Washburn v. A. F. Gilmore Co.

HOUSER, J.

It appears that plaintiffs, together with Stuart M. Salisbury and Lois C. Salisbury, were the owners of certain real property which, for the purpose of drilling and operating thereon for the production of petroleum, etc., they leased to the A. F. Gilmore Company, a corporation, and that thereafter, following several preceding assignments thereof, the said lease was assigned to defendants E. C. Joannes and Roy Maggart, doing business under the firm name of J. & M. Oil Company; that prior to such last-mentioned assignment, one of the former assignees had drilled an oil-well on the leased property and in the course of production operations had excavated or constructed thereon several sump holes. It also appears that in pursuance of authority reserved to the lessors by the provisions of the lease, for a violation by the lessee or its assignee of some of its covenants, the lessors terminated the lease. With reference to the obligations of the lessee on the happening of such a contingency, the lease contained the following provision:

“On the expiration of this lease, or sooner termination thereof, lessee shall quietly and peaceably surrender possession of the premises to the lessors, and shall, as far as possible,

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cover up all sump holes and excavations made by it, and restore the land as nearly as possible to the condition in which it was received.”

For the failure of the last assignees of the lease, namely, Joannes and Maggart, doing business under the firm name of J. & M. Oil Company, to “cover up all sump holes”, etc., the plaintiffs, who theretofore had become the sole owners of the leased property, brought an action for damages on account of such failure against the original lessee and each of the succeeding assignees of the lease, which action resulted in a money judgment being rendered against the defendants Joannes and Maggart, both individually and as copartners doing business under the firm name of J. & M. Oil Company; and from which judgment this appeal is prosecuted.

Since on the trial of the action no express assumption by the assignees of the lease of the covenants thereof, including the covenant to “cover up all sump holes”, was shown to exist, appellants contend that on the expiration of the lease no duty devolved upon them to comply with the covenant in question. Considerable effort is expended by appellants in their attempt to 'establish as applicable herein the principle of law that in the situation presented by the facts no privity of contract existed between the lessors and the appellants as assignees of the lease, but that at most the legal relationship of such parties was represented by the 'connection known as privity of estate, and that the liability of the assignee attaches only as long as such relationship ■exists. In other words, as soon as the privity of estate ceased, contemporaneously therewith ceased the liability of the assignee for any damage which thereafter occurred to the lessor by virtue of the provisions contained in the lease. ■Appellants also produce authority to the effect that where the status known as privity of the estate obtains between a lessor and an assignee of a lease, the latter incurs no liability arising from breaches of personal covenants of the lease, especially those breaches, if any, which occur prior to the assignment of the lease to the person whose liability is sought to be established. And in that connection appellants urge the point that since admittedly the excavations ■for the sump holes were made by assignees of the lease who in interest preceded the interest and ownership therein of