Statement of the Case.
Arthur Latreille and S. A-Spencer having entered into a certain contract, Spencer assigned his rights therein to S. A. Spencer & Co., by whom they were assigned to plaintiff, and plaintiff brings this suit for their enforcement. The contract in question is set forth in the petition, and contains, among others, the following stipulations, to wit:
“That the party of the first part, * * *' in consideration of the sum of one dollar, to-him paid, * * * and of the covenants and' agreements hereinafter contained, * * * has granted, leased, and let * * * unto the said party of the second part, its successors and assigns, for the sole and only purpose of mining and operating for oil and gas, laying pipe lines, and building tanks, stations, and structures-thereon, to take care of said products, all that certain tract of land, situated in Acadia parish,. * * * described substantially as follows: West, by Jules Clement and Orange Land Company; north by Arnaudet; east, by lessor; and south, by Houssiere — containing 40 acres,, more or less, * * * reserving, however, therefrom 100 feet around the buildings, on which no well shall be drilled. * * * It is agreed that this lease shall remain in force for the term of ten years from this date and as long thereafter as oil or gas, or either of them, is-produced therefrom by the party of the second.Page 797part, its successors and assigns. In consideration of the premises, the party of the second part covenants and agrees: First, to deliver to the credit of the party of the first part, his heirs and assigns, free of cost, in the pipe line to which it may connect its wells, the equal one-eighth part of all oil produced and saved from the leased premises; and, second, to pay one-eighth of all the gas from each and every well drilled on said premises, the product from which is marketed and used off said premises. * * * Second party covenants and agrees to locate all wells so as to interfere as little as possible with the cultivated portions of the farm, and, further, to commence operations on said premises within six months from date hereof, or pay at the rate of $50 quarterly in advance for each three months such operation is delayed until such well is completed; and it is agreed that the completion of such well shall be and operate as a full liquidation of all rental under this provision during the term of this lease. It is agreed that the second party is to have the privilege to use sufficient water from said premises to run all necessary machinery and fixtures placed on said premises, and, further, upon payment of $100 at any time by the party of the second part, its successors and assigns, to the party of the first part, his heirs or assigns, said party of the second part, its successors or assigns, shall have the right to surrender this lease for cancellation, after which all payments and liabilities thereafter to accrue under and by virtue of its terms shall cease and terminate, and this lease become absolutely null and void.”
Plaintiff, by original and amended petitions, alleges that it and its authors have complied with the obligations thus assumed by them; that, not having commenced operations within six months from the date of the contract, they, on October 19, 1901, paid Latreille the sum of $50 as the quarterly rental in advance, and made like payments on January 19 and April 19, 1902; and that its tender of $50 on or about July 19, 1902, was declined for no sufficient reason. It further alleges that on December 6, 1901, the Corkran Oil & Development Company instituted suit against Latreille and others, praying to be decreed the owner of the land in question; that the judgment in favor of defendants did not become final in the Supreme Court of the state until November, 1903, and was then taken by writ of error to the Supreme Court of the United States, where the suit is still pending, for which reason, in addition to those given, plaintiff' was legally justified in delaying active operations under its contract, but that, promptly after said suit had been decided by the-Supreme Court of the state, it erected a derrick on the leased land, with the bona fide intention of drilling for oil and gas, and was-engaged in that work when, on January 15, 1904, it was enjoined by defendant from further prosecuting the same and from entering, upon the premises, and that, though the injunction was ordered by the court to be dissolved, it was nevertheless kept in force by a. suspensive appeal from the order of dissolution, which appeal is still pending in the Supreme Court of the state.
Plaintiff further alleges that the land herein question is the western 40 acres of that part of section 47, township 9 S., range 2W, known as the “Latreille tract”; that theHoussiere-Latreille Oil Company, asserting title thereto under conveyances from Latreille, executed and recorded long after the-making and recording of the contract here-sued on, and availing itself of the pending injunction, has taken possession of said, land, and is now, -with its assigns, aiders, and. abettors (the R-ayne Planters’ Oil & Development Company, Sharp Bros., John W.. Champion, J. B. Newton, J. P. Smith, John. C. McCullough, John Brown, Jim Tierce, J. B. Flynn, Tom Smith, the Moonshine OiL Company, the Texas Company, the Producers’ Oil Company, Rev. Francis Rouger, and. the Rex Oil Company), engaged in drilling wells, and, as plaintiff is informed, has obtained at least 2,000,000 barrels of oil, of' which, with its aiders and abettors, it has-converted and appropriated 1,000,000 barrels, leaving 1,000,000 barrels on hand, and that, for the preservation of its rights in the-premises, writs of injunction and sequestration should be issued. Wherefore plaintiff prays that a writ of injunction be issued and maintained, restraining the parties named
The defendants filed various pleas and exceptions, which were overruled, and now rely ■upon the following defense, as set forth in the answer and amended and supplemental .answers of the Houssiere-Latreille Company, to wit: That said company is the owner of •the property in question, having acquired the same, through mesne conveyance and directly, from Arthur Latreille, and is in pos.sesssion of the same; that the contract set up by plaintiff, though never legal or binding, has lapsed,- according to its terms, by reason of plaintiff’s failure either to drill a well ■or to make the quarterly payments as stipulated; that said contract “was obtained from Latreille, plaintiff’s author, through fraud .