Court Opinion

ID: 9625257
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:33:39.046474+00
Date Added: 2024-06-11T18:06:04.488835
License: Public Domain

HUNT, Justice
(dissenting).
The majority opinion herein holds that the recital “ ‘cash paid in advance’ ” appears (Italics ours) to be the consideration for the lease, and the privilege of delaying drilling for the entire term of 40 years. It quotes the further statement contained in the lease of “ $1 and the covenants and agreements * * * ‘hereinafter contained’ * and further quotes the provision whereby the lessee agrees to commence drilling a well and to prosecute same with due diligence, etc., and then proceeds to hold that, because certain blanks in the lease as to time of drilling were left blank, delay in the commencement of a well was *455intended by the parties and that the “ ‘cash paid in advance’” was in lieu of delay rentals and relieved lessee of any obligation whatever'under the terms of the lease. We cannot agree that the lease is susceptible of this narrow construction, especially in view of all the other provisions of the lease and the many holdings of this court concerning both express and implied covenants contained in oil leases.
This is not a suit to collect delay rentals and we agree none are due under the terms of the lease. We do not agree, however, that there was no obligation on the part of the lessee to develop within a reasonable time, but that to do so was clearly intended by the parties, as well as implied, when you consider all the provisions of the lease and apply the rules heretofore announced by this court in similar situations in construing same.
A very similar situation was presented in Hitt v. Henderson, 112 Okl. 194, 240 P. 745, and therein we said:
“An oil and gas lease for a term of 15 years, in consideration of one dollar and to deliver to the lessor one-tenth of the oil realized from the premises, containing no covenant by the lessee to commence drilling operations at any certain time, does not vest title to oil and gas in the land and is not a grant of any estate therein, but is simply, a grant of a right to prospect for oil and gas, no title vesting until such substances are reduced to possession by extracting same from the earth.
“In such lease there is an implied covenant by the lessee to begin development operations within a reasonable time, and if he does not do so, he will be presumed to have abandoned his right, and a court of equity will, at the suit of the lessor, cancel the lease as constituting a cloud on his title.
* * * ⅜ * *
“The general rule is that a court of equity will not cancel an oil and gas lease for failure to comply with an implied covenant to diligently develop such lease unless notice has been served upon lessee that a failure to commence drilling operations will- be ■ considered grounds' for cancellation of the. leasé: There are, however, cases in Which the giving of such notice may be unneces-^ sary or where the circumstances excuse the failure to give it, as where the les-, see’s abandonment of the contract may be inferred from the fact that he has. been in default for a long period of years.” • ■
In the body of the opinion it is stated:
“There being no stipulation in the lease specifying the time within which the lessee shall begin operations for oil and gas, or minerals, there is an implied covenant by the lessee to begin development within a reasonable time, and if the lessee does not do so he will be presumed to have abandoned his right, and a court of equity will, at the suit of. the lessor, ■ cancel the lease as constituting a cloud on the lessee’s title. Chandler v. French, supra [73 W.Va. 658, 81 S.E. 825, L.R.A.1915B, 561].”
This case is almost identical with. the, case at bar, except as to the term of the-lease which in the instant case is 40 years, and no development is shown for 32 years, which was more than 6 years after exploration and development for oil and gas had been begun in the general area of the land here involved. Hitt v. Henderson, supra, has never been modified or overruled and has often been cited with approval by this court and the Federal Court. One of the cases being Doss Oil Royalty Co. v. Texas Co., 192 Okl. 359, 137 P.2d 934, 938. In that case, this Court held that 14 years was an unreasonable length of time for the lessee to hold the undeveloped portion of the lease without drilling, or without showing its intention to drill. In the body of the opinion the Court said:
“ * * * The implied covenants of a lease require the lessee to develop and operate the lease with due regard for the lessor’s interest therein as well as his own. Neither the lessor nor the lessee is the arbiter of the extent to which, or the diligence with which, the lessee shall proceed, but such question *456is committed to the sound discretion of the courts to be determined from the facts and circumstances of each case. * * * v
I ag-ree that the rule of law announced in the syllabus of the majority opinion is correct but am further of the opinion that applying same to the facts, as disclosed by the record in this case requires that this cause be reversed with directions to render judgment for plaintiff.
The majority opinion also recognizes the well established rule that oil and gas leases are construed most strongly against the lessee and in favor of the lessor, citing Frank Oil Co. v. Belleview Gas & Oil Co., 29 Okl. 719, 119 P. 260, 43 L.R.A.,N.S., 487, and also the rule that oil and gas leases should be construed to promote development and prevent delay where the terms of the lease will permit, citing Crain v. Pure Oil Co., 10 Cir., 25 F.2d 824, Paraffine Oil Co. v. Cruce, 63 Okl. 95, 162 P. 716, 719, 14 A.L.R. 952, with which I am also in accord. On the authority of these cases, and others herein cited, we reach the conclusion, as herein above announced.
There was a specific agreement on the part of the lessee in the lease here involved to “commence drilling a well on said premises * * * to prosecute such work with due diligence to completion”, and even though the time in which he was to commence said well was left blank we think said provision clearly shows it was the intention of the parties that a well be commenced within a reasonable time in addition to the implied covenant to do so, and that failure to commence a well within 32 years constitutes an abandonment of the lease, especially in the absence of any explanation or excuse for such failure, and none is shown or attempted to be shown here.
Other questions raised in this appeal, not being considered in the majority opinion in view of the conclusion there reached, are not discussed in this dissent. However, I am of the further opinion that under the facts in this case no notice or demand to begin development was necessary, and further, that the plaintiff could maintain this action as to its interest without joining his co-tenants. See Skelly Oil Co. v. Wickham, 10 Cir., 202 F.2d 442, and other Oklahoma cases therein cited.
I, therefore, respectfully dissent.