113 Kan. 67 | Kan. | 1923
The opinion of the court was delivered by
George W. Scott brought this action against Paul Steinberger and George Steinberger to recover a balance alleged to be due for gas obtained by them from plaintiff’s land which they held under a lease. Judgment in favor of plaintiff was awarded, and defendants appeal.
The decision of the case turns upon a construction of the following paragraph of the lease:
“Party of the second part shall deliver to the credit of party of the first part free of cost in the pipe fines to which he may connect his wells one-eighth of all oil produced and saved on said premises, and shall pay the market price for same in cash if party of the first part shall so desire; and shall pay to party of the first part one-eighth of all gas produced and marketed.”
When the lease was made no pipe lines had been laid near to the leased premises. After the execution of the lease wells were drilled on the leased premises, from which gas was produced in paying quantities. Later the defendants built a pipe line from the field to
The terms of the lease are somewhat ambiguous as to the point where the gas was to be'measured and its price fixed. There was no pipe line, in the vicinity when the contract was made. Evidently the parties contemplated that if oil or gas in paying quantities was found some pipe line company would build into the field and transport it to places of consumption. It will be observed that the provision respecting oil was that the lessees should deliver one-eighth of the oil produced into the pipe lines to which the wells might be connected and pay the market price in kind or in cash as the lessor should desire. In the same connection it was provided that the lessee should pay one-eighth of the gas produced and marketed. We think the parties contemplated, and the provision should be construed, that gas, if produced should be measured and the price determined at the place where the wells were connected with pipe lines, and not at some distant market that might be found at the end of a pipe line remote from the field and where the cost of transportation might equal or exceed the value of the gas produced. If the pipe line had been built by defendants to Kansas City or
Of course, the rights of the parties here are to be determined by the provisions of the lease, and we think the reasonable interpretation of the lease is that the lessor’s share of the gas was to be ascertained and the price determined at the pipe line with which the wells were connected. The case of Barton et al. v. Laclede Oil & Mining Co., 27 Okla. 416, cited by plaintiff, is not a convincing authority. However, in that case the contract was that the lessor
The judgment, however, must be reversed, and the cause remanded for further proceedings in accordance with this opinion.