■and misrepresentation, as the parties for whom he signed same imposed upon him by representing that they were in a position to -prevent the bringing of the suit of the Cork-ran heirs, and by further representing that whatever proceedings would be taken by said Corkran heirs would be rendered less inimical if said lease were granted, which representations were entirely untrue, but had the effect of coercing said Latreille into signing said lease”; that S. A. Spencer acquired the lease in question as a speculation, and. with no intention of developing the property, and that plaintiff had no other assets than said leases and others of a similar ■character, and was incapable of such devel■opment, and it was only after it found that ■defendant was moving in that direction that it made any pretense of drilling for oil; that by the terms of the contract the lessee is not bound to drill for oil, but may hold the property until development elsewhere makes it profitable for it to do so, and that defendant is unwilling to submit its property to the blight of such a contract; that, when Latreille accepted the quarterly payments, he did so with the understanding that the next well drilled in that field would be on his property; that $100, payable on the surrender of the contract, is relatively nominal, and is insufficient to support said contract as a consideration, and that the quarterly payments are “vile,” as considerations, “both with respect to the ordinary value of the property at the time of the contract, and its possible oil value then, and its actual oil value since; * * * that the contract is not only unconscionable, because of the insufficiency of the consideration aforesaid, but also because the duration of the delay that may be involved, at the will of the lessee, permits the property to suffer in its oil value, or to entirely lose it — time being an essential factor in the operation under the contract”; that, in the alternative, if said lease be binding, it is a mere servitude, not' exclusive, and that defendant should be allowed to establish others of similar character; “that at the date of the alleged contract said property was much sought after by parties interested in-the discovery of oil, as the indications upon said property of the existence of oil were very great, and gave great and sudden value to said property by reason of the discovery of oil, shortly before, at Beaumont, Tex.; that the indications which led to the discovery of oil at Beaumont were the same as those upon that property, and that the Beaumont discovery, being the first in this entire section, was the beginning of widespread search for oil, and that property presenting favorable oil indications became valuable beyond all precedent; * * * that the fraud
Early in the trial plaintiff’s counsel “objected to any and all evidence going to establish fraud, duress, undue influence, and the like, set up in the pleadings, because, first, the charges of fraud, duress, and undue influence are so vague and indefinite as not to permit the introduction of evidence to’ prove the same; second, conceding, for the sake of argument, that the contract is fraudulent in that way, the same cannot be attacked now, as the plaintiff is a third party, and is not charged with fraud, duress, or undue influence, and is holder for value of the contract rights of Spencer — which objection was sustained by the court.” Subsequently, however, the following question was propounded, and objection and ruling made, to wit:
“Q. For the purpose, Mr. Latreille, not of proving up any fraud which is alleged to have been committed against you, but merely * * * •of sustaining the allegation made by the Houssiere-Latreille Oil Company and by you to the effect that this property had a great oil value at the time of the execution of the contract, I want to ask you why it was, if you consider that your property had the value that you say it had, you signed a contract of that kind? How did you come to sign that contract ? The foregoing question is objected to by counsel for plaintiff on the ground that, in the first place, the allegations should not be limited to fraud, but should include duress and undue influence, and for the further reason that it is irrelevant, and is an attempt by counsel to bring out evidence which hag been ruled out by the court, under objection made by counsel for plaintiff, which objection is overruled by the court; the court limiting the evidence to the question of value only, which is now before the court, and not for the purpose of proving fraud, duress, or undue influence. To which ruling of the court counsel for plaintiff excepts,” etc.
Under this ruling Honssiere and Latreille were enabled, as witnesses for defendant, to testify, practically without restriction, not only as to the facts connected with the negotiation and making of the contract sued on, but as to their understanding of what the written instrument signed by Latreille contained and as to the feelings which influenced him to sign it. As their testimony was not, however, offered for the purpose of proving the fraud and coercion alleged by defendants, plaintiff did not consider it worth while to offer evidence in rebuttal, so that, quoad those allegations, the evidence gives only the defendant’s version of the matter — offered and admitted merely to show the value of the property, as compared with the consideration, and thereby make it appear that the contract was and is unconscionable, to the prejudice of defendants.
Considering all of the evidence adduced, we find the facts to be as follows, to.wit:
Eugene Houssiere and Arthur Latreille are brothers-in-law, and are such good friends that they practically hold their property in common and act in concert in all matters of the slightest business importance; the transaction out of which this litigation arises having been dealt with from the beginning as a matter in which they were and are equally interested. They came from France in 1883,
Houssiere and Latreille had directed their attention to the cultivation of rice and the raising, for home consumption, of hogs, chickens, and vegetables. Latreille’s tract contained but little land that was adapted tortee culture, and Houssiere had turned over-part of his in order to help Latreille out. Together they cultivated about 75 acres, and this with poor success (notwithstanding that, they erected an irrigation pump and that at one time Houssiere operated a small sawmill),, up to and after the making of the contract here sued on. In fact, it is doubtful whether Latreille had ever, prior to that time, received more than $300 in any one year from his. crops, and Houssiere testifies that in April,. 1901, their pecuniary condition was poor, and. if they had received $50 he would have remembered it. There is nothing in the record to justify the belief that, prior to the date at which the possibility of oil added value thereto, their holdings were worth more tham $10 an acre, and it is hardly likely that they could have found a purchaser at $8 an acre-The fixing of that date is, therefore, regarded, as a factor in the case.
Oil was “brought in” on the “Spindle Top’” field, near Beaumont, Tex. (about 90 or 1001 miles from the locus in quo), in January, 1901, and was immediately followed by a speculative excitement in that vicinity, the-accounts of which read like those of the-“South Sea Bubble”; but that excitement did not at once, or for several months, extend, to, or affect values in, the parish of Acadia.. It seems, however, that the indications which-led to the discovery at Spindle Top consisted of a seepage of gas in proximity, more or-less, to a mound, which is situated in an otherwise flat prairie, and, as gas seepage-was known to exist in many places in Acadia,. Calcasieu, and other parishes in Louisiana,, they attracted some renewed attention, and after a few months began to be seriously considered. It had been known for many years that such a phenomenon existed on section 48-(known as the “McDaniel Tract”), adjoining.
