
    The Northwestern Ohio Natural Gas Company v. The City of Tiffin, et al.
    
      Leases of natural gas and oil lands to be recorded — Rights of subsequent purchasers with notice prevail against unrecorded lease, when — Section 4-lllia Revised Statutes — Law of contracts.
    1. A lease or license to operate upon land for natural gas or petroleum, until filed for record as required by section 4112a, of the Revised Statutes, is without any effect, either at law or in equity, as against a subsequent lessee, or licensee, or other third person acquiring an interest in or lien on the land, although he took with notice of such prior unrecorded lease or license, unless the person claiming thereunder was, at the time, in the actual possession of the land.
    2. Such a lease or license granted for a specified term of years, and as much longer as oil or gas is produced or found in paying quantities on the land, expires at the end of the specified term, unless within that time oil or gas is obtained from the land in the designated quantities,
    3. Where it is sought to establish an implied contract from extraneous facts and circumstances and have a reformation of a written instrument in conformity therewith, such relief, if attainable in any case, shou] d only follow clear and convincing proof that the party against whom it is sought had full knowledge of all the material facts from which it is claimed the implied contract arose.
    (Decided January 17, 1899.)
    Error to the Circuit Court of Hancock county.
    On the fourteenth day of October, 1895, The Northwestern Ohio Natural Gas Company brought suit in the court of common pleas of Hancock county, against the City of Tiffin, its Gas Trustees, and Alvin Shoup, to enjoin the city and its officers from entering upon, and removing natural gas from, certain premises on which the plaintiff-claims it had a prior lease; and to have a correction made in the description contained in the lease The petition avers that:
    
