Davis v. Keeche Oil & Gas Co.

• Decision Date: 27 March 1923
• Docket Number: Case Number: 11791
• Citation: 89 Okla. 226,214 P. 711,1923 OK 176
• Parties: DAVIS v. KEECHE OIL & GAS CO.
• Court: Oklahoma Supreme Court

1923 OK 176

214 P. 711

89 Okla. 226

DAVIS v. KEECHE OIL & GAS CO.

Case Number: 11791

Supreme Court of Oklahoma

Decided: March 27, 1923

Syllabus

¶0 1. Reformation of Instruments--Mistake--Sufficiency of Evidence.

In order to justify a reformation of a contract, the evidence must be full, clear, unequivocal, and convincing as to mistake and its mutuality. Mere preponderance of the evidence is not enough. The proof must establish the facts to a moral certainty, and take the case out of the range of reasonable controversy.

2. Appeal and Error--Review of Equity Case--Findings.

In an equitable action, the findings of fact of the trial court will be sustained, unless they are clearly against the weight of the evidence.

3. Same--Reformation of Oil Lease.

The record in this case examined, and held, that the findings and judgment of the trial court are not clearly against the weight of the evidence.

4. Contracts--Practical Construction.

Where a contract, or any clause thereof, is uncertain and indefinite, and the parties thereto, by their subsequent conduct or acts, have construed it, and such construction is within the purview of the language used, the courts will ordinarily adopt as controlling the construction made by the parties themselves.

5. Oil and Gas--Validity of Lease--Estoppel of Lessor.

One who, with knowledge of the facts and without objection, suffers another to go upon and drill an off well on his land under the belief that he has a valid lease thereon, will be estopped to deny the binding force of such lease.

Error from District Court, Caddo County; Will Linn, Judge.

Action by L. A. Davis against the Keeche Oil & Gas Company and another for cancellation of oil lease, etc. Judgment for defendants, and plaintiff appeals. Affirmed.

J. S. Estes, Louis E. McKnight, and W. C. Stevens, for plaintiff in error.

Bond, Melton & Melton, for defendants in error.

NICHOLSON, J.

¶1 This action was brought by L. A. Davis, as plaintiff, against the Keeche Oil & Gas Company and the Gorton Trust, as defendants, seeking a reformation and cancellation of an oil and gas lease executed by him to the Keeche Oil & Gas Company, and for an accounting for the oil produced from the land covered by said lease.

¶2 The material allegations of the petition are, in substance, that on June 5, 1916, the plaintiff executed and delivered to the Keeche Oil & Gas Company an oil and gas lease on 20 acres of land situate in Caddo county, said lease being for a term of two years, and as long thereafter as oil or gas, or either of them, was produced from said land by the lessee. That said lease was executed under the following circumstances: That one F. M. Bailey, the president of the Keeche Oil & Gas Company, acting for and on behalf of said Company, and the defendant agreed, prior to the execution of said lease, that said lease should be for a term of two years, and that said company should drill a well upon said land within one year from the date of the lease, but that the company should have the second year of the term of said lease to insure the completion of said well; that Bailey prepared the lease and the same was duly signed and acknowledged by the plaintiff; that Bailey claimed to be in great haste and stated that he did not have time to prepare a copy of the lease for the plaintiff, but that he would send plaintiff a Copy thereof at a subsequent date; that the second paragraph of said lease reads:

"If no well be commenced on said land on or before the 5th day of June, 1918, this lease shall terminate as to both parties unless the lessee on or before that date shall pay or tender to the lessor, or to the lessor's credit in the Bank of Cyril at Cyril, Okla., or its successors, which shall continue as the depository regardless of changes in the ownership of said land, the sum of twenty dollars, which shall operate as a rental and cover the privilege of deferring the commencement of a well for 12 months from said date. In like manner and upon like payment or tender the commencement of a well may be further deferred for like period of the same number of months successively. And it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privileges granted to the date when said first rental is payable as aforesaid, but also the lessee's option of extending that period as aforesaid, and any and all other rights conferred"

