Kennedy v. Crawford

OpikioN,

Mr. Justice Gkeen:

In point of fact, the event upon which the lease between the parties was, by its -express terms, to become null and void, actually transpired. No oil or gas was pumped or excavated in paying quantities, or, indeed, in any quantities, on or before June 27, 1886. Some question arose as to whether the defendant had been prevented by the action of the plaintiff, from producing oil or gas in paying quantities, and, in answer to the defendant’s fourth point, the court told the jury that if the defendant completed the well, and thereafter was prevented by the plaintiff from pumping it, the verdict should be for the defendant. There was conflicting evidence on the subject, and as the verdict was for the plaintiff, we must conclude the jury found that the pumping of the well after its completion was not prevented by the action of the plaintiff.

Much of the contest in the case arose upon the construction, and also upon the performance of the covenant of the lease in these words:

“ The said parties of the second part hereby agree to commence drilling on said test well within ninety days from June 27, 1885, and to prosecute said drilling with due diligence to success or abandonment; and, should oil or gas not be pumped or excavated in paying quantities on or before June 27, 1886, then this lease to be null and void.”

It was not disputed that the drilling of the well had been commenced within the proper time, and had been prosecuted continuously until some time in the month of December, 1885, when the defendant ceased his operations, withdrew the casing, took down the tools out of the rig, and left the premises. The defendant claimed that he had completed the well; that he found gas and oil in paying quantities, and that he left the well and the premises because it was cold weather; and that he intended to return in the spring, in April, and resume operations. He claimed, also, that he had until June 27, 1886, to pump the well in paying quantities; and he testified that he went back in April, to resume operations, but that the plaintiff warned him off, and refused to allow him to go on with the work. This testimony was denied by the plaintiff, who said he never interfered with him in April, or at any other time, until, about the 21st of June, he served a written notice on the defendant to the effect that the lease had expired, and that it had become void, and that he must remove the machinery from the land. This notice was in fact dated May 21st, but the plaintiff testified that he wrote May by mistake for June, as it was really June when it was written and served, and he wrote 21st, instead of 27th, because he mistook the figure 7 for 1 in the lease, and thought the end of the year had arrived. The plaintiff denied distinctly that he had notified the defendant in April, or at any other time, or in any other circumstances than by the written notice dated May 21,1886, erroneously as he said for June, to leave the premises or remove the machinery. All this testimony was for the jury, and, as they have found for the plaintiff, we must assume they gave credence to the plaintiff’s testimony, and not to the defendant’s, so far as it bears upon this part of the case. On cross-examination, the defend-aut admitted tliat he had never obtained any gas or oil from the well for actual use, and that when he drew the casing, took down the tools, and left the premises in December, he did nothing more, and did not even return to the premises until in April following.

The court construed the expression in the lease, “to prosecute the said drilling with due diligence to success or abandonment,” to mean that there must be a product obtained capable of division between the parties in the proportions mentioned in the lease, and that unless this was done, the drilling was not prosecuted to success. He left it to the jury to say whether any product had been obtained which was divided or could be divided in any proportion whatever. It was admitted by the defendant, and proved by the plaintiff, that no such product had ever been obtained. We quite agree with the court below that the work could not be regarded as prosecuted to success, so long as no actual product of oil or gas was obtained.

The court further charged that due diligence required that the lessee was not at liberty to leave the work from December till April, even if he had found oil or gas in paying quantities, and in this, also, we think the court was right. It would certainly not be diligence to leave the well and cease all operations on it, if it was a producing well, for three entire months; and, if it had not yet, at the time the work ceased, been proved to be a producing well, it would be still less diligent to abandon the work for so long a period, especially as the lease was to become null and void, unless oil or gas was produced in paying quantities by June 27th following. By the middle of December, one half the year had about expired; four months more of idleness would leave but two months of the entire period of testing, and certainly such an amount of inactivity could not be regarded as due diligence in carrying on the work. There was no proof that oil or gas had been found in paying quantities, except the defendant’s declaration to that effect, but that was a mere matter of opinion on his part, since he admitted on cross-examination that he bad not actually produced any oil or any gas. We cannot think the court was in error when they left to the jury the question whether the forfeiture had been incurred by a lack of due diligence in prosecuting the work.

The defendant contended, however, that he had an absolute discretion to delay his operations indefinitely, provided he produced oil in paying quantities at any time before June 27,1886, and that he was prevented from exercising this discretion at any time after April, by the action of the plaintiff. We have already seen that the jury has found against him as to prevention by the plaintiff, and we do not agree that he had a right to desist from operations up to the day of the expiration of the time limited. He was subject to an obligation of due diligence during the whole of the time; and then, if, being duly diligent in his work, he produced oil or gas in paying quantities at any time on or before June 27, 1886, there would be no forfeiture. This is practically the view the court took of the contract relations of the parties, and the facts disputed were left to the jury, who found them against the defendant. This included the fact of abandonment, of which we think there was sufficient evidence to justify the verdict. The assignments of error are all dismissed.

Judgment affirmed.