917.
(162 Pac. 737.)

Oil and Gas-Leases-Contract.

Where a drilling contract by the terms of which an oil company, in consideration of the assignment to it of a one-half interest in an ol and gas lease, specifically undertook to Cominence and with diligence drill a well on the premises into a designated sand, contained a clause providing that the failure to commence and complete such well should work a forfeiture and render the contract null and void, held, that such provision was for the benefit of the owner of the leasehold interest, and gave to him alone tue option to declare a forfeiture upon failure of the company to discharge its obligation to drill, and that the company could not by virtue of such forfeiture clause, without the consent of such Owner, terminate the contract by its own default, and thus escape liability for resultant Jamages.

(Syllabus by Bleakmore, C.)

Error from District Court, Okmulgee County; Wade S. Stanfield, Judge.

Action by G. W. Lavery and others against the Mid Continent Oil Development Company, a corporation. Judgment for defendant, and plaintiffs bring error. Reversed and remanded.

Merwine, Newhouse & Albertson and Lex V. Deckard, for plaintiffs in error.

Belford & Hiatt, for defendant in error.

Opinion by BLEAKMORE, C. This action was commenced in the district court of Okmulgee county to recover damages alleged to have been occasioned by the failure to sink a test well pursuant to the terms of an oil and gas drilling contract. The parties appear and are referred to here as in the trial court.

Plaintiffs were the owners of an oil and gas mining lease covering 13 1-3 acres of land in Okmulgee county, and on August 10, 1912, entered into a written agreement by the terms of which, in consideration of the drilling of a test well on the premises by defendant, plaintiffs undertook to assign an undivided one-half interest in and to said lease. defendant agreeing within three days thereafter to commence the moving of rig timbers and necessary equipment on the premises for the erection and completion of the same and the drilling of a well with due diligence into a designated sand.

The contract provided that the expense of drilling such well should be borne by defendant; that if oil or gas was found in raying quantities plaintiffs should pay out of the first production thereof one-half of the cost of casing, tubing, rods, lead lines, and other equipment used in operating the well, and should thereupon become the owners of an undivided one-half interest in the derrick, bull wheels, etc. The contract contained no surrender clause. It was also provided therein:

"The failure to begin operations as above set forth on the above-described premises. within the time provided in this contract, and to continue the same with due diligence to completion, shall work a forfeiture of the assignment of the interest in said leasehold premises herein agreed upon, and shall cause the same to be null and void and of no further force or effect whatsoever."

At the time of the making and delivering of said contract plaintiffs executed an as signment of an undivided one-half interest in said oil and gas lease, which together with the contract, was placed in an envelope and deposited in a bank, there being indorsed upon such envelope the following:

"Escrow agreement between Charles E. Martin, Mid-Continent Oil Company, and G. W. Lavery et al. This assignment to be taken down to Charles E. Martin, of the MidContinent Oil Development Company, when he has completed a well on the east 13 1-3 acres of the northwest quarter of the north west quarter of section 24-14 north, range 12

east, known as the Peggy Berryhill allotment."

Pursuant to the contract, a derrick was erected on the premises, about the time of the completion of which a well on an adjoining tract some 200 feet from the line of the lease in question was shown to be dry, and defendant thereupon refused to sink a well on the lands involved,

Thereafter plaintiffs commenced this action, alleging, among other things:

"That at the time of the execution of said contract, and now, adjoining oil wells, which would require offset wells, were and are now draining oil in large quantities from said leasehold premises, and will continue so to do; that by reason of the premises plaintiffs bave been damaged in the sum of $10,000."

The cause was tried to the court, which rendered the following judgment:

"The court finds that the following provision in the contract alleged and set forth in the petition and sued on herein, to wit: 'A failure to begin operations as above set forth on the above described premises within the time provided in this contract and to continue the same with due diligence to completion shall work a forfeiture of the assignment of the interest of the said leasehold premises herein agreed upon, and shall cause the same to be null and void and of no further force or effect whatsoever'-gave the defendant the right, after a derrick had been placed upon said real estate and operation begun thereunder, to declare said contract forfeited, and that by reason thereof the plaintiffs are not entitled to recover anything from the defendant in this action."

