Harrington v. Texaco, Inc.

• Decision Date: 09 February 1965
• Docket Number: No. 21148.,21148.
• Citation: 339 F.2d 814
• Parties: H. M. HARRINGTON, Jr., et al., Appellants, v. TEXACO, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

339 F.2d 814 (1964)

H. M. HARRINGTON, Jr., et al., Appellants, v. TEXACO, INC., Appellee.

No. 21148.

United States Court of Appeals Fifth Circuit.

December 4, 1964.

Rehearing Denied February 9, 1965.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

H. M. Harrington, Jr., Roberts & Smith, Harrington & Harrington, Longview, Tex., for appellants.

Lawrence Jack Moore, Houston, Tex., Jack W. Flock, Ramey, Brelsford, Hull & Flock, Tyler, Tex., for appellee.

Before RIVES and BROWN, Circuit Judges, and GARZA, District Judge.

JOHN R. BROWN, Circuit Judge:

This slant hole oil well case presents the questions whether the technical evidence was sufficiently trustworthy to establish the deviation, whether an operator has a joint liability with other co-owners, whether allowance is to be made to the convertor for the cost of production, and whether proper credit was given for amounts received in settlement from other alleged convertors. We reject each of the complaints and affirm.

On special interrogatories, F.R.Civ.P. 49, the jury found the well to have been deviated and bottomed under the adjoining Texaco lease. On the verdict the Court entered judgment for the stipulated value of the oil and gas extracted during the two-year period preceding the commencement of this action.¹

The slanted well was drilled in 1952 on a twenty-acre tract. The mineral fee owner, Texas Pacific Coal and Oil Company, retaining a ¼ royalty interest, had leased the working interest to Harrington (¼), Allgood (1/8;), Lutes (¼), Baton (1/16), and Godfrey (1/16). In the beginning Baton, operating under the trade name of "HAL Company,"² was the operator of the well, and as such filed the required forms³ and complied with the regulations of the Railroad Commission of Texas. Since July 30, 1953, Harrington has been designated as the operator. It is stipulated that from the time the well was completed until it was shut-in during July of 1962, $670,000 worth of oil and gas was produced from the well. During the two-year period, the royalty and lease owners received from pipeline purchasers a total of $95,546.92. Texaco, asserting that all of the oil and gas was taken from beneath its lease, claimed 7/8; of the amount paid ($83,603.56). Under an agreed court order, Sperry-Sun Well Surveying Company with the assistance of McCullough Tool Company conducted a directional-deviational survey which revealed that defendants' well was slanted approximately 1600 feet to bottom under the Texaco tract. Over defendants' objection, the survey report was admitted into evidence. Judgment was entered for Texaco for full recovery of the market value of the oil produced less certain credits⁴ for the principal sum of $67,549.16 adjudged specifically against the several defendants.⁵

As their principal attack on the merits, the defendants complain of the admission of the Sperry-Sun well survey report on the ground that a proper predicate was not laid, relying on Wigmore's statement of the back-up information which must be adduced in order to prove up the results of a scientific instrument.

"A. The type of apparatus purporting to be constructed on scientific principles must be accepted as dependable for the proposed purpose by the profession concerned in that branch of science or its related art. * * *

"B. The particular apparatus used by the witness must be one constructed according to an accepted type and must be in good condition for accurate work. * * *

"C. The witness using the apparatus as the source of his testimony must be one qualified for its use by training and experience."⁶

The structure of the objection is then built on the dual assertion that (a) Texas has recognized this principle,⁷ and (b) the Texas law of exclusion is controlling. Analysis shows that the principle (a) is satisfied and, of course, as to (b) it is now clear that F.R.Civ.P. 43 (a) is to be applied to favor the receipt, not the exclusion, of evidence. Monarch Ins. Co. of Ohio v. Spach, 5 Cir., 1960, 281 F.2d 401; Dallas County v. Commercial Union Assur. Co., Ltd., 5 Cir., 1961, 286 F.2d 388.

