Gem Oil Co. v. Callendar

• Citation: 70 Okla. 214,1918 OK 269,173 P. 820
• Decision Date: 01 May 1918
• Docket Number: Case Number: 8919
• Parties: GEM OIL CO. v. CALLENDAR.
• Court: Oklahoma Supreme Court

1918 OK 269

173 P. 820

70 Okla. 214

GEM OIL CO. v. CALLENDAR.

Case Number: 8919

Supreme Court of Oklahoma

Decided: May 1, 1918

Syllabus

¶0 1. Oil and Gas--Contract--"Proposed."

The word "proposed" in a binding contract for the payment of $ 3,000, "if a well proposed to be drilled upon certain land proves a commercially paying oil or gas well," must, in construing such contract, be defined as fixed intention on the part of the promisor fully known to the promisee at the time the contract was entered into that a well was contracted to be drilled upon the land referred to in the contract.

2. Compromise and Settlement--Condition.

The Gem Oil Company entered into a binding contract with J. J. C. in settlement of an existing liability to pay J. J. C. $ 3,000 if a well proposed to be drilled upon lands leased to Gem Oil Company proved to be a commercially paying oil or gas well, and shortly thereafter sold the lease on which the well was to be drilled, and the purchaser thereof developed a commercially paying gas well upon said land. Held, that upon the development of a commercially paying gas well upon the land in question the Gem Oil Company became liable to J. J. C. for the payment of said $ 3,000.

Error from District Court, Tulsa County; W. J. Campbell, Judge.

Action by J. J. Callendar against the Gem Oil Company. Judgment for plaintiff, and defendant brings error. Affirmed.

Poe & Lundy, for plaintiff in error.

H. B. Martin and R. A. Reynolds, for defendant in error.

COLLIER, C.

¶1 This is an action brought by the defendant in error against the plaintiff in error to recover damages for the breach of a contract. By stipulation of counsel a jury was waived, and the case tried to the court. The petition contained two causes of action, but by stipulation the first cause of action was dismissed, and a cross-action filed by the plaintiff in error was also dismissed, and the trial limited to the second cause of action pleaded in the plaintiff's petition. The court found in favor of the defendant in error in the sum of $ 3,000, and rendered judgment accordingly, to which the defendant in error duly excepted. Timely motion for a new trial was filed, overruled, and excepted to. Hereafter the parties will be designated as they appeared in the trial court.

¶2 The second cause of action, omitting the formal parts, is as follows:

"And plaintiff for his second and further cause of action against the defendant says and avers: That the defendant is now, and has been at all times hereinafter mentioned, a corporation organized and existing under and by virtue of the laws of the state of Oklahoma, engaged in the general business of buying and selling oil and gas mining leases and mining for the production of oil and gas, having its principal office and place of business at the city of Tulsa, in the state of Oklahoma.

¶3 "That heretofore, to wit, on or about the 1st day of March, 1913, the plaintiff and the defendant made and entered into their certain contract in writing by the terms of which the defendant agreed, in consideration of certain services rendered, to pay to the plaintiff the Sum of $ 500 cash and the further sum of $ 500 when and if a well then drilling or about to be drilled by or for the defendant, near Owasso, by one Wayne Kingsbury, should be drilled in and prove a commercially paying oil end gas well, and the further sum of $ 1,000 when and if a well proposed to be drilled by the defendant in section 15, township 17 north of range 12 east, in Oklahoma, should be drilled in and should prove a commercially paying oil and gas well, and the further sum of $ 3,000, when and if a well proposed to be drilled by the defendant on any of its leases in sections 14 or 15, township 20 north of range 13 east, in Oklahoma, should be drilled in and prove a commercially paying oil or gas well.

"And plaintiff avers that said contract was entered into on behalf of the defendant, through its president and managing officer, R, A. Josey, who was duly authorized thereto by the defendant. A true, full, and complete copy of said written contract is hereto attached, marked Exhibit A, and made a part of this petition the same as if herein in full set out.

"And plaintiff avers that the word 'proposed,' as used in said contract, was intended by the parties, at the time of the execution of said contract to mean a positive engagement on the part of the defendant to drill said wells, and all of them, within a reasonable time thereafter, and that it was the intent of the plaintiff and the defendant in executing said contract that the engagement of the defendant evidenced thereby to drill said wells should be an unconditional promise.

