Oil v. Moss
| Citation | 131 Okla. 49,267 P. 855,1928 OK 352 |
| Decision Date | 29 May 1928 |
| Docket Number | Case Number: 17573 |
| Parties | COSDEN OIL & GAS CO. v. MOSS et al. |
| Court | Supreme Court of Oklahoma |
¶0 1. Contracts--Nonperformance Excused by Nonexistence of Subject-Matter--"Impracticable" Given Legal Effect of "Impossible."
Where it is apparent that a contract was entered into on the basis of the existence of something essential to its execution, there is the implied condition of the contract that if literal performance becomes impracticable or impossible by reason of the nonexistence of the essential thing, to the extent of nonexistence performance will be excused, and in such circumstances the terms "impracticable" and "impossible" are of equal legal effect.
2. Same--Oil and Gas--Construction of Drilling Contract for Test Well in Undeveloped Territory--Test Well Defined--Drilling to Specified Maximum Depth Excused by Encountering Formations Proving Production Improbable--Refusal of Court to Instruct on Principle of Dispensation Reversible Error.
In a drilling contract entered into for the purpose of determining the commercial existence or nonexistence of oil or gas in undeveloped territory, which provides for a completed test well, with a specified maximum depth to which the well shall be drilled unless oil or gas be found in paying quantities at a lesser depth, and it is apparent that the parties contracted on the basis that a well could be drilled to such maximum depth with the reasonable expectation of finding such minerals, a completed test well means a well drilled to the specified maximum depth, or to such lesser depth of discovery of oil or gas in paying quantity, or to the depth of encounter of a geologic formation within the specified maximum depth which in the business of production of such minerals it is recognized will reasonably preclude the probability of finding oil or gas in or below such formation. And in an action for damages for a breach of such contract, where the existence of such formation is at issue, the question is one of fact for determination by the jury under proper instructions of the trial court, or by the court as a trier of the fact; and in such case, refusal of requested instructions, embodying the principle of dispensation where none otherwise are given, constitutes reversible error.
3. Oil and Gas--Measure of Damages for Failure to Complete Test Well According to Drilling Contract.
In an action for damages for failure to complete a test oil or gas well, where the well has been drilled to a less depth than the specified maximum depth and abandoned without legal excuse, the measure of damages is the cost to complete the well from the depth of abandonment to the maximum depth specified in the contract.
Commissioners' Opinion, Division No. 1.
Error from District Court, Tulsa County; Z. I. L. Holt, Judge.
Action by E. K. Moss et al. against Cosden Oil & Gas Company, on contract. Judgment for plaintiffs, and defendant appeals. Reversed and remanded, with directions.
J. C. Denton, J. H. Crocker, R. H. Wills, and I. L. Lockewitz, for plaintiff in error.
H. B. Martin, C. A. Warren, and John Cantrell, for defendants in error.
¶1 In the consideration of this cause, we will refer to the parties as they appeared in the trial court. A brief chronological narrative of certain undisputed facts will be helpful to a proper understanding of the respective theories of the parties in this litigation.
¶2 E. K. Moss, W. B. Webb, and R. J. Hill, the plaintiffs, in 1917, were the owners of certain oil and gas leaseholds situated in Tillman county. During the year they undertook to drill a test well on a particular lease, and upon drilling to a depth of about 860 feet, they deemed it advisable to seek financial aid in their undertaking. To that end the plaintiff Moss entered into certain negotiations with the defendant, Cosden Oil & Gas Company, a corporation, at Tulsa, Okla., through its managing officer. As a basis of the negotiations a memorandum of agreement was entered into on November 23, 1917, by the negotiators, whereunder it was proposed, in substance, that an undivided three-fourths interest in certain leaseholds, including the one on which the well was located, would be assigned under satisfactory title to the defendant for a consideration of the assumption of indebtedness not to exceed $ 5,000, then incurred by plaintiffs in their drilling operations, with the obligation of defendant to drill the well mentioned to a depth of 2,000 feet, unless oil or gas be found in paying quantity at lesser depth. It was further proposed thereunder, that defendant would have the free use of certain drilling tools owned by plaintiffs then used in their drilling operations at the well. The proposal was conditioned upon investigation and favorable report by defendant's geological department, and to that end defendant had the acreage comprised in the leaseholds investigated by its geologist.
