## Facts

- Hubert Davis and other landowners owned approximately 60 acres in Illinois and executed a written mineral lease granting Nokomis Quarry, Inc. the exclusive right to quarry and remove limestone.
- The lease ran from November 17, 1966 to July 1, 1967, and then continued “from year to year thereafter.”
- The lessee agreed to pay $1,000 for the term ending June 30, 1967, and thereafter $1,000 “on the first day of July of each year thereafter until this lease is terminated, as hereinafter provided.”
- The lease also required royalties of $0.05 per ton of limestone removed, with royalties credited against the $1,000 annual rent.
- The lease imposed no obligation on the lessee to begin quarry operations; the lessee could keep the lease in effect by making the annual payments.
- The lease provided specific termination methods: the lessee could terminate by giving timely notice (by March 1 of a given year), and the landowners could terminate on 30 days’ notice if the lessee defaulted in payment.
- After years of accepting payments, the landowners sent notice of intent to terminate and refused rental payments tendered in 1976 and 1977.
- The landowners sued for declaratory relief (seeking a declaration that the lease ended on July 1, 1977) and also pleaded a separate damages count for injury to the freehold.
- The trial court ruled on the declaratory count that the lease was perpetual and entered an appealable order under Illinois Supreme Court Rule 304(a); the damages count remained pending.

## Issues

1. Whether the lease’s “from year to year thereafter” term, combined with a rent clause payable each year “until this lease is terminated, as hereinafter provided,” created a perpetual (indefinite-duration) mineral lease terminable only through the contract’s specified termination events.
2. Whether the lease was unenforceable for lack of mutuality because the lessee had no duty to commence mining operations.
3. Whether construing the lease as perpetual was barred by Illinois law or the rule against perpetuities.

## Decision

- The appellate court affirmed the trial court’s declaratory judgment.
- The court held the lease was properly construed as perpetual (indefinite in duration), continuing from year to year unless and until terminated in the manner the lease specified.
- The court held the lease was not void for lack of mutuality because the lessee had a definite, ongoing obligation to pay $1,000 annually (with production royalties credited against that amount).
- The court rejected the argument that the absence of words like “forever” prevented a perpetual construction where the instrument, read as a whole, clearly required a positive act to terminate.
- The court concluded that enforcing the lease as written did not violate the rule against perpetuities.

## Legal Principles

- Illinois will enforce an indefinite-duration lease when the parties’ intent is stated clearly in the instrument read as a whole, even if the document does not use the word “perpetual” or similar terms.
- A mineral/royalty lease may be drafted to continue from year to year indefinitely, with termination only by stated events such as surrender by the lessee or termination by the lessor upon default.
- A lessee’s binding obligation to pay a fixed minimum annual amount supplies consideration and mutuality, even if the lessee has no contractual duty to begin mining.
- Contract language requiring payments “until this lease is terminated, as hereinafter provided,” supports a construction that the lease does not end automatically on a calendar date but continues unless terminated under the agreement.
- The rule against perpetuities does not, by itself, invalidate a mineral lease of indefinite duration that is structured to end upon specified termination events.

## Conclusion

The Illinois Appellate Court held that the limestone lease continued indefinitely because its text provided for year-to-year continuation and required annual payments until termination occurred through the agreement’s stated procedures; the court also found the lessee’s minimum annual rent obligation supplied mutuality, so the lease was enforceable and not barred by the rule against perpetuities.


Davis v. Nokomis Quarry, Inc., 397 N.E.2d 216 (1979)