Colgan v. Forest Oil Co.

Citations

• 194 Pa. 234
• 45 A. 119
• 1899 Pa. LEXIS 767

Syllabus

<p>Lease — Oil and gas lease — Govenant — Specific performance — Fraud— Equity — Equity jurisdiction.</p> <p>A court of equity will not assume jurisdiction to enforce specifically covenants in an oil and gas lease which are merely implied, and whose extent depends altogether on oral evidence of opinions, unless it appear that the lessee is fraudulently evading his obligations to the lessor.</p> <p>There is no relation of special trust or confidence between lessor and lessee in gas or oil leases, any more than in any other. Like all other contracting parties they deal at arm’s length, each for his own interest. So long as the question is one of business judgment and management, the lessee is not bound to work unprofitably to himself for the profit of the lessor, and the parties must be left as in other cases to their own ways. It is only when a manifestly fraudulent use of opportunities and control is shown that courts are authorized to interfere.</p> <p>If a lessee of oil and gas lands derive some collateral or incidental advantages from his leases of adjoining territory he is entitled to them, just as a stranger would be. He may operate them jointly, at less expense, or he may be helped in other ways by having both under one management. It is only when wells on adjoining territory are being fraudulently used to drain the lessor’s land that courts have any occasion to interfere. If, in such a ease, the sinking of wells on the adjoining territory would render it necessary for the lessor to put down another well to save his own land from exhaustion, then it would be the duty of the lessee to put down the additional well that his lessor might get the proper royalty.</p> <p>Where a lessee in an oil lease has bound himself by covenants to develop a tract, and has entered and produced oil, he has a vested estate in the land which cannot be taken away on any mere difference of judgment; and a court of equity, in the absence of any allegation of fraud, has no jurisdiction t