¶3 The memorandum of agreement was supplemented on November 30, 1917, by letter of defendant, whereunder defendant further proposed that a cash advancement of $ 1,500 would be made by it to be applied on the drilling indebtedness to enable immediate resumption of the drilling commenced by plaintiffs, and to be continued by defendant unless a granite formation be encountered at a lesser depth than 2,000 feet, whereupon there would be a discontinuance thereof, and the obligation of defendant terminated with reimbursement by plaintiffs of the cash advancement. On December 4, 1917, defendant, by letter, further supplemented the memorandum of agreement by additional proposals to the effect that upon defendant's being convinced that the formation at the bottom of the test well was not that of granite, defendant would make an additional cash advancement of $ 3,500 to be used in the payment of plaintiffs' drilling indebtedness, and continue drilling of the well to the depth of 2,000 feet unless oil or gas be found in paying quantity at a lesser depth, or a granite mass formation be encountered at such lesser depth, whereupon there would be performance of defendant's obligation with no duty of plaintiffs to refund the first cash advancement of $ 1,500. In the event defendant elected to continue drilling the well, and make the additional cash advancement of $ 3,500, plaintiffs were to assign to the defendant an undivided three-fourths interest in all the leaseholds in the vicinity of the well described in the memorandum of agreement, and all material furnished by defendant in the further drilling of the well to be its exclusive property in the event of a nonpaying well, otherwise, ownership of such material would be in the proportion of the respective interests of the parties in the leaseholds, with the cost of further operations to be borne by the parties on a like basis. On June 15, 1918, plaintiffs executed assignments to defendant of their whole title to 2,937 acres of the leaseholds described in the memorandum of agreement.
¶4 On June 17, 1918, defendant wrote the plaintiffs as follows:
¶5 On November 5, 1918, defendant commenced operations to deepen the well mentioned, which was at a depth of 986 feet upon assignment of the leaseholds, and obstructed with certain tools and broken casing. Finding it impossible to remove the obstruction, defendant, without objection by plaintiffs, abandoned the well, and commenced the drilling of another well about 100 feet from the original location on January 13, 1919, and drilled the same to a depth of 1,410 feet, when a geologic formation alleged by defendant to be a granite mass formation was encountered, whereupon the defendant, on September 4, 1919, abandoned further drilling on the well.
¶6 By appropriate pleadings plaintiffs declared the letter of June 17, 1918, as the contract between the parties wherewith it was alleged they had complied by assignment of the leaseholds to defendant, and alleged a breach thereof by defendant by failure to drill the well to the specified depth, to their damage in the sum of $ 35,000 for which they prayed judgment.
¶7 Defendants answered by express and specific denial of the allegations on which plaintiffs sought a recovery, and interposed a further defense of an oral contract between the parties, many of the terms and condition of which being evidenced by the memorandum of agreement and the several letters of defendant addressed to plaintiffs above referred to, the contract having been concluded prior to its letter of June 17, 1918, which contract was...
To continue reading
Request your trial
-
Gulf Oil Corp. v. F. P. C.
...Land Co. v. Howard, 172 Cal. 289, 156 P. 458 (1916); Carozza v. Williams, 190 Md. 143, 57 A.2d 782 (Ct.App.1948); Cosden Oil & Gas Co. v. Moss, 131 Okla. 49, 267 P. 855 (1928). Relying on these authorities, Gulf asserts that "(N)o one entertained the thought that Gulf would be required to d......
-
Anderson v. Cliff Gold Mining Co.
...... found; and under some leases, he is excused from further. performance, as provided for in the lease, where the mine. cannot be worked or operated at a profit, or cannot be. carried on with reasonable effort and expenditure.". . . In. Cosden Oil & Gas Co. v. Moss, 131 Okla. 49, 267 P. 855,. 859, we find the court declaring the law to be:. . . "Where. it is apparent that a contract was entered into on the basis. of the existence of something essential to its execution,. there is the implied condition of the contract that if. literal ......
-
Markle v. Stekoll
......The appellate record shows prior consideration of the motion and disposition thereof by denial. This we regard as final. Cosden Oil & Gas Co. v. Moss, 131 Okla. 49, 267 P. 855. ¶6 Defendant makes a further point which requires our first consideration, namely, that as plaintiff failed to demur to defendant's evidence, or move for judgment, or in anywise challenge the sufficiency of the evidence prior to submission, and incorporate ......
- Cosden Oil & Gas Co. v. Moss