Case Name: The Gas Co. v. Eckert; and The Gas Co. v. Kull
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1904-04-26
Citations: 70 Ohio St. 127
Docket Number: Nos. 8250, 8251
Parties: The Gas Co. v. Eckert and The Gas Co. v. Kull.
Judges: Spear, C. J., Davis, Shauck, Price and Crew, JJ., •concur.
Reporter: Ohio State Reports, New Service
Volume: 70
Pages: 127–139

Head Matter:
The Gas Co. v. Eckert and The Gas Co. v. Kull.
Grant of oil rights to corporation — Grantee agrees to drill well, etc. — Conditions of reconveyance hy grantee — Contract is a lease at option of lessee — Interpretation of contracts.
A grant to a corporation, its successors and assigns, without limitation as to time, of “all the oil, etc.,” upon the following terms: “First. Second party agrees to drill a well upon said premises within six months from this date, or thereafter pay to the first party one hundred and sixty dollars annually until said well is drilled, or the property hereby granted is reconveyed to the first party. Seventh. Second party may at any time remove all their property and re-convey the premises hereby granted, which conveyance said first party agrees to accept, and thereupon this instrument shall be null and void,” after the expiration of six months, and until a well is drilled, is a lease at an annual rental of one hundred and sixty dollars, at the option of the lessee only.
(Nos. 8250, 8251
Decided April 26, 1904.)
Error to the Circuit Court of Fairfield county.
The principal question in each of these cases, viz.: (No. 8250) The Central Ohio Natural Gas & Fuel Co. et al. v. Henry S. Eckert et al., and (No. 8251) The Central Ohio Natural Gas & Fuel Co. et al. v. Lewis Kull, is the interpretation of a gas and oil lease.
The lease in the first case is in the words and figures following:
“In' consideration of the sum of one dollar and of the covenants and agreements -hereinafter contained, we, Henry S. Eckert, Catharine Eckert and Clara Eckert, first party, hereby grant unto the Central Ohio Natural Cas & Fuel Co., second party, successors and assigns, all the oil and gas in and under the following described tract of land, and also the said tract of land, for the purpose and with the exclusive right of operating thereon for said oil and gas, together with the right of way, the right to lay pipes over, to use water from, and also the right to remove at any time all property placed thereon by the lessee, which tract of land is situated in the township of Berne, county of Fairfield, and state of Ohio, and is bounded and described as follows (description omitted), containing three hundred and twenty acres, more or less.
“The lessor shall select a square acre of land on said tract on which the first well shall be drilled, and no other well shall be drilled on said premises without the consent of the lessor.
“The above grant was made on the following terms:
“First. Second party agrees to drill a well upon said premises within six months from this date, or thereafter pay to the first party one hundred and sixty dollars annually until said well is drilled, or the property hereby granted is reconveyed to the first party.
“Second. Should oil be found in paying quantities upon the premises, second party agrees to •deliver to first party in the pipe line with which, it may connect the well or wells, the one-eighth part of .all the oil produced and saved from said premises.
“Third. Should gas be found, second party ■agrees to pay to first party one hundred dollars annually for every well from which gas is used off the premises.
“Fourth. First party shall be entitled to enough gas free of cost to heat and light one dwelling house ■on said premises as long as second party shall use ;gas off said premises under this contract, but shall lay and maintain the service pipes at his own expense, and use said gas at his own risk. The said party of the second part further to have the privilege ■of excavating for water and of using sufficient water, gas and oil from the premises herein leased to run the necessary engines for the prosecution of said business.
“Fifth. Second party shall bury, when requested so to do by first party, all gas lines used to conduct gas off said premises, and pay all damages to timher and crops by reason of the burying, repairing or removal of lines of pipe over the said premises.
“Sixth. No well shall be drilled nearer than six hundred feet to any building on said premises.
“Seventh. Second party may at any time remove all their property and reeonvey the premises hereby granted, which conveyance said first party agrees to accept, and thereupon this instrument shall be null and void.
“In witness whereof, the parties have hereunto set their hands and seals this twenty-third day of January, A. D. 1894.”
