In the Cities Service Gas Co. v. Peerless Oil & Gas Co., et al., case in 1950, the U.S Supreme Court ruled on a dispute involving oil and gas leases. The plaintiff, Cities Service Gas Company, had leased land from Peerless Oil & Gas for drilling purposes but later discovered that some of these lands were already leased to other companies by mistake. When Cities Service learned about this error, they stopped paying royalties to Peerless and sought a refund for payments made previously under mistaken belief that they held exclusive rights to drill on those lands. The court decided in favor of Cities Services stating that it was entitled to recover payments mistakenly made due its lack of knowledge regarding prior existing leases at the time when initial payment was done. However, it also stated that any recovery should be reduced by value received from production during period before discovery of mistake as well as reasonable rental value after discovery till lease termination or surrender.

The dissenting opinion in the Cities Service Gas Co. v. Peerless Oil & Gas Co., 1950, argued that the majority's decision was not consistent with Oklahoma law and did not respect the rights of property owners to freely contract their land for oil and gas leases. The dissent emphasized that under Oklahoma law, a lease is considered both a conveyance of an interest in land as well as a contract between parties. Therefore, it should be interpreted according to its terms rather than by applying rules from other jurisdictions or general principles of equity jurisprudence which may undermine these contractual agreements. Furthermore, they disagreed with the majority's view on implied covenants within such contracts arguing that this could lead to uncertainty and confusion among parties involved in similar transactions.