Douthett v. Gibson , 1899 Pa. Super. LEXIS 166 ( 1899 )

Opinion by

Beaver, J.,

The defendant, who is the appellant here, leased from the plaintiff a tract of land “ for the purpose of operating and drilling for petroleum and gas ” and the purposes incident thereto. In case of development, the rent was to consist of a royalty of the one-eighth part of all the petroleum obtained from the said premises and for gas $200 per annum. Two additional covenants contained in the lease were as follows: “ The party of the second part agrees to commence operations within thirty days from the execution of this lease, or in lieu thereof thereafter pay to the said party of the first part $20.00 per month in advance until work is commenced, said rental to be paid at the Butler Savings Bank, Butler, Pa.” “And it is further agreed that the second party, his heirs or assigns, shall have the right at any time to surrender up this lease and be released from all moneys due and conditions unfulfilled; then and from that time this lease and agreement shall be null, void and no longer binding on either party and the payments which shall have been made shall be held by 'the party of the first part as the full stipulated damages for the nonfulfilment of the foregoing contract.”

The defendant assigned his lease to a third party but neither he nor his assignee developed the property by drilling a well thereon. Demand was made for the amount due under the covenant first above recited, but he neither paid nor offered to surrender the lease. After suit brought he obtained a reassignment of the lease and shortly thereafter delivered it by way of surrender to the attorney of the plaintiff. On the trial defendant claimed that the surrender made after suit brought absolved him from all liability under his covenants in the lease, asking the court to charge the jury that by reason of said surrender he was released from all moneys due, including the amount now in suit and conditions unfulfilled. The court refused to so charge and directed a verdict for the plaintiff.

The specifications of error, although varied in form, all relate to the single question which is the important oné in the case, namely, Did the surrender of the lease by the defendant release him from the payment of the rental stipulated to be paid monthly in advance under the covenant first above quoted? This question is argued by the counsel for the appellant as if it were an abstract one based entirely upon the construction of the agreement itself. It is to be noted, however, that it is to be considered in reference to the particular facts of this case, namely, that the surrender was not made until after a demand for payment and a refusal by the defendant and after a suit had been brought to enforce the provisions of the agreement. In Ray v. Natural Gas Co., 138 Pa. 576, Mr. Justice Clark, in delivering the opinion of the court, said: “No case has been brought to our notice in which the lessee was allowed to take advantage of his own wrong or to set up his own default to work a forfeiture of his own contract. It must be conceded, however, that, if the old rule is the right one, this anomalous result must ensue. Persons may perhaps contract expressly in this form and to this effect. When they do, the transaction amounts to a mere option and the lessee in setting up his own default simply avails himself of an elective right secured to him in his contract.” Assuming, as we fairly may, that the agreement under consideration amounts in legal effect to a mere option, it must not be so construed as to extend the elective right thereunder beyond what is reasonable and fair. There was a time when the defendant was bound to exercise his right of election under the option. That time came to him, when the plaintiff made the demand for the accrued rentals under the agreement. He not only declined to pay but did nothing. He should have exercised his right of election at that time and surrendered the lease. This he did not do, nor did he offer to do it. It is true that the lease was beyond his control, having been assigned to a third party, but this was not the fault of the plaintiff and, in default of payment or surrender, she, as she undoubtedly had a right to do, brought her suit. She thereby incurred costs and expenses, based upon the natural presumption that the defendant intended to retain the possession of the property. Nothing remained for the plaintiff but to sue. The conduct of the defendant was a practical invitation to her to do ,jso. Her right of action was complete. After suit brought and costs and expenses thereby incurred, new rights had accrued which, in view of defendant’s laches, it would be grossly inequitable to permit him to defeat by a mere surrender of the lease, without the tender even of the accrued costs. Without determining, therefore, the abstract question involved in the case, and construing the agreement independently of the acts of the parties, we are clearly of the opinion that, under the circumstances, the defendant fixed his liability under the agreement at the time of the demand of the plaintiff for the amount due under the agreement, and that the judgment entered upon the verdict for that amount should be allowed to stand.

Judgment affirmed.