202 Ky. 261 | Ky. Ct. App. | 1924
•Opinion of the Court by
Affirming.
(On July 17, 1919, W. B. Huddleston and wife executed to the Oil Fork Development Company an oil and gas lease on a tract of land in Cumberland county, “for the term of two years (and so long thereafter as oil or gas is produced from the land leased and royalty and rentals' paid therefor).” The lease provided that it was to become null and void and no longer binding on either party if a well was not completed on the premises within six months, unless the lessee should thereafter pay monthly to the lessor $35.42 per month for each month’s delay in completing said well. There was a further provision that upon the signing and delivery of the lease, the lessor agreed to pay $212.50, being advance rental for six.months. The lease concluded with the following provision: “Lessee to have privilege at end of term hereof of renewing this lease for two additional years on the same terms and conditions and payments.”
The lessee entered upon the premises and drilled a well to the depth of 1,021 feet. On July 11, 1921, it removed the drill rig and machinery from the leased premises, but paid the monthly rental up to' the 17th day of July, 1921.
Alleging that the well drilled was a dry hole, that the lessee never exercised its privilege of renewing the lease upon the expiration of the two years, and that the lease was no longer in force, the lessors brought this suit
Sections 2 and 3, c. 24, Acts 1920, are as follows:
“2. That all valid, existing or future contracts and leases for oil and gas rights upon and under the lands of this Commonwealth, wherein by their terms a rental clause is provided in event of failure to drill for oil or gas within a given period, are hereby validated and declared to be, and shall be, construed by the courts of this Commonwealth enforcible and binding contracts according to the terms thereof between the parties so long as the rentals therein provided shall be paid or tendered at and as provided by their terms during the period of said lease and contract.
“3. That the drilling of one nonproductive well shall be sufficient consideration for the discharge of rentals for holders of said contract and lease for a period of twelve months after its completion, and at the expiration of which time another well shall be commenced or rentals renewed as per said lease or contract, and if lessor fails to commence a well or renew payments of rentals said lease shall automatically expire and become null and void.”
The answer proceeds on the theory that section 3 is controlling, and that the completion of the nonproductive well automatically extended the lease for a period of
Judgment affirmed.