no royalty was due. In that instance the lease provided for a royalty per ton on all coal mined, the ton in all cases to be 2,240 pounds prepared coal; and it was shown that it was the custom at the time of the execution of the lease to hoist prepared coal from the mines by the use of steam power obtained by the incidental consumption of the coal itself.26 But where the lessee agreed to give a portion of all the oil and one-fourth of the profits of all gas "conducted off the premises or sold, it was held that in ascertaining the amount due lessor, all the expenses, including the cost of pipes and materials, payments for right of way and for employees' salaries must first be deducted, and one-fourth of the remainder paid him; and that gas used by the lessee should be charged for at the same rates as if sold to others. 27 $228. When royalty due,- removal of oil from premises. The usual lease fixes the time when the royalty shall be paid as, where it provides for payment of a royalty on all oil produced during the month. In such an event the royalty is due, of course, at the end of that period of time. As a rule little controversy can arise over the point of time when the royalty is payable. If the lease should provide that it was payable on each barrel of oil "mined, taken, or removed from the premises," then the royalty is due when the oil is removed from the well, and its maturity is not postponed until after its shipment. 28 26 Wright v. Warrior Run Coal Co., 182 Pa. St. 514; 41 W. N. C. 179; 9 Kulp. 1; 28 Pittsb. L. J. (N. S.) 202; 38 Atl. Rep. 491. 27 Akin v. Marshall Oil Co., 188 Pa. St. 614; 41 Atl. Rep. 748. See also Meeker v. Browning, 9 Ohio C. D. 108. 28 Higgins v. California, etc., Co., 109 Cal. 304; 41 Pac. Rep. 1087. A coal lease provided that the lessee should mine a certain quantity of coal yearly, and pay royalty in quarterly installments. It was held that the year for which the payments were to be made commenced from the beginning of the actual "mining year," and not from the time at which the lessee had procured his machinery and was ready to proceed with mining operations. Flynn v. White Breast Coal Co., 72 Iowa 738; 32 N. W. Rep. 471. Lessees of a stone quarry agreed to pay a certain rate for stone $229. When rent is due for failure to develop land. Frequently leases require the premises to be developed by a certain time, and if not developed, then the payment of a monthly or yearly rental. In such instances it becomes a ques tion when the rent is payable. In one case a lease required a well to be completed within ninety days, and, "in case of failure so to do, to pay a yearly rental from the expiration of the ninety days until such well shall be completed." It was held that the annual rental was due only at the end of one year after the default, and not from the beginning of the lease." Where the lease required the payment of eight dollars per annum from the time of its execution until a fixed date, and thereafter one hundred dollars annually for each gas well after its completion, but until a well was drilled the rent should be eight dollars, there being no clause binding the lessee to drill a well, it was held that the higher rental was not due until the well was completed.3 $230. To whom payable - joint lessors. Royalties or rent is payable, of course, to the lesssor or his agent, or to the person designated in the lease as the beneficiary or recipient. On such a proposition as this, there can be no dispute. Of course, if the lessor assign or convey the lease, or convey the fee in the leased premises, without reserving the right to the rent or royalty, then it will be payable to his assignee or grantee. And if the lease be granted by two or more joint owners of the premises, and the rent or royalties fixed in it is reserved to them jointly, without a designation of any particular part due any of the lessors, payment to one will be a payment to all, especially so if there be no objection upon the part of the lessors not receiving them.31 And if the rent is payable to two lessors, one of whom in fact had no interest in the premises, in an action to recover one-half of the rent brought by the party having no interest in the premises, the lessee may show the circumstances under which such lessor signed the lease, not to deny his landlord's title, but to deny that, as to such alleged lessor, the lease created that relation.32 In such a case the assignment by the owner of his interest in the lease, does not amount to a severance of his interest nor an apportionment of the rent, as a matter of law.33 Where a lease was put upon six hundred acres, divided into three farms, and the lessor dying devised them to his three children; and the lease provided that all its conditions should extend to the lessor's heirs, as signs and personal representatives, it