T. 95; Re. W.
“Q. You have read the first provision of the contract? A. Yes, sir. Q'. Do you understand the first provision of the contract? A. Not all of it. Q. Now, what part of this first part of the contract is it that you do not understand? * * * A. I understand all the first paragraph, except one word. Q. Now, read the second paragraph, and tell me how much of it you understand? A. I understand about all of it. Q. Now, read the third paragraph and tell me what part of it you understand. A. I understand about all of it. Q. Is this all of the contract between Houssiere-Latreille Oil Company and the Rayne Planters’ Development Company? A. I think so.”
It is an admitted fact that Latreille could read, write, and speak English in 1901 (though imperfectly), and it appears that it was fully explained to him and Houssiere that the lessee under the contract which was then made was to begin operations within six months, or pay $50 quarterly in advance for each three months that such operations should be delayed. He and Houssiere say that they were told that the first well would be drilled on the Latreille tract; but Latreille says, at another time, that he was told that the first well would be drilled on the Clement tract, and the next well on his tract. The contract is silent on that subject, and
Latreille and Houssiere tell different stories as to what Elms said about the Oorkran claim, though they agree that he had apparently abandoned his effort to obtain a lease and was getting his horse to leave, when they called him back and, after consultation with each other and with Madame Latreille, signed the lease, for which action Latreille, in his testimony, gives the following reason, to wit:
“A. I was kinder forced. Q. In what way? A. Mr. Elms told me that, if I did not sign the lease for the 40 acres, he would do as Mr. Duson had done about the Oorkran heirs, and buy their interest and attack my title. Q. Now, how and why were you influenced by such a threat, coming from Mr. Elms? A. Because they were attacking on two sides of the title, and Elms told me that they had some good lawyers, and they would defend the title.”
Houssiere having testified, at considerable length, about Latreille’s reason for signing the contract and about what had been said by Elms, and not having referred to the Oorkran claim, counsel for defendants finally called his attention to it as follows:
“Q. Then the Corkran suit was not discussed on that occasion, as one of the considerations of the contract? A. Yes, sir; it had been talked of a few days before that by Mr. Pavy. Q. Then Mr. Elms said nothing about it? A. Yes, sir; he did. Q. In what connection? A. 1-Ie said: ‘You know, I always told you that the Gellert title was not worth anything, and I can prove it, and if you gentlemen will give me a lease I will buy out the heirs, who are going to proceed against you.’ Q. What was said to that proposition? A. When Mr. Elms started off, and when he was catching his horse, we went and called him back. Q. Now, Mr. Houssiere, what was the main inducement to your signing the contract, considering all that was said? A.- It was to get some wells. Q. Although you wanted some wells, what would have been your answer to Mr. Elms if he had said nothing about the Corkran suit? A. We -would not have leased to him at all. We wanted to sell.”
It appears that about — or, as we think, before — -that time Latreille had been advised by a prominent lawyer in a neighboring town that his title would be stronger after the 12th of May, then approaching, at which date the period of three years required for the prescription established in favor of tax titles by article 233 of the Constitution of 1898 was to be completed; that he had been visited by P. J. Pavy, who desired to obtain a lease, but was unsuccessful; that Pavy knew of the Oorkran claim, and perhaps had some connection with the Oorkran heirs, and had spoken of the possibility of a suit in their behalf; that C. O. Duson had called and made propositions about the land; that Duson was a member (nominal, it is said) of the firm of W. W. Duson & Bro., which at that time represented some of the Oorkran heirs; that he, too, mentioned the possibility of a suit in their behalf; and that Latreille, bearing in mind the advice which he had received, temporized with him — requested him to call again — and in the meanwhile, and after making the contract with Spencer, absented himself from his home until after the 12th of May, when he declined Duson’s proposition. It further appears that in the fall of 1901 suit was brought on the Corkran claim for the recovery of the whole of section 47; that S. A. Spencer & Co., to whom S. A. Spencer had transferred his lease, appeared by counsel and defended it, not as a matter of obligation to Latreille, or because of any request from him, but for the protection of their own interest. In fact, it somewhere appears that Houssiere, Latreille, and Arnaudet conveyed a one-fifth interest in their lands to the able counsel by whom they were represented, as compensation for professional services in -that litigation, and possibly in
What followed the making of the contract is told by Spencer in his testimony, to wit:
“A. After the leases were taken, we spent about $2,000 more, and we paid our different proportions, and then, as we were not oil men, we decided to see if we could not interest some parties in Beaumont in the hold we had, and Mr. Williams and myself went to Beaumont, and the first oil man we met was Mr. Scott Heywood. They were very successful men, had operated successfully at Spindle Top, and they were prominent and attracted our attention. We met him at the hotel, and told him we had acquired by purchase leases of large tracts of land —between 4,000 and 5,000 acres — in Acadia parish, on what they call ‘Mamou Prairie,’ and which had a gas seepage on one place which, for certain tests, had gotten certain results, and, judging from what we read in the papers about the Beaumont, or Spindle Top, oil field, there were indications that would induce practical oil men to come in with us. He agreed to come to Jennings and look the territory over, and in a week or ten days after the talk in Beaumont he came, and we took him out to the place and showed him the gas seepages. He took some notes as to what our holdings were and then went back to Beaumont. I do not remember whether he came back to Jennings, or we went to Beaumont; but I think we went to Beaumont, and then we had a talk with Mr. Scott Heywood and Mr. Dewey Heywood, and we entered into a contract with myself and .associates and themselves at Jennings, in which they agreed to drill two wells on our holdings, at a depth of 1,000' feet, in consideration of our transferring to them one-half interest in our holdings, and after the drilling of the two wells they would drill a third well before they would be released from their contract. That is my recollection of it now. I have not seen the contract for three, four, or five years. The agreement arrived at between myself and associates and Heywood Bros., or rather with Scott Heywood, was satisfactory to us, and after some delays they got their machinery on the grounds and began drilling, and after getting down the required 1,000 feet we only had a little showing for oil, and to us inexperienced people it looked rather gloomy, and the question came up as to where the next well would be drilled, and, if I remember right, I think the Heywood Bros, agreed to put the second on top of the first, to give the land a good test, if we would agree to release them from putting down the third well. That looked fair to us, and they went ahead, and finally brought in the first well, at 1,790 feet. It was 1,790 and some odd feet, I believe. * * * Q. When, if at any time, was there excitement at Mamou, or at Jennings, with reference to the Jennings oil field? A. Never, until after that first well was brought in. Understand, of course, that there was, naturally, a little excitement among our local people, and a few outsiders came in after reading in the papers of the gusher, and we — the citizens of Jennings — rather helped along the newspaper notoriety. It was to our interest to do so.”
