Allen v. Narver

VICTOR E. SHAW, J., pro tem.

The question presented on this appeal from a judgment in favor of plaintiff and an order of court denying defendants’ motion for a new trial involves the interpretation of a lease made by plaintiff to defendants of certain lands for use in extracting oil and other mineral substances therefrom, the express consideration therefor being a royalty of one-eighth of the mineral so extracted.

[203]

The provision of the lease upon which the action is based is as follows: “It is further expressly agreed and understood, that in the event that the second parties (defendants) shall fail to commence operations by the fourth day of July, 1911, under the terms of this lease, then and in that event the parties of the second part (defendants) will pay the party of the first part (plaintiff) one hundred ($100) dollars per month for each and every month in which they shall make such default in the commencement of operations hereunder.” The complaint alleged and the court found that defendants, and each of them, wholly failed and refused to commence operations on or before July 4, 1911, and from thence to March 4, 1913, continuously failed and refused so to commence operations in accordance with their covenant so to do, and likewise refused to pay the one hundred dollars per month or any part thereof during said period of default. No attack is made upon this finding; indeed, it is conceded that defendants never at any time complied or attempted to comply with their agreement in this respect. Their contention is that, notwithstanding their express covenant, the lease constitutes merely an option on their part, and that plaintiff’s sole remedy for breach of the agreement was to enter upon the property and terminate the lease. It is quite true that by another provision of the lease it was provided that a failure on the part of the lessees to comply with the conditions thereof, or their failure to diligently prosecute the work of drilling and producing oil, would render the lease null and void and of no effect. This provision constitutes an option given to the lessor which, in lieu of insisting upon the payment of the one hundred dollars per month as provided in that portion of the lease hereinbefore quoted, he might or might not exercise at his election. Defendants having agreed to commence operations before July 4, 1911, could not insist that their failure to perform their covenants should be equivalent to performance. As said by the court in discussing a like contention in