Hein v. Shell Oil Co.

42 N.E.2d 949, 315 Ill. App. 297, 1942 Ill. App. LEXIS 878
CourtAppellate Court of Illinois
DecidedJune 27, 1942
StatusPublished
Cited by10 cases

This text of 42 N.E.2d 949 (Hein v. Shell Oil Co.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hein v. Shell Oil Co., 42 N.E.2d 949, 315 Ill. App. 297, 1942 Ill. App. LEXIS 878 (Ill. Ct. App. 1942).

Opinion

Mr. Justice Culbertson

delivered the opinion of the court.

This is an appeal from an order of the circuit court of Wabash county denying a motion to dissolve a temporary injunction and to dismiss the complaint, pursuant to which such injunction was issued, in favor of appellee, P. F. Hein (hereinafter called plaintiff), as against appellant, Shell Oil Company (hereinafter called defendant). *

The complaint filed by the plaintiff alleged that plaintiff was the owner of certain real estate, and that the defendant was the owner of an oil and gas lease (which was set forth in the complaint), and that defendant was operating the oil and gas lease and producing oil from a certain oil well. It was alleged that the oil well, likewise, produced casinghead gas and that the plaintiff had connected a gas line which piped the casinghead gas from such oil well into his residence in which the gas was used for heating purposes. A temporary injunction was issued, without notice, enjoining defendant from disconnecting such gas line which the plaintiff had connected to defendant’s oil well upon the premises leased by plaintiff to the defendant. The defendant thereafter filed a motion to dismiss the complaint and also a motion to dissolve the temporary injunction. Upon hearing, the court below entered an order overruling the motion to dissolve the temporary injunction, and defendant has appealed from such order.

It is alleged in the complaint that the defendant is operating five oil wells upon plaintiff’s lands, pursuant to the terms of the oil and gas lease, and that one of the oil wells is situated behind the dwelling house of plaintiff, and that the gas from such oil well has been heretofore permitted to waste into the atmosphere by the defendant in the operation of its well. The complaint alleges that the pipe connection was made on November 5, 1941, but was disconnected by defendant on November 7,1941, and that on November 8,1941, it was reconnected by plaintiff (he alleges, with permission of defendant’s agent) and that plaintiff has continued to use the gas for heating purposes since that date. It is also alleged that on November 12, 1941, defendant notified plaintiff that unless he disconnected his connection from the pipe line on or before 3:00 p.m. on November 13, 1941, that defendant would cut and destroy the gas line.

The oil and gas lease, under which defendant is operating oil wells, contains three royalty provisions, in the following terms:

“1st. To deliver to the credit of lessor, free of cost into tank reservoirs or into pipe line to which lessee may connect wells on said land, the equal one-eighth (Ys) part of all oil produced and saved from the leased premises.
“2nd. To pay lessor one-eighth (Ys) of the gross proceeds each year, payable quarterly, for the gas from each well where gas only is found, while the same is being used off the premises, and if used in the manufacture of gasoline, a royalty of one-eighth (%), payable monthly at the prevailing market rate for gas; and lessor to have gas free of cost from any such well for all stoves and all inside lights in the principal dwelling on said land during’ the same time by making lessor’s own connections with the well at lessor’s own risk and expense.
“3rd. To pay lessor for gas produced from any oil well and used off the premises or in the manufacture of gasoline or any other product a royalty of one-eighth (Ys) of the proceeds, payable monthly at the prevailing market rate at the mouth of the well. ’ ’

The plaintiff’s complaint, as amended, alleged that the volume of gas wasted from the well to which plaintiff had made his connection, was in excess of 35,000 cubic feet per day, exclusive of the small amount which was used by plaintiff in heating, and that the wasted gas is emitted from a discharge pipe or flare attached to the pipe and maintained by the defendants. Plaintiff contends (by allegations in the complaint) that he is entitled to use such gas under (1) the implied terms in the lease, or (2) in the alternative, irrespective of the terms in the lease, on the basis of custom and usage in the area. Plaintiff also contends, very vigorously in his brief in this court, that he is entitled to take the gas in the manner indicated on the theory that in any event the defendant was about to waste it.

Defendant in the motions to dismiss the complaint and to dissolve the temporary injunction, in addition to the contention that there is no right of action set forth and that plaintiff is not entitled to the injunctive relief under the facts as set forth in the complaint, also insists that the oil and gas lease, on its face, shows that plaintiff has no right to use the gas from an oil well and that such use is in violation of the terms of the lease.

It is of primary importance in determining the question before this court, to analyze and look to the provisions of the lease between the parties. A contract between parties dealing in oil and gas is subject to the same rules of interpretation as any other contract and there is no relation of special trust or confidence between the lessor and lessee in such lease, any more than in any other (O’Donnell v. Snowden & McSweeney Co., 318 Ill. 374, 378). A court has no right, by construction, to establish a contract different from that expressed in the written agreement (Decatur Lumber & Manufacturing Co. v. Crail, 350 Ill. 319, 323; Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 105).

As stated by the court in the case of Poe v. Ulrey, 233 Ill. 56, at pages 63, 64, 65 and 66,

“So far as the charge that the contract was harsh and unjust is concerned, it may be said that the parties were competent to contract with each other and neither side can be relieved from their agreements on the ground that they did not use good business judgment in entering into the contract. . . . Their agreement shall be respected and enforced by the Courts, and .... Neither shall be relieved from the obligation of his contract, except upon some certain ground deemed valid by the law. . . . Counsel for Appellants insist that there was an implied agreement that the lessee would drill wells to reasonably develop the farm for production of oil and gas, and that the lease could be cancelled by the Court and the rights under it forfeited for failure to do so, and that the lease might be forfeited for failure to drill the well, although compensation was agreed upon. The argument would have greater force if the lease had not contained a provision that it could be forfeited for a failure to complete a test well on the block of leases, before the 1st day of May, 1905. That agreement would imply an exclusion of other grounds of forfeiture, and the agreement for compensation effectually excludes a forfeiture not stipulated for.”

In proceeding with other construction of the lease in the instant case, it is obvious that the paragraph of the lease marked “1st” and set forth hereinabove, relates to the lessor’s royalty in oil produced and saved. The second paragraph clearly relates only to gas from each well where gas only is found. In this connection it has been determined that there is a distinction in law between gas produced from a gas well and casinghead gas which flows from oil wells and comes between the casing and the tubing (Humble Oil & Refining Co. v. Poe (Tex. Com. App.), 29 S. W.

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Cite This Page — Counsel Stack

Bluebook (online)
42 N.E.2d 949, 315 Ill. App. 297, 1942 Ill. App. LEXIS 878, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hein-v-shell-oil-co-illappct-1942.