The oil, seepage was in the southwest corner-of section 48, and as the Arnaudet tract lies between that section and the Latreille tract, whilst the Clement tract adjoins section 48 on the west, the drilling was prosecuted on those tracts first, as being nearer to the point at which it was supposed the oil would be found. Before the expiration of six months Latreille was paid the $50 called for by his contract for further delay, and a similar payment was made on or before January 19, 1902. In February, 1902 (the Hey-woods having, in the meantime, found oil), the plaintiff corporation was established, and the capital stock, represented by the holdings of Spencer & Co., which were transferred to the Corporation, and by the work done
Returning, now, to the consideration of what others were doing, and of the effect, in April, 1901, of the oil movement on the value of Latreille’s land: C. O. Duson (who has been mentioned as the tax collector by whom section 47 was sold to Gellert in 1882, and as a member of the firm of W. W. Duson .& Bro., which firm founded the town of ‘Crowley and have been engaged in the real •estate business at that place ever since) appears to have lived in what is now the parish of Acadia, or in that section of the state, all his life, and from that circumstance,' together with his occupations, was particularly well informed in regard to land matters. He does not appear to have been interested in, much less excited about, oil, until some time in April (following the discovery, in January, of oil at Spindle Top). Having then associated himself with a few other citizens of Crowley, including Mr. Toler, Mr. Abbott, and Dr. Martin, they reconnoitered the field at Spindle Top, and, comparing the conditions which they found with those which they knew to exist in Acadia, set about putting themselves in a position to make a profit, should oil be discovered in that parish. Duson’s attention was at once (or, perhaps, it would be more correct to say, had already been) directed to the McDaniel tract (section 48). He had purchased that property, some years before, for the Pacific Improvement Company, and W. W. Duson. & Bro.- were, and had been, the local agents of the owner, and had had it for sale for a long time, subject to the approval of the attorney in fact of the owner, who resided in the adjoining parish of Lafayette, and, knowing of the gas seepage thereon and of the mound on the Latreille tract, he and his associates concluded to buy section 48. W. W. Duson had, however, sold to Welman Bradford, for $200, payable within a short time, the privilege of buying that section at $11 an acre, and Bradford was taken into the association; the understanding being that the associates were to pay the $200, acquire the property, organize a company for its development, and give him (Bradford) one-eighth of the shares as a bonus. For the carrying out of this program it seems to have been found necessary to take in other persons; that is to say, the $200 cash, which was needed, was not exactly forthcoming; and was gathered, in sums of $25, from per
“They were not taking in big quantities, and Mr. Crippen and myself decided to ask people to pay for the stock in order to develop our country. That was our understanding. So we went to work and commenced to talk about it on that line, and as soon as we sold 2.000 shares at $5 we would put down a well.”
The doctor also testifies that they kept the daily paper pretty well supplied with inspired articles, and his testimony on that subject is corroborated by specimens of the articles referred to, which we find in the transcript. In that way, and by the diligent efforts of some of its members, the company after awhile collected money enough to begin the drilling of a well: but even then we do not discover the existence of any general excitement or enthusiasm. In the course of the drilling one of the holders of the stock gave 800' of his shares to Mr. Pavy in exchange for a tract of land which was valued at $800, and thought that he was getting the better of the bargain by thus disposing of his stock at 10 cents on the dollar (it having cost him only 2 cents on the dollar), and somewhat later, when the money which had been collected gave out, and no oil had been found, the company suspended operations in great discouragement and would go no further until the I-Ieywoods had “brought in” a well on the adjoining tract. Duson, it has been stated, called on Houssiere and Latreille and made propositions which were not accepted. One of the propositions was that they should divide their land into four tracts, and sell him 45 acres from each tract, at $10 an acre; he to undertake to protect them, as to the balance, against the Corkran claim. The other proposition was no better, and need not be stated. He testifies that they were willing at that time (during the month of April) to sell their entire property at $25 an acre, or say $10,000; and Dr. Martin gives testimony to the same effect. They deny this; but they say that Hurtevant, a neighbor of theirs, was going to Beaumont, and that they told him, if he found any one “foolish enough” to give a good price for their property, to let them know, and, upon his asking them what price they meant, they fixed the “foolish” price at $200 an acre. Section 40 (the “King Tract”), adjoining section 47 to the south, was for sale during the whole of the summer of 1901 at $12 an acre. The north one-haif of section 41, containing- 113.-52 acres, was sold to P. S. Spencer on April 12th for $l,740-.80, and it is affirmatively shown that, prior to the date at which oil was actually found, no one (save Duson) of
In December, 1903, after the Corkran Case had been decided by this court, the Houssiere-Latreille Company leased the 40 acres in dispute to the Bayne Oil & Development Company; but before that concern got into the field plaintiff had begun drilling a well. The company thereupon instituted what is called the “possessory action,” enjoined plaintiff off the property, kept its injunction in force by an appeal from a judgment dissolving it, and under cover thereof made leases to various of the other parties herein made defendants, and among them they have produced a vast quantity of oil, which is now in the hands of the sheriff under writs of judicial sequestration. One'of the questions presented in the ease is as to the rights of the defendants, should they be dealt with as possessors in bad faith, arising out of the fact that the oil in question has been produced at their expense. The learned judge a quo, though of the opinión that the contract about which the dispute has arisen is unreasonable and unconscionable, and should be decreed forfeited by reason of plaintiff’s failure to pay the rental on or before July 19, 1902, considered himself bound by the ruling-of this court in the possessory action, and gave judgment, maintaining plaintiff’s rights under said contract; distributing the oil on hand (subject to the payment of costs) in the proportions of 12% per cent, to the Houssiere-Latreille Oil Company, as transferee of Latreille, 00 per cent, of the remainder to the defendants by whom it was produced, respectively, and the other 40 per cent, of such remainder to plaintiff; reserving to defendants the right to remove all their improvements and pipes, if possible; dismissing the suit as to J; C. McCullough and J. P. Smith, who are shown to have no interest; condemning all the defendants, save McCullough, Smith, the Texas Company, and the Producers’ Oil Company, for costs; ordering the ease to remain on the docket as to the two companies last mentioned, who were not parties to the trial; and directing that
Opinion.
