W. Scott Calderwood, William Glassman, Warren, for appellant.
R. Pierson Eaton, Warren, for appellees.
Before Rhodes, P. J., and Hirt, Reno, Dithrich, Ross, Arnold and Gunther, JJ.
[ 170 Pa. Super. Page 277]
This is an appeal by defendant from an order of the court below in an action of ejectment wherein plaintiffs seek to recover possession of 112 1/2 acres of land (less five acres to be surveyed and set apart to defendant) in Warren County, Pennsylvania, leased in 1905 to defendant's predecessors for the 'sole and only purpose of * * * producing * * * oil and gas.' The lease was for a period of twenty years. The present litigation is between assignees of the original parties. In 1926 the lease was extended for twenty years, subject to all the terms and conditions thereof; and on June 11, 1938, the lease was again renewed, subject to its terms and conditions, 'for so long as oil or gas or either of them is produced in paying quantities.'
[ 170 Pa. Super. Page 278]
The original lease of 1905 required that the lessee 'shall within ten days from the date hereof, commence one well upon said premises and shall complete the same within ninety days thereafter unless prevented by inevitable accident, and within fifteen days after the completion of said first well commence the actual drilling upon another well, and so on complete additional wells by commencing and drilling on each successive well within fifteen days from the completion of the preceding, until at least one well is completed on each ten acres, * * *.' The lease contained provisions for forfeiture and the entry of an amicable action and confession of judgment in ejectment upon lessee's failure to comply with his covenant to drill wells. The lease further provided that 'in case of forfeiture as aforesaid, that each completed and producing well, together with five acres of the demised premises contiguous to the well, to be surveyed and set apart by the parties of the first part, their legal representatives, or assigns, shall be excepted from the said forfeiture, and such portion exempted as aforesaid shall thereafter be held by the party of the second part, subject to this lease so far as applicable.' [Italics supplied.]
Defendant acquired an assignment of the lessee's interest in 1926. At that time two wells had been drilled; one well was abandoned in 1932. The lessors accepted royalties from the single producing well on the tract until 1941, when the present plaintiffs purchased the fee or lessors' interest, at which time plaintiffs called to the attention of defendant the forfeiture provisions of the lease. On October 11, 1948, plaintiffs made demand upon defendant to commence drilling the additional wells within thirty days, in compliance with the terms of the lease, or they would enforce forfeiture of the lease and retake possession of the undeveloped acreage. Defendant refused to begin to drill any further
[ 170 Pa. Super. Page 279]
wells on the premises, whereupon plaintiffs instituted by complaint the present proceeding on February 15, 1950. Defendant filed an answer to plaintiffs' rule to show cause why judgment in ejectment should not be entered in which defendant in effect alleged, as he contends here, (1) that plaintiffs and their predecessors waived their right to forfeit the lease by reason of the acceptance of royalties, and their failure to insist, over a period of forty years, upon the provisions as to drilling wells; and (2) that plaintiffs' right to forfeiture is barred by the Statute of Limitations. In this connection defendant states that, under the terms of the original 1905 lease, 'the drilling requirement should have been satisfied by January 1, 1909, over forty one years ago.'
Testimony was taken in the court below on the rule and answer. The court held that plaintiffs were entitled to a judgment in ejectment for the 112 1/2 acre tract in question, except five acres surrounding the single well thereon. The court below by its order declared the oil and gas lease covering the 112 1/2 acres forfeited 'pursuant to the terms of said agreement, except as to the producing well, together with five (5) acres surrounding said well, to be surveyed by the parties as contemplated and provided for in said original lease, and the said well and acreage shall be subject to the covenants and conditions of the original lease 'so far as is applicable.'
The facts in this case establish plaintiffs' claim to possession of the undeveloped acreage under the provisions of the lease, and they are entitled to a judgment in ejectment. Forfeiture clauses in leases such as oil and gas and mining leases will be enforced where such forfeiture is necessary to do justice, is not contrary to equity, and protects ...