Appeal from decree of Court of Common Pleas of Elk County, May T., 1967, No. 1, in case of Cecil Brown v. Robert Haight et al.
Murray R. Garber, with him I. E. McCommon and Norbert J. Pontzer, for appellant.
Anthony H. Chambers, with him Chambers & Crisman, for appellees.
Bell, C. J., Jones, Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Jones.
In this case we are again called upon to interpret an oil and gas "lease" containing the traditional "in paying quantities" habendum clause.
The "lease" in question was executed in 1927 and contained the following provisions: "Witnesseth: That the Grantors, in consideration of the sum of one
dollar paid by the Grantee . . . do hereby grant and convey unto the grantee, all the oil and gas in and under the following described tract of land, and also all the said tract of land for the sole and only purpose and with the exclusive right of drilling and operation thereon for said oil and gas and removing the same therefrom. . . . To have and to hold the said lands and rights unto the Grantee for the term of twenty years from the date hereof, and as much longer as the said premises are being drilled or operated for the production of oil or gas, or as oil or gas is found or produced in paying quantities thereon. . . ."
At the expiration of the primary twenty-year period in July, 1947, there was a well on the property but it was not equipped for production until some months later. From 1947 until 1953 the Grantor pumped oil and gas for his own purposes, but at no time did the grantee produce any gas or oil. In 1952 appellees Robert and Joanne Haight acquired the grantor's reversionary interest with knowledge of the grantee's right to drill for oil and gas. One year later appellant Cecil Brown acquired the grantee's right to produce oil and gas. When Brown informed the Haights that he intended to purchase the oil and gas rights, they voiced no objections. Brown produced oil and gas on the property from 1953 until 1967; during this time, the Haights accepted the stipulated royalty payments for the oil and gas produced. In April of 1967 the Haights leased the gas and oil rights to appellee Albert Beaver and thereafter refused to allow Brown to enter upon the premises to operate the well. Brown then instituted an action in equity seeking to enjoin Beaver from drilling on the land and asking that the land be restored to him with a declaration that his rights in the oil and gas were still in effect. The chancellor denied the requested relief, holding that since gas and oil had not been produced in paying
quantities for the six years immediately following the expiration of the primary twenty-year period, the "lease" had been transformed into a tenancy at will which the Haights could rightfully terminate at any time.
The traditional oil and gas "lease" is far from the simplest of property concepts. In the case law oil and gas "leases" have been described as anything from licenses to grants in fee. The document now before us is somewhat unusual in that it appears to grant in fee not only the gas and oil below the surface but also the surface of the land itself. In pertinent part the "lease" states that the " Grantors. . . do hereby grant and convey unto the grantee, all the oil and gas in and under the following described tract of land, and also all the said tract of land. . . ." (Emphasis added) Nowhere in the document do the words "lease," "lessor" or "lessee" appear. In fact, ...