      “The plaintiff is and has been during all of the times hereinafter mentioned a corporation, organized and existing under the laws of the state of Ohio, for the purpose of leasing and owning gas territory, drilling for oil and gas and transporting and selling the same. That the defendant, the City of Tiffin, is a municipal corporation, organized under the laws of the state of Ohio, and is and was during the times hereinafter stated, a city of the fourth grade and second class. That the defendants, Robert V. Clark, Amos Greenleaf and Thomas F. Whalen are the duly appointed, qualified and acting trustees of the Natural Gas Department of . said city of Tiffin. The plaintiff further says that on or about the tenth day of June, 1886, one John A. Taylor, who was then the owner and in possession of the premises hereinafter described, executed and delivered to one William Duke, Jr., his certain written instrument duly signed, witnessed and acknowledged, by which the said Taylor granted and demised unto the said William Duke, Jr., his heirs or assigns, for the purpose and the exclusive right of drilling and operating for petroleum and gas all that certain tract of land situated in Cass township, Hancock county and state of Ohio, described as follows, to-wit: The south half [■£•] of the west one-half [i] of the southwest quarter [J] of section number two [2] and three-fourths [¶] of the north half [i] of the southeast quarter [£] of section number three in said Cass township, containing one hundred [100] acres, together with the right of using sufficient water therefrom necessary to the operation thereof, the right of way over said premises, the right to lay pipes to convey oil or gas and the ris'ht to remove any machinery or fixtures placed on said premises by said Duke or his assigns. Under the terms of said agreement said right was to continue for and during the term of five years from said date or as much longer as oil or gas should be produced or found in paying- quantities thereon. In consideration of said grant and demise the said Duke agreed to give or pay to the party of the first part the full one-eighth [!] part of all petroleum produced or found on said premises, and should gas be found in sufficient quantities to justify said Duke or his assigns in marketing- the same, the consideration in full to the said Taylor, instead of the petroleum royalty, should be one hundred dollars ($100.0(J) per annum for the gas from each well so long as it should be sold therefrom. It was further agreed therein that the said Duke should comlete a well on the above described premises within nine months from the date thereof, and in case of failure to complete such well within such time, the said Duke or his assigns agreed to pay to the said Taylor for such delay a yearly rental of fifty cents per acre on said premises from the time of completing such well as above specified until such well should be completed. The plaintiff further says that by a mutual mistake of said Taylor and said Duke and through the mistake of the scrivener who wrote said instrument, the last described tract above mentioned was described therein as three-quarters [¶] of the north half [-¡-] of the northeast quarter [i], instead of the southeast quarter [ij, which latter is the correct description of the only property in said section three then owned by said Taylor, and was the property intended to be named by the parties in said instrument. Said instrument was duly entered for record with the recorder of said county at 9:30 A. M., April 27, 1887, and recorded in voi. 5, page 389 of the records of leases of said county.
    The plaintiff further says that on or about the —— day of----, 188 — , the said William Duke duly sold, transferred and assigned to this plaintiff all of the right, title and interest of said Duke in and to said instrument of writing and the rights and privileges conveyed thereby, which said assignment was in writing and has been duly entered for record upon the records of leases of said county.
    The plaintiff further says that on the fifteenth day of May, 1891, the said John A. Taylor, by an agreement in writing, on said date entered into with this plaintiff and in consideration of the sum of one hundred and fifty dollars ($150) then paid by plaintiff to said John A. Taylor, agreed and consented to the extension of all the terms and conditions of the lease aforesaid for a period of two years from June 10, 1891, or until June 10, 1893, and that on the fifth day of April, 1893, the said John A. Taylor, being still the owner of said premises, by an instrument in writing, entered into with this plaintiff, and in consideration of the sum of one hundred and fifty dollars ($150) then paid by this plaintiff to said Taylor, and the further agreement to pay one hundred and fifty dollars ($150) each year in advance, agreed to extend and did extend the terms and conditions of said lease from June 10, 1893, to June 10, 1894, and from year to year thereafter so long as said one hundred and fifty dollars ($150) should be paid, until a well should be drilled, and the further agreement to pay the sum of one hundred and fifty dollars ($150) for each gas well which might be found on said premises and from which gas should be