Newman v. Roach

• Decision Date: 15 September 1925
• Docket Number: Case Number: 15466
• Citation: 111 Okla. 269,239 P. 640,1925 OK 714
• Parties: NEWMAN v. ROACH et al.
• Court: Oklahoma Supreme Court

1925 OK 714

239 P. 640

111 Okla. 269

NEWMAN v. ROACH et al.

Case Number: 15466

Supreme Court of Oklahoma

Decided: September 15, 1925

Syllabus

¶0 1. Contracts--Annulment by Agreement -- Consideration.

While the contract remains executory on both sides, an agreement to annul on one side is a consideration for the agreement to annul on the other, and vice versa. On the other hand, if the contract has been executed on one side an agreement without any new consideration that it shall not be binding is without consideration and void.

2. Same--"Waiver."

"Waiver" in the law of contracts may be defined as the intentional relinquishment of a known right under the contract based on a consideration.

3. Action -- Conditions Precedent -- Demand--Futility.

It is a general rule that when it is manifest that a demand would have been wholly futile if made, it is unnecessary to go through the formality of making it.

4. Limitation of Actions--Starting of Statute After "Reasonable Time for Performance."

Under section 5060, C. S. 1921, providing that "If no time is specified for the performance of an act required to be performed a reasonable time is allowed, * * *" the statute of limitations begins to run at the expiration of such time. The question of what is a reasonable time for the purpose of determining whether the statute of limitations had commenced to run should be submitted to the jury for them to determine, taking into consideration all the facts and circumstances disclosed by the evidence in the case.

5. Oil and Gas -- Breach of Contract to Drill Well--Measure of Damages.

The measure of damages for the breach of an express covenant in a contract to drill certain wells for oil and gas to a depth of 2,500 feet free of cost to the plaintiff is, under the facts and circumstances of this case, the reasonable cost of drilling the wells.

Commissioners' Opinion, Division No. 5.

Error from Superior Court, Okmulgee County; J. H. Swan, Judge.

Action by Mattie N. Roach; Mattie N. Roach, adm'x of the estate of C. F. Roach, deceased; Mattie N. Roach, guardian of Jessie and Frances Roach minors, against William C. Newman. Judgment for plaintiffs, and defendant brings error. Reversed.

Arthur H. McLain, N. A. Gibson, J. L. Hull, and T. L. Gibson, for plaintiff in error.

R. E. Simpson and Hummer & Foster, for defendants in error.

PINKHAM, C.

¶1 This was an action brought by the defendants in error, as plaintiffs, against the plaintiff in error, as defendant, for damages claimed to have arisen from a breach of a contract by which it is claimed the defendant, William C. Newman, undertook to drill three wells upon certain lands in Okfuskee county.

¶2 The petition alleged substantially that plaintiffs are the heirs at law of C. F. Roach, who died April 6, 1920; that about January 10, 1916, the defendant, for a valuable consideration, executed and delivered to C. F. Roach an assignment and agreement, whereby defendant assigned to the said Roach an undivided one-thirty-second interest in certain oil and gas leases and agreed to drill three wells thereon to a depth 2,500 feet; that the assignment and agreement contains a provision as follows:

"Said William C. Newman agrees to drill three wells at three widely separate points on said leases free from expense to the said C. F. Roach; said wells to be drilled to the depth of 2,500 feet or to oil or gas in paying quantities at a less depth. There shall be no expenses chargeable against said C. F. Roach for the drilling and equipping of said three wells up to the tanks for the same, if productive. If dry holes, the equipment shall remain the property of William C. Newman. Thereafter the expense of drilling and operating said leases shall be borne by the said William C. Newman and the said C. F. Roach in the proportions in which they have interests in said leases. It is further agreed that if said wells are drilled to depths greater than 2,500 feet there shall be no charges against C. F. Roach."

¶3 It is alleged that defendant, pursuant to the terms of said assignment, drilled one well to a depth of 2,565 feet, but that he failed and refused to drill the other two wells as provided by said agreement; that said contract does not provide the time when said wells should be drilled, but that on or about the 23rd day of September, 1920, the defendant disposed of his entire interest in said leases and rendered it impossible for him to comply with said agreement; that by, reason of his failure to drill said two wells the plaintiffs have been damaged in the sum of $ 40,000. The petition was filed on December 9, 1922.