It is signed by both parties, attested by two witnesses, and was duly acknowledged by the lessors and delivered and recorded.
The lease in the second case is exactly the same as-that in the first, except that it is for one hundred and ten acres, and the payment stipulated in the first clause was fifty-five dollars, and the lessor is a different person.
In each case the company paid the sum or rental stipulated by the first section of the lease in each of the years, 1895, 1896, 1897 and 1898, and on the. twelfth day of July, 1899, tendered the amount for the year thereafter ending in that month. This the first party, in each case refused to accept, and on the eleventh day of July, 1899, served notice upon the gas company that it had no further right under the lease, and that the first party had elected to and did terminate the lease.
On the twelfth day of July, 1899, the gas company moved onto the property and undertook to erect a. derrick for the purpose of drilling for oil. The first party then brought suit and obtained an injunction against the gas company doing anything upon the premises. In the petition in each case it was also averred that the lease was a cloud upon the title, and the plaintiff asked that the title might be quieted; and, in each case, for a second cause of action, the plaintiff averred that his signature to the lease had been obtained by misrepresentation and fraud, and a cancellation, upon that ground, was prayed for.
The circuit court in each case found that after the six months stipulated in the written instrument, it was merely a lease from year to year, at the rental therein stipulated, and might be terminated by either party at the end of any year. A decree was entered quieting plaintiff’s title and perpetually enjoining the company from asserting any estate or interest in the premises or in any way disturbing plaintiffs in the possession of the same.
Messrs. Nash, Lentz, Addison & Fritter and Mr. George E. Martin, for plaintiffs in error,
cited and commented upon the following authorities:
Home Ins. Co. v. Lindsey et al., 26 Ohio St., 348; Raudabaugh v. Hart, 61 Ohio St., 73; Insurance Co. v. Reed, 33 Ohio St., 283; 1 Modern Law of Contracts, sec. 792; 2 Bates on Pleading, 707; Hastings v. McGee, 66 Pa. St., 384; 2 Jones on Real Property, sec. 1598; Barringer & Adams on Law of Mines and Mining, 30; 1 Pingrey on Real Property, sec. 3; 1 Kerr on Real Property, sec. 27; Kelley v. Ohio Oil Co., 57 Ohio St., 317; Williamson et al. v. Jones et al., 39 W. Va., 231; Gas Co. v. DeWitt, 130 Pa. St., 235; Harris v. Oil Co., 57 Ohio St., 129; Edwards v. McClurg, 39 Ohio St., 41; Hosack v. Crill, 53 Atl. Rep., 640; Gas Co. v. Browning, 8 Circ. Dec., 188; 15 C. C. R., 84; Oil Co. v. Crawford, 55 Ohio St., 165; Oil Co. v. Guffey et al., 43 S. E. Rep., 101; Brown et al. v. Fowler et al., 65 Ohio St., 507; Van Etten et al. v. Kelly, 66 Ohio St., 605; Gas & Oil Co. v. Gas & Fuel Co., 64 Ohio St., 573; Wettengel v. Gormley, 160 Pa. St., 559; Lessee of Boyd v. Talbert, 12 Ohio, 212; Webster et al. v. Insurance Co., 53 Ohio St., 558; Thompson v. Christie, 138 Pa. St., 230; Marshall v. Forest Oil Co., 198 Pa. St., 