The principal question for our consideration is whether defendant had the right, by virtue of the forfeiture clause therein, in the absence of the consent of plaintiffs, to termi nate the contract by refusing to drill, with cut incurring liability for resultant damages.

The provisions of the contract in the instant case are clearly distinguishable from those in the oil and gas leases considered in Frank Oil Co. v. Belleview Oil & Gas Co, 29 Okla. 719, 119 Pac. 260, 43 L. R. A. (N. S.) 487, Deming Investment Co. v. Lanham, 36 Okla. 773, 130 Pac. 260, 44 L. R. A. (N. S.) 50, and subsequent decisions, and construed to confer a mere option upon the lessee, which he might exercise or not, without incurring further liability. Here for a sufficient consideration--the undertaking of plaintiffs to assign a one-half interest in an existing oil and gas lease, and with which they complied defendant specifically obligated itself to commence the drilling of a test well on the lands involved, and to continue the same

with diligence to completion into a designated sand, the approximate depth of which was evidently known to the parties.

The manifest purpose of the parties was the exploration and development of the leased premises. Defendant defeated this purposeby refusing to discharge its obligation, and now sets up its own default, under the forfeiture clause, as relieving it from the alfeged consequent damages. In our opinion this it may not do.

In Cohn v. Clark, 48 Okla. 500, 150 Pac 167, L. R. A. 1916B, 686, it was said by this court:

"If the lessee's contention be true, then we would meet the anomalous condition of æ party profiting by his own breach or gaining advantage by his own wrong. Under such a contract the lessor binds his hands and gets nothing for the lease unless the pleasure of the lessee moves him to action. Should we determine that a failure to pay the rentals stipulated, after a default in beginning operations, ipso facto operates to release the lessee from all liability, why incumber the lease with the sixth paragraph, known as the surrender clause? If failure to pay rentals nullifies the lease automatically, then there is no use of the surrender clause at all. It would be useless to insert a surrender clause in a lease requiring the lessee to go to the trouble. and expense of executing an actual reconveyance, when there is a provision in the lease for his advantage which is self-executing upon his failure to pay the rentals. Wemust construe this contract so as to give some effect and meaning to every part of the same. We are not permitted to say that the parties hereto have deliberately inserted a clause in this contract that is useless andir unnecessary, when a fair and reasonable con-.. struction will give weight and effect to it.. and, following this line, we conclude that if the surrender clause has been inserted in the contract for the benefit of the lessee, and affords him an easy and expeditious way of ridding himself of the contract and its liability.. the forfeiture clause in paragraph 1 must have been inserted for the benefit of the lessor only. This construction will give both of the clauses the weight and effect that were reasonably intended for them, and give both of the parties to the contract a means of protection and a way of relieving themselves of the contract."

See, also, Brown v. Wilson, 58 Okla. 392 160 Pac. 94.

In Thornton on the Law of Oil and Gas sec. 151, the rule is announced as follows:

"A lessee cannot set up his own default in order to terminate the lease or escape lia-bility under its provisions. If he make default, not keeping the covenants of the lease, it is with the lessor to declare a forfeiture or that it shall no longer be in force. If a

mining lease provide that if the mine should not be worked the lease should be void, the word 'void' means 'voidable' at the election of the lessor; and it will be necessary for him to do some act evincing an intention to avoid it before it can be considered avoided or terminated. This is true even though a clause provides that a failure to do the thing covenanted to do 'shall render this lease null and void, together with all rights and claims, and not binding on either party and not to be revived without the consent of both parties hereto in writing.' 'Such provisions of forfeiture,' said the court, 'are for the benefit of the lessor, and not for the benefit of the lessee. The lessee cannot plead his own default or wrong in discharge of his obligation to drill or pay rental.' The lessor has the option to discontinue the lease, on default of the lessee, or affirm the continuance of the contract. Where a lease provided that the lessee's failure to complete a well within a period certain, or, in default thereof, to pay a certain yearly rental, should render the lease 'null and void,' and that all rights and claims should therefrom cease, 'with like effect as if this agreement had never been made,' it was held that the lessee, by his own default could not relieve himself from liability already incurred."

