Nisbet v. Van Tuyl, 11874-11875.

• Decision Date: 07 March 1957
• Docket Number: No. 11874-11875.,11874-11875.
• Citation: 241 F.2d 874
• Parties: William A. NISBET, Katherine Nisbet, Lanna M. Nisbet, Emma M. Nisbet, J. C. Nisbet, Plaintiffs-Appellants, v. Ira VAN TUYL and Elsin C. Van Tuyl, doing business as V-T Drilling Company, Ray Ryan and Helen Ryan, doing business as Ryan Oil Company, Defendants-Appellees, William A. NISBET, Katherine Nisbet, Lanna M. Nisbet, Emma M. Nisbet, J. C. Nisbet, Plaintiffs-Appellees, v. Ira VAN TUYL and Elsin C. Van Tuyl, doing business as V-T Drilling Company, Ray Ryan and Helen Ryan, doing business as Ryan Oil Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

241 F.2d 874 (1957)

William A. NISBET, Katherine Nisbet, Lanna M. Nisbet, Emma M. Nisbet, J. C. Nisbet, Plaintiffs-Appellants, v. Ira VAN TUYL and Elsin C. Van Tuyl, doing business as V-T Drilling Company, Ray Ryan and Helen Ryan, doing business as Ryan Oil Company, Defendants-Appellees, William A. NISBET, Katherine Nisbet, Lanna M. Nisbet, Emma M. Nisbet, J. C. Nisbet, Plaintiffs-Appellees, v. Ira VAN TUYL and Elsin C. Van Tuyl, doing business as V-T Drilling Company, Ray Ryan and Helen Ryan, doing business as Ryan Oil Company, Defendants-Appellants.

Nos. 11874-11875.

United States Court of Appeals Seventh Circuit.

March 7, 1957.

William L. Craig, Nat H. Youngblood, Herman L. McCray, Evansville, Ind., for plaintiffs. James G. Wheeler, of Wheeler & Marshall, Paducah, Ky., of counsel.

William P. Foreman, Joe Vol Butt, Frederick P. Bamberger, Edmund F. Ortmeyer, Wesley Bowers, Ellis B. Anderson, Evansville, Ind., for defendants (appellees and cross-appellants).

Before DUFFY, Chief Judge, and FINNEGAN and LINDLEY, Circuit Judges.

LINDLEY, Circuit Judge.

Plaintiff sued to recover damages said to have resulted from defendants' negligence in failing to seal properly an abandoned oil well. The cause was before us previously on appeal from a summary judgment in favor of defendant. 224 F.2d 66. As we pointed out there, the complaint was predicated upon an alleged violation of §§ 353.110 and 353.120 of Kentucky Revised Statutes, which impose a duty to plug an abandoned oil or gas well drilled through a "workable coal bed" and prescribes the procedure to be followed. Plaintiffs sought to recover the actual cost of replugging, notwithstanding the fact that that cost had not been borne by plaintiffs primarily, but rather by a third party, the West Kentucky Coal Company. The district court concluded that, though defendants were liable, the recovery should be limited to $1,000, the amount actually expended by plaintiffs. On appeal plaintiffs deny that their damages should be so restricted and, on cross-appeal, defendants deny all liability.

In June, 1947, plaintiffs entered into an oil and gas lease covering Kentucky land which was later assigned by the lessees to defendant Ryan Oil Company, who caused a well to be drilled which ultimately proved to be non-productive. Thereupon, plaintiffs notified the geologist and the men working about the well that they wanted it properly plugged and sealed, so as not to interfere with any coal mining operations, for which they expected to lease the land. Later, plaintiffs did lease the coal to the West Kentucky Coal Company, who, after mining had begun, discovered that gas and water were leaking into the mine from the abandoned well. Thereafter, the coal company entered into an agreement with plaintiffs whereby the former agreed to replug the well. The pertinent provisions of this contract were: "(1) That if the party of the second part the Coal Company will undertake to cause to be properly plugged said oil well and advance the cost thereof, * * * plaintiffs will repay from royalties to be earned upon demand the total cost when the same is ascertained. (2) Plaintiffs do hereby advance to the second party upon said total cost the sum of One Thousand Dollars ($1,000.00) the receipt of which is hereby acknowledged by the second party and * * * plaintiffs covenant and agree upon demand when the total cost of said plugging is finally ascertained to execute their note to the second party payable in one year from the date thereof subject to the credit of One Thousand Dollars ($1000.00) this day advanced, * * *." (Emphasis supplied.) The replugging was completed by the coal company at a cost "in excess of * * * $1000 but less than * * * $5104", as found by the district court, and the $1,000 mentioned was withheld from coal royalties accruing to plaintiffs. However, no demand was ever made by the coal lessee for the note mentioned in the agreement and, at the time of suit, no further royalties had accrued or were being withheld, and coal mining had completely abated.

Upon defendants' contention that no liability exists, it is urged that no statutory violation resulted for the reason that the well had not been drilled through "workable coal beds" within the meaning of the statute. A "workable coal bed" is specifically defined in § 353.010 of Kentucky Revised Statutes in these words: "(a) A coal bed actually being operated commercially, (b) A coal bed that the department decides can be operated commercially and the operation of which can reasonably be expected to commence within not more than ten years, or (c) Any coal bed that, from outcrop indications or other definite evidence, proves to the satisfaction of the department to be workable and, when operated, will require protection if wells are drilled through it." Obviously, the pertinent provisions are (b) and (c). It is defendants' position that, as there was no evidence of proof having been made to the satisfaction of the Department of Mines and Minerals that the coal bed was workable and protection needed, or, of a decision made by the Department, the requirements of neither (b) nor (c) had been met, and, consequently, that no liability ensued.

There is no dispute that the well was drilled through three separate minable coal veins. Likewise, defendants admit that they carefully logged the drilling of the well. Nevertheless, defendants contend that they had no actual knowledge of the presence of coal, although they candidly admit that a duty to cap properly an abandoned well is imposed under the circumstances mentioned in the statute. The record is replete with evidence that defendants should have known, in the exercise of reasonable care, that the well was being drilled through coal bearing strata and that the circumstances were such as to impose a duty on them to seal the well properly as provided by §§ 353.110 and 353.120. We cannot say as a matter of law that the trial court's finding in this respect is clearly erroneous.

As was succinctly stated, in Meeks Motor Freight v. Ham's Adm'r, 302 Ky. 71, 193 S.W.2d 745, 748, quoting from 38 Am.Jur. § 23 at page 665: "`The foundation of liability for negligence is knowledge — or what is deemed in law to be the same thing: opportunity by the exercise of reasonable diligence to acquire knowledge — of the peril which subsequently results in injury.'" The court added: "Every person is under a duty to exercise his senses and intelligence in his actions in order to avoid injury to others, and where a situation suggestions investigation and inspection in order that its dangers may fully appear, the duty to make such investigation and inspection is imposed by law. * * * One under duty to use care for which knowledge is necessary cannot escape...