Wiles v. People's Gas Co. , 1898 Pa. Super. LEXIS 341 ( 1898 )

Opinion by

Smith, J.,

In an opinion just filed in No. 73, April term, 1898, we have construed the phases of the act of March 7, 1873, presented here ; we need not repeat the interpretation of the act, but refer .to what is said in that opinion so far as it is material to this case.

The principal question before us involves the construction of the agreement between Otto Limberg and the gas company. Did the company part with its entire interest in the lease under which, as assignee, it held the leasehold for oil and gas purposes and thereby remained free from liability for any work done in the operation and development of the leasehold for oil and gas ? The material parts of this agreement or assignment are given ' in the reporter’s statement of the case. By the terms of the assignment the leasehold is “ transferred and set over to Limberg, his heirs and assigns ” in language sufficient in itself to convey any and all the interest of the gas company in the leasehold estate of the one hundred acres described.

The company owned the derrick, boiler, engine and casing on the premises and retained the title to it, but gave Limberg the right to use this machinery and material in the work specified in the agreement. The mechanic’s lien was filed against the leasehold, and also against the machinery and fixtures of the company thus .left on the premises, and this controversy is over the right to maintain the lien against the latter. It is contended on behalf of the defendant that it is not an owner, lessee, or tenant, within the meaning of the statute, and therefore that no lien can be filed against any of their property on the demised premises, though used in the work of boring for oil and gas; that Limberg took exclusive possession of the leasehold, and merely acquired the privilege of using the machinery and fixtures of the company in the prosecution of the enterprise.

The learned court below, being of opinion that under “ the agreement the company reserved an option to take the gas and agreed to pay the expenses of producing it, and thereby remained the owner, at least until it elected not to take it, while Limberg became the owner of the oil,” held that the company retained an interest in the leasehold and in the work of development in which the plaintiff was employed, and directed a verdict for the plaintiff.. The correctness of this ruling must depend on whether the company retained such right or interest in the leasehold as would subject its property, left on the premises, to a lien for the work and labor done. There is no reservation in express terms. Does “the option to take said gas well” or the “ well and gas,” upon paying Limberg certain expenditures by him made in its development, constitute a reservation in the leasehold? We think not. An option is the right of choice, election, or selection; not a right in or to the thing, but the right to acquire it or an interest in it on certain conditions. Not until the owner of an option elects to accept and enforce its terms does it become binding upon him. Ordinarily (and in the present case), the grantor of an option has no power to compel the grantee to accept the right or privilege conferred or reserved; this remains wholly within the discretion of the grantee, and as we have said he has no right to or in the thing for which the option is given until this election is made. Of course a substantial present interest cannot be fraudulently converted into an option or disguised under tbe form of one, and if it were shown that this was the purpose of the option in the present case it would be pronounced void. While the legal effect of the written agreement was for the interpretation of the court, whether its terms were so favorable to the company, in view of the exigencies of the business for which it provided as to be in effect a fraudulent evasion of this mechanic’s lien law, was a question of fact to be passed upon by the jury. The testimony of the plaintiff to the effect that Mr. Adams, the secretary of the company, came upon the ground about the time it was intended to abandon the work, and ordered that it be continued until midnight, should have been submitted to the jury. It was for them to ascertain whether Adams was there representing the company and directing the conduct of the work on its behalf because of an existing interest in the leasehold or in the prosecution of the enterprise, or whether be was there in the interest of the company under the written agreement and in accordance with its terms. These were questions of fact for the consideration of the jury and the court erred in passing upon them as matter of law. While optional agreements in writing are to be interpreted and enforced in the same manner as other contracts, they cannot be used as vehicles of fraud, and are liable to impeachment for this reason if the evidence warrants it.

For the reasons given the judgment is reversed and a venire facias de novo awarded.