Court Opinion

ID: 7171342
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:26:46.729573+00
Date Added: 2024-06-11T16:15:44.360849
License: Public Domain

On the Merits.
[7] We quote one of the original leases (the other being identical, except as to price .and description of the property) as follows:
“State of Douisiana, Parish of Caddo.
“Know all men by these presents that I, D. H. Raines, Vivian, Caddo parish, Douisiana, the party of the first part, in consideration of the .sum of $600, paid by C. E. 'Dunson, party of the second part, the receipt of which is hereby acknowledged, and the further consideration hereinafter mentioned, have granted, bargained, sold, and conveyed, and do by these presents, .grant, bargain, sell, and convey, unto the said party of the second part, his heirs and assigns, all of the oil and gas in and under the following described land, together with the rights of ingress and egress at all times for the purpose of drilling, mining, and operating for gas, •oil, or water, and to conduct all operations for gas, oil, or water, to erect storage tanks and other necessary structures, and to lay all pipes necessary for the production, mining, and transportation of oil, gas, and water, with the right to use sufficient gas, oil, or water to operate said property, and shall have the right to remove all machinery, fixtures, and improvements placed thereon at any time, reserving, however, to the party of the first part the equal one-eighth of all the oil produced and saved upon said premises, to be delivered in any pipe line to which well or wells may be connected to the credit of the party of the first part.
“If gas is found, second party agrees to pay to the first party two hundred ($200.00) dollars for the product each year, payable quarterly for the product of each well while the same is being used off the premises; and party of the first part, by furnishing his own pipe and connections, shall have sufficient gas free of cost for use in one dwelling house on the premises, so long as the gas is utilized off the premises, at his own risk.
“No well shall be drilled within 200 feet of any building now on said premises without the consent of the first party. [Here follows description of land.]
“To have and to hold the above-described premises unto the party of the second part, his heirs and assigns, on the following conditions: In case operations for either the drilling well for oil or gas is not commenced and prosecuted with due diligence within ninety days- from this date, then this grant incumbrance shall become immediately null and void as to both parties, provided that second party may prevent such forfeiture from quarter to quarter for one year by paying to the first party the sum of $600 per year until such well is commenced, and it is agreed that the commencement of a well shall operate as full liquidation of all rentals under this provision during the remainder of the term of this lease, which payments can be made at Vivian State Bank of Vivian, or payable direct to party of the first part.
“In case the party of the second part should bore and discover either oil or gas, then in that event this grant incumbrance or conveyance shall be in full force and effect for twenty-five years from the time of the discovery of said product, and as muqh longer as oil and gas may be produced in paying quantities thereon.
“This grant is not intended as a mere franchise, but is intended as a conveyance of the property above described for the purpose herein mentioned, and it is so understood by both parties to this agreement.
“It is agreed and understood by both parties hereto that the drilling of a well for oil or gas, either on the above-described property or within a radius of two miles of the above-described property shall be in full satisfaction of the drilling clause under this lease.
“It is understood between the parties to this agreement that all conditions between the par*539ties hereunto shall extend to their heirs, executors, administrators, and assigns.
“Witness our hands this 27th day of October, A. D. 1916. [Signed] D. H. Raines.
“S. P. Harrell.
“T. O. Searacy.”
This document was not signed by Dunson, but was proven up by the witness Harrell, and recorded in the conveyance office of Cad-do parish on December 20, 1916, in Book 112, page 377. On its face, with the stipulated cash consideration, it would appear to be a commutative contract, the vendee having paid a fair consideration for the right to drill for oil and gas, although there is no obligation assumed therein on that score. However, it is charged in the petitions of Raines and Herndon that no amount whatever was paid, and this is admitted by defendants; so that at the time of their execution the leases stood, as between the parties, just as if the clause reciting the cash payment were not written therein. The contract was unilateral. Dunson was not bound; neither were Raines and Herndon. R. C. C. arts. 1765 and 1766; Union Sawmill Co. v. Mitchell, 122 La. 900; 48 South. 317; Long v. Sun Co., 132 La. 601, 61 South. 684; In re Bristo, 139 La. 312, 71 South. 521.
Counsel for defendants appear to concede that the contracts were nothing more than licenses or offers to permit Dunson to develop the lands of plaintiffs for oil and gas, and were not binding upon the lessors until the lessees commenced in good faith to exercise the same. But they, contend these offers were subsequently ripened into binding contracts by performance on the part of their client.
[8, 9] The record discloses that, after taking the leases from Raines and Herndon, Dunson formed a sort of copartnership with the other defendants herein, and through their efforts a well was bored on the property of Herndon to a depth of some 1600 feet, and which produced only salt water. This well was-begun early in December and completed about the middle of January, at which time the machinery and materials were moved off of Herndon’s land, and boring was commenced on the property of one Hobbs, on which defendants held a contract similar to those of plaintiffs. This latter well proved to be a producer. No further efforts were made upon the lands of Herndon, and. none whatever upon those of Raines, until a few days before these suits were filed on May 30,1917. However, the Hobbs well was within 2 miles of the lands of both Raines and Herndon, and it is claimed that this fact, together with the boring of the first well on the latter’s land, had the effect of converting the leases into contracts as to both plaintiffs, because of the following clause therein, to-wit:
“It is agreed and understood by both parties hereto that the drilling of a well for oil or gas either on the above-described property, or within a radius of two miles of the above-described property, shall be in full satisfaction of the drilling clause under this lease.”
