Nicholson Corp. v. Ferguson

• Decision Date: 29 September 1925
• Docket Number: Case Number: 13691
• Citation: 1925 OK 783,243 P. 195,114 Okla. 16
• Parties: NICHOLSON CORPORATION v. FERGUSON et al.
• Court: Oklahoma Supreme Court

1925 OK 783

243 P. 195

114 Okla. 16

NICHOLSON CORPORATION v. FERGUSON et al.

Case Number: 13691

Supreme Court of Oklahoma

Decided: September 29, 1925

Syllabus

¶0 1. Oil and Gas--Lease Construed as "Granting Estate in Realty."

The granting clause of the oil and gas lease in the instant case recited that the lessors have granted, demised, leased, and let, and by these presents do grant, demise, lease, and let unto the lessee all the oil and gas in and under the land, also the said tract of land for the purpose of entering upon, operating, and removing therefrom oil and gas for a term of five years and as much longer as oil or gas is produced thereon. Held, that this lease granted an estate in the realty covered thereby.

2. Same--Measure of Damages for Breach of Covenant--Rights of Assignee of Lease.

Under section 5980, C. O. S. 1921, the measure of damage for the breach of the covenants therein mentioned in a "grant of an estate in real property" is set out; held, that the estate mentioned in the foregoing syllabus conveyed by the oil and gas lease involved in the instant suit was such an interest as is referred to in said statute as an estate in real property and the measure of damage provided by said statute for the breach of the covenants recited therein is applicable as the rule in determining the damage sustained by the warrantee in an assignment of such lease.

3. Appeal and Error--Right to Review Where Judgment Satisfies Demands.

Where a cross-petitioner seeks to recover damages for breach of warranty set forth in an assignment of an oil and gas mining lease, such as the one in question in this suit, and he actually recovered, by the judgment of the trial court, the sum which in amount is what he would have been entitled to recover had other relief contained in the prayer of his cross-petition been granted, this court will not inquire into whether the trial court erred in failing to grant the other relief.

Error from District Court, Okmulgee County; Mark L. Bozarth, Judge.

Action by J. B. Ferguson against Nicholson Corporation and the Kingwood Oil Company. Judgment for plaintiff, and Nicholson Corporation appeals. Affirmed

Jno. F. Goshorn and W. E. Foster, for plaintiff in error.

Wm. M. Matthews and Arthur H. McLain, for defendant in error Kingwood Oil Company.

W. W. Noffsinger and A. L. Harris, for defendant in error J. B. Ferguson.

BRANSON, V. C. J.

¶1 The judgment to reverse which this appeal is here was entered in the district court of Okmulgee county, Okla. In said court, J. B. Ferguson was plaintiff and the Nicholson Corporation and the Kingwood Oil Company, a corporation, were defendants. Herein the plaintiff in the lower court will be referred to as the plaintiff, and the Kingwood Oil Company, when not named, will be referred to as the defendant, and the Nicholson Corporation will be referred to as appellant.

¶2 The plaintiff sought injunctive relief against the appellant restraining it from taking gas from a gas well located on a certain tract of land alleged to be his property, for an accounting and damages to the amount of the value of the gas taken for a period of approximately three years prior to filing the suit. The defendant Kingwood Oil Company owned, among other lease holdings, an oil and gas lease located upon a tract of land lying immediately east of the northeast quarter of the southeast quarter of section 1, township 11 north, range 13 east. On this land the well was located. The granting clause of said lease was as follows:

"The said lessors * * * have granted, demised, leased and let, and by these presents do grant, demise, lease and let, unto the lessee * * * all the oil and gas in and under the following described tract of land, also the said tract of land for the sole and only purpose of entering upon, operating thereon and removing therefrom said oil and gas for a term of five years from date and as much longer thereafter as oil or gas is produced thereon," etc.

