Case Name: Hodges v. Harrell
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1927-03-07
Citations: 173 Ark. 210
Docket Number: 
Parties: Hodges v. Harrell.
Judges: Mr. Justice Kirby dissents.
Reporter: Arkansas Reports
Volume: 173
Pages: 210–223

Head Matter:
Hodges v. Harrell.
Opinion delivered March 7, 1927.
Attyn Smith, for appellant.
Marsh, McKay é Marlin and Powell, Smead <£ Knox, for appellee.

Opinion:
McHaNey, J.,
(after stating the facts). Counsel on both sides of this case, in their very able briefs, have presented for our consideration some very interesting questions. Appellants contend that, where a lease is executed to several tracts of land by the terms of which the lessee is required to drill a well on said lands within a certain specified time, and thereafter the lessee assigns one' of said tracts to another person, the assignee or the original lessee is bound, either by the express or implied covenants contained in the original lease, to drill a well on such tract within such time, regardless . of the fact that the original lessee or his assignees has drilled one or more wells on the other portions of the land contained in the original lease.
Appellants further contend that, in such a case, they may maintain an action in a court of equity to cancel such portion of the lease and the rights of all assignees claiming thereunder after the expiration of the time limited in the lease contract for drilling a well, on the ground that such tract has been segregated from the original lease by assignment, and is in the same situation as if such tract had been covered by a separate lease agreement between the .lessor and original lessee.
Counsel for appellees contend that this is not true; that the drilling of a well by the original lessee or any assignee on any part of the lands originally leased, within the time limited in the lease, protects the whole of the leased premises and every part thereof, from forfeiture and cancellation for failure to drill on any other part of the leased premises that may have been assigned by the original lessee, and that therefore a suit in equity to cancel the 40-acre lease in controversy here, same being one of the three tracts originally leased, containing 200 acres, cannot be maintained, as it is a suit to cancel a part of the lease, and that therefore appellants' suit states no cause of action cognizable in equity, and that whatever cause of action he had remaining would be one at law for damages.-'
But we find it unnecessary in this case to decide these interesting questions. 'In the plaintiff's amended complaint filed on Febrfiaiy 3, 1925, in compliance with the order of the court requiring the complaint to be made more, definite and certain, it is alleged "that W. II. G-illiland drilled ITodges No. 1 on the northwest quarter of the northeast quarter of the southeast, quarter of section 6, township 16 south, range 16 west, permit having been issued on November 15, 1924, and same having been drilled after the term of the lease had expired," which is on the land in controversy.
It will therefore be seen that the appellants themselves say, on the face of their complaint, that the appel-lee, W. H. Gilliland, had drilled a well on the 40-acre lease in question after it is claimed by the appellants that the lease had expired. Without deciding in this case whether, under the terms of the lease, the appel-lee, W. H. Gilliland, who claimed title theretq through mesne conveyances from the original lessee, 0. 'Alexander, was required to drill a well on this particular 40 ac-res within the five-year period limited in the lease, we think it would be manifestly unjust and inequitable for appellants to stand by, after October 1, 1924, and permit appellee Gilliland to enter upon the land and drill a well under the belief that he had the 'right to do so. The original complaint in this case was filed on November 24, 1924, nine days after they say the permit for the drilling of said well was issued, and manifestly after the drilling of a well on said 40 acres had been begun by Gilliland.
The lease was dated October 1, 1919, and the five-year period for drilling a well, if he was required to drill one on this particular 40 acres within that period of time, expired October 1, 1924. This was a provision in the lease for the benefit of the lessor, and one which he could waive. By permitting appellee, Gilliland, to enter upon said lease and begin the drilling of a well without taking any steps to prevent him from doing so, we hold that appellants waived the right to insist upon a forfeiture and a cancellation of the lease as to this particular 40 acres.
In the case of Friar v. Baldridge, 91 Ark. 137, 120 S. W. 991, this court said: ' ' The law will strictly enf orce the agreement of the parties as the3r have made it; but, in order to find out the scope and true effect of such agreement, it will not only look into the written contract which is the evidence of their agreement, but it will look also into their acts and conduct in the carrying out of the agreement, in order to fully determine their true intent. It is a well-settled principle that equity abhors a forfeiture, and that it will relieve against a forfeiture when the same has, either expressly' or by conduct, been waived. The following equitable principle formulated by Mr. Pomeroy has been repeatedly approved by this court: 'If there has been a breach of the .agreement sufficient to cause a forfeiture, and the party entitled thereto, either expressly or by his conduct, waives it or acquiesces in it, and he will be precluded from enforcing the forfeiture, and equity will aid the defaulting party by relieving against it, if necessary.' 1 Pomeroy Eq. Jur. 452; Little Rock Granite Co. v. Shall, 59 Ark. 405; Morris v. Green, 75 Ark. 410; Banks v. Bowman, 85 Ark. 524; Braddock v. England, 87 Ark. 393." And this rule applies to- lease contracts. The case of Wales-Riggs Plantations v. Banks, 101 Ark. 461, 142 S. W. 828, was a suit to cancel a lease contract entered into between the parties on the alleged ground of breach of various covenants in the lease between appellant and appellee. This court quoted from Little Rock Granite Co. v. Shall, supra, as follows: "Where there has been a breach of a contract of lease sufficient to cause a forfeiture, and the party entitled thereto, either expressly or by his conduct, waives it, equity will relieve the defaulting party from a forfeiture, unless the violation of the contract was the result of gross negligence, or was willful and persistent. ' '
Inasmuch as the decision of this case rests upon the matters stated in the complaint, we have examined same carefully and failed to find any allegation that appellants notified appellee Gilliland that, unless he drilled a well on this 40-acre lease prior to October 1, 1924, he would declare the lease forfeited. Nor is there any allegation in the complaint that, prior to the time that appellee began drilling a well upon said lease, he warned him against doing so, on the ground that the time had expired, or any other ground. Appellants content themselves by alleging that, since the first day -of October, 1924, they have notified the appellees that their right to said lease had expired and notified them to execute proper releases to be filed and recorded, or to enter proper releases on the margins of the records upon which said leases and assignments had been recorded, and that defendants refused to do so. But this is far from saying that they gave them any notice prior to the beginning of drilling operations. The complaint was filed on November.24, and they may have given them notice the day the complaint was filed, as the allegation does not state any date the notice was given, except that it was since October 1, 1924.
But, even if appellants had given the notice prior to the expiration of the lease, or prior to the beginning of the drilling of a well, and thereafter, with knowledge of the fact, suffered the appellee, G-illiland, to enter upon said lease and begin the drilling of a well without doing anything more to prevent it, they should be held to a waiver of the right to insist upon a forfeiture.
The complaint therefore stated no cause of action cognizable in equity. It was a suit for damages in the law court. The chancellor properly transferred the cause to the circuit court, and the circuit court was correct in refusing to remand it to chancery, and, when appellants refused to proceed with the prosecution of their ease in the circuit court, the court was right in dismissing the cause for want of prosecution.
The judgment of the circuit court is correct, and it is therefore affirmed.
Mr. Justice Kirby dissents.