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NORTH STAR COAL COMPANY v. WAVERLY OIL WORKS COMPANY (03/20/72)

decided: March 20, 1972.

NORTH STAR COAL COMPANY
v.
WAVERLY OIL WORKS COMPANY, APPELLANT (ET AL., APPELLANT)



Appeal from decree of Court of Common Pleas, Civil Division, of Allegheny County, Jan. T., 1966, No. 2830, in case of North Star Coal Company v. The Waverly Oil Works Company, and Pennzoil United, Inc.

COUNSEL

Maurice Louik and Edmund K. Trent, with them David M. Harrison, Harrison & Louik, and Reed, Smith, Shaw & McClay, for appellants.

Roger Curran, with him Rose, Schmidt and Dixon, for appellee.

Jones, Eagen, O'Brien, Roberts, Pomeroy and Barbieri, JJ. Opinion by Mr. Justice Pomeroy. The former Mr. Chief Justice Bell took no part in the consideration or decision of this case. The former Mr. Justice Barbieri took no part in the decision of this case.

Author: Pomeroy

[ 447 Pa. Page 242]

This appeal is from a judgment on the pleadings declaring terminated and of no effect an oil and gas lease in which defendant has a lessee interest, enjoining defendant from carrying on any operations on the leased premises, and directing that it remove its equipment therefrom. From the pleadings the following appears:

Plaintiff (herein "North Star") purchased the property in question, some 229 acres, in September, 1960, from one George C. Kuehnert. The deed was made under and subject to an oil and gas lease which had been

[ 447 Pa. Page 243]

    entered into in 1891 between James Mevey (also referred to as McVey) Kuehnert's predecessor in title, as lessor, and John A. Steel and M. C. Egbert (also referred to as N. C. Eghart), as lessees. This lease was for a term of five years "or as long thereafter as oil and gas is found in paying quantities". The lease provided that it would become null and void if the lessees should "at any time cease to operate on the above premises for the continuous space of six months".

The complaint alleged that defendant Waverly Oil Works Company ("Waverly") was "successor in interest to the original lessees",*fn1 and that it had forfeited the lease under the six months clause, and also that the lease had automatically terminated because oil and gas were no longer to be found in paying quantities. Waverly by its answer: (1) admitted that drilling had stopped for a period in excess of six months, but stated that this was made necessary to protect two producing gas wells from the blasting operations of a coal stripper operating under lease from North Star; (2) averred that the lease had not been abandoned, as evidenced by its repair of an oil tank before receipt of North Star's Declaration of Forfeiture and the resumption of drilling as promptly as possible following backfilling by the stripper; and (3) averred that Kuehnert had reserved to himself the royalties under the lease, so that North Star had no interest therein and was attempting by this suit to defraud those rightfully entitled to the royalty interest.*fn2

[ 447 Pa. Page 244]

The chancellor concluded that the answer did not set forth a valid defense to the complaint, and accordingly granted plaintiff's motion for judgment on the pleadings.*fn3 This appeal followed.*fn4

Pending appeal but before the argument, a petition for leave to intervene as a party appellant was filed with our Court by Pennzoil-United, Inc. which, after answer by North Star, was duly granted.*fn5 The Pennzoil petition to intervene asserts, inter alia, without contradiction by North Star in its answer, that South Penn Oil Company (Pennzoil's predecessor) became the assignee of the Steel-Egbert lease in 1902, that Waverly is assignee from South Penn of the right to drill for and produce oil and gas ...


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