Appeal from the Circuit Court of Clinton County. No. 97-CH-7 Honorable Dennis E. Middendorff, Judge, presiding.
The opinion of the court was delivered by: Justice Maag
This action was brought by Ruth Ann Maschhoff (plaintiff) against Edward J. Klockenkemper (defendant) pursuant to the Illinois Oil and Gas Release Act (765 ILCS 535/0.01 et seq. (1996)). Plaintiff is seeking the forfeiture of an oil and gas lease due to defendant's nonproduction. Subsequent to a bench trial on the stipulations and admissions of the parties, the circuit court entered judgment for plaintiff against defendant. Defendant appeals.
The relevant facts are as follows. Plaintiff is the owner of the surface, oil, and gas of the following described real estate: "W ½ SE 1/4, Section 6, T3N, R2W of 3rd P.M., Clinton County, Illinois." Plaintiff's parents are Reinhold and Lorna Twenhafel.
On July 29, 1954, the Twenhafels, as lessors, executed an oil and gas lease to Denzil U. Webster and A. M. Perrine, as lessees, covering the aforementioned real estate. The Twenhafels and plaintiff and her husband executed another oil and gas lease on May 11, 1977, to defendant, covering the same real estate. Both leases were recorded.
The 1977 Twenhafel lease provided that it was for a term of one year from the date of the lease and as long thereafter as oil, liquid hydrocarbons, gas, or their respective constituent products or any of them were produced from the real property. The lease further provided that after a discovery of oil, liquid hydrocarbons, gas, or their respective constituent products or any of them, if the production therefrom should cease from any cause, the lease would not terminate if the lessee commenced additional drilling or reworking operations within 60 days thereafter.
The last oil sold from the real property pursuant to production from the 1977 Twenhafel lease was in 1987. Additionally, there have been no operations for the production of oil or gas from the real property or for drilling or reworking since 1987. The parties agree that oil-and-gas-producing equipment remains on the real property and that four well bores are located on the real property.
In August of 1977, defendant filed suit against Charles E. Fisher and others in Clinton County circuit court, No. 77-L-24. The issue in that lawsuit was whether the 1954 Twenhafel lease was valid. Fisher and others were the working-interest defendants in No. 77-L-24 and are the assignees of the 1954 Twenhafel lease.
In June of 1979, defendant went into possession of the 1977 Twenhafel lease. On June 6, 1980, the circuit court of Clinton County in No. 77-L-24 granted defendant permission to operate the oil wells on the 1977 Twenhafel lease using oil sale proceeds from the lease to pay his operating costs. While this judgment was later vacated, defendant did nothing to protect his interest during the seven years of litigation, and this order was reinstated against Fisher in 1987.
In 1989, defendant decided not to spend an estimated $80,850 on the lease for rework, major repairs, and replacement equipment. Defendant claimed that he did not want to expend the funds unless he knew for certain that his oil and gas lease was valid. Pursuant to Supreme Court Rule 23 (155 Ill. 2d R. 23), this court in Klockenkemper v. Fisher, No. 5-96-0002 (April 22, 1997) (unpublished order under Supreme Court Rule 23), put the parties back in the same position that they were in at the time of the original 1980 judgment and gave all the rights of production on the leases to defendant.
In 1997, one day before the aforementioned decision in Klockenkemper was filed, plaintiff filed a complaint against defendant claiming that the oil and gas lease had terminated by its own terms due to the nonproduction of oil and gas from 1987 to the date of the complaint. The complaint requested that the oil and gas lease be terminated, that defendant be compelled to execute a release of the lease, and that the court declare that defendant abandoned all of the oil and gas equipment that was remaining on plaintiff's property. Plaintiff also requested costs and reasonable attorney fees.
Although defendant admitted that there had been no production from defendant's oil and gas lease since 1987, defendant alleged an affirmative defense and prayed for a dismissal of the complaint. In defendant's affirmative defense, he alleged that the Twenhafels executed an oil and gas lease dated July 29, 1954, to Denzil U. Webster and A. M. Perrine, as lessees. Defendant alleged that the Twenhafel's daughter, Ruth Ann Maschhoff, and her husband, Donald Maschhoff, executed another oil and gas lease dated May 11, 1977, to defendant. Defendant stated that in 1987, a lawsuit was pending (No. 77-L-24) in the circuit court of Clinton County regarding whether the 1954 Twenhafel lease or the 1977 Twenhafel lease was the valid lease. Defendant claimed in his affirmative defense that the oil and gas lease could not terminate because of nonproduction "while the lessee is engaged in litigation with the lessor or his privies in title to establish the validity of the lessee's lease." Hence, defendant claimed that he was not required to produce oil and gas under the May 11, 1977, lease while he was engaged in litigation since 1987 with the Twenhafels or their privies in title under the 1954 lease. Defendant requested that the circuit court enter judgment dismissing plaintiff's complaint.
Plaintiff's response to defendant's affirmative defense admitted most of the facts but denied that an oil and gas lease will not terminate because of nonproduction while the lessee is engaged in litigation with the lessor or his privies in title.
On December 17, 1998, defendant filed a motion for summary judgment. The circuit court determined that defendant's motion for summary judgment was "stricken," and the case proceeded to trial by the stipulation of the parties. The circuit court entered its order on February 11, 1999, and determined, after reviewing the record in No. 77- L-24, that defendant could have been using his leasehold since he was specifically awarded that right. The circuit court then stated that ...