Case ID: ky_120/html/0337-01.html
Source: Caselaw Access Project
Author: {"author": "Judge O’Rear", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Case 43. — ACTION BY H. D. FRISBIE AND OTHERS' AGAINST LEANDER BERRY, TO ENFORCE A CONTRACT FOR THE SALE OF OIL AND OTHER MINERAL RIGIJ.TS.
    April 19.
    Berry v. Frisbie, &c.
    Appeal from Bracken Circuit Court.
    Jambs P. Harbeson, Circuit Judge.
    Judgment for Plaintiffs. Defendant appeals.
    Reversed.
    
      Mines and Minerals — Option—Leasing Contract — Prospecting— Deed ■ — • Specific Performance — Consideration —Validity—E'mforcement — Unilateral Agreements.
    1. Option — Leasing Contract — Prospecting for Minerals, Coal, Gas, &e. — Deed—When Due- — Construction of Contract — B., in consideration of $1, leased to F. & Co. the right to go on his land and prospect for oil, coal, gas and all ether minerals, the said F. & Co. to have four mtonths from, date of contract to determine whether they would accept the grant, and if accepted to so notify B. in writing, and to have two years from the date of acceptance to prospect and locate said minerals, and as compensation to give to B. 10 per cent, of the product in the dump at the mine. F. & Co. gave notice of acceptance, sunk some wells on adjacent lands, finding some oil and gas, and within two years applied to B. to“ make a deed of conveyance to said mineral rights, which B. refused. Held — That the contract when accepted bound the lessees to, within the two years- therefrom, explore the land by actually sinking a well or wells upon it. If oil or gas or coal was found therein in paying quantities then the lessees were bound to diligently work and operate same so as to- bring the product to a present market and- so as to- promptly yield to the lessor his royalty; that unless the lessees did so actually develop the land in question and in good faith and diligence operate it, the lease should be deemed abandoned, and in no event were the lessees entitled to a deed provided for by the option, until, as the result of such actual development within the life of the contract, gas, oil or coal was found in paying quantities.
    2. Contracts — Mutuality—Consideration—Validity—Enforcement—Such contracts- lack the mutuality essential to their validity. A unilateral executory contract is, in law, nudum pactum, and is unenforcible. Where it is left to one of the parties to an agreement to choose whether he will proceed or abandon it, neither can specifically enforce its execution in equity, nor is a recited consideration of $1 sufficient to- uphold an action for the specific enforcement of a contract otherwise unsupported by consideration.
    E. L. WORTHINGTON for appellant.
    1. Reciprocity of obligation is essential to the validity of a contract. (Litz v. Goosling, 93 Ky., 185.)
    2. The consideration of one dollar recited in the paper sued on, is a mere nominal consideration and will not support such an agreement.
    
      3. An agreement that can not be enforced against both parties will be enforced against neither. \ , ¡ | |
    AUTHORITIES CITED.
    Bitz v. Goosling, 93 Ky., 185; Huggins v. Daley, 99 Fed. Rep., 606; Thornton on Oil and Gas; see. 66; Donahue on Petroleum, and Gas, sec. 155; Federal Oil Co. y. Western Oil Co., 112 Fed. Rep., 373; Marble Co. v. Ripley, 10 Wall., 339; Steelsmith v. Gartlan, 44 B. R. A., 107; Parish Fork Oil Co. v.' Bridgewater Gas Co., 59 B. R. A., 566.
    GEORGE DONEPHAN and W. S. PRYOR for appellees.
    1. The only question presented in this case arises on the face of the petition. The consideration we think supports the grant and the writing evidences the sale of the oil and gas rights, subject to the conditions contained in’ the written contract.
    2. While it is true the consideration of .$1, if there was nothing else in this case, would be regarded as merely nominal, but'the labor expended in exploring the territory and ascertaining where the oil would likely be found,was as much a consideration as if a well had been actually bored on appellant’s land;
    AUTHORITIES CITED.
    Adams v. Ore Knob Copper Co., 7 Fed. Rep., 634; Alleghany Oil Co. v. Snyder, 106 Fed Rep., —;Bitz v. Goosling, 93 Ky., 186; Davis y. Wells, Fargo & Co., 109 U. S. S. C., 159, 26 L. Ed., 686; Thornton Oil & Gas, 66; Huggins v. Daley, 40 C. C. A., 112; ■Bacon v. Ky. Central Ry. Co., 95 Ky., 373, 44 B. R. A., 107.
   Opinion by

Judge O’Rear

Reversing.

