Martin Oil & Gas Co. v. Fyffe

• Decision Date: 05 December 1933
• Citation: 251 Ky. 517
• Parties: Martin Oil & Gas Co. v. Fyffe et al.
• Court: United States State Supreme Court — District of Kentucky

251 Ky. 517

Martin Oil & Gas Co. v. Fyffe et al.

Court of Appeals of Kentucky.

Decided December 5, 1933.

1. Contracts. — When contract was intended to and does bind all parties and imposes upon them mutual reciprocal obligations, requirement as to mutuality is satisfied.

2. Contracts. — In construing contract, courts look to entire instrument and deduce parties' intention from language employed.

3. Contracts. — Secret intentions of one contracting party cannot prevail as against intention expressed in contract.

4. Mines and Minerals. — Oil-well drilling contract requiring contractors to commence drilling first well on receipt of notice from owner contemplated that contractors would drill at least one well.

Contract provided that contractor agreed to drill two wells for owner to depth of through big shale formation unless gas or oil was found at lesser depth, that contractor should commence drilling first well upon receipt of notice from owner to do so, and that drilling of second well should be commenced upon receipt of notice from owner after completion of first well if owner desired to do so, and that if owner desired to abandon well before completion, he could give notice to contractor and thereupon contractor should cease further drilling.

5. Mines and Minerals. — Oil-well drilling contract was not unenforceable because of provisions that contractors would not begin drilling until notified by owner, and because no limitation was fixed to give notice, since law would imply notice within reasonable time.

6. Contracts. — In absence of definite specified time for performing contract or any act in connection therewith, law implies performance within reasonable time.

7. Mines and Minerals. — Under oil-well drilling contract providing that contractors should commence second well if owner desired, it was wholly optional with owner whether to drill second well.

8. Mines and Minerals. — Provision of oil-well drilling contract permitting owner to abandon well before completion did not render contract wholly ineffectual.

9. Mines and Minerals. — Owner could not invoke provision of oil-well drilling contract permitting abandonment of well, where by owner's own act it put it out of power of contractors to even begin drilling.

Appeal from Floyd Circuit Court.

COMBS & COMBS and J.B. CLARKE for appellant.

WHEELER & WHEELER for appellees.

OPINION OF THE COURT BY CREAL, COMMISSIONER.

Affirming in part and reversing in part.

The Martin Oil & Gas Company, a corporation, is appealing from a judgment in favor of J.H. Fyffe and Proctor Fyffe for breach of a drilling contract. The judgment is for $1,000 for each of the two wells mentioned in the contract. The pertinent facts as made to appear from the record are that on Januray 8, 1930, appellant and appellees entered into a written contract, the relevant portions of which read:

"Witnesseth: That the parties hereto, for and in consideration of their mutual covenants hereby agree as follows: The Contractor agrees to drill two wells for the Owner to the depth of thru the big shale formation unless gas or oil is found in paying quantities at a lesser depth, the owner to decide what volume of gas or oil is paying quantities, in accordance with the specifications hereafter contained, * * *

"The Contractor shall commence the drilling of the first well upon receipt of notice from the owner to do so, said notice to give the date drilling is to be started. After the commencing of the first well the Contractor shall prosecute the work of drilling said well continuously thereafter until said well is completed. Upon receipt of notice from the owner the Contractor shall commence the drilling of the second well immediately after the completion of the first well if the owner desires to do so. * * *

"In case the Owner shall desire to abandon the said well at any time before its completion, he may give notice to the Contractor of their intentions to do so, and thereupon the contractor shall cease further drilling of said well, and shall be entitled to receive payment as above specified for each lineal foot of hole drilled at the time of receipt by him or them of said notice."

The wells were to be drilled upon the Amanda Dingus lease, where prior to the execution of the contract, appellees had drilled a well. After entering into a contract, appellees purchased some necessary equipment for their drilling outfit which was permitted to remain upon the Dingus lease until appellant sold and transferred its lease to the Southeastern Oil Company, another corporation, and the latter had let a drilling contract to others. The Southeastern Oil Company was joined as defendant with appellant and recovery sought against each of them.

The petition merely sets up the contract, the alleged breach thereof, and facts relating to the transfer of the lease, and appellan...