Mathes v. Shaw Oil Co.

The opinion of the court was delivered by Graves, J.: It seems clear from the provisions of the lease that it contemplated the production of both gas and oil, and whether from the same or separate wells was not considered material. In either case the parties would naturally expect to receive the benefits due them under the provisions of the lease. Some of the wells in controversy produced both oil and gas. The defendants seem to understand that in such a case the well must be regarded either as a gas-well or an oil-well, depending upon which predominates. The district court, in its findings, appears to have taken the same view. Upon this conclusion a finding seems to be predicated to the effect that if oil predominates [184] it is an oil-well, and gas may be used by the defendants, for their own purposes without accounting to the lessors for any part thereof.. It is claimed that the defendants are liable for gas only when there is a quantity sufficient to justify the expense of saving it and casing the well for that purpose. There is a' clause in the lease which, standing-alone, would apparently justify such a conclusion, but immediately following this clause, and apparently for-the purpose of avoiding such a construction and to prevent any trouble or misunderstanding as to when a. well was producing the stipulated quantity of gas, the further condition was added: “If, however, second party shall use, market or sell gas from any well producing gas, it shall pay,” etc. This indicates that gas shall be paid for if used by the defendants for any purpose other than for drilling, the purpose for which the gas is used by the defendants, rather than the, amount produced by the well, being the test as to when rent shall be paid. If the liability of the defendants for gas used by them depended upon the quantity produced by the well, a controversy might arise whenever-the lessors insisted that there was enough to justify casing the well for that purpose. This provision obviates such trouble and embarrassment, and apparently was inserted for that purpose. The defendants have had the benefit of the lessors’ gas, and no good reason has been shown why it should not be paid for. The fact that this might compel the defendants to pay rent, for gas and royalty for oil out of the same well does not seem important. The lessors should of right -have, what oil and gas their premises produce, whether it is taken from one well or several. The second defense of the answer fails to state a defense to the petition, and the demurrer thereto should have been sustained.. The judgment of the district court is reversed, with direction to sustain the demurrer to the second defense of the answer and proceed in accordance with the views herein expressed.