Berry v. Tide Water Associated Oil Co.

Berry (plaintiff) entered an oil, gas, and mineral lease with Richardson in Mississippi. The lease stated that the lease would terminate unless Richardson drilled on or developed the land within the lease’s five-year primary term (i.e., an unless lease). A portion of the leased premises was subsequently assigned to Tide Water Associated Oil Company (Tide Water) (defendant). Richardson timely drilled a well on the retained portion of the land and paid a shut-in royalty in lieu of actual production. However, Tide Water did not drill on or develop its assigned portion of the land within the required time. Berry sought a decree that Tide Water’s failure to drill on or develop the assigned portion meant that the lease had terminated as to Tide Water. Berry claimed that when the lease was assigned to Tide Water, the assigned lease effectively became a separate lease that required Tide Water to fulfill the drilling-or-development requirement on its separate property to extend the lease term. Tide Water countered that Richardson’s well and the payment of the shut-in royalties satisfied the drilling-or-development requirement for both Richardson’s retained land and the assigned portion of the land. The trial court entered judgment for Tide Water. Berry appealed, arguing that Tide Water was responsible for drilling on or developing its portion based on the Mississippi Supreme Court’s decision in White v. Hunt, which held that an assignee of a leased portion of premises was obligated to pay rents on the assigned portion by a certain time to prevent the lease from terminating.