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cannot avoid or excuse himself from complying with the terms of his lease to Mallory, as to the 45, 25, and 4 acre tracts; but, while that is true, it does not excuse the lessee from complying with the terms and conditions of the lease on his part.

The question that presents itself for the further consideration of the court is, has the lessee in good faith complied with the terms and conditions of his lease, and is he entitled to the relief sought for by his bill? On January 11, 1895, S. T. Mallory leased from John Boley 100 acres of land, more or less, "for the purpose and with the exclusive right for operating thereon for oil and gas," together with other rights, which are immaterial to refer to. That lease was for the term and period of five years from its date, and as much longer as oil or gas was found in paying quantities. There was a provision contained in the lease in reference to gas, which is not deemed important to refer to, as the only well drilled is not a gas well. The lease required that a well should be completed upon the premises within three months from its date. Unless completed it should be null and void. There was well drilled on the lease within the three months, the time provided for in the lease, and was a compliance with that provision of the contract; therefore, no forfeiture could take place. It is contended, however, that the evidence discloses that the lessee did not in good faith proceed to develop and operate the territory embraced in this lease for oil and gas. By the terms of the lease it had five years to run. During the lifetime of the lease there was but one well put down, although the evidence discloses that the lessor, John Boley, often requested and demanded that the lessee should proceed to develop the land covered by the lease for petroleum oil, and, as often as he requested, the agent of the lessee promised to comply with his requests, but, as I have said, there was no effort upon the part of the lessee to comply with the repeated demands of the lessor, unless the futile attempt by Reynolds, as the agent of the lessee, in March, 1899, to have a rig placed upon some portion of the land for the purpose of drilling another well, was an act in good faith upon the part of the lessee as evidence of his intention to comply with the terms and provisions of the lease. It is true that Owen Boley says that John Boley, the lessor, notified him not to cross his land for the purpose of hauling a rig upon the leased premises to drill another well. Owen Boley, who made the contract with Reynolds, says he notified Reynolds of that fact, and Reynolds admits that he did; but it does not appear from the evidence that there was no other way of getting upon the leased premises to continue the operations of drilling another well, nor does it appear that the agent of Barnsdall, or Barnsdall himself, ever made any strenuous effort, either legal or otherwise, after the information that Owen Boley conveyed to Reynolds to go upon the leased premises for the purpose of further development. This information was conveyed to Reynolds in March, 1899, less than a year before the lease, by its own terms, expired, which should have caused the lessee to have taken immediate action to assert his rights, if any he had. There is not even a pretense that such was the fact. Is a court of equity, disposing of rights between parties, to hold

that an obstruction of that character is a reason why the lessee in this case should be absolved and released from the performance of his duties under the contract? I think not. It was a reason why a greater effort should have been made, if the agent of the lessee intended in good faith to proceed with the further development of the leased premises for oil. There is no evidence in this case that another effort was made before or since that time during the lifetime of the lease, nor, in fact, since its termination. We must hold that this excuse for a failure to prosecute the work in the development of the lease for oil is inadmissible as a defense upon the part of the lessee in neglecting to comply in good faith with its legal requirements. But it is claimed that, inasmuch as the lease provided that the lessee could hold, not only "for the term and period of five years from its date, but as much longer as oil or gas was found in paying quantities thereon," the lease is valid, and binding upon the lessor, John Boley, for the reason that the one well that has been drilled upon the leased premises known as the "four-acre tract" produced oil, and that he had received his royalty from that production. The evidence discloses, as we have said, that it is a small producer; in fact, so small that it did not justify the continuous pumping of the well; and when it was last pumped in 1899, it only yielded about three-fourths of a barrel per day. Reynolds testified in reference to pumping the well, and says "that he hired a pumper there to pump the well along, and furnished the fuel for it." The evidence of six witnesses of great experience in the oil fields has been taken in this case, who have had long experience both in drilling and pumping wells, and they state that a well yielding no more than this well has yielded, as shown by the evidence, could not of itself be a paying well. What is a paying well? Is the cost of drilling a well embracing the machinery purchased for that purpose to be considered as an element to determine whether it is paying well or not? I think not. It must be a well whose product covers the expenses incident to the pumping of it. If it does not pay a profit over the operating expenses, can it be said that oil is found in paying 'quantities? I think not. It was expressly held in the case of Young v. Oil Co., 194 Pa. 243, 45 Atl. 121, that where oil has been found, but no longer pays the expenses of production, that it is not producing in paying quantities, and, applying that principle to the terms of this lease, if oil at the date and institution of this suit and for some time previous had not been found in "paying quantities," would it be right and just to prevent the lessor from releasing his land? The answer to that question is obvious. The principle established in that case is that sufficient oil must be found to justify the operator in pumping the well or wells at a small profit over and above the actual expenses.

