Title: Wilson v. Talbert
Citation: 535 S.W.2d 807
Docket Number: 75-327
State: Arkansas
Issuer: Arkansas Supreme Court
Date: April 5, 1976

535 S.W.2d 807 (1976) Jay C. WILSON et al., Appellants, v. Floydena M. TALBERT et al., Appellees. No. 75-327. Supreme Court of Arkansas. April 5, 1976. Rehearing Denied May 17, 1976. Keith, Clegg &amp; Eckert, Magnolia, for appellants. McKay, Chandler &amp; Choate, Magnolia, for appellees. JONES, Justice. This is an appeal from a chancery court decree canceling an oil and gas lease. The appellee Talbert[1] owned an undivided three-fourths mineral interest and Mrs. Haltom owned the other one-fourth interest in a tract of land in Ouachita County and they executed separate leases to the appellants covering their respective interests. The primary term of the Talbert lease was two years and that of the Haltom lease was three years. The leases were executed in 1964 and 1965 and an oil producing well was drilled by the appellants. The well continued to produce and royalties were paid under the lease contracts until in March, 1974, when a leak developed in the bottom of one of the appellants' 500 barrel storage tanks and production from the well was discontinued. The Haltom lease simply provided that it would remain in force for a term of three years from its date and as long thereafter as oil and gas, or either of them, was produced from the land by the lessee. The *808 pertinent provisions of the Talbert lease provided as follows: The so-called force majeure clause in the Talbert lease reads as follows: On September 23, 1974, Talbert filed petition for cancellation of the lease as a cloud on his title. He alleged that there had been no production from the lease since March, 1974, and no royalty paid since February, 1974; that the lease had expired and had not been renewed. He alleged that he had made demand for release under Ark.Stat. Ann. § 53-313 (Repl.1971); that his demand had been ignored; that the lease constituted a cloud on his title and he prayed that his title be quieted. By amendment to Talbert's petition, Haltom prayed the same relief as to her undivided one-fourth interest. The appellants filed answer and counterclaim denying that the lease had expired. They alleged the rupture in a storage tank and the difficulties encountered in repairing it as the reason for cessation of production. They alleged that when they sought entry to the premises in July, 1974, in an attempt to repair the tank, that Talbert refused them permission to enter; that his conduct estopped him from enforcing a forfeiture and that they were damaged in the amount of more than $1,000 per month because of such refusal. They prayed for a restraining order and for damages. On October 30, 1974, the chancellor entered a temporary restraining order permitting the appellants to enter the premises for repair of the tank and to restore production and, following a hearing on the merits, the chancellor rendered a letter-form memorandum opinion reciting in part as follows: The chancellor entered a decree in accordance with his findings and ordered an accounting for oil produced under the Talbert lease after its termination. There is no appeal from the chancellor's decree as to the Haltom lease but as to the Talbert lease, the appellants contend that the chancellor "erred in declaring a forfeiture of the Talbert lease under the 60-day clause." The appellants argue that since the chancellor found the cessation of production was of such temporary nature and reasonable effort to reinstate production sufficient to prolong or keep in force the Haltom lease, the question on this appeal is narrowed to, As we interpret the first above provision of the lease which twice contains the so-called "60-day clause," it refers to cessation of production because of depletion or threatened depletion of the well or wells rather than a temporary cessation because of such things as temporary lack of storage facilities. The wording of this provision is somewhat ambiguous but it evidently refers to a threatened permanent cessation which can be averted only by extensive measures such as the drilling of a new well or the reworking or deepening or plugging back of an existing well. As we interpret the "force majeure clause," it applies to temporary cessation of production as a result of causes beyond the control of lessee such as the ones therein set out. In this provision the parties fixed no minimum time, such as 60 days, in which to reinstate production because, obviously, the nature and extent of the breakdown, or cause of cessation of production, would govern the time required for making the necessary repairs or eliminating the cause of cessation of production. The length of such necessary time, in the absence of agreement to the contrary, could only be measured by such time as would be reasonable under the facts and circumstances of the particular case. The appellants argue that "the question on this appeal is narrowed to whether the language of the force majeure clause *810 prevented the lease from terminating because of the temporary cessation of production due to the breakdown of equipment." It is our view, however, that the question, under the force majeure clause, is narrowed to whether the time involved in making the necessary repairs and restoring production was reasonable under the facts and circumstances of this case and, upon review of the evidence de novo, we conclude that it was not. The rupture in the tank bottom occurred in March and apparently there was no effort made to repair it until July. Furthermore, there was evidence to the effect that another storage tank stood adjacent to the damaged one and that it could have been utilized by simply opening or closing valves, following minor repairs. The rule is well established that on trial de novo in chancery cases, the chancellor's decree will be affirmed if it appears to be correct upon the record as a whole, even though the chancellor may have given the wrong reason for his conclusion. Morgan v. Downs, 245 Ark. 328, 432 S.W.2d 454 (1968); James v. Medford, 256 Ark. 1002, 512 S.W.2d 545 (1974). The decree is affirmed. [1] Both Mr. and Mrs. Talbert were parties but will be referred to in the singular.