Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1944-04-01

Is al appeal K0T E&n&aTln& now
of the state of Montana.
While directly affecting only a
lease tn the gas area of the Kelvin
Sunburst field, the action is of far
greater import according TO briefs
filed In successive stages of the
proceedings, In that II bears upon
the effect of the termination clauses
such as are ordinarily part of
standard Montana oil leases.
The case had It's inception In a
suit filed by the Consolidated Gas
Co Of Shelby to clear title TO acreage
hitherto leased to e. @. Reickhoff
The original ReickhDff lease covered
800 acres of the Katherine l.. Jones
farm I'm TOWNSHIPS 30 north, range 2
west. Date of the lease was Sept 2,
1887.
In trial Of the action, before Dis
trict Judge R. M Hattersley, evil
dence was introduced showing that
Reickh0ff paid $50 i'm delay rental
Sept /, 1889, which granted the
privilege of IL months extension of
the lease from and after Sept. 2,
1888. Another payment was made
Oct 20, 1910, which according 20 the
receipt given ReicIxh0ff~ by the land
owner, granted an extension to
Sept. 2, 1871. Reickhoff moved a rig
90 khe acreage In 1910 and Sept.
and drilled so feets when opera
tons terminated Action of the Con
solIdated Gas Co TO clear title TO a
lease on the land, which 1t had sub
sequently obtained, was commenced
April 2 1912
II was observed by Judge Hat
tersIey that neither had Ok or gas
been produced ssaSyw fsaa tree ds4ki8n@
of well been commenced upon the
land In good faith and thereafter
prosecuted with reasonable dill
gence.
District court decision was in
favor of the Consolidated Reickhoff
appealed. and the decision was re.
versed by the high court.
Brief Of the Consolidated Gas Co,
entered in connection with its
appeal for reEaearing, asserts the
decision has serious and far-reach-
ing consequences.
Says the brief, IN part:
A very large acreage In the so
called Sweetgrass arch in particu-
lar. . has heretofore been leased for
oil and gas. and In passing upon
abstracts, IL the granting clause of
the old lease appeared to be for a
definite term and as much longer
thereafter as oil, gas either is pro
lieve. have diSrgarded the drilling
clause and accepted an affidavit set
ting forth that no oil or gas has
been or was being produced from
the land, and passed the abstract
MANY oil companies, further.
more, have, under such circum-
stances taken top leases and dis.
regarded all previous oil and gas
lease appearing of record, and
proceeded with development, and II
this is to be the rule of decision In
this state, 1t would appear 70 us that
IL would be unsafe to take new
lease on any land in this state upon
which previous lease had at ans
time been given, If the old LEASE
contained the provision for defer
ring drilling obligations by payment
of rental unless q release Is obtained
or the title qaieted against the ole
instrument
at will make no difference tina
not one thing was done toward
development by former lessee, mol
win 1t make any difference as to ths
length Of the term OF the lease &C
cording t0 the granting clause. @
the evident speculative character o
the instrument, or lack Of good faitl
on the part Of the lessee
III the EeaEe provides for motto
in the event OF 1OnrpeFfOFmance,
vii be necessary 10 give motto
under this Interpretation even b.
fore an actt1u as Instituted t0 Qlae
fzF exa& x&mm