Grayce Oil Co. v. Peterson

• Decision Date: 12 November 1936
• Docket Number: No. 5978.,5978.
• Citation: Grayce Oil Co. v. Peterson, 98 S.W.2d 781, 128 Tex. 550 (Tex. 1936)
• Parties: GRAYCE OIL CO. et al. v. PETERSON et al.
• Court: Texas Supreme Court

Page 781

98 S.W.2d 781

GRAYCE OIL CO. et al. v.PETERSON et al.

No. 5978.

Supreme Court of Texas.

November 12, 1936.

Error to Court of Civil Appeals of Second Supreme Judicial District.

Suit by the Grayce Oil Company and another against Ed Peterson and others. To review a judgment of the Court of Civil Appeals [37 S.W.(2d) 367] reversing a judgment for plaintiffs, and remanding the cause for a new trial, plaintiffs bring error.

Affirmed.

Kilgore & Rogers, of Wichita Falls, for plaintiffs in error.

E. C. de Montel, of Wichita Falls, W. H. Sanford, of Longview, and Charles L. Black, of Austin, for defendants in error.

CURETON, Chief Justice.

This case is fully stated in the opinion of the Court of Civil Appeals, 37 S.W.(2d) 367, and an elaborate restatement in this opinion is unnecessary.

The plaintiffs in error, Grayce Oil Company et al., instituted the suit to recover the value of oil alleged to have been diverted from their producing wells by the operation of a vacuum pump of defendants in error in producing oil from a well, or wells, adjacent to those of the plaintiffs in error, but on a separate lease.The action was also for damages alleged to have been suffered because of the depreciation in market value of the properties of plaintiffs in error caused by the operation of the vacuum pump, and for exemplary damages upon allegations relevant thereto.The verdict of the jury and judgment thereon were favorable to the plaintiffs in error; and defendants in error appealed.The Court of Civil Appeals reversed and remanded the cause because of the erroneous admission of the testimony of one witness, and for errors in the charge.The plaintiffs in error filed a motion for new trial in the Court of Civil Appeals, and applied to this court for writ of error, which we granted.The defendants in error did not file a motion for new trial in the Court of Civil Appeals, and made no application for writ of error to this court.We granted the writ of error upon the view to some extent that the case presented to usnecessarily involved the validity of rule 40 of the Railroad Commission, relating to the use of vacuum pumps in oil fields and the right of the complaining party to recover damages alleged to have been due to a violation of that rule.In view of the state of the record, however, and our concurrence with the opinion of the Court of Civil Appeals in reversing the judgment of the trial court, the above questions are not before us, and will not be reviewed.

With the conclusion just stated, the defendants in error, in the brief filed by them in this court on June 3, 1932, concur, in part saying: "There is not now before the Supreme Court, upon the present writ of error, any question involving the authority of the Railroad Commission, or the effect of its regulations."(Italics are ours.)

