Acme Oil and Mining Co. v. Williams

In Acme Oil and Mining Co. v. Williams (1903) 140 Cal. 681, a lessor leased lands to a lessee for the purpose of oil and gas production. The only consideration the lessor received was prospective oil and gas royalties from the lessee. (Id. at p. 684.) When the lessee abandoned the premises, the lessor declared the leased forfeited. (Id. at pp. 683-684.) Our Supreme Court held that under the lease the lessee had an implied covenant to diligently produce oil from the property. (Id. at p. 684.) The court also upheld the forfeiture because the lessee's production of oil and gas was an implied condition precedent to the lessor's performance under the lease. (Id. at p. 686.)