Cole v. Taylor

Opinion by

Porter, J.,

The lease in this case gave the lessees the right “ to have and to hold the said premises for and during the term of two (2). years from the date hereof and so long thereafter as oil or gas can be produced in paying quantities.” The date of the lease was June 17, 1892. The rental was one eighth of the oil produced. The lessees pumped oil until August, 1898, and paid the rental. They then ceased work and abandoned the premises because, as testified by tbe plaintiff, oil could not be produced in paying quantities. Nothing further was done under the lease for more than two years. In October, 1895, the defendants under an assignment of the lease from the original lessees entered upon the premises and proceeded to pump oil until the date of the trial below in November, 1897. For a part of this time, it was claimed that the well in connection with other wells, was producing oil in paying quantities.

Carr Bros., the original lessees, stopped pumping in August, 1898. They left no one in charge of their machinery. There was a palpable abandonment of the enterprise. On May 28, 1894, they requested an extension of the leasé for a further period of two years, thus indicating their own belief that their rights under the lease would certainly terminate on June 17, 1894, that being the limitation of the term if oil could not be found in paying quantities. The request for a renewal was refused, but in May, 1895, as the plaintiff testifies, “ Mr. Carr told me to draw a lease and make the lease as tight as we could and then give him a few days’ notice and he would meet me here and he would sell what he had there to the parties. .... He said it didn’t pay them to operate out there.” From this nothing can be more clear than that Carr had given up the enterprise because of the inability to produce oil in paying quantities. The original lessees having' abandoned their rights under the lease they had none to confer on their assignees, the defendants here.

In addition to this, however, assuming that oil could have been produced in paying quantities, there is the fact that the lessees failed to so produce it for a period of two years, and bj1this means deprived the lessors of their rent which was payable out of the oil produced. It would seem that the failure so to produce for so unreasonable a length of time ought in equity to work a forfeiture of the rights of the lessees, inasmuch as if a lessee under such a lease “ explores and finds oil or gas, the relation of landlord and tenant or vendor and vendee is established and the tenant would be under an implied obligation to operate for the common good of both parties and pay the rent or royalty reserved:” Williams, J., in Glasgow v. Chartiers Oil Co., 152 Pa. 52.

The judgment of the court below is therefore affirmed.