Gas v. Pittsburg Plate Glass Co.

Opinion by Mr. Justice Mestrezat, This is an action of ejectment to recover possession of a tract of land in Armstrong county for oil and gas purposes. Both [187] defendants filed an answer and abstract of title under the Act of May 8, 1901, P. L. 142. The answer of the defendant company, and in this respect the answer of the defendant Barker, is substantially the same, avers, inter alia, as follows: “ that contemporaneously with the execution and delivery of the alleged lease of Barker to plaintiff’s alleged assignor and as part of the alleged contract, T. W. Phillips Sons & Company entered into a parol contract with said Barker whereby said partnership accepted the said alleged lease, subject to the existence and continuance of respondent’s lease and whereby said partnership agreed to at once return said alleged lease to Barker and cancel the same and that the same should thereupon and ipso facto be and become null and void in the event of the respondent’s claiming or continuing to claim title under its said lease or upon its proceeding to operate the same. Respondent avers that immediately thereafter it claimed exclusive title to the promises for oil and gas purposes and immediately proceeded to and did drill a well producing natural gas in paying quantities, and that the said firm thereupon violated said parol contract, refused to return said alleged lease, refused to cancel the same and treat it as null and void as they had obligated themselves so to do.” The correctness of this averment was the issue in the case. If it was true, and the jury so found, the plaintiff company’s lease had no validity and the company was not entitled to the possession of the premises in controversy. Whether the Plate Glass Company’s lease, assigned to it by Runyon, was still legally in force and effective against Barker was immaterial in this issue. It would be important in a contest between that company and Barker for the possession of the premises, but not here, where the plaintiff company relies upon a lease from Barker to sustain its right to drill and operate for oil and gas on the land. If Barker chose to continue the Runyon lease, as his receipts of the rentals conclusively show he did, although it may, by its terms, have expired, he could do so, and if the Phillips company took a subsequent lease, which was, by a contemporaneous agreement, to be null and void in the event of the plate glass company “ claiming or continuing to claim title under its said lease or upon its proceeding to operate the same,” then the attempt of the Phillips company to assert the validity [188] of its lease in direct opposition to this agreement is a fraud upon Barker which he and those claiming under him with his consent may successfully resist. That the defendants could set up as a defense to this action the parol agreement made contemporaneously with the plaintiff’s written lease of March 16, 1904, is clear under all our cases. If the plaintiff company refused to surrender the lease for cancellation in violation of its parol agreement and asserted its right to the possession of the premises by virtue of the instrument, it was a fraud upon Barker, the lessor, and an attempt to make a fraudulent use of the lease. Parol evidence will be received in such cases to defeat the fraud. In Rearich v. Swinehart, 11 Pa. 233, it was held that when an attempt is made to use a written instrument in violation of an agreement accompanying its execution, to which attempt no moral guilt can be imputed, a legal delinquency attaches to the attempted abuse of the writing, sufficient to subject it to the influence of oral evidence. The case of Davidson v. Young, 167 Pa. 265, was an issue between the obligee and obligor of a bond in which a contemporaneous parol agreement was set up as a defense. It was there held that the trial court committed no error in charging the jury that if the parties entered into that arrangement, although there was no fraud, accident or mistake, and the obligee after-wards undertook to use the bond for a purpose that was not contemplated, and contrary to the agreement of the parties at the time the bond was executed, that the obligor would be entitled to recover, for such use of the bond would be a fraud. In Honesdale Glass Co. v. Storms, 125 Pa. 268, Mr. Justice Green, delivering the opinion of the court, says (p. 278) : “ In that aspect of the case (setting up a written contract in violation of a parol promise) it comes, within the very numerous decisions of this court which hold substantially that when the execution of an instrument has been obtained by means of a fraud, or where there has been an attempt to make a fraudulent use of the instrument, in violation of a promise or agreement made at the time the instrument was signed and without which it would not have been executed, parol evidence may be given to prove the fraud, though it contradict the written instrument.” Many decisions of this court are cited in the opinion' to sustain the principle. [189] The assignments alleging error in admitting the testimony of certain witnesses cannot be sustained. The testimony was not received for the purpose of establishing an agreement prior to the date of the execution of the Phillips lease, but as corroborative of the testimony adduced to show the parol agreement between the parties made contemporaneously with the written lease. For this purpose it was competent: Rinesmith v. Peoples’ Freight Railway Company, 90 Pa. 262; Pyroleum Appliance Co. v. Williamsport Hardware, etc., Co., 169 Pa. 440 ; Hinchcliffe v. Koontz (Ind.), 16 Am. St. Rep. 403. The judgment is affirmed.