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R. W. Kays and Laura J. Kays, Appellants, v. A. A. Little et al. (H. V. Foster, Appellee)

Kansas Supreme Court1918-07-06No. No. 21,680
103 Kan. 461

Summary

Holding. The judgment in favor of Foster is affirmed. A lessee who acts diligently to pay required rental before the contractual deadline and whose payment is delayed solely by postal delays beyond his control is entitled to equitable relief against forfeiture of the lease.

The plaintiffs executed a ten-year gas and oil lease to defendant Little in December 1915, which was subsequently assigned to defendant Foster. The lease required that drilling commence within one year or rental payments of $80 per quarter would be due. Foster, who held adjacent leases and was actively drilling nearby, attempted to pay the required rental before the December 2, 1916 deadline by sending a check via registered mail through his agent. Due to mail delays, the check did not arrive until December 5, 1916, after the one-year period had expired. When Foster's agent tendered the late payment through a local bank, the plaintiffs refused it and subsequently sued to cancel the lease.

The trial court found that Foster had exercised appropriate diligence in attempting timely payment and had demonstrated clear intent to continue developing the property. The court determined that the circumstances warranted equitable relief against forfeiture, particularly because Foster's failure to make timely payment resulted from postal delays beyond his control rather than neglect or abandonment. The court concluded that Foster maintained a valid and enforceable lease.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether a lessee forfeits rights under a gas and oil lease when rental payment is delayed due to postal delays despite timely remission
  • Whether equitable relief may be granted against forfeiture when the lessee demonstrates diligence and lack of intent to abandon
  • Whether actual receipt of payment or evidence of timely dispatch satisfies the rental payment obligation

Procedural posture

The plaintiffs appealed from a trial court judgment rendered without a jury in favor of the defendant Foster, who sought to enforce his rights under an assigned gas and oil lease.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

The opinion of the court was delivered by

Marshall, J.:

The plaintiffs seek to cancel a gas and oil lease given by them to defendant A. A. Little, and by him assigned to defendant H. V. Foster. Judgment was rendered in favor of defendant Foster, and the plaintiffs appeal.

On December 2, 1915, the plaintiffs, husband and wife, gave to defendant A. A. Little a gas and oil lease, running for ten years, on 80 acres of land in Greenwood county in consideration of $1, one-eighth of the oil produced, $100 for each well from which gas should be sold, and free gas for domestic use. The lease contained the following provision:

“Provided, a well is not commenced on said premises within one year from the date hereof, unavoidable accidents and delays excepted, then this grant shall become null and void unless second party shall pay to the said first parties a yearly rental of Eighty ($80) Dollars payable quarterly in advance for each quarter thereafter commencement is delayed, it is expressly agreed that payment of all moneys due under this lease may be made by cash or check to parties of the -first part or be deposited to their credit in the Home ‘National Bank of Eureka, Kansas.”

Defendant Foster held other leases covering lands in the vicinity of that owned by the plaintiffs. That territory was undeveloped, so far as gas and oil were concerned, but defendant Foster was drilling a well about two miles southwest of the plaintiffs’ land. On December 2, 1916, that well had been drilled to a depth of about 1,500 feet, at a cost to the defendant of approximately $15,000. On October 18, 1917, the well had been drilled to a depth of 2,600 feet, and, at the time of the trial, was producing oil which was being sold by defendant Foster. Paul Dahlgren was Foster’s general agent at Bartlesville, and J. C. Gibson was Foster’s agent at Eureka. Gibson looked after Foster’s drilling operations in Greenwood county, and paid rentals on Foster’s leases, as specifically directed, when the mbney was sent to him. The rental due the plaintiffs was not paid until December 5, 1916. On November 27, 1916, Foster, through his agent, Dahlgren, by registered letter from Bartlesville, Okla., remitted to J. C. Gibson, at Eureka, a check for $20 with which to pay the rental under the lease. That registered letter should have reached Eureka on the following day. On account of being delayed in the mail, the check was not received by Gibson until December 5, 1916, although he called repeatedly at the post office at Eureka and inquired for his mail. On December 2, Dahlgren, not having received any word from Gibson, and not having received the returned registered-letter receipt, got into telephone communication with Gibson, and learned that the $20 had not been received by him. Dahlgren immediately, by mail, transmitted another check to Gibson for the same amount and for the same purpose. This check was also received on December 5, 1916. On that day Gibson tendered $20 to the plaintiffs through the Home National Bank of Eureka, but the payment was refused. This action was commenced shortly thereafter. The cause was tried without a jury; special findings of fact were made; and the court, in its conclusions of law, said—

“That a state of facts is presented which, in the interest of justice, requires that a court of equity should relieve against the forfeiture attempted to he enforced by the plaintiffs in this action.”

The plaintiff attempted to enforce the forfeiture of Foster’s rights under the lease, although Foster was diligent in doing what the lease required that he should do. He manifested no intention to abandon his rights under the lease, not even by neglecting to make any effort to pay the rental required until after the time fixed for that payment. He attempted to make those payments before the-stipulated time. It was not through any act of his that the payment did not reach the plaintiff in ample time. Under the circumstances, it would have been inequitable to have granted the plaintiff the relief he asked. The court decreed that Foster had a “good, valid, and subsisting oil and gas lease” on the property in question, and rendered judgment against the plaintiffs for costs.

The judgment rendered was justified by the facts, and is affirmed.