McKee v. Colwell

Citations

• 7 Pa. Super. 607
• 1898 Pa. Super. LEXIS 350

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 ten years and as much longer as oil and gas were found in paying quantities. The consideration was a bonus of $100 and a royalty of one eighth part of the oil produced. 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 said premises within three months from the date hereof, or unless the second party shall pay one hundred dollars per annum, payable twenty-five dollars quarterly for each year such completion is delayed from the time above mentioned for the completion of such well until a well is completed.” Held, 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 $100 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 three months, it is lost to him, unless he chooses to pay $100 in advance, as the price of another year’s opportunity to explore. I'f 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. Glasgow v. Oil Co., 152 Pa. 48, followed.</p>