Case ID: monaghan_2/html/0065-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Brushwood Developing Co. v. Hickey.
    Plaintiff leased to defendant a farm for the sole purpose of developing oil, plaintiff to receive one-eighth of the product . Subsequently the parties entered into a supplemental contract in writing, in reference to an existing oil-well on the farm, as follows : “It is understood that, should the oil-well on said farm, on further test or development, in conformity with the conditions of the lease, produce, for 30 days, a daily average of 5 barrels of oil, defendant is to pay plaintiff $250 ; should said well produce 10 barrels, defendant is to pay plaintiff $500 ; should the second well provided for in the lease in like manner produce 15 barrels, defendant is to pay plaintiff the further sum of $1000. Explanation : The understanding and agreement in regard to the test-well being that plaintiff is in no event to receive exceeding the sum of $500.” The first well, which was an old one, failed to produce oil. The second well produced more than 15 barrels a day for 30 days. Defendant claimed, as a defence to an action of assumpsit, that the use of the words “ in like manner ” and “further ” indicated that the sum to be paid upon the production of the second well, was dependent upon the production of the first, and, that having failed, nothing was payable on the second. The court held that the sums to be paid under the agreement were in the nature of a bonus tobe paid upon the production of the oil-wells, and accordingly entered judgment on a special verdict for plaintiff for $1000 with interest. Held, not to be error.
    Oct. 25, 1888.
    Error, No. 119, Oct.T. 1888, to C. P. No. 1, Allegheny Co., to review a judgment on a verdict for plaintiff, in an action of assumpsit, by John Hickey against the Brushwood Developing Co., at March T. 1887, No. 467.
    The pleadings do not appear by the paper-books.
    The lease, signed by the plaintiff as lessor, and defendants, as lessees, and given in evidence, recited the demise to be “ for the sole and only purpose of mining and excavating for petroleum, coal, rock, carbon oil, or gas, &c.; and for the laying of pipe either under or on top of the said surface, for transportation of oil or gas. . . . To have and to hold the said premises, for the said purpose only, unto the said parties of the second part, their executors, administrators, or assigns, for, during and until the full term of fifteen years, next ensuing the day and year above written.
    “ The said parties of the second part hereby covenant, in consideration of the said grant and demise, to deliver unto the said party of the first part, his heirs and assigns, the full equal one-eight part of the petroleum, or carbon oil, or coal, or rock, or gas, discovered, excavated, pumped and raised on the premises herein leased, as produced, excavated or pumped in the crude state; the said parties to furnish tankage for the same.
    “ The said party of the first part is fully to use and enjoy the said premises for the purpose of tillage, except such part as shall be necessary for said mining purposes, and a right of way over and across said premises to the place or places of mining or excavating. The parties of the second part further to have the privilege of using sufficient coal or gas, and parties of the second part further agree, in case gas is discovered in paying quantities, to allow the casing to remain in wells on said farm.
    “ The said party of the first part covenants to grant to the said parties of the second part the right to remove any other machinery or fixtures placed on said premises by said parties of the second part. The parties of the second part covenant to commence operations for said mining purposes within forty-three days from the execution of this lease, otherwise this agreement shall become null and void, and of no effect, said parties of the second part agree to return this lease to the party of the first part, duly cancelled.”
    An agreement, signed by the defendants as parties of the first part, and the plaintiff as party of the second part, and offered in evidence, recited the lease and “further obligated and bound themselves to the following additional conditions, not set forth in said lease.” The conditions appear by the opinion of the court below.
    The jury rendered a special verdict for the plaintiff, on which the court subsequently entered judgment for the plaintiff, filing the following opinion, in which the special verdict and the facts are stated:
    “ In this case, the plaintiff offered in evidence a lease, by him to the defendants, dated June 8, 1885, of certain lands therein mentioned, for the purpose of mining and excavating for oil, etc., and articles of agreement between the same parties, bearing date June 23, 1885. It was admitted that the latter was entered into before the delivery of the lease and was in part the consideration of it.
    “ The jury found a verdict as follows :
    ‘And now, to wit, January 27, 1888, we, the jurors empanelled.to the above entitled case, find in favor of the plaintiff in the sum of $1084.50. We further find that the first well mentioned in the contract, accompanying the lease in evidence, did not produce any oil. The verdict is subject to the opinion of the court upon the question of law, whether, under said agreement, the plaintiff is entitled to recover anything on the production of the second well, the first well having failed to produce anything.’
    “ The clause of the agreement referred to, and upon which the question principally depends, is as follows:
    