In Woodland Oil Co. v. Crawford, 55 Ohio St. 161, 44 N. E. 1093, 34 L. R. A. 62, it is said:

"The principal contention in this case arises upon that part of the lease which provides that a test well should be drilled within one year, and in default payment of a yearly rental of $128 for further delay, and the further provision that a failure to drill the test well or pay the rental should render the lease null and void, and not binding on either party, and not to be revived without the consent in writing of both parties. It was this provision that was relied upon in the demurrer to the amended petition and in the third general defense in the answer of the oil company. Reduced to its essence, this is a promise in writing upon sufficient consideration to pay a yearly rental of $128 for the right to use, to a limited extent, certain premises, with a further provision in the same instrument, that a failure to pay should discharge the debt; that a de fault of payment should be the equivalent of payment; that failure should be performance; that nonpayment should be payment. Such contradictions in like instruments have caused the courts to look critically into such instruments to ascertain the real intention of the parties, because such contracts cannot be enforced according to their letter. A promise to pay cannot be fulfilled by a failure to pay. A promise to drill a well cannot be satisfied by failure to drill such well. The proper construction to be placed upon such an agreement is, that upon failure of the lessee to drill a well, or pay the rental, or both, as the case may be, the lessor may elect to put an end to the lease, and enforce payment of the promised rental. cr sue for damigs for

failure to drill the well, or he may elect to have the lease continue in force to the end of the term, and enforce the drilling of wells, and the payment of rentals, as provided in the lease."

In Evans v. Consumers' Gas Trust Co. (Ind.) 29 N. E. 398, 31 L. R. A. 673, it is held:

"A provision in an oil and gas lease that it shall be null and void on failure of the lessee to perform his agreement is no defense to him for breach of his agreement, but merely gives the lessor an option to declare it void for that reason."

The lease there under consideration contained a forfeiture clause similar to the one in the case at bar. In the body of the opinion it is said:

"'Appellee contends that a proper construetion of the leases gives it the option to avail itself of the benefits of the contract or not. as it pleases; if it fails to avail itself according to the terms of the contract and within the time limited, the right to do so expires and the contract becomes a nullity;' also that the contracts are not properly leases, but 'merely contracts between the parties for the doing of certain things and the payment of certain sums of money,' with the remarkable and peculiar feature of a contract that the entire failure of one party to perform not only forfeits his rights under it, but relieves him of liability. This is the effect, the appellee insists, of the provisions of the contract that a failure to complete such well or to make the deposit or payment as stipulated should render the lease null and void, and to remain without effect between the parties.

"It is, however, not material whether it be Whether it be regarded as a lease or not. regarded as a lease, a license, or a mere option, that construction is unsound."

In Galey Bros. v. Kellerman, 123 Pa. 491, 16 Atl. 474, it is said:

"The lessees had the right to enter at any time during the eight months and either drill a well or make the stipulated payment. If they did neither within the time limited, their right of entry was extinguished and the contract itself was at an end. But the acts that forfeited their rights did not also forfeit those of the lessor. Their liabilities growing out of their nonperformance are to be dis tinguished from their rights under the contract. The latter they could forfeit, but the former belonged to the lessor, and could be lost only by his act."

It is contended by defendant that, anticipating a breach of the contract, the parties by the forfeiture clause stipulated in lieu of damages that the failure on the part of defendant to comply with its obligation to complete the well should result merely in relieving plaintiffs of their undertaking tỏ execute and deliver an assignment of a one

half interest in the lease. This position we do not consider tenable.

In Woodland Oil Co. v. Crawford, supra, it is said:

