Ringle v. Quigg

The opinion of the court was delivered by Graves, J.: This is a suit to cancel a gas lease on the ground that it is void. The particular defects which it is alleged vitiate the lease may be summarized as follow: (1) The lessees were unable when the lease was executed to perform the conditions thereof, having no right to lay pipes to lessors’ premises, which they might want to do, at the end of five years; (2) the lessors expected operations to be commenced before the expiration of the five-year limit; (8) the lease is ambiguous; (4 and 5) while the receipt of royalty is of the essence of the contract, the lease imposes no obligation upon the lessees to begin or continue work; (6) the provisions of the lease lack mutuality; (7) the design of lessees and assigns is to hold the land for speculative purposes only. A general demurrer was filed to each of the several [590] causes of action, which was sustained. The plaintiffs stood upon their petition, and judgment was entered against them for costs. They bring the case here alleging that the court erred in sustaining the demurrer. This is the sole question presented to this court. We are unable to attach the importance to these alleged defects which has been given to them by the plaintiffs. We cannot agree with the contention that the lease is so inherently vicious as to be void. In support of their claim the plaintiffs cite the following cases: National Oil & Pipe Line Co. v. Teel (Tex. Civ. App.), 67 S. W. 545; Ray v. Natural Gas Co., 138 Pa. St. 576, 20 Atl. 1065, 12 L. R. A. 290, 21 Am. St. Rep. 922; Glasgow, Appellant, v. Chartiers Oil Co., 152 Pa. St. 48, 25 Atl. 232; Oil Company v. Oil Company, 47 W. Va. 84, 34 S. E. 923; Roberts v. Bettman et al., 45 W. Va. 143, 30 S. E. 95; Federal Oil Co. v. Western Oil Co., 112 Fed. 373; Martel v. Jennings-Heywood Oil Syndicate, 114 La. 351, 38 South. 253. None of these cases is in point here. No question is decided by any of them which would, if followed, dispose of this case. The instruments involved in the cases cited are in substance quite similar to the lease in question. There is a margin of difference, however, between the facts involved in this case and those cited, sufficient to destroy their applicability to the question here presented. In none of the cases mentioned was suit brought to cancel the instrument involved because it was void, but the object in each case was to determine the rights of the parties thereunder. It will be necessary, therefore, to consider the validity of' the lease in controversy upon its own provisions and conditions. Taking the objections in their order, the first is that it was impossible for the lessee, when the lease was executed, to exercise his option to keep the lease alive by furnishing gas at the end of five years. We do not understand that an option to do something five [591] years in the future is void merely because the person making the agreement is unable to perform the contract at once. The second objection is that the lessors expected operations would be commenced immediately and not be delayed during the five-year limit, and that they have been disappointed in these expectations. We do not understand that a written instrument is void merely because one of the parties expects the other to perform the conditions thereof on his part at once, when by the express stipulations of the agreement such performance may be delayed five years. The third objection is that the lease is ambiguous. While the terms of this instrument are not as clear and specific as usual in such important agreements, yet it is not difficult to ascertain therefrom what the parties intended thereby, and, when this can be done, written contracts should not be set aside as void merely because to some degree ambiguous. The fourth and fifth objections are apparently regarded as the most important, and are chiefly relied upon. It is claimed that the receipt of royalty is the essence of the contract, and that the stipulations therein do not require the lessees to begin or continue operations ; that the lessees are thereby able to defeat the real object of the lease, and that, for this reason, the instrument is void. In the language of the brief of plaintiffs, “it cannot be said that this lease was valid for a single minute, either before or after the assignment thereof.” This objection is founded principally upon paragraph four of the lease. It may be conceded that obtaining royalty is the essence of the contract, and also that under these provisions the lessees might continue the lease during its full term of twenty years without doing anything in the way of exploration for gas of oil. These considerations, however, do not make the lease void, nor unreasonable. There are no facts alleged in the petition which indicate that these pro [592] visions are in any way injurious to the interests of the lessors. Whether or not a contract is unconscionable, unreasonable, or improvident, may depend upon something more than its mere language.. The subject-matter of the agreement, its condition, surroundings, and the relation of the parties thereto, may become material matters for consideration. The land described in the lease, in the absence of allegations to the contrary, may have been assumed by the district court to be, when the lease was executed, situated remote from oil- or gas-producing territory. When this lease was executed the idea of valuable deposits of gas or oil being under the leased premises may have been regarded as somewhat visionary. The lessors may have been disposed to grant very liberal terms to persons willing to make the necessary expenditures to ascertain whether such deposits existed or not. On the other hand, the lessees may have been willing to undertake such explorations if inducements sufficiently liberal, as to time and otherwise, could be secured. The terms and conditions of such a contract, including the time during which a lease shall continue in force before the commencement of the work of exploration, are proper matters of agreement which the parties have the right to fix to suit themselves. In the absence of fraud, imposition or mistake, neither of which is suggested here, parties should be left to make their own contracts, and, when freely and voluntarily made, should be held to the conditions thereof, even though it should turn out in the light of subsequent developments that their rights were valued too lightly. In the case of Rose v. Lanyon, 68 Kan. 126, 74 Pac. 625, Mr. Justice Burch used language which is quite pertinent here. He said: “Courts have no right to declare that, whatever the parties may think, operations for sinking a well must begin át once under an oil or gas lease. If this court had done so prior to the time plaintiffs desired to contract they would have rebelled, without any doubt, [593] with the utmost indignation against the decision as an infringement of their liberty to contract with reference to their land and the minerals beneath its surface as they pleased. In so doing they would have been justified. If plaintiffs should desire to contract for an immediate exploration, they must have that right; and if they should desire to give an oil or gas company five years in which to sink a well, upon a consideration satisfactory to themselves, and as the result of negotiations free from imposition and fraud, they must have that right. But having deliberately made a contract of the latter description, they have no right to call upon a court to declare that it is of the other kind merely because generally it might seem to be better for farmers not to encumber their lands with mineral leases giving a long time for exploration, or because generally such leases do contemplate that forfeiture shall follow a failure to explore at once.” (Page 134.) We see no want of mutuality in the terms of the lease. Taken as a whole, it is such a contract as parties may properly make. We do not think the district court erred in sustaining the demurrer, and the judgment is affirmed. All the Justices concurring.