Glasgow v. Chartiers Oil Co.

Citations

• 152 Pa. 48
• 25 A. 232
• 1892 Pa. LEXIS 1167

Syllabus

<p>Oil lease — Forfeiture—Condition—Covenants.</p> <p>An oil lease demised the oil and gas under the grantor’s land with the right to go upon and operate the land for oil and gas purposes. The lease was to continue for five years and as much longer as oil or gas should be found in paying quantities. The consideration was a bonus of one hundred dollars, and a royalty of one eighth part of the oil produced. If gas was found, the rental was fixed at three hundred dollars per year for each well. The lease then proceeded as follows: “Provided, however, that this lease shall become null and void and all rights hereunder shall cease and determine, unless a well shall be completed on the premises within one month from the date hereof, or unless the lessee shall pay at the rate of one hundred dollars monthly in advance for each additional month.” Held, that the lease contained no covenant on the part of the lessee to pay rent or develop the land. The only penalty imposed upon him for failure to operate the land or pay one hundred dollars per month for delay, was a forfeiture of his rights under the agreement.</p> <p>The legal effect of the agreement is to confer on the grantee the right to explore for oil on the tract described. If he does not exercise this right within one month, it is lost to him, unless he chooses to pay one hundred dollars in advance, as the price of another month’s opportunity to explore. If he does exercise it, and finds nothing, he is under no obligation to continue his explorations. If he explores and finds oil or gas, the relation of landlord and tenant or vendor and vendee is established, and the tenant would be under an implied obligation to operate for the common good of both parties and pay the rent or royalty reserved: Per Williams, J.</p>