sold, instead of the sum of one hundred dollars ($100) as provided in said original lease. A copy of said original lease and of the two subsequent agreements herein referred to are hereby attached and made part hereof, marked exhibits “A,” “B” and “C.” The plaintiff says that said plaintiff and its said assignor, William Duke, have duly kept and performed all of the conditions of said contracts or either of them on the part of said Duke or this plaintiff to be performed. The plaintiff further says that on the-day of —, and prior to the twenty-fourth day of May, 1894, the defendants, John J. Ullery and Alvin Shoup, became the owners, as plaintiff is informed and believes, of the premises herein described, having full knowledge of the rig-hts of this plaintiff in said premises and of the error which had been made by the scrivener in the writing of the original lease, and that on the twenty-fourth day of May, 1894, this plaintiff paid to said defendants, Ullery and Shoup, the sum of one hundred and fifty dollars ($150) as in full for the rental on said lease from June 10, 1894, to June 10, 1895, and on both of the pieces of property therein described, which said sum was accepted by said defendants, Shoup and Ullery, and their joint receipt therefor was made to this plaintiff. Plaintiff further says that on or about the twenty-fourth day of May, 1895, the plaintiff completed and drilled in a gas well on said premises which produced gas in paying quantities, and that on the seventeenth day of June, 1895, the said well was connected with the general line of said plaintiff, and thereafter said gas was and still is marketed from said well. The plaintiff further says that on the fifteenth day of July, 1895, this plaintiff tendered to said defendants, Shoup and Ullery, the sum of one hundred and fifty dollars ($150) in lawful money of the United States as payment for the well rental so as aforesaid drilled by plaintiff on said premises, but the same was then refused by said defendants. The plaintiff further says that this plaintiff was prior to the attempted entry of any of the defendants herein, and is now in the actual possession of the premises as hereinbefore described, and being the premises actually intended to be conveyed by said original instrument of lease, and that all of the defendants herein have for a long time known of the interest so held by this plaintiff m said premises, and did so know all of the facts herein alleged long prior to the time when they attempted to acquire any interest or rights therein. The plaintiff further says that the defendant, The City of Tiffin, together with the defendants, the Trustees of the Natural Gas Department of the said City of Tiffin, and the defendant Henry O’Brien, have entered upon said premises wrongfully and unlawfully, and have commenced to drill for natural gas on said premises, and unless restrained by order of this court will drill for, produce and carry away the natural gas on said premises owned by said plaintiff, to the great and irreparable injury of this plaintiff in the premises, and that plaintiff is without remedy at law in the premises. Wherefore plaintiff prays that said original instrument of lease may be reformed and corrected and made to conform to the actual intention of the parties executing' the same by correcting the description therein; that the defendants, The City of Tiffin, Robert V. Clark, Amos Green-leaf and Thomas F. Whalen, as trustees of the Natural Gas Department of said city, and Henry O’Brien, together with the agents' and*servants of each of them, may each and all be restrained by the order of this court from entering upon said premises, either individually or by their servants or agents, and from drilling- for, producing or carryingaway natural gas on said premises, or in any manner trespassing upon or interfering with the rights of said plaintiff as aforesaid, and that upon final hearing of this cause that such restraining- order be made perpetual, and for all proper relief.”
    The case is fully presented by the findings of fact made by the circuit court, where the cause was tried on appeal, upon the issues joined between the parties. Those findings, and the conclusions of that court on the law of the case, are as follows:
    ‘‘First — The plaintiff is a corporation duly organized and existing under the laws of the state of Ohio for the purpose of leasing- and owning gas territory, drilling for oil and gas, and transporting the same.
    Second — The City of Tiffin . is a municipal corporation and is and was a city of the fourth grade of the second class, and the defendants, Clark, Greenleaf and Whalen, are the duly appointed, qualified and acting trustees of the Natural Gas Department of said City of Tiffin.
    Third — That on or about the tenth day of June, 1886, one John A. Taylor, being then the owner of the property and which was all the property that said Taylor owned in said sections 2 and 3, executed and delivered the lease alleged in the petition, a true copy of which is attached to the petition. Said lease was entered for record with the recorder of Hancock county on the twenty-seventh day of April, 1887, at 9:30 A. M., arid duly recorded in lease record, volume 5, page 389 of said county.
    