After a careful review of the record before us, we have concluded that the Court of Civil Appeals correctly reversed the judgment on the grounds stated, and fully shown in the opinion.Obviously the witness Olden had not qualified sufficiently to express an opinion as to the effect of the operation of the vacuum pump on the valuation of the properties of plaintiffs in error.Olden was an experienced oil operator, familiar with the factors ordinarily considered in determining the value of oil leases or of oil wells, but, in his own language, he"had had no experience with the vacuum, and did not know anything about it."The effect of a vacuum pump, when applied to one well, on other adjacent wells, or on the common pool of an oil field, is a highly technical subject (seeU. S. Bureau of Mines BulletinNo. 322, "Effect of Vacuum on Oil Wells"), and unless a witness knows the result of such an operation, his opinion as to whether or not it would detract from the value of an adjoining lease would be the merest guesswork, and is of no value to a court or jury trying the issue.In the instant case the vacuum was operated for about 90 days, when it was abandoned under orders of the Railroad Commission.What was the effect of the operation of the vacuum for this period of time?How far distant from the vacuum into the adjoining field would the operation of the pump be effective?Would the texture and porosity of the producing sands or shale have any effect on the operation?What effect would the operation of a vacuum as in the instant case have on the gas pressure, water pressure, and rock pressure on adjacent wells, such as those of plaintiffs in error?What effect does the character of oil, either as to weight or viscosity, have on vacuum operations?Does the operation of a vacuum affect the oil-gas ratio; and if so, how?Would the operation of the vacuum for a limited period of time open up new ways or channels for oil and gas, so that upon its discontinuance oil and gas coming into the area would flow from the adjacent lease to that of the defendants in error?Or would the operation of the vacuum, and its subsequent discontinuance, cause oil and gas to flow into the general producing area and become available for production on adjoining leases as well as upon the one where it was installed and operated?Or would less oil and gas so flow and be available for production?The witness could not, and did not, answer these questions; for the reason that he knew nothing about the effect of the operation of a vacuum pump.What amount of vacuum could be safely applied to the well in question without injury to the adjoining property of plaintiffs in error; or what amount would be sufficient to cause the flow of casing-head gas as permitted by rule 4 of the Railroad Commission?Was the amount of vacuum applied in the instant case more than was necessary to cause the casing-head gas to flow into the gathering lines in use?The witness did not, and could not, answer these questions, because he knew nothing about the operation and effect of a vacuum pump.Yet, in order for the witness to determine the effect of the operation of the vacuum pump here involved on the value of the lease of the plaintiffs in error, it was essential that he be able to answer these questions, or others of a similar nature.We cannot agree with the insistence that the witness Olden was qualified to express an opinion, as he did, in response to the questions objected to, that the operation of the vacuum pump complained of would detract from the value of the lease of plaintiffs in error.Texas Jurisprudence states the elementary rule:

"Before a witness may be allowed to state his opinion of the value of property he must show his qualification.While this does not mean that he must qualify as an expert, it does mean that he must show that he has had opportunities to form an intelligent opinion on the subject, superior to those of the jury.Such showing should reveal that he has some knowledge of the property and of its value at the time and place in question."19 Tex.Jur., p. 206, § 134.(Italics ours.)

Again, the same authority states:

"Whenever the value of the property depends upon something peculiar to itself, such as its physical condition, individual qualities, particular uses and the like, the witness must, as a rule, show some direct personal knowledge of the property in order to be entitled to express an opinion."19 Tex.Jur., p. 208, § 135.(Italics ours.)

The witness Olden did not say that he was familiar with the value of an oil lease, adjacent to which a vacuum had been operated, such as is here involved.He gave the formula used by him for ascertaining the value of an oil lease where production had become stable, but not a method where, after becoming stable, the lease had been subjected to a vacuum operation on an adjoining or adjacent lease.In fact, the witness knew nothing about the effect of a vacuum operation.In the instant case the value of the lease of plaintiffs in error depended not merely upon the ordinary operation after having reached stable operation, but upon something peculiar to itself; namely, the fact that it had been subjected to the operation of the vacuum of defendants in error on an adjacent lease, which may or may not have affected the operation and production of oil on the lease of plaintiffs in error, and, therefore, may or may not have affected its value.Of course, a witness as to value need not always be an expert, but he clearly must have a knowledge of the subject-matter in question; which in the instance before us involved a knowledge of the effect of the vacuum operation, made the basis of the damages claimed in this action, or knowledge of the effect of similar operations under similar circumstances.Texas Jurisprudence on this question says:

"While, as we have seen, a witness on the issue of value need not be an expert, the mere fact that he has observed the property whose value is in question will not always suffice, for he may be incapable of appreciating the value even though he has seen it.It follows that the witness should, as a rule, have not only a knowledge of the specific property to be valued, but also a knowledge of the general subject matter sufficient to enable him to draw a proper conclusion; in other words, he must show that he is better equipped in this respect than the jurors."19 Tex.Jur., p. 211, § 137.

We have no doubt that the admission of the testimony of the witness Olden, to the effect that the operation of the vacuum pump, as shown by the evidence, detracted from the value of the lease of plaintiffs in error, was erroneous.We agree with the Court of Civil Appeals that this error was a reversible one.Texas Jurisprudence states:

"Perhaps the most fruitful source of error in connection with the receipt of opinion evidence arises in the admission of opinions of unqualified witnesses and in the rejection of opinions of qualified ones.While, as we have seen, mere minor defects in qualification go more to the weight of the opinion than to its admissibility, receipt of an opinion from...