In reply plaintiffs say that the clause just quoted is a forgery; that it was not in the leases when signed by them, but, if it was, the same was purposely concealed from petitioners, who are ignorant colored men, and was omitted from the reading of the contract by the said Dunson to them at the time they were signed. While both of the plaintiffs swear that this provision was not in the contracts, and there are other suspicious and corroborating circumstances surrounding the matter, we do not think that the forgery has been established with that degree of certainty which would justify us in treating the provision as not written in the documents. Dunson and Harrell swear just as positively that it was in the leases, and in the light of all the evidence we think it probable that the documents were signed with very little attention to detail, and without Raines and Herndon appreciating that they were doing *541anything more than giving leases upon their properties with the view of having them explored. for oil and gas. These are equitable considerations which we may take into account in determining the effect to be given to the stipulation in view of the unilateral character of the leases and in weighing the subsequent conduct of the defendants. There was no more obligation on the part of Dunson to bore on other lands than there was upon the lands of Raines and Herndon; in fact, the clause quoted did not provide that, if a well should be bored by Dunson or his assigns, the same should be in satisfaction of his obligations to bore under the leases, but made it equally applicable in event a well were drilled by third persons over whom he might have no control. It was therefore null and void as to the plaintiffs, just as the other provisions of the leases. R. C. C. arts. 2023, 2024, 2034, and 2035. If the leases had been signed by Dunson, and the other stipulations therein by him to be performed had been assumed, the clause referred to would not have been binding. It was a casual and potestative condition pure and simple.
It is true that we have held that, notwithstanding a lessee may not bind or obligate himself to explore for oil and gas, yet, if it be done without objection on the part of the lessor, and resultant benefits flow to him therefrom, he cannot be heard thereafter to urge the want of mutuality. This is, however! upon the theory that in standing by and permitting the lessee to perform acts and make expenditures which he could have prevented by timely protest the want of mm tuality is waived, and to the extent executed the leases become commutative contracts. Busch-Everett Oil Co. v. Vivian Oil Co., 128 La. 887, 55 South. 564; Hudspeth v. Producers’ Oil Co., 134 La. 1013, 64 South. 891. On the other hand, as to a stipulation of the nature above quoted, the lessor would have no right to question or prevent the boring
on lands of other persons, so as to escape the effect thereof, and such a clause would be particularly harsh, when, under the terms of the lease, the boring would be a full discharge of the obligation to drill or to pay rentals, and thereby tie up the lands of the lessor for a period of 25 years or indefinitely, making it possible to extract all the minerals from the field without requiring the development of his property. We do not mean to hold that a valid contract cannot be made, in which it may be provided, with the view of developing a new field, that the boring of a well within a specified territory shall be part of a valid consideration, where there is an accompanying obligation to develop the property of the lessor in event of the discovery of oil and gas, and in which it is provided that such rights may be prolonged for a reasonable time upon the payment of adequate rentals. But that is not the ease here. Berl v. Kehoe, 130 La. 1020, 58 South. 864; Martel v. Jennings-Heywood Oil Syndicate, 114 La. 351, 38 South. 253; Murray v. Barnhart, 117 La. 1023, 42 South. 489; Jennings-Heywood Oil Syndicate v. Houssiere-Latrielle Oil Co., 119 La. 851, 44 South. 481; Goodson v. Vivian Oil Co., 129 La. 955, 57 South. 281.
As stated elsewhere in this opinion, there was never any effort made to develop the land of Raines until long after the expiration of the three months’ stipulated, and after he had made formal demand on defendants to cancel said lease, when they placed some materials for the erection of a derrick on the ground a few days before the filing of these suits. The situation is no better as to Herndon. While defendánts did bore one well upon his property, it produced salt water and was abandoned. Defendants removed the machinery and other materials to the property of Hobbs, as it was provided they might do at their pleasure, and were under no further obligation to explore Herndon’s lands. This was in January, and they made *543no further efforts in that direction until he, like Raines, had demanded the cancellation •of his lease, when a derrick was erected upon his property just prior to the filing of his suit. There was no reasonable prosecution of the work, nothing had been paid to him, and it was left entirely to defendants as to whether they should make any further efforts. According to the* lease, after boring this well, they had the privilege of holding Herndon’s lands for 25 years, without paying any rental, and with no obligation on their part to pursue the development, for, in the first paragraph of the lease it was provided that Dunson “shall have the right to remove all machinery, fixtures, and improvements placed thereon at any time,” and in the fifth paragraph “it is agreed that the commencement of a well shall operate as full liquidation of all rentals under this provision during the remainder of the term of this lease.”-
The leases therefore were null and void as between the original parties, Raines and Herndon, on the one part, and Dunson, on the other, and it follows, that if Layne’s leases are valid, they must take precedence •over the rights of Dunson or his transferees, as well as any one acquiring subsequent thereto.
It is therefore ordered, adjudged, and decreed that the judgments appealed from in these consolidated cases be, and the same are hereby, annulled and reversed in so far as they affect the rights of R. T. Layne, appellant; and, it is now further ordered, adjudged, and decreed that the lease executed by D. H. Raines to and in favor of C. E. Dunson, of date October 27, 1916, and recorded on December 20, 1916, in Notarial Book 112, page 377, of the conveyance records of Caddo parish, and the lease from Joe Herndon to C. E. Dunson, dated October 23, 1916, and recorded on December 20, 1916, in Notarial Book 112, page 389, of the conveyance records of Caddo parish, La., be, and the same are hereby, avoided and annulled, in so far as they affect the rights of the appellant, R. T. Layne, reserving to the defendants or their assigns the right to test the validity of the leases held by Layne, and which form the basis of this appeal. It is further ordered that the defendants and appellees pay the costs of both courts.
■MONROE, C. J., not having heard the argument, takes no part.