In what is called the “possessory action,” heretofore decided, it was held that the contract here sued on, purporting to be a lease for a term of 10 years of mineral rights in .a 4.0-acre tract of land in an unproved part •of the country, whereby the contractor, agrees to commence operations within six months, ■or pay $50 quarterly, in advance for each additional three months such operations are delayed, until an oil well is completed, and whereby he is given the right to remove his machinery at any time, and to cancel • the •contract, on payment of $100 at any time, .and whereby, in the event of the discovery •of oil and gas, the yield is to be shared by the contracting parties in certain proportions, was not void upon its face for want •of mutuality or as containing a potestative condition. Houssiere-Latreille Oil Co. v. Jennings-Heywood Oil Syndicate, 115 La. 107, 38 South. 932.
For the purposes of the judgment so rendered it was assumed that there had been no fraud, misrepresentation, or coercion prac-ticed by the defendant (the present plaintiff), .and that the contract was no more unconscionable, by reason of conditions not dis-closed, than it appeared upon its face. It has now been shown that Latreille entered into a contract, apparently legal (and which may be called a “lease”), granting to Spencer, the other contracting party (whom we will call the “lessee”), the right upon certain conditions to exploit 40 acres of his land in search for oil and gas, during a period of 10 years or longer, and to enter upon and use the land during that period for that purpose. By the terms of the contract the lessee was authorized, without consulting the lessor, to transfer his rights therein and substitute another person in his place, and acting under that authority, after recording the contract in the public records, he made a transfer such as was contemplated to S. A. Spencer & Co., and the contract remained so recorded for more than 9 months, during which period the lessor made no objection or protest upon any ground whatever, but received from the substituted lessees two payments in cash, made in execution of the contract as written. Thereafter the substituted lessees transferred their rights to the plaintiff, from whom, a month or two later, the lessor received, in further execution of the contract, a third payment in cash; and when, upon the next occasion a payment was tendered, the money was refused, not upon the ground that the contract was illegal, either as to the plaintiff or any one else, but upon the ground that it was forfeited, because, it was said, the tender came too late.
In their attack upon the contract, so made and so partially executed, the defendants do not allege that the plaintiff, as the transferee through mesne conveyance of the original lessee, was a party to or had notice of the fraud, misrepresentation, and coercion said to have been practiced by the latter, and the judge a quo properly excluded all evidence offered in support of the allegations as made on that subject. Fletcher v. Peck, 6 Cranch (U. S.) 133, 3 L. Ed. 162; Harris v. Harris, 109 La. 913, 33 South. 918; Snoddy v. Bras
As an independent proposition it must be conceded that it is not within the power of the courts to prohibit the owner of land worth §10 an acre from leasing it for 10 years at §5 an acre; and there is no law that authorizes the owner to oust or disturb the lessee’s possession during the term of his lease for the purpose of exploiting the land for oil or of selling it at a higher price. If, therefore, Latreille, in the year 1900, had leased his 40 acres to Spencer for 10 years at §5 an acre, he could not thereafter, by reason I of the discovery of possible mineral wealth, beneath the soil, have canceled the lease. Im that case, however, he would (we will assume, although it is not really so) have acted, in total ignorance of such possibility and would have been entitled to sympathy, upon its being afterwards ascertained that lie-had unwittingly precluded himself for so-long a period from realizing a fortune frorq the leased land. In the instant case it is-shown that he acted with his eyes open; that he and Houssiere had for years known of the-gas seepage and the mound; that the possibility that the gas indicated oil had been a matter of common conversation; that he-knew of the excitement at Spindle Top, where speculators and others, wise and unwise, were buying and selling land at extravagant prices; and he had had one or two-offers with reference to his own property. He also knew that there was ño gas seepage on his land, and he may have heard that the-oil at Spindle Top had not been found under-the mound, but at the places where the gas-seeped through and elsewhere. And with, this knowledge he entered into the contract here sued on, and, whilst reserving the use-of his land for all ordinary purposes, secured for himself an annual rental in cash equal to-one-half its ordinary value, plus one-eighth, of the oil that the lessee, at his own expense,, should discover and deliver to him. We are-informed by the testimony in the record that: there are many tracts of land in Texas, besides Spindle Top, and many tracts in Louisiana, besides the Mamou Prairie, upon which there are gas seepages, and that, whilst upon some of them vast amounts of money have-been expended in the fruitless search for oil,, no one has as yet been found to exploit the others. Whether it would be wise for-the owners of the exploited, or the unexploited, or the partially exploited, tracts to sell them, or to lease them for a term of years, or to lease merely their oil possibilities, are-
It is true our law undertakes to interfere to some extent with the right of the citizen to do as he pleases with his own; but it defines and limits the cases to which such interference extends with great precision. Thus, quoting from the Civil Code:
“Art. 1SG0. Lesion is the injury suffered -by one who does not receive a full equivalent for what he gives in a commutative contract. The remedy given for this injury is founded on its being the effect of implied error or imposition ; for, in every commutative contract, equivalents are supposed to be given and received.
