Leatherman v. Oliver

Opinion by

Mb, Justice Williams,

The question raised in the court below and in this court is over the sufficiency of the affidavit of defence. The contract sued on is what is commonly called an oil lease, made by the plaintiffs to the defendant, which covers one hundred and fifty-five acres of land; and which was to continue for five years “ and as much longer as oil or gas should be found or the rental paid thereon.” The lessee agreed to complete a well on the leased premises within six months, “or in default thereof pay to the party of the first part for futher delay an annual rental of five hundred dollars, payable quarterly in advance.” It is conceded that the lessee did not complete a well on the premises or pay the yearly rental in lieu thereof. The plaintiff insisted that having given the defendant the benefit of an exclusive right to bore for oil or gas upon his farm in accordance with the terms of the lease, he is entitled to performance on the part of his lessee, and accordingly sues to recover a year’s rent, which the lease fixes at five hundred dollars. The defendant replies in substance that it is true he promised to complete a well within six months, or pay the rental until he should do so; but that it is also stipulated in another part of the same instrument that he shall be under no obligation to do either. The clause relied on to operate as a release from his covenants, is as follows: “ And a failure to complete such well, or pay said rental for ten days after the time specified for so doing, shall render this agreement null and void, and it can only be renewed by mutual consent; and no right of action shall, after such failure, accrue to either party on account of a breach of any promise or agreement herein contained.” The contention of the defendant is that this clause relieves him from all liability for any breach of his covenants, and takes away from the plaintiff any possible form of legal remedy or redress.

In considering the legal effect of the anomalous provision in the lease before ús, two well established rules of construction should be borne in mind. One of these is, that words should be taken most strongly against him whose words they are. The other asserts, that between two or more conflicting constructions of an instrument, that one should ordinarily be adopted that will sustain most of its provisions. Turning now to the lease, we find it contains a plain, unequivocal promise or covenant to complete a well on the premises within six months from the date of the contract, “ or in default thereof to pay to the party of the first part for further delay an annual rental of five hundred dollars.” Under the express words of this promise, the rental is payable quarterly in advance, and the first payment fell due at the end of six months from the date of the contract, unless a well had been completed on or before that day. A right of action accrued at that time. The liability of the lessee was fixed.

The clause relied on by the defendant provides,,first, that, if no well is drilled, and the rent remains unpaid for ten days after it is due, the agreement shall be null and void, and shall not be renewed, except by mutual consent. This, as we have repeatedly said, is for the protection of the lessor, and not of the defaulting lessee: Galey v. Kellerman, 123 Pa. 491; Wills v. The Gas Company, 130 Pa. 222; Ogden v. Hatry, 145 Pa. 640. The lessor may, in this way, rid himself of a lessee who will do nothing; or he may, at his election, resort to his legal remedies upon the contract. The words mainly relied on by the defendant are those that assert that “ no right of action shall, after such failure, accrue to either party on account of a breach of any promise or agreement herein contained.” To what do the words “ after such failure ” relate ? They must relate to the failure described in the preceding sentence, and that is not the failure to drill a well within six months, or to pay the rent on the day it falls due, but a continued failure to make such payment for ten days after it fell due.

The lessor cannot re-enter and treat the rights of the lessee as forfeited or abandoned on the day the default happens, but he must give the lessee ten days of grace, in which to come in and make payment, before he can take advantage of the default to terminate the lease. When the ten days have expired, if the lessor asserts the forfeiture, the contract becomes null and void from that day forward. It can only be revived by agreement. Out of this now extinguished relation, created by the contract, no right of action can accrue. The covenants have ceased to bind. The agreement itself is at an end.

But the lessor in this case did not choose to insist on the forfeiture, when the ten days expired. No one could assert it for him, except under his direction. No one could compel him to assert it. Certainly the defendant, who had promised to drill a well or to pay the rental of five hundred dollars per year, if he failed to complete a well within six months, and as against whom a right of action had accrued upon the happening of his default, could not compel his lessor to re-enter for his, the lessee’s, benefit. He might surrender. He could di vest himself of his interest in the lease, but he could not strip his lessor of his rights under that instrument, or of a cause of action already accrued. But let us suppose the lessor had entered, asserted the forfeiture, and made a new lease to other parties for the same farm. This would have extinguished the rights, and, with them, the obligations of the lessee for the future. The contract would have become thereby null and void from and after the day when the forfeiture was asserted, and no cause of action thereafter accruing upon the covenants of the lease could be asserted. This is quite clear. But such action by the lessor could not operate as a release of the defendant from liability, by reason of any right of action which had already accrued. That is a result not among the legal consequences of the re-entry, and not “ nominated in the bond ” on which the defendant relies. The construction of this agreement which we have adopted, does violence neither to its letter nor its spirit. It gives its appropriate office to every covenant in it, and makes the contract itself a reasonable and an honest one.

The judgment of the court below is for these reasons affirmed.