      Said lease is in the words and figures following: This agreement made and entered into this tenth day of June, A. D. 1886, by and between John A. Taylor, of Cass township, of the county of Hancock and state of Ohio, of the first part, and William Duke, Jr., of Wells ville, New York, of the second part, witnesseth: That the said party of the first part, for the consideration of the covenants and agreements hereinafter mentioned has granted, demised and let unto the party of the second part, his heirs and assigns, for the purpose and the exclusive right of drilling and operating for petroleum and gas, all that certain tract of land situated in Cass township, Hancock county and state of Ohio, bounded and described as follows, to-wit: The south half of the west half of the southwest quarter, section No. 2, and [¶] three-fourths of the north half of the northeast quarter, section No. three [3], Cass township, Hancock county, Ohio, containing one hundred acres, be the same more or less, together with the right of using sufiicient water therefrom necessary to the operation thereof, excepting- from wells now located, except by consent of first party, the right of way over said premises, the right to lay pipes to convey oil or 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, his heirs or assigns, 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 and gas is produced or found in paying quantities thereon. In consideration of said grant and demise, the said party of the second part agrees to give or pay to said party of the first part, the full equal one-eighth part of all the petroleum produced or found on the said premises, and deliver the same, free of expense,into tanks or pipe lines to the credit of the first party and should gas be found in sufficient quantities to justify the party of the second part in marketing the same, the consideration in full to the party of the first part instead of the petroleum royalty shall be one hundred dollars per annum for the gas from each well so long as it shall be sold' therefrom. It is further agreed that the party of the second part shall complete a well on the above described premises within nine months from the date hereof, and in case of failure to complete such well within such time the said party of the second part agrees to pay to the said party of the first part for such delay a yearly rental of fifty cents per acre on the premises herein leased from the time of completing such well as above specified until such well shall be completed. The said yearly rental, amounting to fifty dollars, shall be deposited to the credit of the party of the first part in the First National Bank of Findlay, Ohio, or be paid direct to the said party. And a failure to complete such well, or to make such deposit or payment • as above mentioned shall render this lease null and void and to remain without effect between the parties hereto. Above named payment to be made by the first day of March in each year. The party of the second part to furnish all the gas necessary for domestic use, including not to exceed five hundred feet of one inch pipe to convey the gas from the well to the dwelling, free of charge. It is understood between the parties to this agreement that all conditions between the parties hereto shall extend to their heirs, executors and assigns. In witness whereof, we the said parties of the first and second parts hereunto set our hands and seals the day and year first above written.
    John A. Taylor, [Seal.]
    Sophia A. Taylor, [Seal.]
    ¥m. Duke, Jr. [Seal.]
    Witness: I. L. Andress, W. S. Richard.
    State of Ohio, county of Wood, ss.:
    Be it remembered, that on this fifteenth day of January, A. D. 1887, before me, the subscriber, a notary public in and for said county, personally came John A. Taylor and Sophia Taylor, his wife, and acknowledged the signing of the foregoing instrument to be their act and deed for the uses and purposes therein expressed, and the said Sophia A. Taylor wife of the said John A. Taylor, being examined by me separate and apart from her said husband, and the contents of sáid instrument being by me made known and explained to her as the statute directs, did declare that she did voluntarily sign and acknowledge the same, and that she is still satisfied therewith as her act and deed.
    In witness whereof, I have hereunto set my hand and affixed by official seal.
    [Seal.] W. S. Richard,
    , Notary Public.
    State of Ohio, county of Hancock, ss.:
    On this twentieth day of January, A. D. 1887, before me, a notary public in and for said county, personally appeared said #W. Duke, Jr., above named, and acknowledged that he did sign and seal the foregoing-instrument, and that the same is his free act and deed for the use anti purposes therein named.
    [Seal.] J ames A. Bope,
    Notary Public.
    