“Art. 1861. The law will, however, not release a person of full age, and who is under no incapacity, against the effect of his voluntary contracts, on account of such implied error or imposition, except in the two following cases: (1) In partition, where there is a difference in the value of the portions to more than the amount of one-fourth to the prejudice of one of the parties. (2) In sales of immovable property, the vendor may be relieved if tlie price given is less than one-half of the value of the thing sold; but the sale cannot be invalidated for lesion to the injury of the purchaser.
“Art. 1862. Lesion can be alleged by persons ■of full age in no other sale than one of immovables, in which is included whatever is immovable by destination.
“Art. 1S63. Persons of full age are relieved for lesion in no other contracts than those .above expressed; not even in exchange, which bears some resemblance to the contract of sale.”
Construing this law, our predecessors iu this court have said:
The right to rescind a sale for lesion beyond moiety is the only restraint upon the liberty of the citizen to bind himself and his property according to the dictates of his own judgment, and the evidence relied on to establish that right should be peculiarly strong and conclusive.” Demaret v. Hawkins, 8 La. Ann. 484; Mayard v. Laporte, 109 La. 110, 33 South. 98.
“Much has been said about the lesion which affects this contract. It is greatly exaggerated in the statement of counsel. * * * But the law is emphatic that lesion, however enormous it may bo, has no effect upon the contracts of persons of full age, and under no incapacity, except in certain designated contracts, and this is not one. Civ. Code, art. 1861; 2 Mourlon, p. 553.” Prescott v. Cooper, 37 La. Ann. 559.
Article 2464 of the Civil Code provides that:
“The price of the sale must be certain, that is to say, fixed and determined by the parties. It ought to consist of a sum of money, otherwise it would be considered an exchange. It ought to be serious, that is to say, there ought to have been a serious and true agreement that it should be paid. It ought not to be out of all proportion with the value of the thing; for instance, the sale of a plantation for a dollar could not be considered a fair sale. It would be considered as a donation, disguised.”
This article is found under the subtitle, “How the Sale is Perfected,” and deals with the price as one of the essential elements of that particular contract. It is evident, however, that the contract here in question is not a sale. It is equally evident that, if the remedy given for lesion, in cases of partition and sale, and the rule thus applied to the price, in the latter contract, had been intended to be applied to the consideration in all contracts, the lawmaker would have so declared, and that he would not, in terms, have limited its application, as has been done in the articles cited. From which it follows that mere inadequacy of consideration would constitute no ground for declaring the contract sued on to be of no effect. The learned counsel for defendants, as we understand it, rely upon the doctrine applied by the courts that:
“Where the inadequacy is so gross as to shock the conscience and common sense of allPage 827men, it may amount, both at law and in equity, to proof of fraud, oppression, and undue influence.”
Considering the case in the light of this doctrine we are confronted with the facts (which, for the most part, have already .been stated), to wit: Latreille’s land was worth, for ordinary purposes, hardly $10 an acre, and it is doubtful whether his gross revenue from the whole tract (200 or more acres) had ever exceeded $300. Spencer paid him $50 in cash, and agreed to pay him $50 quarterly in advance (or $200 a year), for the right to drill for oil on 40 acres, and further agreed to deliver to him one-eighth of the oil that might be produced and saved, etc. The fact that Latreille was, in the meanwhile, to retain the possession and enjoyment of the land, save in so far as he might be disturbed by Spencer’s operations, and that he would, in any event, whether oil was found or not, receive annually, one-half of the surface value of the tract leased, and give practically nothing in return, was worthy of, and no doubt received, his consideration. The value of the land to Spencer had, however, no such elements of certainty. It depended upon the possibility of his finding some one who would be willing to risk his money in the search for, and who would find, oil; and, as there were gas seepages In many places, those possibilities were not particularly valuable assets, nor did they produce any material effect upon the value of the land, save in the hopes and dreams of the parties immediately concerned. Otherwise that value remained as it had been, and, we apprehend, would have so remained until this day, but for the initiation and prosecution of an actual movement for the discovery of the oil finder, and through him of the oil. The movement initiated by Spencer and his associates and by Duson or Martin and their associates, was, therefore, the cause, and not the effect of and hence preceded, and did not follow, the speculative appreciation in the value of the-land; and as it was, even then, altogether uncertain whether oil would be found at all,. and where, and whether in sufficient quantities to make its extraction profitable, that appreciation -was by no means marked at: first, and values fluctuated, with the hopes- and fear of the promoters, up to the moment(during the summer of 1901) when the Hey-woods actually “brought in” the first well-Whether, then, the consideration which Spencer agreed to give and Latreille to receive was adequate or inadequate, reasonable- or unreasonable, was a question the answer-to which was to be determined by no definite standard, but depended upon the temperament and habit .of thought of the individual to whom it was at that time propounded. O. O. Duson testifies that, about the time that he and his associates bought section 48 (for $7,050), he thought it was. 'worth $500,000. W. W. Duson, his brother, testifies that his opinion, at that time, was-that C. O. Duson and his associates were crazy. And O. C. Duson admits-that, when the Crowley Company had spent the money collected by it (mainly from the public at large and as the result of inspired articles in the daily paper and appeals to local pride)in drilling a well and had found no oil, it ceased operations, and would probably never-have resumed them if the Heywoods had not prosecuted similar work successfully. Webster, also a witness for defendants, testifies-that he would not have made such a contract as that sued on with respect to 1,200 acres. of land owned by him near Sulphur, where-there were oil indications, and which is probably nearer the Spindle Top than is PrairieMamou; but it is quite certain that if he had done so, and the contract had been executed, in the matter of the quarterly payments, he would, up to the time that he testified, have received some $27,000 in the-way of rental, and would, so far as we are-
“In appraising the probable value of lands at a past period, it is almost impossible to guard the mind from the influence of those accidental circumstances which have given it its present value. One readily supposes that be would have had the sagacity to forsee those circumstances.” Snoddy v. Brashear, 13 La. Ann. 471.
