Swiss Oil Corp. v. Howell, 199 Ky. 763

Swiss Oil Corp. v. Howell

199 Ky. 763 | Ky. Ct. App. | 1923

Opinion of the Court by

Judge Clarke

Reversing.

In January, 1917, appellee executed an oil and gas lease upon his land to appellant’s remote assignor. The lease provided that it should become void “in case no well is completed within one year,” but that the lessee could prevent “such forfeiture” by paying' stipulated rentals quarterly during the lease period and until a well was completed. No well was drilled, but rentals were regularly paid each three months.

After acceptance of the quarterly payment which fully paid the rentals to April 9, 1920, appellee, on January 7th, gave appellant written notice that he would not accept rentals any longer, and that unless development was begun within ninety days after that date he would sue to cancel the lease. Accordingly, he instituted this ac*765tion on May 4, 1920, for cancellation of the lease, which the chancel or adjudged, ■ and the lessee has appealed.

Counsel for appellee have not favored us with a brief, and the judgment does, not state the ground upou which the cancellation was adjudged. It must have been granted, however, because of the lessee’s failure to begin a well within the time that elapsed between January 7, 1920, when the notice to develop was given, and May 4, 1920, when the suit was filed.

We have held, in many cases, that a failure to develop within a reasonable time after refusal to accept rentals and notice that development is demanded, furnishes ground for a cancellation of such a lease. Monarch Oil & Coal Co. v. Richardson, 124 Ky. 602, 99 S. W. 668; Warren Oil & Gas Co. v. Gilliam, 182 Ky. 807, 207 S. W. 698; Bertram Development Co. v. Tucker, 191 Ky. 9, 228 S. W. 1027, etc.

We have never attempted, however, to say just what is a reasonable time, but have held that to be a question ¡determinable upon the facts of each particular case. Maverick Oil & Gas Co. v. Howell, 193 Ky. 433, 237 S. W. 40; United Fuel Gas Co. v. Adams, 198 Ky. 283, 248 S. W. 841.

As appellee accepted payment of rentals to April 9, 1920, and thereby irrevocably extended the life of the lease until that date, he could not require development within that period, since the rentals were paid and accepted in lieu thereof. McNutt v. Whitney, 192 Ky. 132, 232 S. W. 386. Hence the notice given was. wholly ineffective, if strictly construed, since it required development before the expiration of that period. And even if we could ascribe to the notice the effect, despite its terms, of requiring development after the expiration of such period — a question not decided — but twenity-five days elapsed thereafter until this action was instituted, and this was not a reasonable time even according to the notice and as- arbitrarily fixed by appellee, and it is certainly not such on the facts.

Appellee’s evidence was directed toward proving that a well had been drilled upon an adjoining tract of land and within 200 feet of appellee’s line, evidently upon the theory that because thereof appellant was required by section 3766b-4c of the statutes to dig an offset well within three months after receipt of the written notice, to prevent the lease from becoming void. But the notice *766was given more tiran two months before that statute became effective. The evidence is not clear, that the well on the adjoining tract was. within 200 feet of appellee’s land, and there is- no proof that oil or gas had “commenced to be transported off and marketed from said adjoining premises,” as in that statute provided.

Hence it is clear that the provisions of that statute are not applicable here, even if, since its effective date, it applies to contracts theretofore executed. — a question not now considered.

Wherefore the judgment is reversed, with directions to dismiss the petition.