      Fourth — That by a mutual mistake of the parties thereto the second tract described in said lease was erroneously described as three-quarters of the north half of the northeast quarter of section three [3] instead of being described by its correct description as three-quarters of the north half of the southeast quarter of said section three [3] and being the same lands thereafter conveyed by said Taylor to defendant Shoupe, and defendant, Shoupe, had no notice, knowledge or information of said mistake.
    Fifth — That after the execution of said lease the same was duty transferred to, and now is and was at the beginning of this action, and for several years prior thereto had been the property of the plaintiff herein.
    Sixth — That on May 15, 1891, said John A. Taylor, at the request of plaintiff, made and delivered to it the certain paper writing referred to in the petition, of which the following is a copy:
    May 15, 1891.
    In consideration of the sum of one hundred and fifty dollars to me paid by the Northwestern Ohio Natural Gas Company, and the further agreement to pay me the same sum on or before June 10, 1892, I consent to the extension of all the terms and conditions of the within lease for two years from June 10, 1891, or until June 10, 1893.
    . John A. Taylor.
    Witness: L. C. Beatty.
    This paper writing was made on the back of the original lease, but was never filed for record or recorded in the lease records of said county or elsewhere and defendant Shoupe had no actual notice, knowledge or information thereof.
    
      Seventh--That on April 5, 1893, said Taylor still being the owner of said premises, at the request of plaintiff signed and delivered to it a certain other paper writing of which the following is a copy:
    In consideration of the sum of one hundred and fifty dollars to me in hand paid by the Northwestern' Ohio- Natural Gas Company, and the further agreement to pay one hundred and fifty dollars each year in advance, I do agree to extend the terms and conditions of this within lease from June 10, 1893, to June 10, 1894, and from year to year so long as the one hundred and fifty dollars shall be paid and when well is drilled to draw one hundred and fifty dollars.
    April 5, 1893. John A. Taylor.
    Witness, J. C. Noble.
    Said paper writing was made on the original lease but was never filed for record or recorded in the record of leases of, said Hancock county, or elsewhere, and defendant Shoupe had no actual knowledge, notice or information thereof.
    Eighth — That about April 5, 1893, the date of the last named paper writing, plaintiff paid said Taylor one hundred and fifty dollars, the rental for the ensuing year to June 10, 1894.
    Ninth — That prior to May 24, 1894, and on or about the thirty-first day of March, 1894, said John A. Taylor conveyed the first tract of forty acres described in said lease to the defendant John J. Ullery, and conveyed the second tract of sixty acres intended by the parties to be described in said lease to the defendant Alvin Shoupe. That during the negotiations between said Taylor and said Alvin Shoupe for the purchase of said sixty acres said Taylor informed said Alvin Shoupe that there was a lease upon said lands, and that the same would expire in about one year from the time of the making of said deed; that in the warranty clause of said deed from said Taylor to said Shoupe is written the following words: “Except against gas lease held by the Northwestern Ohio Natural Gas Company, including the pipe line right-of-way.”
    That the consideration for said conveyance from Taylor to Shoupe was the sum of forty-two hundred dollars; that said deed was duly entered for record on the twenty-first day of June, 1895.
    Tenth — That on the twenty-fourth day of May, 1894, the plaintiff, The Northwestern Ohio Natural Gas Company paid to the defendants, Alvin Shoupe and J. J. Ullery, the sum of one hundred and fifty dollars in full for rental on the lease described in the petition from June 10, 1894, to June 10, 1895, a copy of the receipt made and delivered thereof is as follows:
    v 3-6-93-1000. . Voucher No. 2.
    John A. Taylor. May 24, 1894.
    Received of the Northwestern Ohio Natural Gas Co. one hundred and fifty dollars, in full for rental on lease No. 194 from June 10-94 to June 10-95, 100 acres, situate in south i of west i of southwest i section 2 and i of northeast í sections 2-3, Hancock county, Cass township, Ohio.
    $150.00 A. L. Shoupe.
    J. J. .Ullery.
    Defendant Shoupe received and accepted said payment under the impression and belief that the lease still existed but would expire in one year, or about March, 1895.
    Eleventh — That on or about May 24, 1895, and prior to June 10,1895, plaintiff completed the drilling of the well upon the forty acres so sold and conveyed hy Taylor to said Ullery, and being part of the premises described in the petition, but without the knowledge, consent or procurement of defendant, Shoupe; that said well produced gas in paying quantities, and was connected with the distributing line of the plaintiff on June 17, 1895, and thereafter the gas therefrom was and still is connected from said well.
    Twelfth- — That on or about the fourteenth day of February, 1896, as shown by the journal of the court of common pleas of Hancock county, Ohio, at the trial of this cause in said court the plaintiff tendered in open c'ourt to said J. J. Ullery and Alvin Shoupe the sum of $150, the gas rental due on said gas well drilled on the hundred acres described in said lease for the year beginning June 10, 1895, and ending June 10, 1896.
    Thirteenth — That at the trial of this case in this court on June 4, 1896, said plaintiff tendered in open court to said J. J. Ullery and said Alvin Shoupe the sum of $150 as gas rental for said gas well drilled on said hundred acres described in said lease for the year beginning June 10, 1896, and ending June 10, 1897.
    Fourteenth — At and long before the time said Shoupe purchased said sixty [60] acres from Taylor, plaintiff had constructed and was maintaining over and across said sixty acres a pipe line for the transportation and distribution of gas from lands and leases other than the said 60 acres of the defendants and had no connection with defendant’s land for the purpose of transporting gas therefrom.
    Fifteenth- — That when said gas well was drilled on said 40 acres so sold to Ullery, being part of the premises described in the petition, plaintiff connected said well with the main distributing line running across the lands of Shoupe.
    Sixteenth- — That long before the sale of Taylor to Shoupe, plaintiff had connected the residence of said Taylor upon said 60 acres with its said gas line and said Taylor used the gas therefrom in his residence; when said Shoupe purchased and entered into possession of said 60 acres he found the dwelling connected with the main line and continued to use said gas without objection and plaintiff never disconnected said line from the house or demanded payment for the use of such gas.
    Seventeenth — The defendant Shoupe in March, 1894, when he purchased the said 60 acres of Taylor, entered into full, sole, exclusive and adverse possession, occupancy and ownership of said lands and thence hitherto has been and now is m such full, sole and exclusive and adverse possession, occupancy and ownership. When Shoupe so purchased, plaintiff was not in possession of said land, or any part of the same, and never had taken or entered upon any possession, occupancy of said sixty acres, or any part thereof, and had never attempted or offered to drill any well, or taken any steps in that behalf, and Shoupe had no notice, knowledge or information of any right or claim, made by plaintiff, except the information conveyed by Taylor that their lease would expire in one year. That the lands adjoining said sixty acres have been and now are operated for gas and large quantities are taken therefrom. That plaintiff has failed, neglected and refused to enter upon or drill any well or wells upon said sixty acres. That about April, 1895, and after the expiration of the lease,
    ted by Taylor to Shoupe when he so purchased said sixty acres, that said lease would expire, defendant Shoupe executed to the city of Tiffin a gas and oil lease and contract for and upon said lands, granting to the city of Tiffin the sole and exclusive right to enter upon and drill for and develope gas or oil, and in pursuance thereof the said city of Tiffin did in fact enter upon said land and commence the construction of the necessary derricks and machinery and commenced to drill upon said lands until enjoined by the plaintiff in this proceeding, and that the city of Tiffin unless restrained by the order of the court will proceed and drill all wells necessary for the full development of said lands and procuring of the gas thereunder and the transportation thereof to the city of Tiffin for public and private use and consumption.
    Upon consideration whereof and being fully advised in the premises, and from the facts so found, the court as its conclusion of law find that the equity of this case is with the said defendants and against the said plaintiff; that defendant, Shoupe, purchased and paid for said lands in good faith without notice or knowledge of any mistake in the description of said lands, and without any notice, knowledge or information of any extension of said original lease, and that there was no lease thereon other than as stated by said Taylor, and that plaintiff was not entitled to a reformation of said lease as against said Shoupe.”
    The circuit court thereupon dismissed the plaintiff’s petition, and rendered judgment in favor of the defendants for costs; and to reverse that judgment error is prosecuted in this court.
    
      Doyle & Leiois and Burlcet <& Bwket, for plaintiff in error.
    