It is again urged (as it was urged in the possessory action) that the $100 that Spencer was to pay in the event of his abandonment of the contract was inadequate as a consideration, and hence that the whole agreement was founded on a potestative condition; and we repeat, what we have already said, that the parties had the right, in making the contract, to fix the terms upon which it might be terminated, just as they would have had the right to fix those terms after the contract had been made. Instead of the $100 as; the amount to be paid by Spencer, they might have agreed on $10,000 (which was-the amount for which, it is said, that both; Houssiere and Latreille were willing at that' time to sell all the land they owned), and it could not have been contended in such case that the contract was founded on a potestativecondition. The question, then, relates to the amount. The $100 can only be regarded as a liquidation of the damages that Latreillemight have sustained in the event of Spencer’s abandonment of the contract; but we-are unable to discover in what -way any damages could have been sustained by such action, since it is hardly to be supposed that the contract would have been abandoned: without the drilling of a well, unless it had. become reasonably certain that no oil would be found, in which case Latreille would have-sustained no damage by the abandonment,, and, if it had been abandoned after the finding of oil, he would have regained the control, of his land, plus a producing well. The fact is, it was not the abandonment of the contract that he had reason to fear; but he-might have been apprehensive that, by holding on to the contract and delaying the drilling for oil, the lessee would prevent the advantageous sale of the land and might allow it to be drained of its oil by wells on the adjacent tracts. So far as the keeping of the land out of the market is concerned, that happens to every lessor who makes an ordinary lease, and it would be rather startling-for a court to hold that, because of a speculative rise in the value of leased property, the-lessor should be allowed to cancel the lease. As to the danger of drainage, it may be that,, in a case presenting that issue, some relief should be afforded; but we do not consider this such a case. Plaintiff held leases (no-more favorable to it than the Latreille lease) on the Arnaudet and Clement tracts, both;
The proposition that the contract was forfeited by reason of the failure of the lessee either to begin operations or to make the quarterly payments prior to July 19, 1902, is untenable. The contract contains no provision for its ipso facto forfeiture in the event of such failure, and the law does not favor forfeitures and does not impose that penalty in a case of this kind. The violation having been passive, it was necessary that the obligor should have been put in default. Civ. Code, arts. 1912, 1913, 1926, 1931, 2046, 2047; Charpaux & O. Vallette v. Bellocq, 31 La. Ann. 164; Gayden v. Railroad Co., 39 La. Ann. 269, 1 South. 792.
The Supreme Court of Indiana, whose jurisprudence is about as favorable to the lessor as any that we find, had presented to it, during the past year, a case in which the lease was founded on a consideration of $1, coupled with an agreement to drill a well within two months, “or thereafter pay * * * in advance * * * for further delay a quarterly rental of $20”; there being no term fixed in the lease, and it not appearing, from the report of the case, what the other stipulations were. The' lessee had made five quarterly payments, which had been received without objection, but had omitted to make the sixth payment within the time prescribed; and ten days later, no tender of payment having been made and no work having been done in the meanwhile, the less- or brought suit for the forfeiture of the contract. In disposing of the case the court said (inter alia):
“There are many things to be taken into account in arriving at a fair and rational construction of a contract like this. The usual rivalry-in procuring leases in the limited oil and gas territory, the time and expense required in drilling wells, the peculiar character of the fluids, the difficulties and delays in providing pipe lines, and the methods of storage and transportation, are all matters generally present at the making of such a contract. Besides, without a market, the operator can ill afford, and it will avail the landowner little, to put down a well before transportation lines have approached within accessible distance. * * * Under a contract of this sort parties must act fairly with each other. The landowner must be given aPage 833fair opportunity to compel such timely operation as will preserve the underlying oil and gas and prevent it being mined through wells on other premises, while, on the other hand, he will not be permitted to take advantage of delays that have been reasonably induced by his own conduct and force forfeiture for nonperformance. The operator must have a fair chance to perform his contract. He has not had a fair chance in this case. If appellees, when they accepted the advance payment on March 10th, or at some other reasonable time, had given appellants notice that they must drill a well within that quarter and that no further extension of time would be granted, then we should have quite a different question. • This action, however, is brought and prosecuted upon the theory that the failure to drill a well within the paid period put an end to their right to drill one at all. This view is erroneous.” New American Oil & Mining Co. v. Wolff (Ind. Sup.) 76 N. E. 255.