was held that each child was entitled to a share in the royalties, proportioned according as his holdings bore to the six hundred acres, although the wells were all on one farm.34 The grantor of leased premises may be entitled to the royalties, even though he made no reservation in his deed; and the lessee may show this fact when sued by the grantee in the deed of conveyance; and this was held particularly true where a wife and her husband, in a conveyance of her property, at the time of such conveyance, expected that a mortgage of the oil interests would be paid off, and that the rights would revert to them.35 If the lessee assign the lease, reserving rent to himself, then his portion must be paid to him, while the portion to the lessor must be paid to such lessor.36 31 Swint v. McCalmont Oil Co., 184 Pa. St. 202; 41 W. N. C. 491; 38 Atl. Rep. 1021; 28 Pittsb. L. J. (N. S.) 319; Harness v. Eastern Oil Co., 49 W. Va. 232; 38 S. E. Rep. 662. 32 Ibid. 33 Ibid. 34 Wettengel v. Gormley, 184 Pa. St. 354; 39 Atl. Rep. 57. 35 Simmons v. Buckeye Supply Co., 21 Ohio Cir. Ct. Rep. 455; 11 Ohio C. D. 690. 36 Harris v. Cobb, 49 W. Va. 350; 38 S. E. Rep. 559. $231. Damages for failure to deliver lessor his share. If a lessee fail or refuse to deliver the lessor his share of the oil reserved as royalty he will be liable for the actual market value of the oil at the date of refusal to deliver, with interest from that date. 37 $232. Interest on royalties. Interest begins to run on royalties from the date they are due, or if a demand for them is necessary before suit brought, then from the date of the demand. Where a notice of forfeiture was of no effect, for the reason that the demand for unpaid royalties was excessive, it was held that the lessee was only required to pay with interest whatever was due at the time the notice had been given, and the royalties on coal which had been actually mined after the date of the demand and before suit brought, with interest, when a tender had been made.38 $233. Waiver - parol evidence. In an action to recover rent or royalties due under a written lease for a year, parol evidence was held admissible to show a written waiver of such rent or royalty.39 $234. Surrender - tract "retained." A lease covered several tracts of land. It provided that in the event any tract failed to yield the lessor a certain royalty, the lessee should pay a certain named rental upon each tract "retained." It was held that the word "retained" referred 37 Union Oil Company's Appeal, 3 Penny. (Pa.) 504. The court refused to apply the rule applicable to stocks in an instance of a refusal to deliver. 38 West Ridge Coal Co. v. Van Storch, 5 Lack. Leg. N. 189; 7 Del. 39 Crawford v. Bellevue, etc., Gas Co., 183 Pa. St. 227; 38 Atl. Rep. 595; Wilgus v. Whitehead, 89 Pa. St. 131. to the right to operate, which right continued so long as the lessee had made no formal surrender.40 $235. Interdependent conditions. A lessor was to receive one-eighth of all oil produced under a lease. Subsequently he and the lessee entered into a written supplemental contract in reference to an existing oil well then on the farm, in which it was agreed that if it should produce a daily average of five barrels of oil for thirty days, the lessee should pay the lessor $250; if ten barrels, $500; "should the second well provided for in lease in like manner produce fifteen barrels, the lessee to pay the lessor the further sum of $1,000. Explanations: The understanding and agreement in regard to the test well being that plaintiff is in no event to receive exceeding the sum of $500." The first well, being old ceased to produce oil; but the second produced more than fifteen barrels for thirty days. The lessee claimed that the words "in like manner" and "further" showed that the sum to be paid upon the production of the second well was dependent upon the production of the first, and as that had failed, nothing was payable on the second. But the court held that the sums to be paid were in the nature of a bonus, to be paid upon the production of the wells, and that the lessee was bound for the payment on the second well, though the first produced nothing." $236. New lease. If the lessor give the lessee a new lease for the premises, it will amount to a surrender of the old one if the lessee accept it; and will release the lessee from his obligation to pay rental or royalties under the old lease from the date of the surrender, though not from those that had accrued at the time of its acceptance. In such an event, if the lessee has assigned the 42 40 Jamestown, etc. Co. v. Egbert, 152 Pa. St. 53; 25 Atl. Rep. 151. 41 Brushwood Developing Co. v. Hickey (Pa.), 16 Atl. Rep. 70; 2 Mon. (Pa.) 65. 42 Smith v. Munhall, 139 Pa. St. 253; 21 Atl. Rep. 735; Meeker v. Browning, 9 Ohio C. D. 108; 17 Ohio C. C. Dec. 548. 1 |