      W e claim that Shoupe had actual knowledge of a subsisting lease to the company, that this and other knowledge came to him through Taylor and imposed on him tbe duty to inquire, which, had he done, he could readily have obtained full knowledge of the company’s rights, and that he is therefore charged with notice of everything claimed by the plaintiff in error. 16 Am.- and Eng. Ency. of Law, pp. 789-795; and 2 Devlin on Deeds, section 727.
    One who has a knowledge of facts which would lead a fair and prudent man, using ordinary caution, to make further inquiry, is charged with notice of the facts which such inquiry would have disclosed. Actual notice may be inferred from circumstances. Knapp v. Bailey, 79 Me., 195; Drey v. Doyle, 99 Mo., 459; Gibson v. Winslow, 46 Pa. St., 380; s. c. 84 Am. Dec., 552, 555, and note 556.
    This has long been the rule in Ohio. Reeder v. Barr, 4 Ohio, 446; Bonner v. Ware, 10 Ohio, 465.
    Bringing the principle “closer home,” we call the court’s attention to the following cases, in all of which it was held that a grantee was charged with notice of the instruments excepted in the deed. W e have been unable to find any cases where the contrary was held. Morrison v. Morrison, 38 Iowa, 73; Ross v. Worthington, 11 Minn., 323; Buchanan v. Balkum, 60 N. H., 406; White v. Kibby, 42 Ill., 510; Brown v. Eastman, 16 N. H., 588; Kerr v. Kitchen, 17 Pa. St., 433; Building Ass'n v. Parsons, 17 Atlantic Rep., 834; Baker v. Mather, 25 Mich., 51.
    Here there has been no failure to comply with the statute.- The lease and transfer being of record, we say the principle contended for must be applied, and Shoupe held charged with notice of the existence of the lease, together with its terms and conditions.
    The city of Tiffin, applying the same principle, had constructive notice of whatever lease the company had. 16 Am. and Eng. Ency. of Law, 792, and cases cited; Doren v. Robinson, 16 N. J. Eq., 256.
    
      ELmry P. Black, city solicitor, for city of Tiffin, defendant in error.
    
      J. A. c& E. V. Bope, for Shoupe, defendant in error.
    It is very clear that plaintiff in error founds its entire hope of success in securing’ a reversal of the judgment of the circuit court upon the assumption that the common law as to notice, unmodified by statute or the interpretations of such statutes by the Supreme Court, prevails undisturbed in Ohio. But does it? Manifestly the legislature of this state may modify the common law by means of the enactment of statutes that are in conformity to the constitution of the state. No one will dispute this proposition.
    The statute, or at least one of the statutes that control this case, is section 4134 of the Revised Statutes of Ohio. Section 4112<* of the Revised Statutes also bears strongly on this case.
    No one can doubt that Shoupe, under the definition of our Supreme Court of the term purchaser as used in section 4134, is a purchaser of the sixty acre tract, and a bona fide purchaser. No one claims otherwise. Shoupe’s deed was duly entered for record June 21,1895. He took possession of the sixty acres on or about the first day of April, 1894.
    There can be no doubt as to his being completely under the protection of the statute, unless he had knowledge of the lease of the plaintiff in error. Morris v. Daniels, 35 Ohio St., 406; Varwig v. Railroad Co., 54 Ohio St., 455.
    The only knowledge that Shoupe had at the time of his purchase pertaining to these unrecorded extensions was that the plaintiff in error had a lease on his sixty acres, but that such lease would expire on the tenth day of June, 1895. To the extent of this knowledge, we must concede he was bound. But the test is the absence of knowledge, not the absence of that which might induce inquiry. Knowledge that the lease of the plaintiff in error extended further than June 10, 1895, was absent from the mind of Shoupe when he made his purchase of the sixty acres, March 31, 1894.
    There is no evidence that Shoupe acted in bad faith. On the other hand, there is evidence that Shcupe did act in the best of faith, and the circuit court so found. He inquired of his grantor, Taylor, whether he had a copy of the lease that he might verify Taylor’s statements with reference to the lease of the plaintiff in error.
    He exhausted all the means of information that were readily at hand, for the plaintiff in error had negligently refused him information at the source where he might expect to find it — the county recorder’s office.
    We do not doubt that the doctrine contained in the cases of Reeder v. Barr, 4 Ohio, 446, and Bonner v. Ware, 10 Ohio, 465, is good law.
    It is not out of harmony with the cases of Morris v. Daniels and Varwig v. Railroad Company cited above, and so the Supreme Court understood, for the two former cases are not referred to in the two latter.
    
      The case of Bell and Wife v. Duncan et al., 11 Ohio, 192, shows that the construction we have adopted concerning the cases of Reeder v. Barr, and Bonner v. Ware is correct. 46 N. Y. Rep., 384.
   Williams, J.

