Buffalo Valley Oil & Gas Co. v. Jones

The opinion of the court was delivered by Graves, J.: It is claimed that the district court erred in overruling the demurrer to the petition, and also in finding for the plaintiffs upon the trial. The petition contained averments of fact-as to the conditions of the lease not in the written instrument, which would be admitted by a demurrer but could not be proved if proper objections were made to the evidence when offered. Many of these allegations were not established at the trial, and therefore the petition may be said to present a stronger case for the plaintiffs than is shown by the testimony given. We think the court was clearly right in its ruling on the demurrer. As to the findings of the court on the trial, it does not appear what particular point controlled its decision, but from' the discussion of counsel it seems probable that it was based upon the conclusion that the lease had expired. The two-year term provided for in the first clause had passed more than two months before suit was commenced, and the only provision [22] under which it might have been continued is the third clause, which reads: “If oil or gas be found on these premises all rights, benefits and obligations secured hereby shall continue as long as either can be procured in paying quantities and party of the second part shall diligently market and utilize the same for the joint benefit of the parties hereto.” From this it will be seen that two things must concur to extend the life of the lease beyond the period of two years: First, oil or gas must be found in paying quantities; second, the lessee must be diligent in placing the product found upon the market. Gas was found in paying quantities. Whether the lessee used proper diligence or not is a question of fact. This question was decided by the trial court against the plaintiff in error. In the absence of special findings of fact this court will assume that the trial court regarded as established all the facts shown by the evidence which were favorable to the successful party! The claim of the plaintiff in error that it used due diligence in developing the lands covered by the Jones lease is not sustained by the evidence, when construed as above stated. The only effort made by it to develop these lands was to drill one well in the southwest corner of the tract. For nearly two years thereafter it diligently developed the territory embraced in the White lease, and sunk eight wells thereon adjacent to the one well on the Jones land. All of these weils produced a good flow of gas. The efforts to procure a market for the product of these wells were made when the only gas which the company could furnish was that which came from the wells on the.land owned by White. The gas which has been and is now being furnished to the city of Yates Center comes exclusively from the White wells, and he gets the royalty therefor. If any of this gas comes from the Jones tract it is because, of drainage [23] therefrom into the White wells. Whatever Jones loses in this way, if anything, is beneficial to White. The cessation of all work under the Jones lease for two years, and the failure to pay any of the accrued rental for that time, while conducting developments on adjoining property, looks very .much like an abandonment of all rights claimed under such lease. It may at least be said that the plaintiff in error has failed to do the acts which in its contract with Jones it expressly agreed to perform for the purpose of continuing the life of the leáse. These acts — necessary to the existence of the lease — not having been done, it is at an end. This is the result of the plaintiff in error’s admitted unfaithfulness to Jones, and it is not in a position to complain. The district court segregated the land occupied by the well from the other land of the Jones tract, and canceled the lease as to such other land, leaving the lessee to hold and enjoy the limited fruit of the labor performed and expense incurred' by it thereunder. None of the parties objects to this segregation, and we have no occasion to consider it. ' The judgment as a whole is eminently fair and just, and is affirmed.