An exhibit has been filed by the plaintiff in this case, claiming that it is a statement of the Eureka Pipe Line Company of the oil received by that company from Barnsdall and Reynolds, commencing with December 3, 1895, and closing with April 1, 1901, which is a period of nearly six years from the date of the execution of the lease by John Boley to S. T. Mallory. That exhibit shows that during that period 806.61 barrels were produced, which is an aver

age of 134.43 barrels per year. It does not appear from that exhibit where that oil came from. It only appears that Barnsdall and Reynolds had such an oil account; but, assuming the fact to be true that it came from the Mallory well, which was drilled on the fouracre tract, we find that the well produced during the year 1900 104.95 barrels, or about 12 gallons per day. It does not appear what the price of oil was at that time, nor what the price of oil was at the end of five years, when the lease was, by its own limitation, terminated. The question that presents itself at this point is, if this was a paying well, why was it that the lessee did not proceed to drill other wells, and to further develop the tract? Why would he content himself with a small producer like this, which was merely paying at best a small profit over its expenses during the first years of the lease, when the evidence tends to show that it did not pay any profit at the end of the lease? What the motive and purpose for such action was, I am unable to determine, unless he was satisfied that the territory was what is termed in the oil parlance "dry territory." It is true that he pumped this well at various times, pumping off what might be called the "heads," but it is equally true that at various times he removed his machinery from the leased territory, and for the time seemed to have abandoned it. If, in fact, it had been a paying well, why did he remove his machinery, and cease to pump it? The well did not flow. It could not be pumped continuously, and when pumped in the last three or four years it was only pumped by "heads," and finally it did not yield more than 12 gallons per day, as the evidence discloses. Mr. A. J. Boley proves that the well was pumped occasionally from time to time until August or September, 1896, and that after that "the well stood for a long time, and was shut down," and from that time to the time he gave his deposition in this case-which seems to have been taken in April, 1900-it had not been pumped on an average of once a month. It is apparent to my mind that the lessee pursued this course in regard to this well with the hope that such action would preserve his rights under the lease. Can it be said that, where a man "sleeps upon his rights," as the lessee has done in this case, such action upon his part is in good faith? Was it good faith to hold the lease for a period of five years, and only drill but one well on the leased premises, and that well a failure, as the evidence shows? I think not. Is it evidence of good faith to pump a well at a loss to the lessee for two or three years before the expiration of the lease? I think not. I am aware that decisions of some courts hold that the lessee is to determine whether the lease is a paying one or not, but the lessee must act in good faith. The lessee should not be permitted in a court of equity to insist upon retaining a lease after its term had expired without having made any effort upon his part in good faith to develop the property. Certainly he ought not to be permitted to hold the lease merely to prevent others from drilling upon the territory covered by the lease, which would operate a great injustice to the lessor. The lessor when he entered into this lease with S. T. Mallory had a right under its terms to expect that the property would be developed; and he had a right to insist upon it, as he did from time to time, that the property should be developed; but, notwithstanding

his repeated demands to have the property developed, the lessee disregarded, not only his wishes, but his interests in the property. Contracts must be mutual. The rights of the lessor must be protected just as fully as the rights of the lessee. When the lessee, as in this case, neglects and refuses to comply with the contract in good faith, we must hold that the provision in the contract, which says "that the lessee is to have the leased property, not only for a period of five years, but as much longer as oil or gas is found in paying quantities thereon," is a provision that is to be construed with reference to the rights of the lessor as well as the rights of the lessee. The lessee will not be permitted to retain possession and control of the leased premises merely because of the insertion of the words in the lease "as much longer as oil or gas is found in paying quantities" unless oil is actually found in such a quantity as to warrant the lessee in pumping the well. In determining this question he must exercise sound discretion, such as prudent business men would ordinarily exercise in the management of their business; but this discretion, when exercised by him, must be a discretion in good faith, not an arbitrary one upon his part. It must be a discretion based upon the product of the well, which alone can demonstrate whether it is a paying well. Is the lessor to be deprived of his rights in having his property developed when wells may be and are sunk all around his property, because the lessee may claim the right to develop the property when it suits him? Having drilled but one well on the leased premises, and because the lease only provided for one well to be drilled upon it, and failing to further develop the property, it would seem to be the duty of a court of equity to interfere, and redress the rights of a lessor under such circumstances. If the lessee had within the period of five years drilled other wells on the leased premises, and showed a disposition to develop it, a court of equity, under such circumstances, would be justified in holding that such action was a compliance with the terms of the lease. He who asks equity must do equity. The plaintiff in this case has asked for relief. What relief is he entitled to? Can a court of equity grant him any relief if it reaches the conclusion that he has frittered away his rights, and never discovered that there were any obligations upon his part under the lease to develop the property for oil during the term of five years the life of the lease? I think not.

