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ant, after baving been requested by him in writing to retract the libelous charge in as public a manner as that in which it was made, failed to do so within a reasonable time, he shall recover nothing but such actual damage as he may have specially alleged and proved."

The defendant put in evidence, tending to show that its intention was merely to publish what it believed to be true, and an item of public interest, and that it had no personal ill will towards the plaintiff. No request for a retraction was ever made. The difficulty with defendant's argument is that the undisputed facts in the case warranted a finding by the jury that "malice in fact” was shown, and their verdict shows conclusively that they did so find. It appeared on defendant's own proof that on August 11, 1903, its night editor clipped from the New Haven Leader an article containing libelous statements touching the plaintiff, substantially the same as those here complained of, alleging that plaintiff had been on that day arrested and brought before the Harrison street police court in Chicago charged with a misdemeanor, and that she was a physical wreck from the use of drugs. The night editor kept this Leader article three days, and then paraphrased it and published it in his own paper. During the interval he neither made nor instituted any inquiry whatever as to the truthfulness of any of these statements, although manifestly they were of such a character that, if false, they would work a very cruel wrong and injury to the plaintiff. Of such a method of publication this court remarked in Bennett v. Salisbury, 78 Fed. 769, 24 C. C. A. 329:

"It has become the course of business of newspapers of this class (the New York Herald) to receive announcements of this character from news bureaus and from numerous special correspondents who are scattered over the country. and it has become the custom of some daily journals to rely upon the good taith and accuracy of these correspondents and to publish in substance whatever they sent over their own signatures without further investigation into its truthfulness, and in an action for libel, when the falsehood of the publication was manifest, to attempt to ward off the charge of recklessness by saying that the information was received and was published in the usual course of business. Neither judges nor juries have been satisfied with the sufficiency of this kind of care. It is so insufficient as to be justly regarded as an absence of care, and as recklessness with respect to the rights and reputations of strangers to the publisher. The excuse was itself regarded as indicative of a careless indifference to and ignorance of the obligations of an owner to use his property so as not to injure others."

Referring to the very statute now before us, the Supreme Court of Errors of Connecticut has held that it was not improper to draw an inference that there was "malice in fact” when it appeared from the circumstances attending the preparation and publication that there was not a careful or reasonable investigation as to the real facts, and no sufficient occasion or excuse for such publication, and that it was recklessly published in disregard of the plaintiff's rights and of the consequences that might result to him. Osborne v. Troup, 60 Conn. 485, 23 Atl. 157. See, also, Moore v. Stevenson, 27 Conn, 14; Hotchkiss v. Porter, 30 Conn. 414; Wynne v. Parsons, 57 Conn. 73, 17 Atl. 362. There was sufficient evidence in this case to warrant a finding of "malice in fact” and that the jury so found is manifest from their verdict taken in connection with the instructions given to them.

The court charged that the case was not one which called for the infliction of punitive damages; that the statute provides that defendant may, if it can, prove that in making a publication it acted with proper and justifiable motives, with the intention of publishing current news and a just and fair criticism of matters in which the public is legitimately interested; that, in the language of the statute, unless the plaintiff shall prove malice in fact, he shall recover nothing but such actual damage as he may have specially alleged and proved; that, notwithstanding the evidence which had been presented bearing upon that question of intention, if the jury "shall find from the character of the libel and from the circumstances attending the publication, taking into consideration' all the evidence offered by both parties in relation thereto, that there was not a reasonable or careful investigation as to the real facts, and that there was not sufficient occasion or excuse for such publication, but that it was recklessly published, in disregard of the plaintiff's rights and of the consequences that might result to her, that will be sufficient to constitute malice in fact within the meaning of the statute." And he added:

"If you shall take the view of these matters which I have just suggested to you, then it would be within your province to find such damages as would fairly and reasonably compensate the plaintiff for her injuries as alleged in the complaint.”

Unless they took the view suggested they certainly could have brought in no substantial verdict for the plaintiff under this charge. No exceptions were reserved to any part of the charge, but only to the refusal to charge certain requests.

The first of these was to the effect that if the jury failed to find actual damages, and failed to find malice in fact their verdict must be for the defendant. This practically asserts that if plaintiff cannot prove actual special damage, nor prove actual malice, he cannot, in the event of a libelous publication, obtain even the verdict for nominal damages which will clear his character by finding the charges against him to be false. The Connecticut authorities above cited would seem to indicate that if the statute were given any such meaning it would be unconstitutional.

The second sets forth elaborately and in great detail what constitutes "actual damages." In view of the single question submitted to the jury, viz., whether there was malice in fact, such definition was academic.

