Stetson v. Orland Oil Syndicate, Ltd.

PARKER, J., pro tern.

This was an action wherein plaintiffs sought a decree quieting their title in and to certain lands in Tehama County.

The defendants admit title in the plaintiffs to the lands in controversy but claim a leasehold interest therein by virtue of a certain oil and gas lease entered into between the parties.

The trial court found that the lease was terminated prior to the commencement of the action and entered its decree quieting the title in the plaintiffs and further decreeing that the defendants have no interest in or to the property. Prom this decree defendants prosecute the appeal.

A brief outline of the facts, as gleaned from the transcript before us will suffice to illustrate the points relied on. On the 24th day of March, 1930, the parties executed an oil

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and gas lease agreement, covering the premises in dispute. The instrument recited that the agreement was for “the sole and only purpose of mining and operating for oil and gas and of laying pipe lines and of building tanks, power stations and structures thereon to produce, save and take care of said products”. The term of the lease was three years from the date thereof and as long thereafter as oil or gas or either of them is produced from said land by the lessee. The lease further provided, and it is around this provision that the controversy centers, as follows:

“If no well be commenced on said land on or before the 24th day of March 1931, this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor, . . . the sum of Three Hundred forty-two & 50/100 dollars, which shall operate as rental and cover the privilege of deferring the commencement of a well for twelve months from said date. In like manner and upon like payments or tenders, the commencement of a well may be further deferred for like periods of the same number of months successively. ’ ’

Pursuant to the instrument, the lessees entered upon the property. No well was commenced prior to March 24, 1931, and lessees availed themselves of the deferment privilege by paying the amount specified. The same procedure followed through the remaining two years of the lease.

On March 31, 1933, the date on which the lease expired, the lessees remained in possession and again paid the deferment money. Prom year to year this practice was followed until, at some date prior to March 24, 1938, the lessees became aware, after negotiations to that end had been initiated, that lessors would no longer accept delay money. On March 21, 1938, the lessees, aware that no deferment was obtainable, undertook the commencement of a well; that is, it is their contention that they did. The trial court found that the activities going to make up this claimed commencement were mere pretenses and not