83; McKnight v. Gas Co., 146 Pa. St., 185; Hubbard et al. v. Norton, 28 Ohio St., 116; Hukill v. Meyers, 36 W. Va., 639; Thropp v. Field, 26 N. J. Eq., 82; Smith v. Whitbeck, 13 Ohio St., 471; Henderson v. Coal & C. Co., 140 U. S., 27; Garnhart v. Finney, 40 Mo., 449; 12 Am. & Eng. Ency. Law (1 ed.), 75 L.; 2 Kerr on Real Property, p. 1151, sec. 1278; Insurance Co. v. Diggs, 8 Baxt., 563 ; Hill v. Carter, 101 Mich., 158; Core v. Petroleum Co., 43 S. E. Rep., 128; Ammons et al. v. Oil Co., 47 W. Va., 610; Harness v. Oil Co., 49 W. Va., 232; Freeland v. Oil Co., 189 Pa. St., 54; Steiner v. Marks, 172 Pa. St., 400; McCarty v. Mellon, 5 Pa. Dist. Rep., 425; Westmoreland Gas Co. v. DeWitt, 130 Pa. St., 235; Lynch v. Gas Co., 165 Pa. St., 518; Stone v. Oil Co., 188 Pa. St., 602; Mactier v. Osborn, 146 Mass., 399; Foley v. Cowgill, 5 Blackf., 18; Gatling v. Newell, 9 Ind., 572; Bigelow on Fraud, 18, 66; Mayhew v. Insurance Co., 23 Mich., 105; Moore v. Turberville, 2 Bibb, 602; Saunders v. Hatterman, 2 Ired., 32; Farrar v. Alston, 1 Dev., 69; Fulton v. Hood, 34 Pa. St., 365; Anderson v. Burnett, 5 How., 165; Salem India Rubber Co. v. Adams, 23 Pick., 256; Hall v. Thompson, 1 S. & M., 443; 1 Story’s Equity (10 ed.), sec. 207; 1 Story on Contracts (5 ed.), sec. 636; Lewis v. St. Louis, 69 Mo., 595; Wilson v. Jones, 1 Bush, 173; Atkins v. Chilson, 11 Metc., 112; Koch’s and Balliet’s Appeal, 93 Pa. St., 434; McKnight v. Kreutz, 51 Pa. St., 232; Janes v. Oil Co., 1 Pa. Supr. Ct. Rep., 242; Blair v. Peck, Ib., 247; Paschall v. Passmore, 15 Pa. St., 295; Woodland Oil Co. v. Crawford, 55 Ohio St., 161; Roberts v. Bettman, 45 W. Va., 143; 1 Pomeroy’s Equity Jurisprudence, secs. 450, 451, 453; Pomeroy on Specific Performance of Contracts, secs. 378, 379; Perkins v. White, 36 Ohio St., 530; DeCamp v. Hamma, 29 Ohio St., 467; Ross v. Doland, 29 Ohio St., 473; Winchell v. Crider, 29 Ohio St., 480; Yeoman v. Lasley, 40 Ohio St., 190; Parmlee v. Adolph, 28 Ohio St., 10; Sexton v. Seiberling, 48 Ohio St., 554; Evans v. Consumers’ Gas Trust, 31 L. R. A., 673; 2 Taylor on Landlord and Tenant, sec. 494.
Mr. M. A. Daugherty, for defendant in error,
cited and commented upon the following authorities :
Wood’s Landlord and Tenant, 601, note 2, to sec. 285; Taylor’s Landlord and Tenant, secs. 62, 75; Oil and Gas Co. v. Jennings, 84 Fed. Rep., 850; 3 Washburn on Real Property, 466; Martin v. Jones, 62 Ohio St., 525; Edwards v. McClurg, 39 Ohio St., 41; Brown v. Fowler, 65 Ohio St., 507; Gas Co. v. Tiffin, 59 Ohio St., 420; Gas Co. v. George, 161 Pa., 47; Cassell v. Crothers, 193 Pa., 359; Oil Co. v. Oil Co., 47 W. Va., 84; Van Etten v. Kelly, 66 Ohio St., 605; 1 Washburn on Real Property, 615; Wood on Landlord, 44; 18 Am. & Eng. Ency. Law, 186; 2 Blackstone, 145; 4 Kent, 110; Doe v. Richards, 4 Ind., 374; 2 Washburn on Real Property, 17; Walker’s American Law, 331; Sperry v. Pond, 5 Ohio, 388; Wood’s Landlord and Tenant, 583, 1192; Harris v. Oil Co., 57 Ohio St., 118; Oil Co. v. Crawford, 55 Ohio St., 177; Donahue on Petroleum and Gas, 149; Gas and Oil Co. v. Gas and Fuel Co., 64 Ohio St., 573; Henderson v. Coal & Coke Co., 140 U. S., 25.

Opinion:
Summers, J.
