APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT
P. Dahman et al., Counterdefendants-Appellees)
507 N.E.2d 1253, 154 Ill. App. 3d 1008, 107 Ill. Dec. 884 1987.IL.525
Appeal from the Circuit Court of Jasper County; the Hon. Joseph L. Fribley and the Hon. Dennis Huber, Judges, presiding.
JUSTICE JONES delivered the opinion of the court. WELCH and HARRISON, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE JONES
Central to this case is the question whether certain oil and gas leases executed in 1960 and 1961 in favor of the plaintiff, Ralph H. Edwards, by the defendant Theresa Dhom and others had expired prior to the execution of subsequent oil and gas leases involving the same property in favor of the defendant Joseph E. St. Pierre, Jr., in 1974, 1975, and 1982.
The plaintiff brought suit in 1976 against Theresa Dhom and Joseph E. St. Pierre, Jr., as well as the defendants Joseph E. St. Pierre, Sr., and Union Oil Company, seeking damages and other relief associated with the operation of the oil and gas lease known as the "Dhom lease," obtained on May 28, 1960, from Harry Dhom, since deceased, and Theresa Dhom, owner of the surface and a part of the mineral interest. As we have indicated, other owners of the mineral interest in the property executed oil and gas leases to it in favor of the plaintiff at approximately the same time. In a two-count counterclaim and third-party complaint filed in June of 1982, the St. Pierres, Theresa Dhom, Peter Morse, and Ray Fehrenbacher sought to compel in the first count the release of the oil and gas leases executed in 1961 and 1962 in favor of the plaintiff and, in the second count, to quiet title to those executed in 1974, 1975, and 1982 in favor of Joseph E. St. Pierre, Jr. The counterclaim and third-party complaint alleged, inter alia, that each of the oil and gas leases executed in 1961 and 1962 was for a fixed primary term, as stated in each lease, and provided for a secondary term for as long after the primary term as oil and gas was produced; that after the expiration of the primary term of each lease, production of oil and gas stopped, no oil and gas having been produced from any of the lands described in the leases for more than two years after October of 1971; and that, as a result, all of the oil and gas leases in question executed in 1961 and 1962 had expired and terminated by their own terms and were no longer of any force and effect. In November of 1982 the counterclaimants and third-party plaintiffs moved for summary judgment on both counts of the counterclaim and third-party claim, which motion was supported by the affidavit of James Dhom, the son of Theresa Dhom, and the affidavit of J. E. St. Pierre, Sr.
James Dhom stated in his affidavit that the plaintiff had commenced oil and gas drilling operations on the property in question which had resulted in the production of commercial quantities of oil and gas and that at the end of 1968 the plaintiff had drilled a total of six wells on the property, referred to as the Dhom No. 1, Dhom No. 2, Dhom No. B-3, Dhom No. 4, Dhom No. 5, and Dhom No. 6. The affiant stated that the plaintiff had plugged and abandoned the Dhom No. B-3 on or about April of 1973 and that the other five wells were plugged and abandoned in July of 1974. He stated further that prior to the date of the plugging of the wells, there had been no production from any of the wells and no operations for the production of oil and gas conducted with respect to any of the wells for about two years. J. E. St. Pierre, Sr., stated in his affidavit that on or about January 26, 1973, he had purchased all right, title, and interest of the plaintiff in and to the six wells in question at a public sale from John W. Callahan, trustee of the bankrupt estate of Ralph Hardy Edwards, the plaintiff in the instant case, in the United States District Court for the Eastern District of Illinois. The affiant stated that after purchasing the Dhom wells, the affiant did not produce any oil and gas or take any steps to attempt to produce oil and gas nor did he intend to produce any oil or gas on any of the land described in the oil and gas leases because the other owners of the working interest would not contribute their part of the costs and none of the wells were in operating condition. After describing the condition of each of the six wells, the affiant stated that in 1974 he had caused five of the six wells to be plugged and had abandoned all attempts to produce oil and gas and removed the personal property from the Dhom leases. The remaining well, the Dhom No. B-3, had been plugged, according to the affiant, on or about April 30, 1973, by the plaintiff. By the end of 1974 all the oil and gas wells on the Dhom lease had been plugged and abandoned either by the affiant or the plaintiff and no operations for oil and gas production were undertaken on the land until 1975. Plugging affidavits for each of the six wells, signed accordingly by the affiant or the plaintiff, were attached as exhibits to this affidavit. In 1974 the affiant and his son, J. E. St. Pierre, Jr., began to lease that part of the property on which the Dhom No. 4 was located and, after obtaining oil and gas leases from all of the owners of the minerals, redrilled that well and started to produce oil and gas from it, a well still producing. The first oil produced from that well by the St. Pierres was sold to Union Oil Company of California on September 17, 1985. The affiant stated that there was no activity that might or could have produced oil or gas from the property in question, on which the Dhom wells Nos. 1 through 5 are located, from January 26, 1973, until the redrilling of the Dhom No. 4 in 1975. On March 31, 1982, according to the affiant, he leased the property on which the Dhom No. 6 is located; he stated that there had been no production or activities to produce oil and gas from it since 1974. The affiant stated further that on December 11, 1974, the Oil and Gas Division of the Department of Mines and Minerals of the State of Illinois had notified him by letter, attached to the affidavit as an exhibit, to produce or plug the Dhom wells Nos. 1, 2, 4, 5, and 6.
