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Keywords

appealleasecompliance
plaintiffdefendantlease

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Saling v. Flesch, 85 Mont. 106, 277 P. 612

Facts

In March 1921, John and Augusta Flesch granted John H. Saling an oil and gas lease for ten years on a section of land in Toole County. The lease required that if no well was commenced by March 18, 1922, the lease would terminate unless the lessee paid a rental fee. In June 1925, Saling conveyed the west half of the section to John O'Neil, which included a clause indicating that O'Neil would pay delay rentals. In March 1926, O'Neil paid Saling part of the rental, which Saling forwarded to the Flesches, but payment was later refused. The Flesches claimed the lease was forfeited due to non-payment, leading to Saling's complaint to cancel the release executed by O'Neil.

The amended complaint alleges: That in March, 1921, defendants John and Augusta Flesch gave to plaintiff an oil and gas lease on a section of land in Toole county for the term of ten years; a copy of the lease is attached to and made a part of the complaint.

Issue

The main issue is whether the instrument executed by Saling to O'Neil constituted an assignment or a sublease, and whether Saling was in default under the lease.

The contention of the defendants John and Augusta Flesch is that the instrument executed by plaintiff to O'Neil was and is an assignment of the west half of the section and that plaintiff has no right, title, or interest in the property thus assigned. Plaintiff contends that the instrument was and is a sublease and not an assignment.

Rule

The distinction between an assignment and a sublease is that an assignment transfers the entire interest for the whole term, while a sublease retains a reversionary interest. The intention of the parties is the controlling consideration in determining the nature of the conveyance.

The distinction between an assignment and a sublease is that in the former the assignor parts with his whole interest for the whole term, whereas in the case of a sublease the sublessor retains for himself a reversionary interest in the lands involved.

Analysis

The court analyzed the language of the instrument executed by Saling to O'Neil and concluded that it contained conditions that indicated Saling retained a right of re-entry upon breach by O'Neil. This led the court to determine that the conveyance was a sublease rather than an assignment. Furthermore, the court found that the actions of John Flesch in accepting the checks without immediate presentation constituted a waiver of strict compliance with the lease terms, meaning Saling could not be held in default.

We think that by this instrument the plaintiff reserved the right of re-entry upon breach of the conditions and covenants by the defendant O'Neil, and that the instrument, when tested by the rules above stated, is a sublease and not an assignment.

Conclusion

The court reversed the lower court's judgment and remanded the case, allowing Saling the right to amend his complaint. The court found that Saling had not defaulted under the lease due to the conduct of the Flesches.

The judgment is reversed and the cause remanded, with direction to allow the plaintiff the right to further amend his complaint, if he so desires.

Who won?

John H. Saling prevailed in the appeal because the court determined that the lower court erred in sustaining the demurrer and not allowing Saling to amend his complaint.

The court found that Saling had not defaulted under the lease due to the conduct of the Flesches.

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