The contention of counsel for plaintiffs below is, First, that the term granted by each of these instruments was for only six months, and that, thereafter, the gas company could continue to hold only by agreement or consent of both parties. Second, that the gas company having the right to terminate the grant, the first party had the same right by operation of law; and, third, that the grant was upon the express condition of development, and that the company having failed to develop the territory, the grant terminated by the terms of the instrument itself.
In Oil Company v. Crawford, 55 Ohio St., 161, a lease similar to the one in these cases, except that the time within which the oil company was to exercise its rights was limited to five years, and also except in that it contained a forfeiture clause, was interpreted, and it was there held: "First, that such instrument is a lease of the land, oil and gas for the limited time and purpose expressed therein. Second, that the forfeiture is for the benefit of the lessor and at his option. Third, that the promise to drill a well or pay rental cannot be discharged by a mere failure to perform the promise. Fourth, upon failure to drill the well, or instead thereof to pay the agreed rental, such rental may be recovered by action as rental, and need not be sued for as unliquidated damages."
And in the opinion Burket, J., says: "So that whether the instruments in question are regarded as leases, options or licenses, the plaintiff below is entitled to receive the considerations or rentals agreed to be paid."
And in the case of Brown et al. v. Fowler et al., 65 Ohio St., 507, where the lease provided that the lessee should have the right, at any time, to surrender the lease, the right or option to terminate the lease was said to be in the lessee, and the fourth paragraph of the syllabus is: "Held also that as the consideration of one dollar paid for the whole lease was also a payment for this clause, the lease is not void for want of mutuality. ' '
. It would seem to follow that the option to terminate these leases or to keep them in force by payment of the stipulated rental is in the lessee and that the one dollar and the agreement to pay the rental is a good consideration for the option.
The cases of plaintiffs below seem to have been suggested by, and based upon, the statement made by Burket, J., in Brown et al. v. Fowler et al., supra, on page 523, that, "a tenancy at the will of one party is a tenancy also at the will of the other. ' ' Assuming that the statement is correct in cases of mere tenancy at will, it has no application in these •cases. This is no mere tenancy at will. There is a good and valid consideration for the option .granted by these instruments, and it is immaterial whether they are called leases, deeds,- or written agreements. The intention of the parties is to control and it is manifest that it was not the intention of either party that the right granted by the instrument should be a mere license that could be terminated by the grantor at any time.
In Warner v. Tanner, 38 Ohio St., 118, a written instrument like the instruments under consideration in this case, in that it was in the nature of a lease and for no definite term and with an option in the lessee to terminate it at any time, was under consideration, and it was held:
"T and B executed an instrument under seal, signed by two witnesses, and acknowledged by T before a justice of the peace, in which instrument it is covenanted that T leases to B two acres of land (described in the instrument), with the use of water in adjoining lands of T and privilege of conducting it in pipes 'to a cheese house to be erected on said premises, T reserving enough water to accommodate the stock kept on the farms of T. And B is to bnild a cheese house on the premises, and agrees to pay T for the use of the premises and the privileges aforesaid, thirty dollars per annum on the first day of October, in each year, while the premises shall be used as and for the manufacture of cheese; and when the premises shall no longer be used for such purpose, the premises, together with the privileges aforesaid, shall revert to T, said B having the privilege of removing all buildings and fixtures put upon said premises by him.' Held, that this was a lease to B for life, provided he continued to use the premises for the manufacture of cheese thereon and paid rents, with the right at any time to remove the buildings and fixtures placed on the premises by _ such lessee. ' '
In that case the instrument contained no words of inheritance, and, presumably for that reason, it was held to be a lease for life, only.
In Delhi School District v. Everett, 52 Mich., 314, it is held, in an opinion by Cooley, J.: "A lease to a school district, to hold the property 'during the time it is used for school purposes,' is a lease in perpetuity at the will of the lessee; and as the lessee is a corporation, and words of inheritance are not required, the lease, if a present consideration is paid, really operates as a bargain and sale, and conveys a base or determinable fee'. ' '
In Foltz v. Huntley, 7 Wend., 210, the syllabus is as follows: "A demise to A B, his heirs and assigns, for such term of time as he pays rent, etc., he, on his part, covenanting for himself and his heirs, etc., to pay rent and perform covenants, is a perpetual lease. The lessor, but not the lessee, may elect, on default, to consider it forfeited."