--that the figures and date "1918" was written in said lease by mistake, inadvertence, and oversight of said Bailey and the plaintiff, and that said figures and date should be "1917"; that both parties to said lease understood and agreed that said date should be 1917 and not 1918; that the term of said lease was to be two years from its date and that the same would expire by its own limitation on June 5, 1918; that at no time prior to June 5, 1918, or at any time before the expiration of said lease by its own terms and limitation, did the defendant Keeche Oil & Gas Company, or anyone for it, begin the drilling of a well or do anything toward the commencement of a well on the premises described, nor pay or tender to the plaintiff any sum whatever as delay money for such failure and default; that soon after June 5, 1918, the plaintiff notified the Keeche Oil & Gas Company that said lease was void because of the failure to commence a well or pay the delay money within the life of said lease, and on various occasions thereafter the plaintiff notified the Keeche Oil & Gas Company that said lease was void and that it had no rights thereunder; that, notwithstanding all of said notices, both oral and written, the Keeche Oil & Gas Company, with full knowledge and notice that it had no rights whatever on said land, in April, 1919, cut the fence surrounding said land, took possession of the land, and begun the drilling of an oil well thereon, and completed said well in September, 1919; that such entrance upon the land and the drilling of said well was without lawful authority and that said plaintiff had at no time consented thereto; that said well produced about 200 barrels of oil per day, which has been by the Keeche Oil & Gas Company sold to the defendant Gorton Trust, and that said Gorton Trust received said oil with full knowledge of the rights of the plaintiff and regardless thereof. The prayer of the petition was that the date 1918, in the second paragraph of the third section of said lease, be decreed to read 1917, that said lease be canceled of record and held void as a cloud upon plaintiff's title to said land, and that defendants be enjoined from claiming any right, title, or interest in and to said land and from trespassing thereon, and that each of said defendants be required to account and pay the plaintiff for all oil produced from said land, and for the appointment of a receiver to take possession of and dispose of any oil then on hand.

¶3 The defendant Keeche Oil & Gas Company answered, admitting the execution of the lease on June 5, 1916, but denied that any error or mistake was made therein, and alleged, in substance, that at the time said lease was executed there was no oil production in the Cement field; that the nearest production of oil or gas to the land covered by said lease was 30 or 35 miles; that at such time the defendant in connection with the Oklahoma Star Oil Company was drilling a well in the Cement field known as the Kunsmiller well, and that such well was the only well drilled within several miles of said land; that after the execution and delivery of the lease and in December, 1916, the Kunsmiller well was drilled into an oil sand which produced oil in paying quantities, and as a result thereof other wells were drilled in the Cement field and a productive oil field developed; that plaintiff was well aware of such conditions and knew of all the development in such field and the progress thereof; that the defendant Keeche Oil & Gas Company, under the terms and conditions of said lease, construed the same to mean that the defendant had until June 5, 1918, within which to begin drilling a well upon plaintiff's land without the payment of any rentals, and if the defendant did not begin drilling a well on said land on or before June 5, 1918, it could on or before that day pay to the plaintiff, as provided in said lease, the sum of $ 20, delay rentals, and thereby extend the time of such lease within which defendant could begin a well for a period of one year from June 5, 1918, and that if the defendant paid such rentals and began drilling a well on said land on or before June 5, 1919, it would have the right, under said lease, to continue the drilling of said well with reasonable diligence until oil or gas was discovered therein or the well proved to be dry, and if oil or gas was discovered in such well in paying quantities, then such lease would, by and under its terms, continue so long as the defendant produced oil or gas from the land: that in accordance with such construction the defendant did on June 5, 1918, tender to the plaintiff the sum of $ 20, rentals, under and pursuant to said lease, and also tendered said sum to the Bank of Cyril, in payment of the rent provided for in said lease; that such tender was refused by the plaintiff and, the plaintiff being at such time cashier of the bank of Cyril, such bank also refused to receive the money so tendered; that the plaintiff at that time knew and understood the construction placed upon said lease by the defendant; that on October 22, 1917, long after the Kunsmiller well had been drilled and after the numerous other wells were being drilled in the Cement field, plaintiff filed suit in the district court of Caddo county against the defendant, seeking to cancel said lease on the ground that it had been materially altered after its execution, and wherein he alleged that said lease when executed by him provided that if no well was begun on or before the 5th day of June, 1917, rental should be paid, and...