"And plaintiff avers that he has fully performed on his part all of the conditions and obligations by him to be performed under the terms of said contract but that the defendant has wholly failed, neglected, and refused to perform said contract, except that it has paid to the plaintiff the sum of $ 500 pursuant to the engagements of said contract, and that the defendant drilled the well agreed to be drilled by it in said contract near Owasso, which was described as being drilled by one Wayne Kingsbury, and that said well proved a failure, and that thereafter the defendant drilled another well proposed by it in said contract to be drilled in section 15, township 18 north of range 12 east, and plaintiff avers that in said well oil was found in commercially paying quantities, but that the defendant has wholly failed, neglected, and refused to pay to the plaintiff the sum of $ 1,000 at the time of the completion of said well or at any other time.

"And plaintiff says that the defendant has further broken said contract in that after the execution and delivery thereof, and without the consent of this plaintiff, the defendant sold and assigned, on or about the -- day of , 1914, all its leases in sections 14 and 15 in township 29 north of range 13 east, and that the assignee of said leases has heretofore drilled upon said leases three commercially paying gas wells, but that the defendant has wholly failed, neglected, and refused to pay to the plaintiff the sum of $ 3,000 promised and agreed to be paid to the plaintiff when and if a well in said territory should be drilled in by the defendant which produced oil or gas in commercially paying quantities--all to the damage and injury of the plaintiff in the sum of $ 4,000.

"Wherefore, plaintiff prays judgment against defendant upon his second cause of action for the sum of $ 4,000 and the costs of this action."

¶4 Exhibit A, referred to in the petition, and attached thereto, is as follows:

"Exhibit A.

"Memorandum of agreement made this March 1, 1913, between Gem Oil Company, first party, and J. J. Callendar, second party, witnesseth: That the first party has agreed to pay and second party has agreed to receive in full for all services of the second party to date the sum of five hundred dollars [$ 500.00] cash, the receipt of which second party acknowledged, the further sum of five hundred dollars [$ 500.00] to be paid when and if the well now drilling or about to be drilled by or for the first party near Owasso by Wayne Kingsbury is drilled in and proves a commercially paying oil or gas well, the further sum of one thousand dollars [$ 1,000.00] when and if a well proposed to be drilled by first party in section 15, township 18 north, range 12 east, is drilled in and proves a commercially paying oil or gas well, the further sum of three thousand dollars [$ 3,000.00] when and if a well proposed to be drilled by first party on any of its present leases in sections 14 or 15, township 20 north, range 13 east, is drilled in and proves a commercially paying oil or gas well.

"Witness the hands and seals of the parties the day and year first above written.

"Gem Oil Company,

"By R. A. Josey, Prest.

"J. J. Callendar."

¶5 The defendant demurred to plaintiff's second cause of action for the reason that "the same failed to state facts sufficient to con-statute a cause of action against the defendant." The demurrer was overruled, and exception saved, but the action of the court thereon is not assigned as error.

¶6 After the overruling of the demurrer, the defendant filed an answer, which, omitting the formal parts, and that part dismissed by stipulation, is as follows:

"Comes now the defendant, the Gem Oil Company, and for answer to plaintiff's petition denies each and every fact, matter, and thing in said petition alleged, and each and every fact, matter and thing in plaintiff's first cause of action alleged, and each and every fact, matter, and thing in plaintiff's second cause of action alleged not herein specifically admitted.

"The defendant admits that it is a corporation organized under the laws of the state of Oklahoma.

"The defendant, for its second defense to both of plaintiff's causes of action, and for answer to plaintiff's second cause of action, and for cross-petition against plaintiff, alleges: The defendant admits the execution of the written contract attached to plaintiff's petition, marked Exhibit A, and denies each and every other fact, matter, and thing in said cause of action alleged."

¶7 The execution of the contract, a copy of which is attached to plaintiff's petition as Exhibit A, is admitted in the answer, and the uncontradicted evidence shows that after the execution of said contract the defendant sold and assigned its leases in section 14 or 15, township 20 north, range 13, and that thereafter wells were drilled upon the land to which the $ 3,000 payment of the contract refers. The evidence as to whether or not the wells drilled upon said land developed oil or gas in commercial paying quantities was in conflict.

¶8 When the parties rested there was no evidence before the court that the well that had been bored produced gas or oil in commercial quantities, and the defendant demurred to the evidence, and against its objection and exception, the plaintiff was permitted to open the...