¶4 The defendant, in his answer, admitted that on January 10 1916, he executed and delivered to C. F. Roach an assignment of an undivided interest in certain oil and gas mining leases, and that he drilled one well pursuant to said agreement. For further defense he alleged that at the time of making said assignment to Roach it was orally agreed between him and Roach that the three wells which defendant undertook to drill should be the same three wells which defendant, under a certain contract made and entered into by and between him and the Edgar Oil Company, on or about the 6th day of December, 1915, had undertaken to drill, as consideration for an assignment to be made to him by the said Edgar Oil Company upon the completion of the said three wells of certain oil and gas leases, which constituted a part of the leases described in the assignment referred to in the plaintiff's petition. A copy of said assignment was attached to defendant's answer.

¶5 Defendant further alleged that thereafter, after completing the first of said wells it was mutually agreed between Roach and the defendant that defendant should surrender such rights as he had under the contract with the Edgar Oil Company, and be released from any further liability or obligation to drill the remaining wells, either under the contract with the Edgar Oil Company, or under the terms of the assignment to Roach; that said agreement was made orally between Roach and defendant; that thereafter defendant agreed with the Edgar Oil Company to surrender his rights under the contract with said company, and in consideration there or the defendant was released from any obligation to drill any further wells pursuant to the same. For further defense defendant pleaded that if any cause of action accrued to Roach or to plaintiff's personal representative, the same accrued more than five years prior to the time of the commencement of this action, and the same was therefore barred by the statute of limitations.

¶6 The contract between the defendant and the Edgar Oil Company, attached to defendant's answer, shows that the three wells which defendant was to drill under said contract were to be completed within 12 months from the date of the contract, to wit, December 6, 1915.

¶7 At the close of the evidence the court sustained the demurrer of plaintiff to the same and instructed the jury to return a verdict for the plaintiff, submitting to the jury only the question of the amount of damages. The jury returned a verdict for the plaintiff and fixed the amount of her recovery at $ 20,000. Judgment was rendered by the court on the verdict of the jury. Defendant's motion for a new trial was overruled, exceptions reserved, and the cause comes regularly on appeal by the defendant to this court.

¶8 The first proposition discussed by defendant is that the evidence offered on behalf of defendant constituted a sufficient defense to this action. The evidence discloses that sometime in 1915, the defendant, Newman, was interested in taking oil and gas leases on lands in certain territory described as township 11, range 11, in Okfuskee county; that he verbally employed Roach to procure oil and gas leases in that particular township; that Roach took leases on some 1,295 acres in the summer of 1915 in the aforesaid territory; that no specific arrangement as to what Roach's compensation was to be was made until after Roach had acquired the leases; Newman paid the expenses: Roach signing all checks therefor, "W. C. Newman, by C. F. Roach." Shortly after December 12, 1915, Roach's remuneration for procuring these leases for Newman was agreed upon and on January 10, 1916, Newman executed to Roach the assignment of a one-thirty-second interest in certain leases in the aforesaid territory, containing the clause which is made the basis of this action, whereby Newman agreed to drill three wells on said leases free of expense to Roach, with the provision that, "Thereafter the expense of drilling and operating said leases shall be borne by the said William C. Newman and the said C. F. Roach in the proportions in which they have said leases."

¶9 It further appears that prior to the making of this contract with Roach, Newman, on December 6 1915, had made an agreement with the Edgar Oil Company, whereby it was to assign to him a one-half interest in certain leases in the said township 11-11, some of which were the leases in which Roach was given a one-thirty-second undivided interest by Newman's assignment to him, the consideration for this being and agreement by Newman to drill three wells upon said leases within 12 months after the date of the contract. The assignment for the one-half interest in these leases was placed by the Edgar Oil Company in escrow with an escrow agreement covering the mutual obligations of the parties. When Newman negotiated with Roach for the execution of the contract sued upon in this case, he exhibited this escrow agreement, and the copy of the proposed agreement attached to it, and he and Roach agreed that the location of the three wells proposed to be drilled by Newman upon the lands he then agreed to assign interests in to Roach should be made at such points as to protect the contract which he had with the Edgar Oil Company. By this contract with the Edgar Oil Company it was agreed that all carrying rentals on the leases should be paid one-half...