"Parties may agree that in the case of failure to drill or failure to pay, or both, the lessee shall be relieved of his obligation upon such terms as the parties may agree upon in the lease, whether the terms be of value to the lessor, or loss or inconvenience to the lessee, but a naked default and nonperformance, as in this lease, cannot be held to discharge the obligations of the lessee. The following authorities are in point: Leatherman v. Oliver, 151 Pa. 646, [25 Atl. 309]; Ray v. Western Pennsylvania Nat. Gas Co., 138 Pa. 576 [20 Atl. 1065] 12 L. R. A. 290 [21 Am. St. Rep. 922]; Clark v. Jones, 1 Denio (N. Y.) 516, 43 Am. Dec. 706; Galey Bros. v. Kellerman, 123 Pa. 491 [16 Atl. 474]; Jones v. Western Pennsylvania Nat. Gas Co., 146 Pac. 204 [23 Atl. 386]; Wills v. Manu facturers' Nat. Gas.Co., 130 Pa. 222 [18 Atl. 721], 5 L. R. A. 603; Ogden v. Hatry, 145 Pa. 640 [23 Atl. 334]; Smith v. Miller, 49 N. J. Law, 521 [13 Atl. 39]; Taylor Land. & T., sec. 492; 1 Smith, Lead. Cas. 102, 119."

The question of the measure of damages is not properly before us on this appeal.

The judgment of the trial court should be reversed and the cause remanded.

By the Court: It is so ordered.

LOCKHART, County Weigher, et al. v. ANDERSON et al.

No. 8331-Opinion Filed Jan. 16, 1917.
(162 Pac. 946.)

Constitutional Law-Weights and Measures -Statutes - Validity — Equal Protection of Law-Due Process of Law.

Act of the Legislature of this state approved April 1, 1915, entitled "An act providing for the weighing of cotton at cotton compresses and making it a penalty for violation thereof, and repealing section 5 of chapter 24 of the Session Laws of 1913" (Sess. Laws 1915, p. 379), denies the right of a party to legitimately contract as to the weighing of cotton bought and delivered to a compress for compression, deprives one of his property other than by due process of law, and denies the equal protection of the law, and is therefore unconstitutional and void.

(Syllabus by Collier, C.)

Error from District Court, Oklahoma County; George W. Clark, Judge.

Action by F. E. Anderson, M. D. Anderson, B. Clayton, and W. L. Clayton, partners do

ing business as Anderson, Clayton & Co., against George D. Lockhart, county weigher, and another. There was a judgment for plaintiffs, and defendants bring error. Aftrmed.

John Embry, Co. Atty., and Paul Van Winkle, Asst. Co. Atty., for plaintiffs in error. Burwell, Crockett & Johnson, for defend ants in error.

Opinion by COLLIER, C. This action was instituted by Anderson, Clayton & Co., a firm to enjoin Geo. D. Lockhart, county weigher, and J. B. Goodnight, deputy county weigher, of Oklahoma county, from proceeding under authority apparently vested in them by an act of the Legislature of this state approved April 1, 1915, Session Laws 1915, p. 379, upon the ground that the said act is unconstitutional. Hereinafter the parties will be referred to as they were in the trial court. The act reads:

"Section 1. It shall be the duty of the county weigher of any county of the state of Oklahoma, where there is located a cotton compress or compresses, within thirty days after the final passage of this act, to either perform the following duties himself, or appoint a deputy to perform duch duties, under the laws of the state of Oklahoma.

"It shall be the duty of said county weigher, or his legalized deputy or deputies, to weigh each and every bale of cotton im mediately before the same is compressed, and it shall also be his duty to keep a complete record of the number of bales so weighed, giving the yard and compress number of the

same.

"Sec. 2. The county weigher, or his deputy, shall receive compensation for the weighing of cotton in the sum of five cents for each Lale, to be paid by the purchaser or purchasers of said cotton: Provided, that no weigher or deputy weigher shall receive a yearly compensation of more than twelve hundred ($1,200) dollars. Any sum collected by him in excess of said twelve hundred dollars ($1,200) shall be turned into the salary fund of said county in which said compress or compresses are located.

"Sec. 3. Any interested persons, not satisfied with the weights or weighing, shall have the right to ask the sheriff of the county in which said cotton compress or compresses are located to test said scales and the sheriff, or his deputy shall immediately upon receipt of such request comply with same.

"Sec. 4. Any person, firm or corporation engaged in the cotton business shall have the right to be present at the weighing of any cotton they may purchase or desire to purchase, and when any cotton shall be weighed in their presence they shall accept the weights as being correct and make final settlement on the same.

"Sec. 5. That section 5 of chapter 24 of the Session Laws of Oklahoma of 1913, is hereby repealed.

