Superior Oil Co. v. Devon Corp.
United States Court of Appeals for the Eighth Circuit
604 F.2d 1063 (8th Cir. 1979)
The Olsens (defendants) leased oil and gas rights to Superior Oil Company (Superior) (plaintiff) in 1949; Superior produced oil, extending the lease, but stopped further development after 1961. In 1976, without notifying Superior, the Olsens leased the same property to a third party, Chris Christensen, and Superior sued for breach; the Olsens counterclaimed that Superior had itself breached the implied covenant to further develop the leasehold, and the district court agreed, cancelling Superior's lease without any prior notice or demand having been given.
Whether an oil and gas lease may be cancelled for breach of an implied covenant without the lessor first giving the lessee notice of the breach and demanding compliance within a reasonable time.