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eBook details

• Title: Bowes v. Republic Oil Co. Et Al.
• Author : Supreme Court of Montana
• Release Date : January 17, 1927
• Genre: Law,Books,Professional & Technical,
• Pages : * pages
• Size : 63 KB

Description

Oil and Gas Leases ? Failure to Drill Within Time Limit ? Forfeiture of Lease ? Waiver ? Estoppel. Oil and Gas Leases ? Termination ? Intention of Parties Controlling Factor. 1. The intention of the parties to an oil and gas lease and not its mere wording is determinative of whether it is an "or" lease under which the lessor must take affirmative action to terminate it for failure on part of the lessee to perform his part of the contract as stipulated, or an "unless" lease, which terminates ipso facto on his failure to exercise the option to commenrce and continue operations within the time limited, without action on the lessors part. Same ? Strict Construction Against Lessee. 2. Oil and gas leases, executed as they are for the purpose of exploration and development of lands and prevent delays in so doing, must be liberally construed in favor of the lessor and strictly against the lessee, and forfeiture of such leases are favored rather than frowned upon by the law. Same ? Lease Held in Effect an "Unless" Lease ? Expiration on Failure of Lessee to Exercise Option. 3. Under the above rules of construction, held that an oil and gas lease which did not conform to any of the known forms of such leases and under which the lessor granted, demised, leased and let the lands described to the lessee for the purpose of "operating for oil" and the lessee "covenanted and agreed" that unless operations were commenced on or before a certain day and prosecuted with diligence, the lease should be null and void, the lessee being empowered to surrender the lease for cancellation at any time on payment of one dollar, did no more than grant the lessee the privilege of drilling or not drilling at his option, and was in effect an "unless lease," which automatically expired on failure of the lessee to exercise the option granted within the time limited, without affirmative action by the lessor declaring a forfeiture. Same ? Failure of Lessee to Drill Within Time Stipulated ? Drilling on Land Adjoining Lessors ? Waiver ? Estoppel. 4. Where an oil and gas well provided that the lessee should within ten months commence drilling a well on the lessors land - Page 135 or on land adjoining, and the lessee did commence operations within that time but abandoned them and, two years after the lease had been forfeited, drilled a new well on land not belonging to the lessor, the latters failure to object to these operations did not constitute a waiver of the forfeiture nor an estoppel to assert it in his action to quiet title to the lands covered by the forfeited lease.

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