      “ ‘ It is understood that, should the oil-well on said farm, on further test or development, in conformity with the conditions of the lease, produce, for 30 days, a daily average of 5 barrels of oil, the Company or party of the first part is to pay Very Rev. John Hickey, the party of the second part, the sum of $250.00. Should said well in like manner produce 10 barrels, said party of the first part is to pay to the party of the second part, the sum of $500.00. Should the same well provided for in the lease in like manner produce 15 barrels, said party of the first part is to pay to the party of the second part the further sum of $1000.00. It being understood that the party of the first part, on signing this ’ agreement, does so on behalf of and for account of the Brushwood Oil Company. Explanation: — The understanding and agreement in regard to the first well being that Very Rev. John Hickey, in no event, is to receive exceeding the sum of $500.00.’
    “ It appears in evidence that the first well had failed to produce oil, and the second well produced more than an average of 15 barrels per day for 30 days. It further appears that the first well referred to was an old well which defendants proposed to clean out and drill deeper.
    [“ A consideration of the lease and agreement indicates that the sums to be paid upon the^production of these wells was in the nature of a bonus, upon their evidence of the value of the property. It was claimed by defendants that the sum to be paid upon the production of the second well was dependent upon the production of the first, such intent being evidenced by the üse of the word “ further,” which implies that it was- not to be paid until the first sum was payable, and, it not having become payable, the liability for the second well never accrued. .This does not appear to be a reasonable construction. There is nothing in the nature of the transaction which would require such construction. Besides, to make the one dependent upon the other would involve a further difficulty. If the first well had produced 5 barrels per day, $250.00 was to be paid, if 10 barrels, $500.00. The construction claimed by defendants would require that the whole $500.00 should become payable before any payment on the second well became due. This would not be reasonable. The idea of the parties seems to be that the well might be worth $500.00, $250.00, or nothing. In either event, a further test should be made and, upon developing a certain value, a bonus of $1000.00 be paid. Regarding this tobe the true construction of the agreement, the plaintiff is entitled to the amount agreed to be paid upon the production of the second well, and it is thereupon ordered that judgment be entered upon the verdict.”]'
    
      The assignment of error specified the portion of the opinion included within brackets, quoting it.
    
      A. V. D. Watterson, for plaintiff in error.
    It was the intention of the parties that the plaintiff was to recover upon the second well only in the event of the first well being a producing one. This is shown by the use of the words “ in like manner ” and “ further.” The contract contained a condition precedent. Bishop on Contracts, § 586; Howell v Com., 97 Pa. 332; Hartupee v. Pittsburgh, 97 Pa. 107; and Plymouth’s Mfg. Co’s Ap., 81* Pa. 147.
    Nov. 5, 1888.
    
      C. C. Dickey, for defendant in error.
    The agreement of June 23, 1885, containing the part of the contract of leasing to be performed by the Brushwood Developing Co., the company stands in the position of grantor or proferrer, just as, in the lease recited, Father Hickey stood in such position. If this were'a question arising under the lease, as to the extent of the grant or the obligations of the lessor thereunder, the lease would be construed most strongly in favor of the company. The agreement is therefore to be construed most strongly against the plaintiff in error. Beeson v. Patterson, 36 Pa. 24; Wharton on Contracts, § 670; Browning v. Wright, 2 B. & P. 22; Jackson v. Hudson, 3 Johns. 387.
    The words “ in like manner ” refer to the substance, oil, and the period of thirty days, and the words “ further sum ” mean a different sum from those which are to be paid upon the first well.. This is also shown by the “ explanation ” added, showing that the plaintiff would be entitled to receive both of the sums for the first and second wells if they produced the quantities of oil agreed on, and negativing the idea that the amount to be paid for the second well depended upon the first. The maxim, expressio unius ex-clusio alterius, applied here, negatives the suggestion that the failure of the first well to produce oil was a release of the company from liability upon the second well.
   Per Curiam,

We concur, not only in the judgment, but also in the opinion, of the court below.

The judgment is affirmed.