Case ID: ohio-cc-dec_18/html/0119-01.html
Source: Caselaw Access Project
Author: {"author": "HAYNES, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

GAS AND OIL.
    [Wood (6th) Circuit Court,
    April 29, 1905.]
    Hull, Haynes and Parker, JJ.
    Hull, J., not sitting.
    George Zeller v. G. M. Book et al.
    1. On. Lease to Run as Long as Oil Pound in Paying Quantities will not be Vacated because Terbitoby is Light.
    An oil lease conditioned to run five years from the date thereof, or as long as oil or gas should he found in paying quantities, will not be vacated by a court of equity on the ground that the territory is so light as not to warrant the sinking of more wells.
    3. Lessee in such Case is Sole Judge of Question of Profitableness of Oil Lease.
    The fact that it is questionable whether oil wells on land held under a lease operative only so long as oil or gas should be found in paying quantities will ever yield a reasonable profit on the investment, is not sufficient . ground for vacating the lease; the lessee is the sole judge on this question, and as long as he can make a profit therefrom, he will be permitted to do so.
    :3. The Mere Pact that Oil Lessee has not Operated Wells for some Time is not Ground for Vacating Lease.
    The mere fact that a lessee, under an oil lease conditioned to run as long as it is a profitable investment, has failed to operate the wells for some time, will not be ground for vacating such lease, where such lessee shows good and sufficient reason why it has been impracticable for him so to do.
    [Syllabus approved by the court.]
    Appeal from Wood common pleas court.
    Jesse Stephens, for plaintiff:
    That the terms of this lease has expired. Bryan, Petroleum & Nat. Gas 172; North Western Ohio Nat. Gas Co. v. Davis, 6 Circ. Dee. 529 (9 R. ■551); Harris v. Oil Co. 57 Ohio St. 118 [48 N. B. Rep. 502]; Detlor v. Holland, 57 Ohio St. 492 [49 N. E. Rep. 690; 40 L. R. A. 266]; Blair v. •Gas Co. 5 Circ. Dec. 619 (12 R. 78); Northwestern Ohio Nat. Gas Co. y. Tiffln, 59 Ohio St. 42Ó [54 N. B. Rep. 77].
    Abandonment. Bryan, Petroleum & Nat. Gas 172.
    Lack of facilities no excuse. Bryan, Petroleum & Nat. Gas. 181-184.. A lease on seventy-three acres forfeiture as to undrilled territory. Bryan, Petroleum & Nat. Gas 196, 198.
    The injury received by one of the defendants on insufficient excuse. Bryan, Petroleum & Nat. Gas 164.
    J. 0. Troup, for defendant.
   HAYNES, J.

This case comes into this court by appeal and is an action that was brought in the court of common pleas for the purpose of declaring-a certain oil lease terminated, and to have the sam’e cancelled. I shall state the ease very briefly. There was an oil lease made upon this land sometime 'in 1893, and there were three wells drilled on the property, and which have been operated most of the time from that date forward. The lease has passed through several hands, the land has been sold, and finally on November 22, 1901, the plaintiff bought the property. On January 27, 1902, he commenced this action. The terms of the lease run for five years from the date thereof, or as long as'oil or gas shall be found in paying quantities. The plaintiff in his petition claims that the wells have ceased to be paying wells, and claims that they have been left to stand idle- and unoperated for some time, and claims for these reasons that the lease should be declared ended and cancelled, and that the defendants should be required to re'move their material from the premsics, and the lease cancelled of record. The plaintiff at the time he purchased this land, took it subject to this lease, and, as will be seen, he was in possession but a few days before he commenced to take steps to lay the foundation for this action, and to bring the action. It appears from the testimony that the wells were not very productive. In common with a great deal of the territory in this section of the county, they have ceased to be large producing wells, if they were run. The whole territory in this immediate vicinity is rather poor for the production of oil — light territory it is termed. Nevertheless these wells have been drilled and money has been expended, and the defendant Book has come into the possession of the lease; he owns the wells and equipment and he has endeavored to make some money out of them; endeavored to make his living perhaps, out of them. The improvements in regard to the operation and management of the wells are such that they can be run at very little expense, and we find in regard to them that they will yield some profit, — not a large-profit, but some.

The plaintiff comes into a court of equity and asks that this lease be terminated; that the property is very poor paying territory and there is no probability of oil being found there. The plaintiff offers no testimony whatever that there.is any probability that it is paying territory, that wells ought to be found upon the territory; in other-words the whole drift of the testimony is that the territory is poor and that the wells, if producing, would be very light, and that a prudent man would not be warranted in drilling a well with the expectation of ever getting his money back, so that, so far as the outcome is concerned, the plaintiff is suffering no injury so far as we can see. So far as the defendant is concerned, he seems to be trying to make his living out of' tbe lease, and we think it would be manifestly unjust to deprive him of this property if he is able to produce oil enough to pay him for the expense and make him some little profit, or at least furnish him the means of a livelihood. We are of the opinion that it is unnecessary to' show that he can expect to get back the cost of drilling a well. His profit from what little he could get out of it would simply be salvage and would produce very little in the market, and it seems too a necessity that he should go forward and pump his wells so long as he can do, so if it pay him anything like a reasonable return. It seems to us that a court of equity ought not to interfere with it unless it is necessary to do so. He is operating upon his own judgment of what he deems best and authorities are cited, especially a case in Young v. Oil Co. 194 Pa. St. 243 [45 Atl. Rep. 121], indicating that it is the option of the lessee himself to decide whether he will proceed, or how long he will proceed. It is presumed of course that he will, operate in his own interest, and so long as he is acting in good faith and máking an effort to get some production out of the well, he has a right to go forward and decide for himself. This right of the lessee to. exercise his own judgment seems to be authorized in the cases cited to us. We think that view is right and just and the natural outlook of the case, and we hold therefor that so far as this man is operating in good faith, it would be unjust to disturb' him and compel him to give up what he has in the lease, — to take out his casing and material and sell it. It will be time enough to do that after he ceases to operate the lease. We do not think equitjr would require that this lease should be cancelled so long as he is acting in good faith, and we think in this case he is.

It is said that there has been an omission for some time to operate.. The testimony of the defendant shows that he has been in a condition physically for some time, where he could not carry forward the work. He gives what we deem good and fair reasons for allowing the wells to remain idle that are now on the lease. There was a storm and the derricks were blown down, — a very heavy storm; and while in this situation the derricks were burned, and the man seems to have had one trouble upon another, and yet he has been fighting along against these difficulties and doing the best he can under the circumstances, and we think the court ought to permit him to hold the premises and continue to operate the wells, so long as he, in his judgment, thinks it profitable, and without further discussion we hold that the petition should be dismissed and judgment awarded the defendant for his costs in the case.

Parker, J., concurs»