The third question deals with mitigation of damages in view of honest publication of a news item, etc.; but there is no question of "mitigation of damages” in this case. If defendant could satisfy the jury that his conduct was such as this request indicates, then he would negative "malice in fact” and there would be no general damages at all, and therefore nothing to mitigate.

The next two requests-as to considering all the evidence, and as to burden of proof-were fully covered by the charge.

The other requests present counsel's views as to the value of newspapers, as to what are legitimate items of news, as to the object of the Legislature of Connecticut in passing the statute above quoted, and as to the harmlessness of such an article to plaintiff's credit or reputation. They need not be discussed. The court did not err in refusing to charge them. The colloquium of the charge gave the jury all the instructions they required to deal with the plain and simple question submitted to them.

It is further assigned as error that the court allowed plaintiff to testify that her health was affected by the publication, so that she had to cancel all the engagements she had. The only ground of objection interposed to the introduction of such testimony, however, was that it was "not admissible under the allegations of the complaint." This objection is unsound as reference to the quotation from the complaint, supra, will show. As to any further question not raised by objection and exception, this court will not inquire.

The judgment is affirmed.


(Circuit Court of Appeals, Seventh Circuit January 2, 1907.)

No. 1,298.



In a suit by a lessor to terminate the lessee's privilege of exploration under an oil and gas lease, which under the law of Indiana could be terminated at the end of any year, and prior to the finding of oil or gas in paying quantities, only by the giving of notice a reasonable time before the expiration of such year, the burden rests upon the complainant to prove that the time between the giving of the notice and the expiration of the year was a reasonable time within which to ascertain whether oil or

gas in paying quantities could be found. 2. SAME--ESTOPPEL.

Where the notice given by a lessor in an oil and gas lease of an intention to terminate the lessee's privilege of exploration thereunder at the end of a year, because of delay in operating, required the lessee to "proceed with all reasonable speed and promptness,” under penalty of a forfeiture of all of its rights, and at the end of the year the lessee was so proceeding and had completed a well, but, owing to an inflow of salt water, it became necessary to incur large expense for machinery and pumping to render the well productive, which expenditure was made with the knowledge of the lessor, she was estopped to thereafter claim that the lease was terminated by the notice.

Appeal from the Circuit Court of the United States for the District of Indiana.

The court on final hearing sustained the master's report; and appellant's bill for the annulment of a gas and oil lease was dismissed for want of equity.

The lease is as follows:

"This agreement made and entered into this 20th day of May, A. D. 1897, by and between Julia E. Campbell and Chas. J. Campbell, of the County of Cook, and State of Illinois, of the first part, and Rock Oil Co. of the second part, witnesseth:

"That the said parties of the first part, for and in consideration of the agreements hereinafter mentioned, have granted, demised and let unto the party of the second part for the purpose and with the exclusive right of drilling and operating for petroleum and gas, all that certain tract of land situated in

township, Liberty, county, Delaware, and state of Indiana, bounded and described as follows to-wit:

“Being in section number 35, township number 21, range number 11 East, bounded north by lands of Margaret J. Murray, and Jno. Shrayer, east by lands of Mary R. Sparks, south by lands of W. C. Swanders and H. B. Swanders, west by lands of Geo. T. Orr, containing 120 acres, be the same more or less, together with the right of way over said premises to the places of operat,ing, the right to lay pipes to convey water, oil and gas, and the right to remove any machinery or fixtures placed on said premises by the party of the second part.

"The party of the second part is to have and to hold the said premises for and during the term of five years from the date hereof, and as much longer as oil or gas are found in paying quantities or the rental paid thereon.

"The said first parties shall fully use and enjoy said premises for farming purposes, except such parts as may be necessary for said operations.

"In consideration of said grant and demise, the said party of the second part agrees to give or pay to the said parties of the first part, the full equal 1-6 part of all the oil produced or saved from the premises, and to deliver the same, free of expense, into tanks or pipe lines to the credit of the first parties.

"If gas only is found the party of the second part agrees to pay to the parties of the first part fifty ($50) dollars per year for the product of each well while the same is used off the premises.

"It is agreed that the first parties may have gas free of cost for household use on the premises so long as this lease is in force; and there shall be no wells drilled within 300 feet of the buildings now on the premises, without consent of the first parties,

"It is further agreed, that the party of the second part shall complete a well on the described premises, within one year from the date above, or in default thereof pay to the parties of the first part for such delay a yearly rental of $60.00 on the said premises from the time of completing such well, as above specified, until such well shall be completed. The said yearly rental shall be deposited to the credit of the parties of the first part in the Citizens' Bank, Muncie, Indiana, or be paid direct to first parties. And a failure to complete such well, or to pay said rental shall render this lease null and void. The party of the second part agrees to drill an oil or gas well within one year from the above date or forfeit to the parties of the first part fifty ($50) dollars. The party of the second part agrees to pay rental on all lands at rate of 50 cents per acre, as above described, excepting forty (40) acres for each well drilled, or abandon same.

