Breedlove v. Pennzoil Co.

399 S.E.2d 187, 184 W. Va. 44, 112 Oil & Gas Rep. 377, 1990 W. Va. LEXIS 187
CourtWest Virginia Supreme Court
DecidedNovember 9, 1990
DocketNos. 19496, 19496-1
StatusPublished
Cited by2 cases

This text of 399 S.E.2d 187 (Breedlove v. Pennzoil Co.) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Breedlove v. Pennzoil Co., 399 S.E.2d 187, 184 W. Va. 44, 112 Oil & Gas Rep. 377, 1990 W. Va. LEXIS 187 (W. Va. 1990).

Opinion

WORKMAN, Justice:

At issue in this case is whether the Circuit Court of Lincoln County correctly interpreted the provisions of several leases involving mineral rights when it determined that the lessees were not obligated [46]*46to furnish free gas for household use to the appellant lessors. Having reviewed the subject language of the leases, we conclude that the covenant to provide free gas for household use was expressly dependent on the lessees’ production of gas from the leased premises. Since gas has never been produced on the leased premises we concur with the circuit court’s conclusion that the lessees are under no obligation to provide free gas, and accordingly affirm the court’s granting of summary judgment to the ap-pellees.

Each of the appellants owns the surface of a tract of land located in Lincoln County, West Virginia, and in turn leases the mineral rights on their respective tracts of land to the appellee oil companies. There are seven actual leases involved, the validity of which are not at issue. Each lease contains separate provisions for the payment of royalties for oil and gas produced from the premises. In addition to royalties, the lessors were to receive free oil and gas for domestic use. The provision of free oil is not at issue, only the furnishing of free gas. The exact language of each of the seven leases providing for free gas is stated as follows in each of the respective leases.

Hazel Whitten: ... the parties of the first part are to have from said premises all gas and oil free of costs for home and domestic purposes....
Edward and Thelma Gillenwater: It is agreed that the parties of the first part are to have free of costs oil and gas for household and domestic purposes from any found on the land.
Harry and Sadako Lovejoy: ... and the parties of the first part are to have free of cost from said premises all oil and gas for home and domestic purposes. Emmit and Wilma Breedlove: The Lessors shall have gas for the dwelling from any gas well on said premises free by making connections.
Jack and Geneva Cooper; ... and the parties of the first part are to have free of cost from said premises all oil and gas for home and domestic purposes.
Sadie Dingess: ... and the parties of the first part are to have free of cost from said premises all oils and gas for home and domestic purposes.
Donald E. and Oneta J. Pack; ... and the parties of the first part are to have free of cost from said premises all oils and gas for home and domestic purposes.

The parties have stipulated that there has never been any production of natural gas under any of the leases. The record suggests that from 1950 to approximately 1987, the lessees or their assigns provided free gas for domestic use in an uninterrupted fashion. The current dispute arose when the lessees terminated the provision of such free household gas apparently in 1987 when they assumed the oil-producing operation on the appellants’ properties.1 When this dispute reached the Circuit Court of Lincoln County, the court found the pertinent language in each of the leases to be unambiguous and granted the appellees’ motion for summary judgment by holding that production of oil from the leaseholds did not obligate the lessees to furnish free gas when there had never been production of gas from the premises with the exception of casinghead gas.2

These two cases were consolidated to resolve two related issues: first, whether the- leases at issue expressly predicate the lessors’ right to receive free gas upon the production of gas from the leased premises and second, whether the thirty-seven year [47]*47practice of providing free gas for household-purposes requires that the lessees continue to supply the lessors with free gas. Appellants contend that the lessees are obligated to provide free gas based on their two-prong argument that: 1) the free gas clause is part of the consideration of the lease; and 2) production of gas on the leased premises is not a prerequisite to the covenant to provide free gas for domestic purposes. The lessees do not dispute appellants’ first argument in principle and in fact agree with the general propositions that the free gas clause is part of the rent in an oil and gas lease and that the covenant to provide free gas is a valuable consideration of a lease for oil and gas purposes. See United Fuel Gas Co. v. Battle, 153 W.Va. 222, 167 S.E.2d 890, cert. denied sub nom. United Fuel Gas Co. v. Haden, 396 U.S. 116, 90 S.Ct. 398, 24 L.Ed.2d 309 (1969). The lessees argue, however, that the rental obligation to provide free gas is not invoked until gas is first produced on the property when the lease makes the covenant to provide free gas contingent on production from the demised premises.

The issue of whether a “free gas” clause is contingent upon production from the leased premises is admittedly “a matter of construction to be determined from the language of the contract.” W. Summers, The Law of Oil and Gas § 587 (1958). Without acknowledging the obvious disparity of the lease terms at issue from those analyzed in Kimble v. Wetzel Natural Gas Co., 134 W.Va. 761, 61 S.E.2d 728 (1950), appellants rely on the following excerpt from that case:

The lease here considered does not contain any express provision or language from which it may be necessarily implied that the production of gas from the leased premises is prerequisite to the validity of the covenant to furnish the lessors free gas. In the absence of such provision or language in the lease, we do not think that the validity of the covenant to furnish free gas is dependent upon the production of gas from the land covered by the lease agreement.
We conclude that the covenant for free gas in the lease here considered must be complied with so long as the lease is in force, even though the lease has been assigned, and the defendant is no longer able to effect a surrender of such lease.

Id. 134 W.Va. at 769, 61 S.E.2d at 733. The language from which the Court determined that the Kimble lease did not contain an express or implied provision predicating free gas on the production of gas from the leased premises provided that

‘[w]hereas, the said first parties have this day leased to said parties of the second part two adjoining tracts of land, it is agreed that said parties are to have gas free to the amount of 150,000 cubic feet of gas per annum for heat and light in one dwelling house on or off said land after the completion of one well on either tract by making their own connection at well or nearest pipe line of second party, at their own risk.’

134 W.Va. at 762-63, 61 S.E.2d at 730.

The language in the leases at issue pertaining to provision of free gas for domestic purposes differs greatly from that in the Kimble lease.

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Cite This Page — Counsel Stack

Bluebook (online)
399 S.E.2d 187, 184 W. Va. 44, 112 Oil & Gas Rep. 377, 1990 W. Va. LEXIS 187, Counsel Stack Legal Research, https://law.counselstack.com/opinion/breedlove-v-pennzoil-co-wva-1990.