Howerton v. Kansas Natural Gas Co.

The opinion of the court was delivered by

Benson, J.:

This action, has been reconsidered by the court after argument upon a rehearing heretofore allowed. The facts are stated in the first opinion. (Howerton v. Gas Co., 81 Kan. 553.)

Upon a careful consideration of the arguments made upon the rehearing and of the authorities the court is satisfied with the former opinion, except in one particular. It was held that there was no adequate remedy in damages for the default of the defendant. Upon a review of the findings of the district court, and of the evidence upon which the conclusions of law of that court were based, we now hold that the plaintiffs failed to show, as they were required to do in order to obtain equitable relief, that damages would.not afford an ade *369 quate remedy. The default consisted in the failure properly to develop the leased territory by drilling and operating a reasonable number of wells necessary for that purpose, and the failure to market gas from, and make the payments stipulated for, the well completed. No reason is shown why witnesses of experience, acquainted with the gas field, may not testify with reasonable accuracy as to the number of wells which should have been drilled on the leased land, both for protection from drainage by neighboring leaseholds and to obtain the gas underneath the land. No insurmountable obstacle to such proof is perceived by the court, and in the absence of evidence that it can not be produced it is concluded that the plaintiffs are not entitled to a remedy- by forfeiture of cancellation of the lease. This conclusion is supported by Harris v. The Ohio Oil Co., 57 Ohio St. 118, cited in the first opinion, and other adjudicated cases which have followed that decision. It needs no authority, however, to support the proposition that if there is an adequate remedy in damages no other relief can be obtained. The burden was upon the plaintiffs to show, either by the nature of the case or by proper evidence, that such damages could not be ascertained with reasonable certainty. Failing in this, the judgment of cancellation can not be sustained.

It should be observed that this is not a case where royalties payable in a share of the product are provided for, but is an agreement to pay $50 per annum for each gas well. The measure of damages, therefore, is the sum the plaintiffs have lost or may lose by the failure of the defendant to complete the number of producing wells reasonably necessary to develop the resources of the leased land and to protect its lines. When the plaintiffs shall have received $50 per year for each well from the time it should have been drilled they will have received the full compensation agreed *370 upon in the lease. Under the terms of the lease they have no share in the product of the wells, no concern as to the disposition which shall be made of that product, and the rules to be applied in leases where the lessor is given a royalty are not entirely applicable here. Penalties and forfeitures are not favorites of the law, and if in this case the damages which the plaintiffs sustain from the breach of the contract can be ascertained with reasonable certainty no forfeiture can be adjudged. It should also be observed that the plaintiffs, during all this long delay for which they now seek a forfeiture, made no complaint other than that the test well was leaking. Some affirmative action ought at least to have been taken by them indicating a purpose to insist upon a forfeiture before summarily declaring it.

If it shall be ascertained upon another trial that such a rule can not be applied, an alternative decree may be entered, upon proper proof adduced to support it, providing that the defendant shall proceed within a reasonable time, fixed by the court, to drill wells and develop and protect the land leased, as before indicated, and pay the amounts stipulated in the lease for such wells, as well as for the well already completed, or, failing to do so, that the lease be canceled. To this end proper amendments of the pleadings should be allowed if 'requested or found to be necessary.

The judgment is reversed and the cause remanded for further proceedings in accordance with these views.