123 So. 330 | La. | 1929
This is a suit to adjudge an oil and gas lease forfeited, as to a part of the land leased. The land consists of two tracts, a quarter of a mile apart, one having an area of 40 acres and the other an area of 200 acres. The lease was granted by the plaintiff, who owns the land, to J.F. Lillard, one of the defendants in this suit, on the 11th of January, 1922, and is now held by the two defendants, Moody and Lillard, jointly. The tract containing 40 acres is under sublease to the Lacolo Oil Corporation, and oil is being produced by the corporation in paying quantities. No well has ever been drilled on the tract containing 200 acres; and it is as to that tract that the plaintiff is suing to have the lease declared forfeited. He contends that the tract of 40 acres held by the Lacolo Oil Corporation is held, not under a sublease, but under an assignment of the original lease as to that area, and therefore that the production of oil by the assignee does not prevent a forfeiture of the lease for nonproduction on the tract containing 200 acres. The district court so held, and the defendants have appealed from the decision.
Our opinion is that the contract under which the Lacolo Oil Corporation is *801
operating on the tract containing 40 acres is a sublease, and not merely an assignment of the original lease on that area. What characterizes the contract as a sublease, as distinguished from an assignment of the original lease, is that the original lessee, Lillard, retained an overriding royalty and a right of reversion, when he made the sublease, and he and Moody now have the overriding royalty and right of reversion on the tract containing 40 acres. For that reason the production of oil by the Lacolo Oil Corporation on the tract containing 40 acres would prevent a forfeiture of the lease for nonproduction on the tract containing 200 acres, if the stipulations of the original lease were merely that production on any part of the land should prevent a forfeiture. Smith v. Sun Oil Co.,
The defendants made no complaint in their pleadings of the plaintiff's failure to put them in default. On the contrary, they admitted on the trial of the case that they had then no intention of drilling on the tract containing 200 acres.
The judgment is affirmed.