"Party of the second part agrees to pay a reasonable damage done fences, growing crops, and timber, while operating.

“All rentals shall be paid annually on or before July 1st.

"It is understood between the parties of this agreement, that all the condi. tions between the parties hereunto shall extend to their heirs, executors and assigns."

No well was drilled prior to 1904; but the stipulated rental was paid each year, including a payment before July 1, 1903, for the year ending May 20, 1904.

On March 26, 1904, appellant served upon appellees the following notice:

"You are hereby notified that the lease for gas and oil made by the undersigned to the Rock Oil Company, bearing date May 20th, 1897, on the following described real estate in Delaware county, state of Indiana, to wit: The west one half (14) of the south-west one quarter (14) of section 35, township 21, range 11, east, and west one half (14) of east one half (42) of southwest one quarter (14) of section 35, township 21, range 11 east, containing 120 acres, will not be extended beyond the period for which extension has been made and assented to, to wit: May 20th, 1904; or delay in operations on said premises be delayed beyond such period; nor will a money consideration be received and accepted for further extension or delay in operation thereon.

“You are hereby notified and required to proceed with all reasonable promptness and dispatch to operate for oil and gas on said premises under penalty of forfeiture of all rights and privileges under said instrument of lease."

After the middle of April, 1904, appellees began to drill. They went to a depth of 1,240 feet. Oil-bearing rock was found at 955 feet. It was penetrated 285 feet. This was a proper depth for finding oil in that territory. On May 18th the well was completed and was shot. It was cleaned out on the 19th, and the pumps were started. Only water came. On the 20th and for some days thereafter small quantities of oil were obtained, when suddenly large volumes of salt water prevented the well from producing oil. The pumps were kept working day and night "until some time after the commencement of this suit," on June 10th. During this time appellees in good faith tried to produce oil, and they operated skillfully in an endeavor to ascertain whether the well could be made a paying one or not.

A well in that territory at that time could be drilled, shot, and equipped for pumping in from 15 to 25 days; and contractors, whose terms were reasonable, were available to appellees.

In their operations on appellant's land appellees expended $1.677 before May 20th; and after that date, $3,704, of which the sum of $1,551 was for machinery, which they subsequently removed,

Appellant had full knowledge of appellees' operations, both before and after day 20th, and made no objection whatever prior to beginning this suit.

C. C. Shirley, for appellant.
Abram Simmons and Roscoe C. Griffith, for appellee.
Before BAKER and SEAMAN, Circuit Judges.

BAKER, Circuit Judge, after stating the facts, delivered the opinion of the court.

Appellant's assertion that prior to her execution of this oil lease in 1897 the Indiana decisions had settled upon a construction of such contracts whereby the lessor at the end of the original or any renewal period could terminate the lessee's interest without notice is not warranted by the cases. Diamond Plate Glass Co. v. Curless, 22 Ind. App. 346, 52 N. E. 782, and Same v. Echelbarger, 24 Ind. App. 124, 55 N. E. 233, were decided by the Appellate Court in 1899 and 1900, and were expressly disapproved by the Supreme Court in Hancock v. Diamond Plate Glass Co., 162 Ind. 146, 70 N. E. 149, decided in 1904. Knight v. Coal Co., 47 Ind. 105, 17 Am. Rep. 692, decided in 1873, was a case of an estate at will in realty, and its inapplicability to a contract right to explore for oil and gas, substances which, owing to their fugitive nature, are not subject to ownership until

reduced to possession, was pointed out in New American Oil Co. v. Troyer (Ind. Sup.) 77 N. E. 739, decided in 1906.

Under the Indiana law appellant had the right to terminate appellees’ privilege of exploration by giving thein notice for a reasonable time prior to May 20, 1904, that no further extension would be granted. And appellees could have held over only by finding gas or oil in paying quantities within such reasonable period. Consumers' Gas Trust Co. v. Littler, 162 Ind, 320, 70 N. E. 363; Same v. Worth, 163 Ind. 141, 71 N. E. 489; Same' v. Ink, 163 Ind. 174, 71 N. E. 477; Same v. Crystal Co., 163 Ind. 190, 70 N. E. 366; Lafayette Gas Co. v. Kelsey, 164 Ind. 563, 74 N. E. 7; Manhattan Oil Co. v. Carrell, 164 Ind. 526, 73 N. E. 1084; New American Oil Co. v. Troyer (Ind. Sup.) 76 N. E. 253.

But the Circuit Court ruled correctly, we believe, that the rights of appellees were not terminated by the notice of March 26th, for two reasons.

151 F.-13

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