The requirements of the rule may be established by expert opinion as was unquestionably done here. The qualification of plaintiff's witnesses Gurasich and Sellers as experts amply appears from the record. Both were graduate engineers employed for a number of years by Sperry-Sun, and both were directly concerned with oil well surveys. Gurasich was the Senior Survey Engineer in charge of surveying practices and had been involved for a number of years in testing and improvement of well survey techniques. His testimony demonstrated the reliability and acceptance of the gyroscopic principles involved in the well survey unit here utilized. Sellers, the Sperry-Sun operator who conducted the survey on defendants' well, testified as to the good working condition of the particular apparatus used and the correctness of the particular test conducted. This was corroborated by the testimony of Davis, the McCullough Tool Company employee of seven years, who made the measured depth determination by use of a "wire line" device.

The defendants argue that the well survey report and all exhibits gleaned therefrom should be rejected because the particular apparatus had been introduced only a few months before its use here. But this is only partially true. The unit used here had an outside diameter of 2½ inches as compared with 4½ inches for the gyroscopic mechanism with a reputation for reliability established over a period of several years. This miniaturization, necessary for smaller well bores, carried with it a sizeable reduction in the weight of the "mass" and a tripling of the velocity of the gyro. Because of these differences and its relative newness, the defendants argue that it could not have been "accepted," and likewise the operator could not have been "experienced."

However, there is adequate testimony to demonstrate that the unit's accuracy was thoroughly tested by Sperry-Sun (whose reputation and good standing in the field was on the line) before introduction for general oil-field use. For like reasons, the defendants' argument that because of the novelty of the unit, Sellers, the operator of the unit, lacked the necessary experience falls short. There is ample evidence to indicate that, even though there were some differences between the 4½ inch gyro and the newer 2½ inch one, they were operated similarly. Thus Seller's skill and experience in operating the larger one carries over to the other. There was ample basis for the Court concluding that the reliability of the device had been adequately established by studies, experiments, and field use.

The objection that the survey was inconclusive because the proof of the length of the "hypotenuse" was established only by hearsay is similarly without merit. The reports of the McCullough wire line service were received without objection. On numerous runs into the well, conducted by a qualified operator, a measured depth of 5080 to 5090 feet was established. None of those figures was challenged despite the fact that the survey reports were filed and available for study as the basis of an attack by experts on behalf of the defendants.

We conclude that this directional-deviation survey was properly admitted.

The next attack relates to Harrington alone. He complains of the entry of judgment against him for an amount in excess of that actually received by him. The judgment cast Harrington jointly for amounts received by Allgood and Lutes (see note 5, items (a) and (b)), whereas each of them was held to account only for what each received.⁸ The basis for holding Harrington jointly liable with everyone receiving payment for oil taken from Texaco is that he was the designated operator-lessee⁹ of the well.

As designated operator, under the relevant statutes and Railroad Commission regulations,¹⁰ a number of important obligations rested on him, compliance with which inevitably put the "operator" in operational control of continued production by the well. Thus, Railroad Commission Rule 32 requires the operator to keep regular and complete records of production, sales receipts, business disbursements, etc. He must file the official, periodic production reports with governmental agencies and make reports of work-overs and the like. Generally, he is the man in charge. See Summers, Oil & Gas §§ 651-52 (1962).

The fact that no effort was made to establish that Harrington had wilfully deviated the well is not relevant to the joint liability issue since such intent is not required to make out conversion. 14 Tex.Jur. 2d Conversion § 3. It is entirely reasonable to subject a designated operator having such immediate, practical operational command over day-to-day production activities of the well to an accountability for an unlawful conversion of all of the oil. He has in fact the full means of knowledge and the full means, at least initially, of ceasing production if any question exists as to the legality of production. It was thus permissible for Harrington to be held jointly with each of his co-lessees.

Also involved in the judgment against Harrington (item (c), note 5) is the problem of the extent to which credit should be given for the amount ($20,109.59) received by Texaco from Texas Pacific in settlement.¹¹ The Court allowed a credit of $4,020.00 (see item (c), note 4). Harrington urges that full credit should have been accorded.

The law of Texas is clear on the general proposition that a wronged party is entitled to one, and only one, full recovery — that is, full satisfaction of his loss. Consequently, although a single joint tortfeasor may be sued for the total, anything received in settlement from the non-sued tortfeasor must be set off as a credit against the amount recoverable from the other tortfeasors. Riley v. Industrial Finance Service Co., 1957, 157 Tex. 306, 302 S.W.2d 652; Landers v. East Texas Salt Water Disposal Co., 1952, 151 Tex. 251, 248...