It is said by the court in the case of Harness v. Oil Co., 49 W. Va. 232, 38 S. E. 662, "that the production in paying quantities of either oil or gas, and the payment or delivery of the royalty as provided for in the contract, will perpetuate the lease during the time of production." There can be no question about that proposition of law that the lease will be perpetuated during the production in paying quantities of either oil or gas. But such is not this case. This is a case that more properly falls within the ruling as stated in Steelsmith v. Gartlan, 45 W. Va. 27, 29 S. E. 978, 44 L. R. A. 107, which holds that a completion of a nonproductive well, though at a great expense, vests no title in the lessee. This well, as the evidence discloses, seems to be a nonproductive well. Although the drilling of the well has cost the lessee possibly a large sum of money,

yet that fact alone does not condone his neglect to operate and develop this lease, nor does it release him from his obligations in good faith to do so. I see no reason why a lessee should hold on to the property of the lessor during the lifetime of the lease, claiming the right to operate it at his pleasure, and thereby defeat the rights of the lessor to relet the property to parties who would develop and operate it. Such is the history of this case. The lessor quietly awaited the expiration of the lease. He repeatedly asked and demanded of the lessee that the leased premises should be developed, to which repeated requests and demands there came nothing but promises, which were never fulfilled. The lessor then determined to relet the 45-acre tract to Watt and others, and the 25-acre tract to A. H. Highby. The lease to Watt and others was made in April, 1900, and the lease to A. H. Highby in May, 1900. The lease to S. T. Mallory expired on the 11th day of January, 1900. This bill was filed on the 5th day of September, 1900, about four months after these leases were made to Watt and others and A. H. Highby, and not until after it was discovered that the drilling under these leases produced paying wells. Can it be said that a court of equity will permit a lessee to wait until after the expiration of his leased term with a nonproductive well, and drill but one nonproductive well during the lifetime of the lease to enforce that lease, and hold it valid against the lessor by reason of the fact that he alone is to determine whether or not this nonproductive well is a well in paying quantities? I think not. I think that equity will require good faith upon the part of the lessee in the performance and discharge of his obligations under his contract. What that good faith is must be determined by all the surrounding circumstances.

The lessor, when he made this lease to Mallory, contemplated the development of the leased premises, and had a right to expect, by the very terms of the lease, that the property would be developed in good faith. This was the main consideration for the execution of the lease, and, if the lessee failed to fully develop the property during the lifetime of the lease, the lessor had a right to conclude, after the lease had expired by its own limitation, that the lessee had abandoned it, and lost his rights under it, and would, therefore, be justified in re-leasing the property. It was held in the case of Foster v. Gas Co., 32 C. C. A. 560, 90 Fed. 178, that:

"The agreement to dig one well within one year secures the prompt beginning of these operations. The completion of the well saves the penalty. It does not amount to a fulfillment of the covenants. The consideration, therefore, for this lease was the prospective rents and royalties the lessor would enjoy if the lessee, by diligent search, could find oil and gas in paying quantities. If the lease failed to bind the lessee to diligent search for oil or gas, it was without consideration, binding on neither party, and voidable at the pleasure of either."

This position is sustained by the following line of cases, to wit, Cowan v. Iron Co., 83 Va. 547, 3 S. E. 120; Petroleum Co. v. Coal, Coke & Mfg. Co., 89 Tenn. 381, 18 S. W. 65; Ray v. Gas Co., 138 Pa. 576, 20 Atl. 1065, 12 L. R. A. 290, 21 Am. St. Rep. 922. In the last-quoted case the supreme court of Pennsylvania says:

"The clear purpose of the lessor was to have his lands operated for oil and gas, and the condition was inserted for his benefit. Whilst the obligation on

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