Appellees are oil prospectors. Appellant is the owner of the land upon which appellees had taken options to prospect for oil, gas, and other minerals. These options are identical in terms, except descriptions, and read as follows:

“Know all men by these presents, that Leander Berry for and in consideration of one ($1) dollar cash in hand paid, the receipt of which is hereby acknowledged, and for. the consideration of the advantages to be derived by the said Leander Berry from the development of the mineral resources of the lands hereinafter described, have’ this day bargained and sold to H. D. Frisbie, J. T. Sharrard and their associates to enter upon and prospect for coals, ores, oils, gases and all other minerals, and to erect the necessary machinery and sink the necessary shafts, and do any and all other work necessary to carry out the objects of this grant, the right of dump, also the right of ingress and egress to and from said lands or any part thereof, but on the condition that said right is to be used in a reasonable and prudent manner so as to injure the said farm as little as possible.
“This sale is made upon these conditions: Said IT. D. Frisbie and his associates shall have four (4) months from the date of this contract to determine and say whether H. Lb Frisbie and his associates will accept this grant, and will undertake, according to the terms of same, to locate and prospect for coals, ores, oils, gases and all other minerals on the said lands, and if within the said four months said PI. D. Frisbie and his associates shall notify the said Leander Berry of their intention to accept the terms of this grant, and prospect for coals, ores, oils, gases and other minerals, he and his associates shall have two years from the date of the acceptance of grant in which to prospect for and locate said minerals, ores, oils, gases, &c. Should minerals, coals, ores, oils, gases, &c., be found on the said land in quantities, which in the judgment of the said H. D. Frisbie and his associates or assigns will pay to work, the said Leander Berry will on demand make the said H. D. Frisbie and his associates or assignees a deed to the said mineral, coal, ore, oil and gas privileges on the following described land, with the privilege and right to open mines, or wells, and erect buildings and machinery and make roads or ways, snch as in the judgment of the said H. D. Frisbie and his associates is necessary for the successful operation of the said mines or wells, and the said H. D. Frisbie and his associates will timber the said mines and pay to the said Leander Berry, as compensation for the privileges granted, ten per cent, of the minerals. &c., in the dump at the mine, or ten per cent, of the oils and gases, as nearly as it can be ascertained as it comes from the ground. [Description of land.] ” * * *

Within the four months mentioned in the options, appellees notified appellant that they accepted the “grant” by a written notice as follows: “Dear Sir: You are hereby notified that the undersigned accept the terms of your lease for the mineral privileges on your lands of date 19th Nov. 1901.” Within two years thereafter they applied to appellant to make them a deed to the oil, gas, coal and other minerals that might be contained in the land. Appellant refused to make the deed, and this suit was brought by appellees to compel its execution.

