Hooks v. Forst

Opinion by Mr. Justice Dean, Thomas Anderson was the owner of a tract of land containing about fifty acres, in Adams township, Butler county. On the 30th of October, 1889, by writing duly executed, he granted to Campbell, Lahey and Stoughton, the exclusive right to drill and operate for oil and gas on this land; the term was for fifteen years, and so long thereafter as oil or gas was produced in paying quantities. In consideration thereof, the lessees agreed to give to Anderson one eighth part of all the oil produced; if gas was found, 1200 annually was to be paid for each well, and further, they were to pay to Anderson flOO per month rent until one well was completed. Anderson reserved the right to the surface for cultivation. The lessees stipulated for the right to surrender [245] the lease at any time, and thus relieve themselves from further obligation, but the payments theretofore made were to be retained by Anderson. The lessees paid $100, the first month’s rental, at the execution of the lease on the 80th of October, 1889, and also a second $100 on the 30th of November following. They made no further payments, nor did they do anything in the way of development. When the third $100 was due, 1st January, 1890, the lessees were unable to pay it, and asked Anderson for an extension of time; this, defendants allege, was granted on the condition, that if not paid at the end of three weeks, the lease should be surrendered or rescinded. The money was not paid, and defendants allege, that these lessees and Anderson, in pursuance of the understanding before had, mutually agreed to a rescission, and Anderson was verbally authorized by them to lease to others. On the 17th of June, 1891, about 16 months after the alleged rescission, Anderson leased the same premises to defendants, who went into possession for the purpose of boring for oil, and made successful developments; then plaintiffs brought this ejectment, claiming the exclusive right under their first lease. In the meantime Campbell transferred his interest to Hooks. On the trial, there was conflicting evidence as to the fact of rescission,.which the court submitted to the jury, who found for defendant. The court afterwards entered judgment on the verdict, and we have th s appeal by plaintiffs, the first lessees. Although there are many assignments of error, the real question, on which the case turns, is, was there a rescission of plaintiffs’ lease ? Anderson had no right to rescind for non-payment of the $100 monthly rental, but he had a right to'enforce payment by personal action against the lessees on each monthty default; unless this were avoided, any right they had would, in a comparatively short time, have been divested. The lessees had the right at any time to surrender the lease, and relieve themselves from liability for the fast recurring monthly payments. In this event, they lost what they had paid, but nothing more. They had paid two monthly installments, and defaulted on the third. Defendants’ evidence showed that, at this time, Campbell and Lahey called on Anderson at his barn, and asked for time on the payment then due; it was agreed between them [246] that the time should be extended three weeks, and if the money was not then paid, they would surrender the lease; at the end of that time, Lahey told Anderson he could not raise the money; that he, Anderson, should go on and lease to any one, and he would bring the lease back; that he would have delivered it then, but had forgotten it; he told Anderson half a dozen of times to go ahead and lease the land, and that he would fetch the lease back. As to the agreement to surrender, if the money was not paid in three weeks, Anderson is corroborated in all his material statements by four witnesses. Campbell, one of the lessees, on cross-examination admitted, substantially, the agreement as alleged by defendants. The decided weight of the evidence shows that there was a positive agreement to rescind, if the money was not paid at the end of three weeks; it was not paid, and one of the lessees told Anderson to go on and lease to others; Campbell even admits, that he had the lease along for the purpose of giving it to Anderson at one time, but, because of some fancied personal insult to himself, did not do so. It was not necessary to a rescission, that there should be a formal re-delivery or cancellation of the lease. Any course of conduct of the parties clearly evincing an intention to rescind a contract such as this, works a rescission of it. As is said in McKinney v. Reader, 7 Watts, 123: “ What is wanting to the rescission of an executory contract, is the assent of the parties; and it may be signified by their words or acts. The rescission of a lease by express words, is called a surrender in fact, and when by acts so irreconcilable to the continuance of the tenure as to imply the same thing, it is called a surrender in law.” This was said of a lease for a term less than three years, and as the lease itself, under the statute of frauds, was not required to be in writing, it may be argued that a rescission of it could be established without any special or formal surrender; but the principle in that case is equally applicable to this. Here it is stipulated that the lessees “shall have the right at any time to surrender up this lease, and be released from all monies due and conditions unfulfilled.” There was no right in the lessor to rescind; there was a right in the lessees to do so at any time ; as to them, the continuance of the term was dependent on their will; they did not absolutely covenant to develop the land; they only agreed to bore or pay 1100 per month if they did not, [247] with the option to relieve themselves of this obligation when ever they chose. Such a right or privilege could be surrendered by parol, for the possession, up until operations commenced, was only constructive. There was no actual possession to surrender on part of lessees, therefore none to be resumed on part of lessor to complete a rescission. They had no vested right in oil and gas under the land, until, by the necessary expenditure, they demonstrated their existence: Venture Oil Co. v. Fretts, 152 Pa. 456. The alleged tender after the rescission, even if it had been proven, would not, if rescission had been consummated, have revived the lessees’ right or privilege. On the evidence bearing on a rescission or surrender of the contract, the learned judge of the court below gave full and explicit instructions to the jury, of which the appellant certainly has no right to complain. While he properly said, such a right as lessees claimed might be surrendered by parol agreement, he also said the evidence to establish such agreement must be clear, precise and undoubted; that the minds of both parties must have assented to the same thing in the same sense. On this, the main question in the case, there was no error. As to the argument that the declarations and acts of Campbell and Lahey could not affect the right of Stoughton, the' other lessee, who was not present, it would be well made if they had been tenants in common of the land; one tenant in common cannot divest the estate of his co-tenant by declarations or deed. But these lessees were not tenants in common ; they were joint grantees of a right or privileges which had never-been exercised, and were bound jointly to perform the covenants of the contract on which the right depended; the obligation was not severable. When Campbell arid Lahey secured the extension, they secured it for all; Stoughton had the benefit of it; he never paid or offered to pay, and never, so far as appears, objected to the acts of the other two. When he makes this objection, he stands here in the attitude of not consenting to the two monthly installments which were paid, not joining in the solicitation for an extension which was granted, not authorizing or consenting to the tender which was alleged to have been made after the rescission, not paying or offering to pay to Anderson any one of the sixteen monthly rentals clue before the commencement of the suit. Starting with the lease to them [248] jointly, down through all the subsequent conduct of the parties, there was ample evidence to warrant the jury in finding that Campbell and Lahey, with the knowledge and consent of Stoughton, acted throughout for all of them ; if so, he was bound by their acts. The plaintiffs asked no instruction in the court below on the evidence bearing on this question, although they presented eleven written prayers for instructions to the jury. In the general instructions, however, njore than once, the court said to the jury that, unless defendants had proven, by evidence clear, precise and indubitable, that the lessees had agreed to a surrender or rescission of the contract, the plaintiffs were entitled to a verdict. This was substantially an instruction that, unless all three lessees had agreed to a surrender of the lease, the case was with the plaintiffs. If more specific instructions on the evidence were desired, plaintiffs’ counsel should have asked for them in the court below. There is nothing of merit in any of the assignments of error; they are all overruled; the judgment is affirmed and appeal is dismissed.