The Hocking sentinel. [volume] (Logan, Ohio) 1871-1906, 1900-08-09
An Important Decision.
New Lexington Herald

On Monday OF this week Judge u
W. II. Wright, of Logan, Ohio, de
livered very able opinion in tn
case of James Mcdonald vs.. Thos. J
Shepperd. The evidence in the cas-
was heard a couple Of weeks ago, ant
was held by the Court for considera
tion on account of the new and intri
cate questions presented, and the de-
cision of Judge Wright is the pioneer
decision not only in Ohio, but in th'
oil producing states of the union as t
what is meant in oil and gas lease
by the words ego long as oil or gas il
found in paying Quantities"
In this case the lease from McDop
aid to Sheprerd granted the the lane
for oil or gas purposes for "Three
years and as much longer as oil or ga.
is found in paying quantities" the
three years ending July 2, 1897, and
since that time the we'll has yielded
to the lesses after deducting an eight
royalty to Mcdonald about $11O worth
of oil or less than $a5 per year. The
we'll was an isolated one, and required
to be pumped in order to pruodce
anything and could not be connected
with other wells to a centre power,
thereby dividing and lessening the
cost of pumping but requifed a separ.
ate pumping outfit, pumper and
power.
The evidence showed that the val
ne of the fuel used each year in pump
ing this we'll amounted to fifty dollars,
and that from four to FIVE hundred
dollars worth Of property was necess-
ary to be kept and used at the we'll in
order to pump it at all; that the cost
of man to pump it would run from
fifty cents to two dollars per day de.
pending upon whether the person do
ing the pumping could receive Other
employment in that neighborhood.
The Court held that question of
what is oil in paying Quantities, is one
of concern to the land owner as we'll
as the operator, particularly where as
in this case large body Of land con-
sisting of one hundred and ninty Eve
acres is attempted to be held under tine
claim that this we'll is producing oil
in paying quantities and that the land
owners rights are OF equal importance
to the court as are the rights of oil
producers, and that a fair test from
any view would be whether there was
any corresponding profits over cost
of production on the amount invested
by the producer, and whether there
was any tar remuneration OF the land
owner in consideration of the amount
OF land burdened by such leases.
Viewing this case from the side of the
operator alone. the court found that
at least the following elements of
cost of production should be consid.
cred.
lst. Cost Of labor to produce the
oil.
End. Cost of fuel and other necess.
arY expences.
3rd. The valae of the machinery
actually necessary to operate the we'll
upon which value the owner should
receive not only fair interest IN re-
turn but also sufficient to compensate
for wear and use of same.
Applying this test to the case at
bar the question is settled by: the
second item alone, towit: cost Of fuel.
the evidence being undlsputed that it
cost fifty dollars per year and this
item alone was largely in excess of
all productions; the other items would
of course add to the expense and de-
monstrate beyond cavil that the well
was and is q losing concern and the
only object Of operating the same
would be the desire to hold large
body of land for speculative pur-
poses.
In view of the undisputed evidence
in this case there could be no other
judgment than judgment for the
plaintiff cancelling the lease and quiet
ing title but the principles laid down
for determining what is "paying qnan-
titles" is of utmost importance and
will be of general interest to land own
er and producer alike.
The plaintiff was represented by
ex Chief Justice Bradbury and Dom
ahue, Spencer & Donahue and the de-
fendant Ellenwood, Smith & Leeper,
of Marietta, o.. and T. NJ. Potter of
Corning, o.