Following a hearing on the motion for summary judgment on December 13, 1982, the trial court, Judge Joseph Fribley presiding, found in an order dated December 23, 1982, and filed on December 27, 1982, that all of the interest of the owners of the leasehold estate in 25 oil and gas leases, attached as exhibits to the counterclaim and third-party complaint, including the lease from Harry and Theresa Dhom to the plaintiff executed on May 28, 1960, had terminated and become void according to their terms. The trial court ordered the leases released and title to the leases executed in 1974, 1975, and 1982 by Theresa Dhom and others in favor of J. E. St. Pierre, Jr., confirmed in the name of J. E. St. Pierre, Jr., free and clear of all purported claims of the plaintiff and others named. Union Oil Company was directed to make payment to certain of the counterplaintiffs for any and all oil and gas that had been or may have been produced from the land described in the leases with respect to the property in question and to make payment for royalty interest to Theresa Dhom and other owners of the minerals in the land in question. At the Conclusion of the hearing the court stated, "I now have examined the leases shown as Exhibits 1 through 25 and find that each of them have the 60-day clause." The clause to which the court refers appears in paragraph five of each lease and states:
"If, prior to discovery of oil, liquid hydrocarbons, gas or their respective constituent products, or any of them, on said land or on land pooled therewith, lessee should drill and abandon a dry hole or holes thereon, or if, after discovery of oil, liquid hydrocarbons, gas or their respective constituent products, or any of them, the production thereof should cease from any cause, this lease shall not terminate if lessee commences additional drilling or reworking operations within sixty (60) days thereafter."
The lease executed by Harry and Theresa Dhom on May 28, 1960, provides that the lease shall remain in effect for a primary term of eight months "and as long thereafter as oil, liquid hydrocarbons, gas or their respective constituent products, or any of them is produced from said land or land with which said land is pooled." In response to the plaintiff's assertion at the Conclusion of the hearing that there was no cessation under the oil and gas leases, the court stated: "Well, you're [ sic ] reply affidavit, not having disagreed with anything about the fact there was 60-day cessation in either your affidavit or the reply, I guess that matter becomes moot as well since you have not disagreed with it." Having granted the motion for summary judgment, the court denied the plaintiff's subsequent motion to reconsider, vacate, and set it aside.
The plaintiff's four-count complaint was amended at various times during the course of this litigation. Count IV of the plaintiff's amended complaint filed on May 17, 1977, was directed against the defendant Union Oil Company of California, which moved for and obtained summary judgment as to that count, the court having found in its order dated July 22, 1983, and filed July 25, 1983, that the defendant Union Oil Company was a disinterested stakeholder on the cause and that the judgment filed on December 27, 1982, was determinative of all issues as between Union Oil, the plaintiff, and all other counterdefendants in the counterclaim and third-party complaint. Union Oil was ordered to pay over certain funds held in suspense by it on account of its purchase of oil from the property in question to the St. Pierres, Peter Morse, and Ray Fehrenbacher. On April 8, 1985, the defendants moved to dismiss counts I, III, IV, and V of the plaintiff's amended five-count complaint filed April 4, 1985. After a hearing on the defendant's motion, the trial court dismissed counts II, III, IV, and V of the amended complaint filed April 4, 1985, with the observation that "[t]he stating of new causes of action is untimely and will not be allowed." Count I of this amended complaint for alleged breach of contract by the defendant Joseph E. St. Pierre, Sr., was tried before the court on July 16 and 17, 1985. Count I alleged that:
"n or about the 7th day of July, 1973, the Plaintiff and the Defendant, JOSEPH E. ST. PIERRE, SR., entered into an oral agreement whereby the Defendant would operate and oversee the oil and gas wells drilled and completed by the Plaintiff under ...