Arkla Exploration Company v. Boren

• Decision Date: 10 June 1969
• Docket Number: 19445.,No. 19430,19444,19430
• Parties: ARKLA EXPLORATION COMPANY, Appellee, v. Sam BOREN et al., Appellants. ARKLA EXPLORATION COMPANY, Appellant, v. Sam BOREN et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

411 F.2d 879 (1969)

ARKLA EXPLORATION COMPANY, Appellee, v. Sam BOREN et al., Appellants.

ARKLA EXPLORATION COMPANY, Appellant, v. Sam BOREN et al., Appellees.

Nos. 19430, 19444, 19445.

United States Court of Appeals Eighth Circuit.

June 10, 1969.

Charles R. Ledbetter, of Shaw, Jones & Shaw, Fort Smith, Ark., for Sam Boren et al.; Richard B. Shaw, Fort Smith, Ark., of Shaw, Jones & Shaw, on the brief.

Robert Roberts, III, of Blanchard, Walker, O'Quin & Roberts, Shreveport, La., for Arkla Exploration Co.; Heartsill Ragon and Wayne Harris, of Warner, Warner, Ragon & Smith, Fort Smith, Ark., on the brief.

Before VAN OOSTERHOUT, Chief Judge, VOGEL, Senior Circuit Judge, and HEANEY, Circuit Judge.

VAN OOSTERHOUT, Chief Judge.

Before us are appeals by Sam Boren and associates from judgment entered against them for a balance due on a contract in the sum of $39,039.15 in favor of plaintiff Arkla Exploration Company (Arkla) and dismissing defendants' counterclaim and from an order denying defendants' motion for a new trial or in the alternative, for judgment n. o. v. Arkla has cross-appealed from final order denying its post-trial motion for pre-judgment interest. Jurisdiction based upon diversity of citizenship is established.

This litigation arose out of an operating agreement entered into between Arkla and Boren, for himself and on behalf of certain named defendants whom he represents. There is no dispute with respect to Boren's authority to bind his co-defendants and Boren and such defendants will for convenience be collectively referred to in the opinion as Boren.

The operating agreement relating to a wildcat drilling venture was entered into by Arkla, Boren and other persons. The agreement provided that Arkla as operator should have full control of the drilling operations and should drill the well in a good and workmanlike manner and with due diligence to 12,000 feet or the top of the Mississippian Formation, whichever occurred first, unless granite or other practically impenetrable substance is encountered at a lesser depth, or unless all parties agree to complete the well at a lesser depth. The contract also provided that Arkla shall have no liability to defendants for losses sustained except such as may result from gross negligence or from breach of provisions of the agreement.

The contract provided that all drilling costs would be shared in the proportion of 50% by Arkla, 34.375% by Boren and 15.625% by other parties. Parties other than the Boren group have paid their share of the drilling costs. Arkla proceeded to drill the well pursuant to the obligation it assumed in the operating agreement. The money spent by Arkla in carrying out the joint undertaking is not disputed. It is stipulated that the cost of the well attributable to the Boren interests is $125,042.37 and that Boren has paid $86,003.22 thereon, leaving a balance of $39,039.15 unpaid. The jury awarded Arkla $39,039.15.

Unanticipated difficulties were encountered in drilling the well which greatly increased the cost of drilling. The drilling was abandoned at a depth of 8,601 feet on December 25, 1965.

Boren, as a defense to Arkla's suit to recover Boren's proportionate share of the drilling costs and by way of counterclaim for a recovery of the drilling payments it had made, asserted Arkla had not performed its drilling obligation with diligence and in a workmanlike manner; that Arkla failed to proceed to 12,000 feet or the Mississippian Formation; that Arkla failed to establish that the drilling was stopped because a practically impenetrable substance was reached, and that Arkla failed to prove Boren consented to termination of the drilling.

BOREN'S APPEALS.

Boren urges that it is entitled to a reversal and remand for a new trial because of error in the court's instructions in the following respects:

I. Erroneous and conflicting definitions of practically impenetrable substance.

II. Error in submitting the issue of consent to termination of drilling when defense of consent was not pleaded and no evidence was introduced to support a finding of consent.

The asserted errors relate to two of three alternate bases upon which Arkla relied. The third basis, to the effect that the Mississippian Formation was reached, is not involved in the attack on the instructions here made. There is substantial evidence to support the contention that the Mississippian Formation was reached. However, since there is no way of determining the theory upon which recovery was allowed by the jury, Boren is entitled to have the errors he asserts considered and to a reversal and a new trial if the instructions excepted to are erroneous and prejudicial. For the reasons hereinafter set out, we find no prejudicial error was committed.

I.

Boren's first point asserts that the court erred in instructing the jury as follows:

"You are instructed that the contract uses the terms `practically impenetrable substance.\'

"You are instructed that practically impenetrable substance in this lawsuit is any substance that is encountered which is not penetrable with reasonable cost and facilities as long as the driller has performed the drilling with due diligence and without negligence. In other words, a practically impenetrable substance is one in which with available equipment and at a reasonable cost the substance cannot be penetrated.

"You are instructed that if you find the term `practically impenetrable substance\' has an accepted meaning among persons experienced in the oil and gas industry, then you must use that meaning in determining whether a practically impenetrable substance was encountered during the drilling of the Fronterhouse No. 1 well."

Elsewhere in the instructions the jury is told that if they find by a preponderance of the evidence that Arkla proceeded in a workmanlike manner and with due diligence and that the drilling was discontinued because practically impenetrable substance was encountered at 8,601 feet, Arkla was entitled to recover Boren's proportionate share of the drilling cost. The contract excuses going to the depths specified by the contract if "granite or other practically impenetrable substance is encountered at a lesser depth."

Defendants' first objection to the instruction, raised below and here, is to the omission of the word "granite" from the definition. There is no contention made that granite was encountered and we perceive no prejudicial error in the omission of such word. The language used in the first paragraph of the instruction quoted is the same in substance as that contained in defendants' requested Instruction No. 4. Defendants are in no position to object to the giving of instructions which are given at their request. Northern Pacific Ry. Co. v. Haugan, 8 Cir., 184 F.2d 472, 476.

Moreover, we believe the use of the word "practically" preceding the words "impenetrable substance" has considerable significance. "Practically" is defined in Webster's Unabridged Dictionary as follows: "in a practical way; as * * * virtually, to all practical purposes (although not entirely or absolutely)." In the somewhat analogous field of impossibility, § 454, Restatement Contracts, provides:

"In the Restatement of this Subject impossibility means not only strict impossibility but impracticability because of extreme and unreasonable difficulty, expense, injury or loss involved."

See Corbin on Contracts, § 1325.

Boren also attacks the second paragraph of the quoted instruction upon the basis that there is no proof as to the industry meaning of practically impenetrable...