Before PHILLIPS, Chief Judge, and BRATTON and MURRAH, Circuit Judges.
Phillips Petroleum Company*fn1 brought this action against Joe W. and Lois B. Curtis to quiet title to an oil and gas lease. From an adverse judgment, Phillips has appealed. The question presented is whether, under the facts, which are not disputed, Phillips was entitled under equitable principles to be relieved from a termination of the lease due to its failure to pay the delay rental on or before the time stipulated in the lease.
On October 4, 1946, Joe W. Curtis and Lois B. Curtis*fn2 gave an oil and gas lease on the SW 1/4 SW 1/4 S. 12, T. 3 N., R. 3 W., Garvin County, Oklahoma, to James T. Blanton. The lease is what is known in oil and gas terminology as an "unless" lease. It contained this provision:
"If no well be commenced on said land on or before the 4th day of October, 1947, the lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor, * * * the sum of Forty and No/100 Dollars * * *.
"In like manner and upon like payments or tenders the commencement of a well may be further deferred for like period of the same number of months successively."
Such lease was numbered 51365-A.
At the time they executed the above-mentioned lease, the lessees owned an undivided 1/3 interest in the minerals in such tract of land.Shortly after they executed such lease they sold an undivided 1/24 interest in such minerals, subject to such lease. Thereafter, under the terms of the lease, the rental was to be apportioned and the amount due the lessees on October 4, 1948, was $11.67.
On January 22, 1948, Phillips acquired such lease from Blanton by assignment.The delay rentals for October 4, 1947, were duly paid. No well was commenced on any portion of such lease on or prior to October 4, 1948, and no delay rental was paid or tendered to the lessees or for their credit in the depository bank named in the lease on or prior to October 4, 1948, because of an inadvertent error made by an employee of Phillips. Promptly upon discovering such error, about December 1, 1948, Phillips informed the lessees thereof and tendered to them the amount of the rental, which they refused. Phillips continued to tender the amount of the rental, with legal interest, but the lessees refused to accept same.
On January 2, 1946, Mabel M. Arnett executed an oil and gas lease to Phillips, covering an undivided 2/3 interest in the SE 1/4 of the NE 1/4, the SW 1/4 of the SW 1/4, the S 1/2 of the NW 1/4 of the SW 1/4, the SW 1/4, of the NE 1/4 of the SW 1/4 and the NE 1/4 of the NE 1/4 of the SW 1/4, all in S. 12, T. 3 N., R. 3 W., Garvin County, Oklahoma. Such lease was numbered 51365.
On January 2, 1948, Joe W. and Lois B. Curtis executed and delivered to Phillips a lease covering an undivided 1/3 interest in the SE 1/4 of the NE 1/4, the S 1/2 of the NW 1/4 of the SW 1/4, the SW 1/4 of the NE1/4 of the SW1/4 and the NE1/4 of the NE1/4 of the SW1/4, all in S. 12, T. 3 N., R. 3 W., Garvin County, Oklahoma. Such lease was numbered 51365-B.
The two leases from Joe W. and Lois B. Curtis covered a 1/3 interest in the 120 acre tract and the lease from Arnett covered the remaining 2/3 interest in the 120 acre tract.
Phillips paid $200 per acre for leases No. 51365-A and 51365-B and $50 per acre for lease No. 51365.
Phillips is a large producer of petroleum products and a large purchaser and holder of oil and gas leases. It handles approximately 36,000 delay rental payments each year. It has set up and maintains a comprehensive and systematic set of records and accounts which is administered by trained and competent personnel for the purpose of servicing its oil and ...