New American Oil & Mining Co. v. Troyer

Hadley, J.

—Suit by appellees to quiet title. Appellant Crown Oil Company filed a cross-complaint, claiming certain interests in the land by reason of an oil-andr gas lease, and asking an accounting for oil alleged to hare been converted to the use of appellees. The complaint and cross-complaint were answered by general denial. Trial by the court, finding and judgment for appellees. Appellants’ motions for a new trial, asked on the grounds that the decision of the court is not sustained by sufficient evidence and is contrary to law, were overruled, and in these rulings appellants claim error.

1. Appellees vigorously insist that the evidence is not in the record. The precipe for the transcript directed the clerk to “prepare and certify a true, full and compíete transcript of the following papers, proceedings and judgment in the above-entitled cause: plaintiffs’ complaint, * * * separate motions for a new trial by the Crown Oil Company and the New American Oil & Mining Company, the original bill of. exceptions of the Crown Oil Company, * * * also all order-book entries made in this cause and also including this precipe.” The clerk certifies that the transcript contains the original bill of exceptions and the original precipe for transcript. The original bill of exceptions containing the evidence is incorporated in the transcript, and the only question is whether it is a part of the record. The bill of exceptions containing the evidence is the only bill that had been filed, and the only paper or document permitted by statute to be incorporated in the transcript in its original form. Therefore, in receiving an order for a transcript for an appeal, and a list of the various papers, documents and entries desired, and which could only find their way into a transcript by being copied therein, to find in the list a call for the “original bill of exceptions,” when the term original could have no significance except as a direction to the clerk to insert the original in the transcript, was sufficient to justify the clerk in construing the precipe into an order to frame the transcript as was done. We tli ink it should be held that the evidence is in the record.

2. This case was tried, prior to the act approved March 9, 1903, section seven of which act (Acts 1903, p. 338, §641g Burns 1905) specifically removes all such questions as that just considered. Appellants, as assignees of Thomas McDonald, base their claim upon a certain oil-and-gas contract, among other things providing:

“In consideration of the sum of $1 and the covenants and agreements hereinafter contained, Lucy M. Troyer [appellee], first party, hereby grants and conveys unto Thomas McDonald, second party, or assigns, all the oil and gas in and under the following described premises in Grant county, * * * together with the exclusive right to enter thereon at all times for the purpose of drilling or operating for oil, gas or water. * * * The above grant is made upon the following terms: Second party agrees to drill a well upon said premises within two months from this date, or thereafter pay, in advance, the first party, for further delay, a quarterly rental of $20, until said well is drilled.”

The other provisions of the contract are in substance the same as those involved in LaFayette Gas Co. v. Kelsay (1905), 164 Ind. 563, and Consumers Gas Trust Co. v. Littler (1904), 162 Ind. 320, and do not affect the questions involved.

Prior to the commencement of this suit, no well had been drilled, and no possession of the premises had been taken for the purpose of drilling.

3. 4. In this, as in other contracts of its class, the purpose of the parties is the exploration for oil and gas. The landowner intends to part with, and the operator intends to acquire, no other right than the exclusive privilege of entering upon the land, and with as little injury as possible to the possession, or the freehold, and for mutual profit in the discovery, put down wells and mine and market the product, whatever it may be. There are many things to he taken into account in arriving at a fair and rational construction of a contract like this. The usual rivalry in procuring leases in the limited oil-and-gas territory, the time and expense required in drilling wells, the peculiar character of the fluids, the difficulties and delays in providing pipe-lines, and methods of storage and transportation, are all matters generally present at the making of such a contiact. Besides, without a market the operator can ill afford, and it will avail the landowner little, to put down a well before transportation lines have approached within accessible distance. So it is more than likely, when the contract before us was executed, neither party expected that a well should be sunk within limits of two months. As to the particular time when the test well should be drilled there is nothing-more definitely expressed in the contract than that it shall be done some time. That some delay was expected, or at least provided for, is very certain from the alternative character of the promise. Note the language:

“The second party agrees to drill a well upon said premises within two months from this date, or thereafter pay, in advance, the first party, for further delay, a quarterly rental of $20, until said well is drilled.”

There is no absolute promise to make a well in two months, or in two years for that matter. But if there is failure within the first two months the operator must thereafter, for further delay, pay $20 quarterly in advance until it is drilled. He might do one or the other at his option, at least for the first quarter. There being no definite time limit within which the well must be constructed, the law intervenes,’ and directs that it shall be accomplished within a reasonable time. This means within a reasonable time at the option of the landowner. Consumers Gas Trust Co. v. Worth (1904), 163 Ind. 141; Hancock v. Diamond Plate Glass Co. (1904), 162 Ind. 146.

The latter might waive performance indefinitely; and if he accepted a valuable consideration for postponement he was as mimh bound by it as if the end of the paid period was the time limit stipulated in the original contract. All things considered, it is at least probable that when the contract was entered into the landowner had reason to believe that the operator was counting on an extended delay, upon prompt payment of the quarterly sums. And it is manifest that appellees were in no hurry to precipitate the beginning of operations. They had a certainty in the rentals being paid, and they might have preferred the certain rentals to the uncertainty of finding oil or gas under their land.

5. At all events, the record shows that appellees accepted five quarterly payments in advance for further delay, without complaint, which carried the paid period up to June 10, 1901, and on the ground that they had the right to terminate the contract, and that the same was forfeited for failure to drill a well within the time paid for, commenced this suit ten days later, to wit, June 20, 1901. Having accepted what was to them a satisfactory consideration for postponement of operations until June 10, appellees were not in a situation to make complaint before that time. Under a contract of this sort parties must act fairly with each other. The landowner must be given a fair opportunity to compel such timely operations as will preserve the underlying oil and gas, and prevent its being mined through wells on other premises. While on the other hand he will not be permitted to take advantage of delays that have been reasonably induced by his own conduct, and force a forfeiture for nonperformance. The operator must have a fair chance to perform his contract. LaFayette Gas Co. v. Kelsay, supra; Consumers Gas Trust Co. v. Ink. (1904), 163 Ind. 174; Consumers Gas Trust Co. v. Worth, supra; Consumers Gas Trust Co. v. Littler, supra.

He has not had a fair chance in this case. If appellees, when they accepted the advanced payment on March 10, or at some other reasonable time, had given appellants notice that they must drill a well within that quarter, and that no further extension of time would be granted, then we should have quite a different question. This suit, however, is brought and prosecuted upon the theory that the failure of appellants to drill a well within the paid period put an end to their right to drill one at all. This view is erroneous. The peculiar character of the contract, and the conduct of the parties while acting under it, are such, we have seen, as make an action without notice, and reasonable time to perform, inequitable and unsustainable.

The judgment is therefore reversed, with instructions to sustain' the motion for a new trial.