In Lowther Oil Co. v. Guffey et al., 52 W. Va., 88, 43 S. E. Rep., 101, it was held that, "Where a grant, of oil and gas, and oil and gas privileges, in consideration of one dollar, without limitation as to time, contains a forfeiture clause in these words: 'In-case no well is completed within two years from this date, then this grant shall immediately become null and void as to both parties: provided, that second, party may prevent such forfeiture from year to year by paying to the first annually in advance eighteen and seventy-five one-hundredths dollars, at-her residence, until such well is completed, ' such lease is thereby converted into a lease from year to year, at the option of the lessee, until a well is completed. It would then continue so long as oil or gas is produced in paying quantities."
See also Alexander v. Tolleston Club, 110 Ill., 65; Gilmore v. Hamilton, 83 Ind., 196; Hosack v. Crill, 204 Pa. St., 97; 53 Atl. Rep., 640.
It is true that at common law a lease at the will of one party was at the will of either, and for the reason that an estate at the will of the lessee, his heirs or assigns, was the equivalent of the fee-simple, which could not-he granted by a lease.
But in this state, at an early day it was provided,, by statute, that permanent leasehold estates, renewable forever, should descend as estates in fee, and they were made subject to he taken on execution as-real estate.
• Why the common law rule is not the law in this-state is well stated by Lowrie, C. J., in Effinger v. Lewis, 32 Pa. St., 367. He says: (368) "This lease-is for one hundred years, with the right in the lessee, his heirs or assigns, to hold the premises at the same rent, as long thereafter as he or they shall think proper; and the counsel insists that, after the hundred years, this becomes a lease at the will of one party, and therefore of either. He urges that such was, for several centuries, the common law of England; and that, therefore, it is now a part of our common law, and that we have assumed legislative functions in setting it aside.
(369) "Now if the law relied on here depended on -a custom that has passed away, it is not we, but the people themselves, that have set aside the law; and it would be mere usurpation in us to declare that it is still in force.
'(That law did depend on a custom that has passed away. An estate at the will of the grantee, his heirs and assigns, is equivalent to a fee simple, and such an estate could not, by the old customs, be conveyed without livery of seisin. By the same customs, there could be no livery of seisin under a lease, but a mere taking of possession. Land granted by livery of seisin, without defining the quantity of the estate, was treated as a life estate. Where there was merely a delivery of possession, without defining the term, there arose only a tenancy at will. For want of livery of seisin, and the form of conveyance proper to that ceremony, it was necessary to treat an estate at the will of the grantee, as being also at the will of the grantor, else a fee simple might be granted in a form that pertained to the lowest order of estates; and this the customs of that •day did not allow.
"Now and here, it is otherwise. With us, a fee ¡simple may be granted without livery of seisin, as well as a lease for years, or at will.
(370) "There is nothing, therefore, to prevent us from giving effect to this contract according to the intention of the parties. If they meant to create an •estate that should endure so long as the grantee, his heirs and assigns, should desire to keep it at the rent agreed upon, then such is its character; and this silences all the minor objections brought to bear on the title. That they did mean such an estate, is •quite plain from their agreement.
"It is, in terms, a demise and grant to James Crozer, his heirs and assigns, for one hundred years, and as much longer as he and they may think proper, at an annual rent of three pounds, and with leave to him or them to surrender the premises at any time during the term, on giving one year's notice; and the grantor, for himself, his heirs, executors, and administrators, covenants with the grantee, his heirs and assigns, that they shall quietly enjoy and hold the premises and privileges granted, against the grantor or any person claiming under him.
"It would be darkening counsel with words to attempt to prove that this means to grant an estate to be held and assigned at the will of the grantee and those holding 'under him. The parties have so contracted, and the law does not forbid it."
The judgment is reversed and the cause remanded to the circuit court for further proceedings.
Judgment reversed.
Spear, C. J., Davis, Shauck, Price and Crew, JJ., •concur.