The ultimate relief sought by the plaintiff, in the action below, was an injunction against the city of Tiffin, preventing it from taking natural gas from the premises in question. The reformation of the lease under which the plaintiff claimed the exclusive right to the gas, was but a preliminary step in the establishment-of the plaintiff’s right to the injunction, and unimportant except in aid of that remedy. This inquiry, therefore, is directed primarily to the ascertainment of the rights of the city under the lease obtained by it from Shoupe, rather than to those of the plaintiff against Shoupe, although the former are to some extent, but not entirely, dependent on the latter. It appears from the finding of facts, that when Shoupe purchased the land and received his conveyance from Taylor, the lease made by the latter to Duke and by him assigned to the plaintiff was, together with the assignment, on record in the proper office; and it was excepted from the covenants in the deed; but the term of years for which the lease was made had been allowed to expire without any effort to develope oil or gas, and no person was in possession of the land claiming under the lease or under any extension of it, nor was any agreement for such extension on record. This was also the condition of affairs when the city of Tiffin obtained its lease from Shoupe, who was then in the exclusive occupancy of the land ; and the receipt given by Shoupe to the plaintiff for rent, which it is claimed amounted to an extension of the lease, was not on record, nor possession held under it. The city upon receiving its lease immediately entered into the actual possession of the land and has since continued in possession.

One question arising on these facts, and probably the most important one, relates to the construction and effect of the act of April 11, 1888 [85 O. L., 179] supplemental to section 4112, and now section 4112a, of the Revised Statutes. It provides: “That all leases and licenses, and assignments thereof or of any interest therein, heretofore executed, given or made, for, upon or concerning any lands or tenements in this state, whereby any right is given or granted to operate, or to sink or drill wells thereon for natural gas and petroleum or either, or pertaining thereto, shall be recorded in the lease record in the office of the recorder of the proper county by the first day of September, 1888, and all such leases, licenses and assignments hereafter executed, given or made, shall be filed for record as aforesaid, forthwith and recorded in said lease record, without delay, and shall not be removed until recorded, and no such lease or license hereafter executed or given, unless the person-claiming thereunder is in actual and open possession, shall have any force or validity until the same is filed for record as aforesaid, except as between the parties thereto, nor shall any such lease or license heretofore executed or given and not recorded by the first day of September, 1888, have any force or validity thereafter until filed for record, except as between the parties thereto, and as to persons claiming thereunder and in actual and open possession.”

This statute, it will be observed, applies to all oil and gas leases and licenses, including those entered into prior, as well as subsequent, to the first day of September, 1888, makes special provision with respect to their registration, and prescribes the consequences of omission to have them recorded as required. It is a settled rule of construction, that special statutory provisions for particular cases operate as exceptions to general provisions which might otherwise include the • particular eases, and such cases are governed by the special provisions. Under that rule this statute takes leases and licenses to which it is applicable out of the operation of sections 4112, and 4134, Revised Statutes, and itself furnishes the rule governing the registry of such instruments, and the effect upon their validity of the failure of registration. In this last respect the declared effect is not essentially different from that resulting from the omission to place on record real estate mortgages. The language of the statute regulating the registry of such mortgages is: “All mortgages, executed agreeably to the provisions of this chapter, shall be recorded in the office of the recorder of the county in which the mortgaged premises are situated, and shall take effect .from the time the same are delivered to the recorder of the proper county for record.” Revised Statutes, section 4133. Since the enactment of that statute it has uniformly been held, and in many eases, that until the mortgage is properly deposited for record, it is without effect, either at law or in equity, as against a third. person who acquires an interest in or lien on the property, although he acquired it with knowledge of the existence of the mortgage. This result arises from the language of the statute requiring such instruments to be recorded, and dedaring that they shall take effect from the time they are delivered for record; the object of the statute being, it is held, to avoid all questions of notice other than that to be obtained from an examination of the record.

