Ellison v. Skelly Oil Co.

1951 OK 122, 244 P.2d 832, 206 Okla. 496, 1 Oil & Gas Rep. 822, 1951 Okla. LEXIS 763
CourtSupreme Court of Oklahoma
DecidedApril 24, 1951
Docket33763
StatusPublished
Cited by15 cases

This text of 1951 OK 122 (Ellison v. Skelly Oil Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ellison v. Skelly Oil Co., 1951 OK 122, 244 P.2d 832, 206 Okla. 496, 1 Oil & Gas Rep. 822, 1951 Okla. LEXIS 763 (Okla. 1951).

Opinions

WELCH, J.

Kenneth A. Ellison commenced action against Skelly Oil Company, a corporation, and others to quiet title to two oil and gas leases.

Plaintiff asserted ownership of an oil and gas lease upon an undivided one-fourth mineral interest under a tract [497]*497of land described as the northwest quarter of section 28, twp. 3 north, range 15 E. C. M. and excepting a certain railroad right of way across said land and excepting two certain highway right of ways across the land and also asserted ownership of an oil and gas lease upon the mineral interests under the said right of ways, and prayed judgment quieting his title to the two leases.

The named defendant, hereinafter referred to as Skelly, asserted ownership of an oil and gas lease of prior execution to those of the plaintiff and covering all mineral interests under the said quarter section of land.

The railroad company with easement and right of way across the land, and the county and state with easements and highway right of ways across the land, made no claim of any mineral interests in the land.

Skelly’s lease was executed on January 20, 1937, by the then owners of the land. Thereafter, Frank T. Clark purchased an undivided one-fourth mineral interest in the land and subject to said lease. The Skelly lease contained provision that if operations for the drilling of a well for oil or gas was not commenced on said land on or before one year from date, the lease should terminate unless the lessee on or before one year pay or tender to lessor, or for lessor’s credit in a certain named bank, the sum of $70 as rental and for the privilege of deferring commencement of drilling operations for a period of one year; that in like manner and upon like payments or tenders, the commencement of drilling operations might be further deferred for like periods successively.

Clark gave notice of his purchase of one-fourth mineral interest in the land described in the Skelly lease, which notice was timely received by such company, and designated the City National Bank of Guymon, Oklahoma, as depository for his proportionate share of any delay rentals paid under the lease. Delay rental for the year of the lease commencing January 20, 1946, as was payable to Clark, was not received by the City National Bank or by Clark on or before January 20, 1946, and drilling operations had not been commenced at that date. On April 8, 1946, Clark executed an oil and gas lease to the plaintiff covering his mineral interests under the quarter section of land. In 1945, Frank T. Clark and others had executed an oil and gas lease to the plaintiff covering a tract of land in section 18, described as “all that part of the Northwest Quarter * * * covered by . . . Right-of-Way . . . containing 20 acres, more or less.”

The Skelly lease, executed on January 20, 1937, contained land descriptions as follows: “All of the Northwest Quarter except about 20 acres for Highway and Railroad Right of Way in Section 28, Township 3 North, Range 15 E. C. M. and containing 140 acres, more or less.”

As of January 20, 1946, the oil and gas mining rights under the lease of January 20, 1937, were owned by Skelly and by Stanolind Oil & Gas Company. By agreement between Skelly and Stanolind, Stanolind was to pay the delay rentals to keep the lease in force and was to pay such rentals on or before January 20, 1946, and bill Skelly for its proportionate share. A rental payment schedule was set up by Stan-olind showing $17.50 payable to Frank T. Clark, as owner of a one-fourth mineral interest in the land covered by the lease, and showing the City National Bank, Guymon, Oklahoma, as depository. Stanolind in purpose of paying Frank T. Clark such rental, by error issued its check payable to Frank E. Clark for $17.50 and forwarded such check to the First National Bank in Pampa, Texas. The check was dated December 18, 1945, and was received by the bank in Pampa, Texas, on December 31, 1945. The error was not discovered before January 20, 1946, and not until in March, 1946, whereupon Stanolind tendered the sum of $17.50 [498]*498to Frank T. Clark and made tender of such amount to credit of Clark in the Guymon bank. The tender and the bank credit were refused by Clark and Clark executed the lease to plaintiff as aforesaid.

Judgment was for the defendant and plaintiff has appealed.

The plaintiff contends:

“Skelly’s oil and gas lease terminated on January 20, 1946, as to the one-fourth mineral interest owned by Frank T. Clark, by reason of non-payment of delay rental, and the trial court should have rendered its judgment for plaintiff, establishing plaintiffs claim to an oil and gas lease on such one-fourth interest by virtue of his subsequent lease from Frank T. Clark.”

In counterproposition Skelly asserts:

“Defendant’s oil and gas lease did not terminate on January 20, 1946, as to the one-fourth mineral interest owned by Frank T. Clark, by reason of non-payment of delay rental, since the non-payment thereof was due to an unavoidable casualty or misfortune or inadvertent mistake which occurred under circumstances which would make it inequitable and unjust to declare a forfeiture, cancellation, or termination of the lease as to said interest.”

Hereunder, Skelly cites Oldfield v. Gypsy Oil & Gas Co., 123 Okla. 293, 253 P. 298, and Brazell v. Soucek, 130 Okla. 204, 266 P. 442, as holding that equitable rules against forfeiture apply so as to prevent termination of an “unless” lease under the circumstances existing in those cases.

In Harris v. Kerns, 144 Okla. 225, 291 P. 100, it is said:

“It seems to be well settled in this state that, where an oil and gas lease expressly provides that rights of the parties shall terminate if no well be commenced within a fixed period, unless the lessee on or before that date shall pay or tender to the lessor a fixed sum, time is of the essence of such a contract, and unless a well is begun or the rentals provided for paid, the contract is automatically terminated at the end of the period for failure either to commence the operations or to pay rentals. Crowder v. James, 110 Okla. 214, 236 P. 891; Garfield Oil Co. v. Champlin, supra.”

See, also, Eastern Oil Co. v. Smith, 80 Okla. 207, 195 P. 773; Crowder v. James, 110 Okla. 214, 236 P. 891, and Williams v. Ware, 167 Okla. 626, 31 P. 2d 567.

The termination of an oil and gas lease for the failure to pay delay rental has been referred to as a character of forfeiture, but it is expressly held that the effect is not truly a forfeiture but is a termination of the lease in accordance with the agreement of the parties. Curtis v. Harris, 76 Okla. 226, 184 P. 574; Garfield Oil Co. v. Champlin, 78 Okla. 91, 189 P. 514; New England Oil & Pipe Line Co. v. Rogers, 154 Okla. 285, 7 P. 2d 638; Eastern Oil Co. v. Smith, supra, and Williams v. Ware, supra.

In the Curtis case, in the third paragraph of the syllabus, it is said:

“A court of equity will refuse to quiet title under an oil and gas lease where a well was not completed or payment tendered within a period fixed under an express provision that the lease should terminate as to both parties, unless a well was completed or payment tendered. To refuse plaintiff relief is not to declare a forfeiture, the lease having terminated by its express terms.”

In the New England Company case, in reference to an “unless” lease, it is said by the court:

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Ellison v. Skelly Oil Co.
1951 OK 122 (Supreme Court of Oklahoma, 1951)

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Bluebook (online)
1951 OK 122, 244 P.2d 832, 206 Okla. 496, 1 Oil & Gas Rep. 822, 1951 Okla. LEXIS 763, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ellison-v-skelly-oil-co-okla-1951.