Gypsy Oil Co. v. Champlin

BAYLESS, J. II. H. Champlin instituted *227 an action in (-lie district court of Garfield county, Okla., against tlie Gypsy Oil Company, a corporation, and others, to cancel an oil and gas lease. Judgment was rendered in his favor and against the Gypsy Oil Company, a corporation, and this appeal resulted. The parties will he referred to herein as plaintiff and defendant in the order in which they appeared in the trial court. The facts necessary to be considered in determining the questions' involved in this appeal are substantially as follows: The owners gave an oil and gas mining lease on a tract of land in Garfield county, Okla., in March, 1916; the lease, and interests therein, by assignments vested in the Furlow Oil & Gas Company and others in 1918, and in August of that year a producing well was drilled in the southwest corner of the tract and a dry hole immediately north of it. After that time no further development took place on this lease. At the time this suit was instituted the producing well so drilled, and the lease on 5 acres upon which it was located, were owned by other parties and are not material to this action. In 1918, the Perpetual Royalty Income Company acquired a one-half interest in the royalty in all of this land, which it still owns. In 1925 the plaintiff acquired the other one-half interest in the royalty and the remaining fee interest in the land. In 1926' the defendant acquired the lease as to the remaining 75 acres. On August 21, 1926, the plaintiff notified defendant by letter that its lease had terminated and demanded a release 'thereof. The demand for the release assigned as a reason for the termination of the lease “want of operation.” The defendant refused to release the lease. The plaintiff then instituted the action, naming several persons as defendants who appeared of record to have some interest in the land, including the Perpetual Royalty Income Company. The ground assigned by the plaintiff as the basis for its cause of action was a breach of the implied covenant to develop. The defendant defended against this. The Perpetual Royalty Income Company filed an answer in the action, and asked that the plaintiff take nothing by his cause of action. The defendant contends that plaintiff is not entitled to equitable relief. In support of this contention plaintiff cites the case of Wapa Oil & Development Co. v. McBride, 84 Okla. 184, 201 P. 984, wherein it is said, on page 186, Okla. Reports; “The general rule as gathered from the different cases may be stated that, before the lessor is entitled to declare a forfeiture for failure to comply with implied covenants, for failure to drill offset wells, he must notify the lessee and demand that the lessee comply with the implied covenants. This is nothing more than equitable.” A similar rule is stated in the case of Farmers’ Mutual Oil Leasing Co. v. Bonneau, 110 Okla. 168, 237 P. 83, and has been reiterated in the case of Utilities Production Corp. v. Riddle, 161 Okla. 99, 16 P. (2d) 1092. The record in this case discloses that the only action taken by the plaintiff was the writing of the letter dated August 21, 1926, notifying defendant that the lease was terminated for “want of operation,” and demanding a release. We, therefore, hold that the letter is insufficient to constitute a demand to comply with the improved covenants of the lease. Under the above rule this is insufficient to entitle the plaintiff to maintain an equitable action seeking to cancel the lease for a failure to perform an implied covenant to diligently develop. Plaintiff in error also urges other assignments of error, but, inasmuch as the court is unable to agree upon the rule to be announced, the same will not be considered herein. The one assignment of error heretofore discussed is decisive of this appeal. The judgment of the trial court is therefore reversed and the cause remanded. RILEY, C. J., CULLISON, Y. O. J., and ANDREWS, McNEILL, OSBORN, and BUSBY, JJ., concur. SWINDALL, J., disqualified and not participating. WELCH, J., absent.