The statute we have here under consideration is not less positive in its requirement that oil and gas leases and licenses shall be recorded as therein provided, and is even more explicit in its declaration that until properly filed for record they shall be without any force or effect except as between the parties to them, unless the person claiming thereunder is in the actual and open possession of the lands. Without such record or possession all leases or licenses within the purview of the statute are nugatory and ineffectual for any purpose, both at law and in equity, against a subsequent lessee or other third person dealing with the land, notwithstanding he had at the time actual notice of the prior unrecorded instrument. The only notice to third persons that can be of any avail is, under this statute, the notice afforded by the proper lease record, or actual possession of the land. Shoupe having the exclusive possession of the land in controversy when the city of Tiffin obtained its lease from him, the estate and interest which the lease purported to grant vested in the city, unless some superior right of the plaintiffs then appeared of record; and there was none, if that cannot be claimed for the original lease made by Taylor to Duke and assigned to the plaintiff. That lease was dated June 10, 1886, and, by its terms, was to continue for the period of five years, “and as much longer as oil or gas is produced or found in paying quantities thereon;” and to ascertain the capacity of the land in that respect the lessee was required to complete a well on it within nine months from the date of the lease, or, on failure to do so within that time, to pay an annual rental until the well should be completed. Upon payment of the rental his right to complete the well continued for the specified term of five years, but no longer; and if within that time oil or gas was produced in paying quantities, then the lease was to continue as long- as the product should prove profitable; but if neither of those articles was so produced within the specified time the lease was at an end. This is the construction which the parties themselves have put upon the lease, and is, no doubt, the correct one; otherwise the subsequent agreements for its extension were unnecessary. , There having been no possession taken under the lease, nor effort made to develope its producing qualities as contemplated within the required time, an examination of the record, while it would have discovered the existence of the lease, would also have disclosed that it had expired and ceased to be a subsisting burden on the land. The agreements between plaintiff and Taylor for the extension of the lease were, in effect, new leases; and their record, or possession under them, was necessary to give them any validity whatever except as between the parties to them. And, such record or possession was also necessary with respect to the receipt given to the plaintiff by Shoupe after he became the owner of the premises, if that is to be regarded as an agreement by him to extend the terms and conditions of the original lease. As neither of these instruments was of record, nor anyone claiming- under either in possession of the land when the city of Tiffin took its lease from Shoupe, and as the original lease had then expired, there was no obstacle arising from either, in the way of the city then obtaining- a valid lease from Shoupe, superior to the claim asserted here by the plaintiff. Such a Lease the city appears to have obtained, and it cannot be deprived of its enjoyment at the suit of the plaintiff.

We are also of opinion that the plaintiff is not entitled to the reformation sought of the original lease, as against Shoupe. When he bought the land, it was not included in that lease; and while its exception from the covenants in his deed was sufficient to apprise him of the alleged mistake in the description, the record disclosed that the lease had ceased to be a subsisting incumbrance or claim against the land at the time of his purchase; so' that, he might then buy with safety sq far as that lease was concerned. And, as neither of the agreements for an extension of the lease had been placed on record nor possession taken under either, he took his title discharged of any claim that might be founded on them. Furthermore, it is established by the finding of facts that at the time of his purchase, Shoupe had no knowledge of either of the agreements of extension, and that he paid full value for the land. It is well settled that a purchaser for value is not affected by an unrecorded instrument unless he has actual notice of its existence; circumstances that should put him on inquiry is not enough. Morris v. Daniels, 35 Ohio St., 406; Varwig v. Railroad Co., 54 Ohio St., 455. So that, independent of the effect of section 4112a, the title acquired by Shoupe was not subject to any outstanding claim then existing in favor of the plaintiff; and, if there is any ground for the reformation sought it must be found in the receipt given to the plaintiff by him after he became the owner of the land. That receipt, it is contended, amounts to an agreement for the continued obligatory force of the original lease, according to all of its terms and conditions, upon the land intended to be included in it. But the same alleged mistake in the description of the land is made in the receipt itself, and to give it the effect claimed for it, its reformation should precede that of the lease.

The receipt is materially different from the two papers signed by Taylor; the latter contain an express consent or agreement to extend all the terms and conditions of the original lease for the periods therein mentioned, while the former contains no stipulation of that kind, but is a receipt simply for a specified sum of money for a year’s rent. The misunderstanding of the parties with respect to this receipt is not inexplicable. The plaintiff, having in mind the former agreements of Taylor extending the lease upon like payments, may very well have intended and understood Shoupe’s receipt to have the same effect; but Shoupe, having no knowledge of those agreements, and relying upon the information obtained from Taylor that the only lease made by him had but one year to run, might just as properly have understood and intended the receipt to be for that year’s rent and to have no other effect. The circuit court so found, and we see no reason for disturbing that finding. This mutual misunderstanding would be sufficient to preclude a reformation of the instrument, for that would result in making a contract, upon the terms of which the minds of the parties never met. The receipt contains no express agreement, nor is it claimed there was any, even verbal, between Shoupe and the plaintiff concerning the lease. It is sought, therefore, to establish an implied contract for the extension, from extraneous facts and circumstances, and have a reformation in conformity therewith. If such relief is attainable in any case, it should only follow clear and convincing proof that the party against whom it is sought was possessed of full knowledge of all the facts necessary to the creation of the contract.

Judgment affirmed.  