Hamilton v. Empire Gas & Fuel Co.

Decision Date25 February 1924
Docket Number6153.,6152
Citation297 F. 422
PartiesHAMILTON v. EMPIRE GAS & FUEL CO. et al. SHRIVER et al. v. SAME.
CourtU.S. Court of Appeals — Eighth Circuit

Rehearing Denied May 19, 1924.

Chester I. Long, of Wichita, Kan. (John Madden and John Madden, Jr. both of Wichita, Kan., C. E. Cooper, of Tulsa, Okl., and J D. Houston, Austin M. Cowan, Claude I. Depew, Forest D Siefkin, James G. Norton, and W. E. Stanley, all of Wichita, Kan., on the brief), for plaintiffs in error.

H. O. Caster, of Bartlesville, Okl., and Robert Stone, of Topeka, Kan. (S. N. Hawkes, of Bartlesville, Okl., R. A. Brown, of St. Joseph, Mo., George T. McDermott, Robert L. Webb, and Beryl R. Johnson, all of Topeka, Kan., and Altes H. Campbell, of Los Angeles, Cal., on the brief), for defendants in error.

Before SANBORN, Circuit Judge, and BOOTH and FARIS, District Judges.

BOOTH District Judge.

These two actions were commenced in the state court of Kansas, and removed to the federal court by the defendant Empire Gas & Fuel Company on the alleged grounds: (1) That the complaints stated a separable controversy between the defendant company and the respective plaintiffs; (2) that the individual defendants were fraudulently joined for the purpose of defeating removal. Issue was joined in the federal court on the question of removal. A hearing was had and testimony taken. Motions were made at the same time to remand the cases to the respective state courts whence they had been removed. The federal court denied the motions to remand, resting its decision upon the first ground, and not passing upon the ground of fraudulent joinder. The cases were thereafter consolidated for trial, and tried, resulting in verdicts and judgments for the defendants. By separate writs of error the respective plaintiffs seek reversal of said judgments. The two cases have been heard here together, the assignment of errors being substantially the same in each case.

Considering the assignments of error in groups, it appears that plaintiffs in error rely upon four grounds for reversal: (1) Refusal of the trial court to remand the cases to the state court; (2) giving of certain instructions to the jury to which exceptions were taken; (3) refusal to give certain requested instructions to the jury; (4) sustaining objections to the introduction of the testimony of one witness.

The complaints in the two actions are in substance identical. Each contains allegations that an oil lease in the usual form existed between plaintiff as lessor and the defendant company as lessee; a copy of the lease is made part of the complaint; that the defendant company owned similar leases on all of the lands immediately adjoining plaintiff's land; that the individual defendants were managing agents of the defendant company, and had control and management of the operation of said leases; that the defendants drilled wells on the lands adjoining plaintiff's land, and thereby drained oil from the plaintiff's land; that defendants failed and refused to develop plaintiff's land by drilling such offset or protection wells on plaintiff's land as would prevent the drainage of oil therefrom; that the defendants willfully and negligently so handled the pumping of such wells as were drilled on plaintiff's land that a greatly reduced quantity of oil was produced therefrom; that a conspiracy existed between all of the defendants for the doing of the aforesaid acts, and that said acts were done pursuant thereto; that ill will existed on the part of the defendants toward plaintiff, growing out of some disassociated matter; that plaintiff was damaged by the acts mentioned in the amount of royalties which would have accrued to the plaintiff but for the commission of such acts.

1. On the question of remand, the contention of the plaintiffs is that their cause of action is in tort; that all of the defendants were tort-feasors, and that plaintiffs had the election to sue them jointly, and have done so; and, further, that by reason of the conspiracy alleged the cause of action is against all of the defendants. The contention of defendants is that the only cause of action stated against the defendant company is for breach of a contract of lease, and that to this cause of action the individual defendants are neither necessary nor proper parties; that, if any cause of action is stated against the individual defendants, it is one in tort. In our opinion, neither contention is wholly right. An analysis of the complaint leads us to the conclusion that at least two causes of action are stated, though they are so blended in the complaint as to appear but one.

