Saling v. Flesch Et Al‪.‬

Submitted April 10, 1929. Real Property — Oil and Gas Leases — Transfer of Lease — When ""Assignment,"" When ""Sublease"" — Wrongful Release of Lease of Record by Subtenant — Cancellation of Instruments — Complaint — Contents — Delay Rental — Payment by Check Conditional — Estoppel by Custom. Oil and Gas Leases — Distinction Between ""Assignment"" and ""Sublease."" 1. By an assignment of a lease the assignor parts with his whole interest in the land for the whole term, no new estate being created thereby; in the case of a sublease the sublessor retains for himself a reversionary interest in the property, a new estate being created resulting in the relationship of landlord and tenant between the sublessor and sublessee, and whether the instrument is one or the other depends upon the intention of the parties. Same — Transfer Held Sublease, not Assignment. 2. Under the above rule held, that where a lessee of a section of oil land transferred his interest in one-half thereof to another with the condition that upon breach of any of the covenants contained in the instrument, the former, styled ""assignor,"" should have the right of re-entry, the instrument was a sublease and not an assignment. Same — Default in Payment of Delay Rental Automatically Terminates ""Unless"" Lease. 3. Default in the payment of delay rental provided for in an ""unless"" oil and gas lease automatically results in the termination of the lease. Checks — Payment by Check Conditional. 4. Payment of an obligation by check is conditional on its being honored. Oil and Gas Lease — Cancellation of Release Recorded by Tenant Holding Under Sublease — Release Held of No Effect. 5. A lessee of a tract of oil land transferred one-half his interest to another by sublease, who after issuing his check for his proportion of the delay rental to the lessee who in turn mailed it to the lessor, stopped payment thereon and then caused to be recorded his release of his rights acquired from the lessee. In an action by the lessee to cancel the release, held that the sublessee was simply the tenant of the lessee and that therefore his attempted release of the premises to the lessor was ineffectual for any purpose. Same — Payment by Lessee of Rental by Check — Lessor Estopped by Prior Custom of Accepting Checks from Declaring Lease Forfeited on Nonpayment of Check Indorsed by Lessee. 6. Where it was customary for the lessee of oil lands to pay delay rentals by checks which were accepted by the lessor without question, the latter was estopped to declare the lease forfeited as to one-half the leased land held by a sublessee whose check for one-half the delay rental, indorsed by the lessee and received by the lessor long prior to the date on which the rental was due but held a long time after such date before presentation, was not paid by order of the sublessee; under such circumstances the lessee could not be put in default until the lessor had notified him of the dishonor of the check and given him an opportunity to pay it. Same — Cancellation of Release — Complaint must Allege Willingness and Ability to Pay and Offer to Pay Past Due Delay Rental for Failure to Pay Which Subtenant Wrongfully Released Lease, as Condition Precedent to Right to Cancellation. 7. Complaint in an action to cancel the release mentioned in paragraph 5 above, must allege plaintiff's willingness, readiness and ability to pay past due delay rental and offer to deposit same in court for defendant lessor, as a condition precedent to his right to cancellation of the instrument.