Appellees had upon an adjacent tract of land, which probably adjoined appellant’s farm, sunk five wells, in which they claim to have found oil and gas in quantities which, in their judgment, would pay to work. There is some conflict in the evidence as to the extent of this find, but, be that as it may, appellees’ contention is that they have by this manner of development demonstrated to their own satisfaction that there are oil and gas on appellant’s nearby lands, embraced in the option. Considerable testimony was adduced by appellees as to the manner in which they satisfied themselves of this fact. They undertook to show that appellee, Frisbie, was possessed of an unerring discernment in locating such wells, although he had been at the business only three or four years, and had never located any but the five wells above alluded to. He said he had a theory that had never failed to show where paying oil was, as well as where it was not. Pie did not say, however, what that theory or method was, except it was disclosed that it in part at least consisted in the use of a forked hazel switch, called a “water witch,” which would by some phenomenal attraction incline itself in the hands of Prisbie to the hidden wells of oil, or maybe of water, he could not say for certain which. It seems that he used this switch on appellant’s land, and in this way in part satisfied himself that there was oil there. Appellant did not deny to appellees the right to explore his land by sinking wells thereon within the two years given by the contract. On the contrary, he said that he was willing that they should do so. The option contracts are susceptible of two possible constructions: One, that they did not hind the lessees to sink any well upon the land, or to demonstrate by actual, physical tests, that oil, gas, or coal in paying workable quantities underlaid it. The other is, that the lessees were hound to make such tests.' Of the first, which seems to be the construction placed on the contract by appellees, it would result in appellants being bound to convey by absolute deed a very valuable element of his estate without any consideration whatever; for, whether coal or oil or gas existed in his land, the prospect of it was of value to him. If it did exist, of course that fact might become of great value to him. But if his lessees were not bound in fact to sink a well or wells upon the land to test its mineral properties, yet could keep appellant and all others from doing so, it would he in the power of the lessees to prevent its development indefinitely or forever. In that way the lessor would get nothing from his lease; would get nothing for even the chance of finding minerals there. In this view of the contract, it does not bind the lessees either to sink a well upon the land or to work the wells if sunk, and if minerals should be found in paying quantities. They could in that way, though satisfied that the land did contain oil and gas, and though it be a fact that it did, get from it these properties without paying anything, by draining them oft through wells tapping the same pools or veins on the adjacent lands. Or they could plug the holes, and indefinitely postpone working the wells. Such contracts lack the mutuality essential to their validity. A unilateral executory contract is in law a nudum pactum, and is unenforceable. "Where it is left to one of the parties to an agreement to choose whether he will proceed or abandon it, neither can specifically enforce its execution in equity. (Litz v. Goosling, 93 Ky., 185, 14 Ky. Law Rep., 91, 19 S. W., 527, 21 L. R. A., 127; Federal Oil Co. v. Western Oil Co. [C. C. A.], 112 Fed., 373; Marble Co. v. Ripley, 10 Wall., 339, 19 L. Ed., 955.) Nor is the recited consideration of $1 sufficient to uphold an action for the specific enforcement of a contract otherwise unsupported by consideration. As was said in Federal Oil Co. v. Western Oil Co., supra, “The consideration would be so trifling, compared with the value of the leasehold interest, as to shock the moral sense.” Any fact showing that the contract is unfair, unjust, and against good conscience will justify a court of equity in refusing to decree its performance. On the other hand, where a written contract can, from its context, be construed so as to be binding upon the parties to it, instead of not binding, the former construction is preferred, as it is not to be deemed that the parties have been to so much care to do nothing. The deliberateness of entering into written engagements of itself implies a purpose to become bound by the making of an enforceable agreement, unless the very terms of the paper repel the idea. The purpose of these contracting parties must have been the finding of oil or gas in paying quantities on this land, if to be found, and their being worked so as to make money for each party. That was the point where their minds met. The owner of the soil could not have dreamt that he was putting it out of his power to ever develop or have developed the mineral possibilities of his farm; nor, if minerals were found, that it would be left to the exclusive discretion of the other party whether they would be brought into marketable condition. In construing a sbrnewhat similar lease it was said in Huggins v. Daley, 40 C. C. A., 19, 99 Fed., 613, 48 L. R. A., 320: “The -land owner is entitled to his royalty as promptly as it can be had. The danger of drainage from his small holding is increased by delay; and the resulting damage, not being susceptible of pecuniary measurement, is, therefore, not compensable. No such lease should be so construed as to enable the lessee, who has paid no consideration to hold it merely for speculative purposes, without doing what he stipulated to do, and what was clearly in the contemplation of the lessor when he entered into the agreement.” And in Conrad v. Morehead, 89 N. C., 31, it was also held: “It Would be unjust and unreasonable, and contravene the nature and spirit of the lease, to allow the lessee to continue to hold his term a considerable length of time without making any effort at all to mine for gold and other metals. Such a construction of the rights of the parties would enable him to prevent the lessor from getting his tolls under the express covenant to pay the same, and deprive him of all opportunity to work the mine himself or permit others to do so. The law does not tolerate such practical absurdity, nor will it permit the possibility of such injustice.”

Our construction of this contract is that when accepted, as it was, within four months of its date, it bound the.lessees to within two years from such acceptance explore the land described by actually sinking a well or wells upon it. If oil or gas or coal were found therein in paying quantities, then the lessees were bound to diligently work and operate same so as to bring the product to a present market, and so as to promptly yield to the lessor his royalty; and that, unless the lessees did so actually develop the land in question, and in good faith and diligence operate it, the lease should be deemed abandoned. (Parish Pork Oil Co. v. Bridgewater Gas Co., 51 W. Va., 583, 42 S. E., 655, 59 L. R. A., 566.) In no event were appellees entitled to the deed provided for by the option till, as the result of such actual development within the life of the contract, gas or oil or coal were found in paying quantities.

The judgment of the circuit court decreeing a specific execution of the contract by the making and delivery of deeds by appellant is reversed, and cause remanded for a judgment in conformity herewith.