Dunaway v. Galbraith

HART, J., (after stating the facts). The trial court seemed to have been of the opinion that the lease comes within the principle of law that, when it is provided that it is terminable at the will of one of the parties, it is terminable at the will of the other. This construction undertakes to divide the lease into independent parts. We are of the opinion that the lease constituted an entire contract. According to the settled rule of construction, all parts of it must be given effect, if possible, and the intention of the parties must be gathered from the four corners of the instrument. -Mrs. Dunaway leased to Galbraith 1,200 acres of land for the sole purpose of mining and operating for oil and gas. She agreed that the lease should remain in force for five years from date and as long thereafter as oil or gas should be produced therefrom by Galbraith or his assigns. In consideration therefor Galbraith agreed to complete a well on the premises within one year or to pay a rental in advance at the rate of $360 per annum for the privilege of extending his time for drilling and bringing in a well on the premises. Section three of the contract further provides that the completion of such well shall operate as a liquidation of all rent under this provision during the remainder of the term of the lease. Under a subsequent provision of the contract Galbraith reserved the right to surrender the lease for cancellation upon the payment of $25 to Mrs. Dunaway. The parties were capable of contracting and were contracting about a matter which was the legal subject of a contract. The covenant of Mrs. Dunaway to allow Galbraith to drill on her land for oil and gas, and the covenant of Galbraith in consideration therefor to bring in a well within a year, and in case he failed to complete the well to pay a stipulated sum in advance as rental for the privilege of drilling for a well for another year are, mutual covenants which prevent the contract from being unilateral. Each imposed a legal liability upon the party maldng it, and thus prevented the contract from being void for want of mutuality. The parties did not insert any forfeiture clause in the contract. The contract, however, does contain a clause allowing the lessee the privilege of surrendering the lease for cancellation at any' time upon the payment of $25. The land was unexplored for oil or gas. This clause was for the benefit of the les^ see, so that in case he did not discover oil or gas, or for some other reason should find it to his interest not to continue as lessee, he could terminate the lease by paying the stipulated amount.’ The payment of $25, the amount fixed for relieving the lessee from the necessity of continuing with the lease, is a substantial sum and not a mere nominal consideration; and, when construed with the other covenants, it sustains the entire lease; for Mrs. Dunaway gave 43-albraith the right to explore her lands for oil or gas and Galbraith obligated himself to complete a well on the land, or pay in lieu thereof $360 in advance as delay money, or to pay $25, a substantial sum, to be relieved from the necessity of continuing with the lease. Thornton on the Law of Oil and Gas (3 ed.), vol. 2, sec. 899; Beebe v. St. Louis Transit Co., 12 L. R. A. (N. S.) 765; Brewster v. Layton Zinc Co., 72 C. C. A. 213, 140 Fed. 801; Houssiere Latreille Oil Co. v. Jennings-Heywood Oil Syndicate, 115 La. 107, 38 Sou. 932, and case note to L. R. A. 1917 B. 1206 et seq. In so holding we have not overlooked the opinion of the majority in Brown v. Wilson (Okla.), L. R. A. 1917 B. 1184. That case is distinguished from the case at bar in that the consideration for the surrender clause was a mere nominal consideration. But, inasmuch as we do not approve the reasoning of the majority in that case, we decline to follow it, and for the reasons given above, are of the opinion that the contract in the present case is not void for want of mutuality, and that the circuit court erred in so holding. It follows that the judgment must be reversed and the cause remanded for a new trial.