"Sec. 6. Any person, firm or corporation failing or refusing to comply with this act shall be deemed guilty of a misdemeanor and upon conviction shall be subject to a fine of not less than fifty dollars ($50) nor more than five hundred dollars ($500)."

A temporary injunction upon hearing was granted, and upon final hearing of the cause it was by the evidence shown that said coun: ty weigher had against the objection of the plaintiffs weighed at the compress in Okiahoma City cotton belonging to said firm, and demanded payment therefor at five cents per bale, and would continue to do so. It further appears from the evidence that the principal business of defendants in error was purchasing cotton from local dealers outside of Oklahoma City, which cotton was shipped to a compress in Oklahoma City. The tenporary injunction was made permanent. Thereupon the plaintiffs in error moved for a new trial, which was overruled and excepted to, and bring error to review the judgment rendered.

There is but one question involved in this case, the constitutionality of the act of the Legislature hereinbefore set out. The act of the Legislature of March 7, 1913, Session Laws 1913, pp. 41 and 42, is as follows:

"Section 1. Every person, firm or corporation in the state of Oklahoma, engaged in the business of cotton buying, where lists of baled cotton are purchased from local buyers, and the said cotton stored in cotton yards or cotTon warehouses owned or operated by cotton weights, shall, before removing same, have said cotton reweighed.

"Sec. 2. Every owner or operator of a cot ton yard or warehouse in the state of Oklahoma, shall be required, before allowing any cotton to be removed from his yard, or warehouse, to reweigh same in the presence of the owner or purchaser, or some agent of said purchaser, or owner of same; and, with indelible ink, mark on the bale, in figures, the weight of the bale.

"Sec. 3. Any interested persons, not satis fied with the weights or weighing, shall have the right to ask the sheriff of the county in which said cotton yard or warehouse is located to test said scales and the sheriff, or his deputy, shall immediately upon receipt of such request comply with same: Provided, the purchaser shall pay the fee of the seconi weighing.

"Sec. 4. Persons, firms, or corporations engaged in the cotton business, coming under the provisions of this act, shall have the right to be present at the reweighing of any cotton they may purchase or desire to purchase, and when any cotton shall be reweighed in their

presence they shall accept the weights as being correct and make final settlement on the

same.

"Sec. 5. When a list of cotton has been reweighed before leaving the cotton yard, according to the provisions of this act, the transaction between the buyer and seller as to weights, shall be at an end and neither party shall have any recourse on the other.

"Sec. 6. Any person, firm or corporation, failing or refusing to comply with this act, shall be deemed guilty of a misdemeanor and upon conviction shall be subject to a fine of not less than fifty dollars ($50) nor more than five hundred dollars ($500)."

er.

In the case of Taylor v. Anderson, 40 Okla. 316, 137 Pac. 1183, 51 L. R. A. (N. S.) 731, this court declared the above legislative act of March 7, 1913, unconstitutional. It thereore becomes necessary to see what differ ence, if any, there is in the two acts, and whether or not the act under review is subject to the same constitutional objection as the one held unconstitutional by Judge TurnSections 3 and 4 of the two acts are identical. Section 1 of said act compels the county weigher to weigh the cotton before it is compressed, and section 2 of the act provides for the payment of the county weigher of five cents per bale by the purchaser for the weighing of such cotton. It therefore clearly appears that the two acts are identical except as to said sections 1 and 2, and the repeal of section 5 of the last-named act. The question is as to whether or not the compelling of the weighing of the cotton and requiring the payment to the county weigher by the purchaser of the fee for weighing same, and the repeal of section 5, so amends the law as to meet the objection of unconstitutionality as held in Taylor. Anderson,

supra.

We think that the said case of Taylor v. Anderson particularly turns on section 5 of the original act, which was repealed by the act under review, and that therefore said case is not conclusive of the question involved in the instant case, that the act under review is unconstitutional.

It is our opinion, and we so hold, that sections 1 and 2 deny the right of a party to legitimately contract as to the weighing of cotton bought and delivered to a compress for compression, and therefore said act impairs the right to contract and is violative of section 7, art. 2, of our Constitution.