Smith v. Hickman

14 Pa. Super. 46 | Pa. Super. Ct. | 1900

Opinion by

W. D. Porter, J.,

The only alleged error assigned in this appeal is the entry of the decree by the learned court below. The facts are undisputed. The plaintiff had on August 9, 1889, executed an oil and gas lease to the predecessors in title of the respondents; one well had been drilled upon the land, from which gas had issued in paying quantities, and been utilized by the lessees and their successor in title, the appellant, down to the year 1899. Prior to the filing of the plaintiff’s bill the appellant company abandoned the said lease and well and sold the casing in the well to the respondent Hickman. The plaintiff thereupon tendered the value of the casing in the well, and the rig, and demanded possession of the well, which the respondents refused, denying that plaintiff had a right to take the well upon payment of the value of the casing and rig.

The only question presented for the consideration of this court is the construction to be put upon the following paragraph of the original lease: “ It is further agreed that if gas is found in paying quantities the consideration in full to the party of the first part, instead of royalty, shall be $500 per annum for the gas from each well when utilized. In case gas is not found in sufficient quantity to market, the party of the first part can, if he wishes,’have the gas by paying ordinary price for the casing and rig.” The contention of the appellant is that gas having been produced by this well in paying quantities, and the same having been utilized, the plaintiff was not entitled, by force of this paragraph, to demand the well, upon payment of the value of the rig and casing, when the gas ceased to flow in sufficient quantity to market. The argument is, that, “ as applied to a search for minerals ‘ find ’ is synonymous with 1 discover,’ and what is once discovered cannot be discovered again: it cannot in any proper sense be affirmed of a producing gas well that gas is still being found; nor of a well that has failed, that gas is not found.” The whole contention of the appellant rests upon the meaning of the word “ found ” in the concluding sentence of the paragraph. The word “find” is, under some circumstances, synonymous with “ discover,” but, under other circumstances, it is the equivalent of entirely different forms of expression. It may mean to supply, to furnish. Unfortunately for the contention of the appellant, all its rights under the lease, after the 9th day of August, 1894, were dependent upon a construction of the word “ found,” which is in direct contradiction of that for which he now contends. Those rights were dependent upon a paragraph in the lease which read: “ The parties of the second part to have and to hold the said premises for and during the term of five years from the date hereof, and as much longer as oil or gas is found in paying quantities.” If the present contention of the appellant is correct all its rights ceased upon the expiration of the five years, unless it kept on continuously making new discoveries of oil or gas in paying quantities. The clause of the lease last above recited, however, has been frequently passed upon by our Supreme Court in construing oil and gas leases, and has a well defined meaning. The phrase, “ and as much longer as oil or gas is found in paying quantities,” means, and as much longer as, under the operations of the lessee, oil or gas continues to be produced in paying quantities. So long as the wells drilled by the lessee continue to supply oil or gas in paying quantities the lease remains in force. Among the latest cases construing such covenants is that of Cassell v. Crothers, 193 Pa. 359. In construing the paragraph in question we must consider the entire contract and give to it its legitimate and fair meaning. In arriving at the meaning of a phrase in one paragraph of a contract, it is proper to consider the meaning which was attached to it by the parties in another part of the contract, where the phrase was used in the same connection and with regard to the same subject-matter. When, in any business, certain terms have come to have a well recognized meaning, parties contracting with relation to that business and using such terms are presumed to use them in that seuse. It is manifest that the parties to this agreement used the term “ oil or gtis is found in paying quantities,” or “ in sufficient 'quantity to market ” in a continuing sense, applying to the lease and to the well at every period of their existence. The word “ found,” when it referred to the lessee, had the same meaning as “ obtained ; ” when applied to the well it meant “ supplied.” When, under the terms of this lease, a well produced gas, the lessee had a right to use that gas as long as he might see fit, paying for the well, $500 per annum. ' If at any time he found, or concluded, that the gas, supplied by the well, was not in sufficient quantity to market, he had the right to relieve himself from the payment of the annual rental by ceasing to use the gas. The lessor might then, if he desired, take the well, by paying for the casing and rig, or he might permit the lessee to destroy it by drawing the casing. This lessor elected to take possession of the well upon its abandonment by the lessee, and to deny his right would be to play upon the meaning of the words, without regard to the terms of the contract.

Decree affirmed at cost of appellant.