¶3 Within the terms of said lease, the defendant had taken possession of what it supposed to be said leased premises and had drilled a well which proved to be a producer of natural gas in commercial quantities. Sometime thereafter the appellant, being in the smeltering business at Kusa, in said county, and purchasing gas for consumption in its business, secured an assignment of the said lease for a consideration, by it paid to the defendant, of the sum of $ 1,000. The moving cause of taking said assignment was the mutual understanding by both the defendant and the appellant that the gas well drilled on the land above described was located upon the land immediately east thereof, which was covered by the defendant's said oil and gas lease. The appellant connected its pipe line to said gas well which led to its said smelter and utilized gas for a period of, approximately, three years, when plaintiff notified appellant that said gas well was on his land and secured an injunction preventing the further taking of gas therefrom and prayed an accounting for the gas taken and award of damages of the value thereof. The defendant and appellant concur that the gas well was, by inadvertence and in good faith, drilled by the defendant upon the plaintiff's land, whereas the defendant thought that the well had been drilled upon its said lease. The appellant prayed reformation of the covenants of warranty contained in the assignment of the lease, so as to include the gas well in question--

"* * * By decreeing that said well and equipment is within the covenants of warranty in said assignment, although not located on the leasehold assigned, and that this answering defendant (designated here as appellant) have judgment upon said contract for such sum or sums as the plaintiff, J. B. Ferguson, upon a hearing had upon his petitions shows himself entitled to, plus the sum of $ 300, well royalty, which this answering defendant has paid the supposed owners in reliance upon the validity of said assignment."

¶4 The judgment of the trial court was in favor of the plaintiff in the sum of, approximately, $ 11,000. The said judgment further denied the said prayer of the appellant except to the extent that it was given judgment against the defendant in the sum of $ 1,000, the amount paid to the defendant for the assignment, with interest thereon, for the $ 300 well royalty paid to the fee owners of the leased land on which the gas well was supposed to be located.

¶5 There are two conclusions found by the trial court drawn in issue here by the petition in error filed by the Nicholson Corporation. One is directed against the plaintiff; the other is directed against the Kingwood Oil Company. The assignment directed against the plaintiff is that the judgment rendered against it is too large in that, conceding that the referee, whose report was confirmed by the district court, found the correct number of feet of gas taken, a wrong rate per cubic foot (7 cents) was applied, which it contends was erroneous, both as a matter of law and as a matter of fact. The assignment directed against the defendant Kingwood Oil Company is to the alleged fact that the trial court erred in not reforming the covenant of warranty so as to include the well, and when so reformed appellant should have been given judgment against the defendant for breach of warranty to the amount of plaintiff's judgment against it.

¶6 We think all the assignments pass with the proper determination of these.

¶7 The assignment directed against the plaintiff, above set out, draws in question the evidence, the appellant contending that by the report of the referee and the judgment of the court the plaintiff was awarded, in calculating the damages, a well gas rate of 7 cents, which was the highest rate, as shown by the evidence, it asserts, obtaining during the period gas was taken from the well, the referee fixing the recovery at the "utmost." The appellant contended that, since it is not denied by any party to the action that the well was drilled on the Ferguson land through error as to the lines bounding the lease in question and in entire good faith, this is not the proper rule to apply. The rules of law set out in the cases cited must be referred to the evidence in the instant case to determine whether or not the court in reality charged against the appellant a rate per thousand foot as the "utmost" rate obtaining during the period. The evidence shows that in the vicinity the gas rate varied at the wells during the period appellant took the gas in question here from 4 1/2 cents to 10 cents, and the court found as a fact that the value of the gas during the period was 7 cents per thousand, and on this basis calculated the amount of the plaintiff's recovery against the appellant. The evidence was unsatisfactory and conflicting on the question, but such finding is not foreign to sufficient evidence to support it, and the issue raised by said first assignment must, therefore, be against the appellant.

¶8 We go to the assignment directed against the Kingwood Oil Company. At the basis of the contention of Nicholson Corporation lies the warranty, which, as quoted in its brief (page 52), is as follows:

"(The assignor) does covenant with the said assignee, heirs, successors or assigns that it is the lawful owner of the said lease and rights and interests thereunder and of the personal property thereon or used in connection therewith; that the undersigned has good right and authority to sell and convey the same and that said rights, interest and property are free and clear from all liens and incumbrances and that all rentals and royalties, due and payable thereunder have been duly paid."

¶9 To repeat, the appellant's prayer was that the said assignment be reformed so as to include the gas well in question and bring within the covenants of warranty the well and equipment thereof, and for judgment against the defendant Kingwood Oil Company upon the reformed covenant for a sum equal to the amount which plain...