Northwestern Ohio Natural Gas Co. v. City of Tiffin
Northwestern Ohio Natural Gas Co. v. City of Tiffin
Opinion of the Court
The ultimate relief sought by the plaintiff, in the action below, was an injunction against the city of Tiffin, preventing it from taking natural gas from the premises in question. The reformation of the lease under which the plaintiff claimed the exclusive right to the gas, was but a preliminary step in the establishment-of the plaintiff’s right to the injunction, and unimportant except in aid of that remedy. This inquiry, therefore, is directed primarily to the ascertainment of the rights of the city under the lease obtained by it from Shoupe, rather than to those of the plaintiff against Shoupe, although the former are to some extent, but not entirely, dependent on the latter. It appears from the finding of facts, that when Shoupe purchased the land and received his conveyance from Taylor, the lease made by the latter to Duke and by him assigned to the plaintiff was, together with the assignment, on record in the proper office; and it was excepted from the covenants in the deed; but the term of years for which the lease was made had been allowed to expire without any effort to develope oil or gas, and no person was in possession of the land claiming under the lease or under any extension of it, nor was any agreement for such extension on record. This was also the condition of affairs when the city of Tiffin obtained its lease from Shoupe, who was then in the exclusive occupancy of the land ; and the receipt given by Shoupe to the plaintiff
One question arising on these facts, and probably the most important one, relates to the construction and effect of the act of April 11, 1888 [85 O. L., 179] supplemental to section 4112, and now section 4112a, of the Revised Statutes. It provides: “That all leases and licenses, and assignments thereof or of any interest therein, heretofore executed, given or made, for, upon or concerning any lands or tenements in this state, whereby any right is given or granted to operate, or to sink or drill wells thereon for natural gas and petroleum or either, or pertaining thereto, shall be recorded in the lease record in the office of the recorder of the proper county by the first day of September, 1888, and all such leases, licenses and assignments hereafter executed, given or made, shall be filed for record as aforesaid, forthwith and recorded in said lease record, without delay, and shall not be removed until recorded, and no such lease or license hereafter executed or given, unless the person-claiming thereunder is in actual and open possession, shall have any force or validity until the same is filed for record as aforesaid, except as between the parties thereto, nor shall any such lease or license heretofore executed or given and not recorded by the first day of September, 1888, have any force or validity thereafter until filed for record, except as between the parties thereto, and as to persons claiming thereunder and in actual and open possession.”
This statute, it will be observed, applies to all
The statute we have here under consideration is not less positive in its requirement that oil and gas leases and licenses shall be recorded as therein provided, and is even more explicit in its declaration that until properly filed for record they shall be without any force or effect except as between the parties to them, unless the person claiming thereunder is in the actual and open possession of the lands. Without such record or possession all leases or licenses within the purview of the statute are nugatory and ineffectual for any purpose, both at law and in equity, against a subsequent lessee or other third person dealing with the land, notwithstanding he had at the time actual notice of the prior unrecorded instrument. The only notice to third persons that can be of any avail is, under this statute, the notice afforded by the proper lease record, or actual possession of the land. Shoupe having the exclusive possession of the land in controversy when the city of Tiffin obtained its lease from him, the estate and interest which the lease purported to grant vested in the city, unless some superior right of the plaintiffs then appeared of record; and there was none, if that cannot be claimed for the original lease made by Taylor to Duke and assigned to the plaintiff. That lease was dated June 10, 1886, and, by its terms, was to continue for the period of five years, “and as much longer as oil or gas is produced or found in paying quantities thereon;” and to ascertain the capacity of the land in that respect the
We are also of opinion that the plaintiff is not entitled to the reformation sought of the original lease, as against Shoupe. When he bought the land, it was not included in that lease; and while its exception from the covenants in his deed was sufficient to apprise him of the alleged mistake in the description, the record disclosed that the lease had ceased to be a subsisting incumbrance or claim against the land at the time of his purchase; so' that, he might then buy with safety sq far as that lease was concerned. And, as neither of the agreements for an extension of the lease had been placed on record nor possession taken under either, he took his title discharged of any claim that might be founded on them. Furthermore, it is established by the finding of facts that at the time of his purchase, Shoupe had no knowledge of either of the agreements of extension, and that he paid full value for the land. It is well settled that a purchaser for value is not affected by an unrecorded instrument unless he has actual notice of its existence; circumstances that should put him on inquiry is not enough. Morris v. Daniels, 35 Ohio St., 406; Varwig v. Railroad Co., 54 Ohio St., 455. So that, independent of the effect of section 4112a, the title acquired by Shoupe was not subject to any outstanding claim then existing in favor of the plaintiff; and, if there is any ground for the reformation sought it must be found in the receipt given to the plaintiff by him after he became the
The receipt is materially different from the two papers signed by Taylor; the latter contain an express consent or agreement to extend all the terms and conditions of the original lease for the periods therein mentioned, while the former contains no stipulation of that kind, but is a receipt simply for a specified sum of money for a year’s rent. The misunderstanding of the parties with respect to this receipt is not inexplicable. The plaintiff, having in mind the former agreements of Taylor extending the lease upon like payments, may very well have intended and understood Shoupe’s receipt to have the same effect; but Shoupe, having no knowledge of those agreements, and relying upon the information obtained from Taylor that the only lease made by him had but one year to run, might just as properly have understood and intended the receipt to be for that year’s rent and to have no other effect. The circuit court so found, and we see no reason for disturbing that finding. This mutual misunderstanding would be sufficient to preclude a reformation of the instrument, for that would result in making a contract, upon the terms of which the minds of the parties never met. The receipt contains no express agreement, nor is it claimed there was any, even verbal, between Shoupe and the plaintiff concerning the lease. It is sought, therefore, to establish an implied con
Judgment affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.