Brown v. Vandergrift , 80 Pa. 142 ( 1875 )

Chief Justice Agnew delivered the opinion of the court,

The discovery of petroleum led to new forms of leasing land. Its fugitive and wandering existence within the limits of a particular tract was uncertain, and assumed certainty only by actual development founded upon experiment. Tbe surface required was often small compared with the results, when attended with success; while these results led to great speculation, by means of leases covering the lands of a neighborhood like a flight of locusts. Hence it was found necessary to guard the rights of the landowner as well as public interest, by numerous covenants, some of the most stringent kind, to prevent their lands from being burdened by unexecuted and profitless leases, incompatible with the right of alienation, and the use of the land. Without these guards, lands would be thatched over with oil-leases by sub-letting, and a farm riddled with holes and bristled with derricks, or operations would be delayed so long as the speculator would find it hopeful or convenient to himself alone. Hence covenants became necessary to regulate the boring of wells, their number and time of succession, the period of commencement and of completion, and many other matters requiring special regulation. Prominent among these was the clause of forfeiture to compel performance and put an end to the lease in case of injurious delay, or a want of success. These leases were not valuable, except by means of development, unlike the ordinary terms for the cultivation of the soil, or for the removal of fixed minerals. A forfeiture for non-development or delay therefore cut off no valuable rights of property, while it was essential for the protection of private and public interest in relation to the use and alienation of property. In the present case the lease was modified by adding immediately after the clause of forfeiture, a stipulation that should the lessee not commence operations at the time specified he should pay to the landlord thirty dollars for each and every month, until such time as drilling should be commenced. The lessee having paid for three months’ delay, suffered eleven months to elapse without payment or tender, and then tendered the whole sum,- which the landlord declined to accept, and insisted on the forfeiture, he in the meantime having made a new lease to a party who went into possession. The learned judge below held that the lease was forfeited by the omission to pay the monthly sums,' the lessee having done nothing in performance of his covenants. We cannot pronounce this to be an error in view of the nature of the lease, the true intention of the clause of forfeiture, and the want of any valuable interest acquired by the lessee, by performance. That time may be made of the essence of the contract by the express agreement of the parties has been so often decided that no citation of authority is necessary. In a case like this equity follows the law, and will enforce the covenant of forfeiture, as essential to do justice. It is true as general statement that equity abhors a forfeiture, but this is when it works a loss that is contrary to equity; not when it works equity and protects the landowner against the indifference and laches of the lessee and prevents a great mischief, as in the case of such leases. To perpetuate an oil-lease for ever by the payment of a monthly sum, as here, at the will or caprice of the lessee, would work great injustice. The covenant of forfeiture was not abrogated entirely, but only modified.

Judgment affirmed.