The existence of the lease, and of the implied covenant accompanying the same to drill protection wells on plaintiff's land when and where necessary (admitted by both parties), and failure of the defendant company to drill such wells, make up one cause of action against the defendant company. This cause of action is for breach of contract. The allegation of ill will does not change its character; the allegation of conspiracy with the individual defendants does not change its character. It is to be noted that the conspiracy alleged is not one between third parties to induce the defendant company to breach its contract with the plaintiffs, but a conspiracy between the defendant company, a party to the contract, and the individual defendants, who are not parties to the contract, to do certain acts which would be a breach of the contract on the part of the defendant company but not on the part of the individual defendants. The allegation of conspiracy, with such a state of facts, adds nothing to the cause of action. For a somewhat analogous situation, see Sidway v. Missouri Land & Live Stock Company (C.C.) 116 F. 381, 385. The individual defendants were simply agents and servants through whom the defendant company committed the alleged breach of contract. The cause of action is based upon nonfeasance; and, whether this nonfeasance was brought about by the command of the defendant company to unwilling servants or by agreement with willing and malicious servants, the cause of action against the company is not changed from contract to tort. The individual defendants are neither necessary nor proper parties to this cause of action against the defendant company, because they are not parties to the contract. It may be conceded that, if the individual defendants, through conspiracy or otherwise, procured the defendant company to breach its contract, the individual defendants would be liable, yet the cause of action would be in tort, and not in contract. The allegations of the complaint, however, are not sufficient to state such a cause of action against the individual defendants.

Plaintiffs contend that, though this cause of action might have been sued upon as a breach of contract, yet that it could also be sued upon as a tort, and that they have elected the latter course. It is true that some causes of action arising in connection with breach of contract are of such character that they may be sued upon either in tort or in contract at the election of the plaintiff, but it is not true that all causes of action thus arising have that character. It is not easy to state the tests, with exactness nor always to apply them with absolute certainty.

Underhill, in his Law of Torts (10th Ed.) p. 33, makes the following statement: 'If the cause of complaint is for breach of a contractual duty (that is to say, is for an act or omission which would not give rise to any cause of action without proof of a contract) the action is one of contract. But if the relation of the plaintiff and the defendant be such that a duty arises from the relationship, irrespective of contract, for a breach of that duty, the remedy is an action of tort.'

Similar test approved in Atlantic & Pac. R.R. v. Laird, 164 U.S. 393, 399, 17 Sup.Ct. 120, 41 L.Ed. 485.

Pollock, in Law of Torts (12th Ed.), on page 547, says:

'Now that forms of pleading are generally abolished or greatly simplified, it seems better to say that wherever there is a contract to do something the obligation of the contract is the only obligation between the parties with regard to the performance, whether there was a duty antecedent to the contract or not. But injury which would have been a tort as breach of a duty existing at common law, if there had not been any contract, is still a tort.'

In Whittaker v. Collins, 34 Minn. 299, 25 N.W. 632, 57 Am.Rep. 55, the court said:

'Where the action is not maintainable without pleading and proving the contract-- where the gist of the action is the breach of the contract, either by malfeasance or nonfeasance-- it is, in substance, whatever may be the form of the pleading, an action on the contract. * * * The foundation of the action is the contract, and the gravamen of it its breach.'

In Tuttle v. Gilbert Company, 145 Mass. 169, 13 N.E. 465, the court said:

'The cases are numerous and confusing as to the dividing line between actions of contract and of tort, and there are many cases where a man may have his election to bring either action. Where the cause of action arises merely from a breach of promise, the action is in contract. The action of tort has for its foundation the negligence of the defendant, and this means more than a mere breach of a promise. Otherwise, the failure to meet a note, or any other promise to pay money, would sustain an action in tort for negligence. * * * As a general rule, there must be some active negligence or misfeasance to support tort. There must be some breach of duty distinct from breach of contract.

Applying the foregoing tests to the cause of action now under consideration, we are clearly of the opinion that it does not belong to the class in which an...

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