In National Oil & Pipe Line Co. et al. v. Teel et ux. (Tex. 1902) 67 S. W. 545, the Court of Civil Appeals of Texas held that a contract calling for the drilling of a well within two years, on pain of forfeiture, but that the forfeiture might be averted by annual payments in advance, there being no term fixed, was an option, which might be rescinded by the owner of the land, in the absence of any equities, owing to work having been begun by the other contracting party. In Allegheny Oil Co. v. Snyder, 106 Fed. 764, 45 C. C. A. 604 (Ohio, 1900), the lease read:
“In case no well shall be drilled * * * within two years from the date hereof, this lease shall become null and void, unless the lessee shall pay for the further delay at the rate of $1 per acre, at or before the end of each year thereafter: * * * that the lessee shall have the right, at any time, to surrender this lease for cancellation, after which all payments * * * shall cease and this lease become null and void.”
The court said:
“An instrument in such form is more than a mere license. It is a lease of the land, for the purpose and period limited therein, and the lessee has a vested right to the possession of the land, to the extent reasonably necessary to perform the terms of the instrument on his part, * * * It is claimed that the consideration of $1 may support the grant of the 2-year term, but that the privilege of extending the same beyond the term of 2 years is supported by no consideration, and is entirely at the option of the lessee, and before it can become a binding agreement requires an engagement on the part of the lessee to pay the stipulated sum of $1 an acre. * * * We are of opinion that this lease constitutes an entire contract, and that the consideration recited supports, not only the grant of the 2-year term, but as well the privilege of extending the time of drilling, by paying the stipulated price therefor. * * » It is an indivisible agreement. Each part of it must be given effect. It is urged that this construction permits the lessee to hold the territory for the term of 25 years, without drilling or developing the same, paying only the rental of $114 a year, and that this would work great hardship to the landowner. * * * This contract, in view of its peculiar purpose and object, * * * has written into it an implied covenant on the part of the lessee that he will drill and operate such number of oil wells on the lands as would ordinarily be required for the protection of the oil contained on such lands and affords ordinary protection to the lines. This was the holding of the Supreme Court of Ohio; and the lessor is not obliged to let the lessee hold the land indefinitely, but may have an action upon this implied covenant for the proper development of the oil and gas on the premises. * * * It is said that the effect of this copstruction would be to specifically enforce a contract based upon an entirely inadequate consideration, and that an injunction restraining the parties interested from interfering with the lease held * * * under Snyder will have an effect to specifically enforce that contract. * * * ln gugh cases, mere inadequacy of consideration is no reason for withholding specific performance.”
In Guffy v. Hukill, 34 W. Va. 49, 11 S. E. 754, 8 L. R. A. 759, 26 Am. St. Rep. 901, and the Eclipse Oil Co. Case, 47 W. Va. 84, 34 S. E. 923, it was held that by the stipulations authorizing the surrender of the leases at will (and as a matter of fact without the payment of any sums of money by way of liquidated damages or otherwise) the obligations of the lessees became (in effect) purely potestative, and hence that the contracts were void. In Friend v. Mallory, 52 W. Va. 53, 43 S. E. 114, the same court sustained a contract containing a similar stipulation, distinguishing the two oases above mentioned by the fact that in those cases the amounts agreed on as consideration for the delay in beginning operations had been paid, and the delay thus paid for had not expired when the lessor acted.
“Under an oil lease for a term of years, which provides that the lessee shall complete a well on the leased premises within six months or pay an annual rental until he does so, a clause in such lease providing that the agreement shall, be void if the lessee does not complete the well or pay the rent within ten days after it is due, and that after such failure neither party shall have a right of action against the other by reason of the breach of any agreement in the lease, does not take away the lessee’s liability to pay the rent, where he fails to complete the well, but such clause constitutes merely a provision by which the lessor can forfeit the contract on the lessee’s failure to comply with the other terms of the lease.”
We have examined many other decisions, rendered by courts to which oil leases have long been familiar, and have found none in which a lease such as is here presented has been held void for want of consideration, or decreed forfeited under circumstances such as are disclosed by the transcript in this-ease.
In conclusion, we may observe that whilst, by reason of the manner in which the case has been presented, we .have been led -into rather an extended review of the facts, we are inclined to think that, save as to the alleged forfeiture, the whole matter was logically disposed of in our affirmance of the ruling of the trial judge excluding the testimony offered in support of the charge of fraud, etc., since it has heretofore been held that, prima facie, the consideration of the contract is adequate, and its inadequacy, as affected by the facts existing at the time that the contract was entered into, falls under the ruling to which we have referred. In the branch of this litigation entitled “Jennings-Heywood Oil Syndicate v. Houssiere-Lattreille Oil Co.,” 116 La. 1058, 41 South. 255, it was held that:
“The syndicate’s right of possession attached to the oil as a product of the soil, * * • and the operating expenses should be deducted from the proceeds of the well.”
The learned judge of the district court has directed that, subject to the payment of the costs, the oil which has been producecL by the defendants (save the Texas Company and the Producers’ Oil Company) be distributed in the proportion of one-eighth to the’ Houssiere-Latreille Oil Company, as the transferee of Latreille, 60 per cent, of the balance to the producers, respectively, and the remaining 40 per cent, of such balance to the plaintiff. We find a paragraph, at the end of one of the briefs filed on behalf of plaintiff, rather objecting to this distribution, and, on the other hand, counsel representing the Moonshine Oil Company (one of the producers) have filed a brief praying that (in the alternative) the judgment appealed from be affirmed in that particular.' The judge a quo correctly proceeded upon the theory that plaintiff is to get the oil, less the royalty of one-eighth and less the cost of production, and has, as we understand it, fixed upon 60 per cent, of the remaining 87% per cent, (or 52% per cent, of the whole product) as fairly representing that cost. We do not, at present, discover any objection to that disposition of the matter, and, as no specific ground of objection has been suggested, it will remain undisturbed.
It is therefore ordered, adjudged, and decreed that the judgment appealed from be affirmed, and that the costs of the appeal be equally divided between the two appellants.