TUCKER v. CANFIELD et al., 276 F. 385

MUNGER, District Judge (after staling the facts as above). Appellant’s claim is that, because of the relationship between the Can-fields and plaintiff, the Canfields were in a fiduciary position toward him, and that the benefit of the new lease taken by the Canfields inured to plaintiff. Whatever relationship there was between these parties had grown out of the dealings which have been set forth relating to this land and to the gas well thereon. It is plaintiff’s theory that this relationship continued to the time when the Canfields became lessees in the new lease from the. owners of the land.

The trial court, after hearing the evidence, made a finding of the facts, and found that the plaintiff had abandoned the lease which had been assigned to him and that the lessors had accepted the surrender. Because of the peculiar nature of such leases for the exploration and production of oil and gas, it is the duty of the lessee to use reasonable diligence to obtain production, so that the income contemplated by both parties will be obtained, and a cessation of operations, lapse of time, and notice of nonproduction may show an abandonment of the lease on the part of the lessee. Brewster v.

Lanyon Zinc Co., 140 Fed. 801, 811, 813, 72 C. C. A. 213; Logan Natural G. & F. Co. v. Great Southern G. & O. Co., 126 Fed. 623, 625, 626, 61 C. C. A. 359; People’s Gas Co. v. Dean, 193 Fed. 938, 942, 113 C. C. A. 566; Pursel v. Reading Iron Co., 232 Fed., 801, 808, 146 C. C. A. 657; Barnsdall v. Boley (C. C.) 119 Fed, 191, 199; Roach v. Junction Oil & Gas Co. (Okl.) 179 Pac. 934.

At the trial the following facts were either established or supported by competent evidence: After the well began its flow of gas, the plaintiff claimed the flow was too light to use, and threatened to pull out the casing and to plug the well, unless he could, make a sale of it. The Canflelds then purchased it, and all of the plaintiff’s property on the land connected with it, leaving to plaintiff the lease and the right to explore further for oil and gas.

The plaintiff then returned to his home in Texas, but returned the 1st of April, 1918, in reply to the inquiry from the Canfields, made in January, as to a possible sale of his interest. He inspected the well, learned that the supply of gas was very low, refused to deepen it or to drill another, but suggested that he might deepen this well, if some further concessions as to royalty were made, and told one of the owners of the land that, if a well then being drilled by other parties about three-fourths of a mile away was successful, he might drill deeper. This well was unsuccessful, as no oil or gas was found.

The plaintiff knew that a large number of wells were producing or being drilled near this property and in the same

section of land. The plaintiff then again returned to his home, and within a month the well ceased to flow, and the Canfields mailed the letter to plaintiff, notifying him that the well had ceased to produce. No reply was received, nor was there any communication between plaintiff and the Canfields, or the owners of the land, for about 15 months, nor until the Canfields had taken a new lease, and had deepened the well and found oil.

There was some conflict of testimony as to some of these circumstances, and some testimony by the plaintiff seeking to excuse his delay; but it is not considered to be sufficient to overcome the legal presumption that the findings of the court are correct. The facts sufficiently show that the plaintiff had surrendered his lease, and that there was no relationship toward him by the Canfields at the time they took the new lease which requires them to be held to be trustees for his benefit.

It ’ivas the plaintiff’s duty to deepen the well, or to drill another and by some means to maintain production of oil or gas in paying quantities, if he desired that his lease should continue in force. The decree will be affirmed.