Burton v. Forest Oil Co.

Opinion by Mb. Justice Mestbezat, B. P. Burton, the plaintiff and appellant, by an agreement dated April 3,1889, leased to W. S. Guffey and Emmet Queen his farm of thirty-six acres in Butler county for the purpose of drilling and operating for petroleum, oil or gas for the term of ten years or thereafter while oil or gas was produced in paying quantities or the rental was paid. The agreement required one eighth of the oil produced on the premises to be delivered to the lessor, and then provides as follows: “ It is further agreed that if gas is obtained in sufficient quantities to utilize, the consideration in full of the party of the first part shall be five hundred dollars (#500) per annum for each and every well drilled on the premises herein described, as long as the same is utilized, payable at T. Mellon’s Bank, Pittsburg, Pennsylvania.” In August, 1889, Guffey and Queen assigned the lease to J. M. Guffey, who by an assignment dated November 15, 1890, assigned to the Forest Oil Company, the defendant and appellant here, an individual one-half interest therein, “ to have and to hold the said interest in the above described lease, lease [353] hold and premises, subject to all royalties, rents and covenants of the lessee therein contained, to be rendered, paid and performed on and after November 8,1890.” By another assignment dated February 1, 1890, the other undivided one-half interest in the lease was vested in the Chartiers Oil Company. A well was drilled on the demised premises in the fall of 1889, producing large quantities of oil and gas. The Chartiers Oil Company had the management and control of the lease until January, 1893, when the Forest Oil Company, the defendant, took possession of the premises and operated the well for oil and gas until 1898. The jury found that the well produced gas in sufficient quantities to utilize, and that the appellant company did utilize it while it had possession of the premises. This action is assumpsit and was brought by the plaintiff to recover the gas rental of $500 per annum, alleged to be due from the appellant company during the time it had the management and control of the leased premises. The case was submitted to the jury and a verdict was returned for the plaintiff, upon which judgment was entered. The defendant company has appealed. There are two questions raised by the assignments: 1. Is the plaintiff entitled to recover the whole gas rental from the defendant? and 2. Did the court err in refusing to permit the defendant to show the trade meaning of the word “gas” in leases of this character ? We are unable to see how the defendant company can relieve itself from liability for the claim of the plaintiff. The assignee of the lease is liable for the rental of the premises by reason of the privity of estate existing between him and the lessor. The same is true of any subsequent assignee of the lease. Here the defendant company denies its liability for the one half of the rental, because, as it claims, the undivided one-half interest in the lease was assigned to the Chartiers Oil Company by the assignee of the lessees. We are not called upon to determine the right of the lessor to recover against the Chartiers Oil Company for any part or all of the gas rental due the plaintiff. It may be that he could recover the whole rental in a joint action against the two companies, or the one half of the rental from each company in an action against them [354] severally. But under the facts in this case why is not the Forrest Oil Company liable for the whole rental? The jury has found that it was in exclusive possession of the demised premises and that it received and utilized the entire gas product. The possession and beneficial enjoyment of the premises for gas purposes by the defendant company were as complete and exclusive as the lessees were entitled to under the terms of the lease. The defendant enjoyed all the benefits conferred by the covenants of the lessor. It took possession and operated the gas well under the assignment from the lessee’s assignee, “subject to all royalties, rents and covenants of the lessee therein contained, to be rendered, paid and- performed on and after November 8, 1890.” It therefore held and operated the well under the covenant in the lease to pay the entire gas rental which, by reason of the privity of contract, the lessor could have collected from the lessees. If, as claimed by the appellant, the Chartiers Oil Company received from it the one half of the proceeds of the gas produced, to which the latter was entitled under the assignment of the undivided one-half interest of the lease, then it can enforce contribution against the Chartiers Company for its share of the rental. In fact, the evidence tends to show that contribution was made by the Chartiers Company as the rental becariie due. An officer of the appellant company testified that his company rendered statements to the Chartiers Oil Company for one half of the amount expended in running the business and that the bills were paid. But if the appellant company has not received from the Chartiers Oil Company the one half of the rental for the premises, it can be no hardship under the circumstances disclosed here to require it to compel contribution, otherwise to bear the loss against which it had the means in its hands to protect itself. From the testimony it is evident that the appellant took charge of the premises and well, and utilized the gas under an agreement by which it was to pay the Char-tiers Oil Company for the one half of the gas produced and the latter was to be responsible for one half of the expense in producing it. The plaintiff was not presumed to, nor did he, "have knowledge of the existence of any arrangement between the parties by which the well was operated. He saw the appellant company in exclusive possession of the premises, taking [355] and utilizing the gas. This was the extent of his knowledge as to the party operating under the lease. Under its assignment, the appellant had, as against the appellee, the right to the possession of the premises for the purpose of operating for gas. The plaintiff could not interfere with or control the appellant in the exercise of this right. As the company, therefore, had by virtue of its assignment the beneficial enjoyment of the premises as fully as the lessees could have had under the lease, the obligation is upon it to perform their covenants to pay the gas rental to the plaintiff. The learned trial judge was right in excluding the testimony offered for the purpose of showing the trade meaning of the word “ gas used in the lease between the plaintiff and Guffey and Queen. The purpose was to show that in the oil and gas business the word “ gas ” as used in such contracts means gas derived from a gas well and not from an oil well. The lease granted the right to drill and operate for “ petroleum oil or gas ” and provides that if gas is obtained in sufficient quantities to utilize, the consideration therefor should be #500 per annum for each well drilled on the premises. The meaning of the word is neither ambiguous nor uncertain, but is well understood. Nor does the connection in which it is used give it a meaning requiring parol evidence to explain it. The offer was in effect not to explain, but to contradict, the explicit provisions of the contract, by showing that the lessees were to pay for the gas only on condition that it was produced or derived from a gas well. This would have been in direct opposition to the agreement and in conflict with its terms. The lease, as we have seen, granted the right to drill for oil and gas but the consideration to be paid for the gas did not depend on whether it was derived from an oil well or a gas well, but whether the gas was “ obtained in sufficient quantities to'utilize.” Parol evidence is not admissible for the purpose of making a new and different agreement for the parties and hence the evidence, the rejection of which is complained of by the appellant, was properly excluded. The assignments of error are overruled and the judgment is affirmed.