Court Opinion

ID: 7168977
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:24:22.413937+00
Date Added: 2024-06-11T16:15:36.861050
License: Public Domain

BREAUX, C. J.
This suit was brought by the Caddo Oil & Mining Company against the Producers’ Oil Company for a decree annulling and setting aside a gas and oil lease.
Plaintiff owns 113.1 acres of land within a few hundred yards of Oil City, in Caddo parish. The land is in possession of the Producers’ Oil Company under a contract entered into with plaintiff about the 18th day of March, 1907.
Plaintiff’s contention is that the contract is illegal and null, because the Producers’ Oil Company, in one of the clauses of the contract, expressly reserved the right to abandon the premises at will and remove all its improvements from the land. Plaintiff adds that the contract is totally wanting in mutuality, and furthermore that it is null because of the failure of the Producers’ Oil Company to comply with the terms and conditions of the contract; that it did not drill wells for oil and gas, and did not explore the land for minerals; that the motive of the parties in entering into the contract was to exploit the lands for oil and gas.
The defendant answered, admitted possession, and claimed the right to hold the land under the mineral lease, as it has (it alleged) complied with all of its obligations. Defendant averred that plaintiff has received over $15,000 in royalties; that it has expended larger sums in exploring for oil on the land. Defendant pleaded .that, by accepting these royalties, plaintiff is concluded and estopped.
The defendant drilled eight wells that were producing oil in limited quantities on the day that the suit was instituted, viz., April 29, 1911. The daily production of these wells was valued at $60.
Under the lease, defendant was obligated to begin drilling a well within 30 days from its date to a depth of not less than 2,300 feet. *705In case of failure to discover oil, then a second well within 60 days thereafter, and, in default of defendant to bore as just mentioned, then the lease was to be decreed of no further force or effect. If, on the contrary, oil or gas was found, the term of the lease was to be 20 years from its date, and thereafter, if oil was found in paying quantities, the finding of oil in paying quantities was the time limit then of the lease.
It is in place to state that the land was in the oil and gas territory. Of late years, however, the oil has become exhausted. It has run into other underground reservoirs. At one time it was practically in the center of the oil fields. Wells have been drilled on all sides of plaintiff’s ground. Since the lease was signed, the drillers find oil in other localities and the tract is not now in or near the center of oil production.
The defendant is unwilling to explore the land. Why not let it return to the possession of the owner? The company declined to drill other wells, giving, as a reason, that at this time there is no prospect of a fair return. Why hold to the land?
The superintendent of the defendant testified that the company left the development of the property to him.
Plaintiff repeatedly called on the defendant to drill other wells. This the defendant refused to do.
Defendant expended large amounts to bore and drill the eight wells, from which it derived scant profit. Only three wells now produce oil. At first, the quantity produced was large. Now the production of oil is worth only about §60 per day. The last producing well was bored about four years ago.
[1] As to these three wells, there is no ground to annul the lease. The potestative condition can be of no avail; for there is a performance of the contract as to these, and consideration received.
A eontractee who has received full consideration cannot have a contract annulled, even if the condition is potestative. Busch-Everett Co. v. Vivian Oil Co., 128 La. 892, 55 South. 564.
This is not all-; there are rules of pleading as binding as any other rule of positive law. By these the rights of parties must be determined.
The rule is that no amendment will be made to a judgment, unless appellee has prayed for it in his answer to the appeal. There was no oversight in this instance. The plaintiff purposely did not ask for an amendment of the judgment of the district court. It accepted it as rendered.
[2, 3] As to the three wells, defendant and appellant has no cause to complain. It has, as to them, all the rights it can ask. But the defendant goes further and seeks to have it decreed that performance of the contract as relates to the three wells is performance as to the whole area of the land. This would lead to the conclusion that the least performance of the least part of the contract is performance of the whole; that performance is entirely indivisible.
With this view we do not agree. The rights of parties are divisible; that is, having decided that defendant has the right to operate three wells, it has the right to ingress and egress from the wells, also the right to maintain its pipe lines. That is all. But the recognition of the right in defendant to this extent does not necessarily include the whole tract.
True, the defendant has accepted the decision of the lower court as correct. The effect extends no further than the three wells before mentioned.
It is possible to put an end to a contract to drill for oil to the extent that the contract is unperformed, provided that the want of performance is of a character and extent as relates to the whole as to justify annulling the contract.
*707It remains: Defendant partially complied with its obligation, and, to the extent that it has complied, it is entitled to the benefit arising therefrom, but not further.
The agreement and averments of the lease confer the right.
The defendant, lessee, has the right to abandon the lease whenever it pleases. This was a reciprocal right, which plaintiff, lessor, could exercise. The contract as to its continuance was optional on the part of either the plaintiff or the defendant. There was no vesting of right in either plaintiff or defendant as relates to the unperformed part. In putting an end to the lease, the plaintiff had the equitable right to performance as to the remainder of the 113 acres.
Were we, for illustration, to consider that several thousand acres had been let, and that the lessee chose to explore only to the extent of one acre or less, it would be possible for the lessor to resume control of his unexplored land, even though he chose to recognize all of defendant’s rights to the one acre.
We are informed by Thornton, in his work entitled “The Law Relating to Oil and Gas” (2d Ed.) § 169, p. 247, that, if the lease required conservative drilling of wells, a failure to drill all of them in time,will not necessarily be fatal to the whole lease. A producing well may keep a lease alive in part, but not necessarily the whole.
Defendant’s insistence is that it has drilled four other wells. The answer is that they are worthless, dead wells, and dead wells will not have the effect of giving life to a lease. It is not because about four years ago defendant drilled those wells it gave it the right to abandon all attempts to bore fox-other wells, and, if possible, increase the production.
In a number of decisions it is laid down as correct that the potestative condition may be invoked by contractor or contractee.
The operations for oil having permanently ceased, the nullity of the unexecuted contract may be invoked.
The purpose was to exploit fox- gas and oil; the consideration was a fractional portion of the production of the wells. One-eighth is the part to which the grantor is entitled.
Neither law nor jurisprudence contemplate that the contractor shall be at liberty to permanently cease the exploitation of the land. If he does, it has been decreed a number of times that it amounts to an abandonment.
If there is cessation in the operation of wells, the contract fails in its purpose; it would be the retaining possession of private property without compensating the owner.
Oil and gas are unstable, and flow from their situs to an extent that they are not considered as part of the land before they are brought to the surface ox- reduced to possession. Ohio Oil Co. v. Indiana, 177 U. S. 190, 20 Sup. Ct. 576, 44 L. Ed. 729; Brown v. Spilman, 155 U. S. 665, 15 Sup. Ct. 245, 39 L. Ed. 304; Busch-Everett Co. v. Vivian Oil Co., 128 La. 893, 55 South. 564.
[4] As to specific performance: One of the rights suggested by defendant in the alternative: That action would afford no relief. One cannot be forced to drill a' well for oil, as such operation would not be within the power of the courts to enforce. It would be subject to many contingencies. It is entirely impracticable. For that reason courts have invariably annulled contracts, and have not ordered specific performance in cases at all similar to the present case.
The possibility of recovering damages has also been suggested, also in the alternative; that is, if plaintiff was entitled to relief, suit for damages was the remedy. That action also is impracticable. The law provides for performance of these necessarily peculiaxcontraets, including fugitive oil and volatile gas, not for damages in case of nonperformance.
*709For reasons stated, the judgment is affirmed.
PROVOSTS, J., dissents.