Okmulgee Producing & Refining Co. v. Baugh

• Decision Date: 09 January 1925
• Docket Number: 11970.
• Citation: 239 P. 900,111 Okla. 203,1925 OK 34
• Parties: OKMULGEE PRODUCING & REFINING CO. v. BAUGH.
• Court: Oklahoma Supreme Court

239 P. 900

111 Okla. 203, 1925 OK 34

OKMULGEE PRODUCING & REFINING CO. v. BAUGH.

No. 11970.

Supreme Court of Oklahoma

January 9, 1925

Rehearing Denied Sept. 15, 1925.

Syllabus by the Court.

Under section 266, C. S. 1921, an equitable cause and a law cause of action may be united in the same petition, and relief granted or denied in each cause as the facts and circumstances warrant.

In an action where the two causes are united in one petition, the facts in the equity cause may be tried to the court, and the facts in the law cause tried to a jury, or both parties can waive the right by going to trial before the court on the whole case without asking for a jury and without objection on this ground.

In an action for specific performance to enforce a contract to drill an oil and gas test well and for damages, the court may refuse to decree specific performance on the ground that the relief asked for is impractical, and award such damages as the proof shows the plaintiff entitled to.

Where plaintiff and defendant enter into a written contract, in which plaintiff agrees to assign two blocks of oil and gas leases in different localities as a consideration for the defendant to put down two test wells to a certain depth, and within a certain time to explore for oil and gas, and the contract shows the plaintiff is to be benefited by the adventure in the increase of value of leases he holds surrounding the blocks of leases to be assigned, and the defendant constructs the derricks, and the assignments are made, and the defendant fails and refuses to put down the test wells, and plaintiff brings suit for specific performance and damages, and the court refuses specific performance, but awards damages, the measure is the cost of drilling the test wells.

The record examined, and held sufficient to sustain the judgment.

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

Action by C.J. Baugh against the Okmulgee Producing & Refining Company. Judgment for plaintiff, and defendant appeals. Affirmed, on condition plaintiff file remittitur; otherwise reversed.

Wm. H McClarin and Poe & Lundy, all of Tulsa, and C. B. McCrory and T. F. Shackelford, both of Okmulgee, for plaintiff in error.

West Sherman, Davidson & Moore, of Tulsa, for defendant in error.

PER CURIAM.

This is an appeal from a judgment of the district court of Okmulgee county by the plaintiff in error, defendant below, in favor of defendant in error, plaintiff below. The parties will be referred to as they appeared in the trial court. The plaintiff brought suit against the defendant upon a written contract executed April 25, 1917, and modified as to time of performance on May 15, 1917. The material allegations of the petition are stated in the defendant's brief as follows:

"That the contract provided for the drilling of two wells on the land of the assignee, the defendant herein; that the purpose of the contract was the drilling of the two test wells; that the same was extended until derricks had been constructed upon the lands therein described, and that the derricks were erected;

that the defendant failed to drill the wells provided in said contract; that the plaintiff, in reliance upon said contract and agreement on the part of the defendant to test said lands for oil and gas, and in pursuance of his intention and purpose at the time of making the said contract to acquire other leases in said ranges 13 and 14, did acquire them, for which he paid in bonuses the sum of $5,000; that he had retained 1,000 acres which he owned at the commencement of the action; that on said leases, acquired after making the contract, and on the leases owned by him at the time of making said contract, he agreed to pay rentals for the privilege of delaying drilling thereon; that in the taking of said leases and in the payment of said rentals therein he relied on the promises and agreement of the defendant to drill said test wells, so that the land in said ranges 13 and 14 might be tested for oil and gas; that he had an interest in the lands and leases so assigned, and in the leases and lands acquired and retained by him as aforesaid, and that if the said test wells should prove productive, he would have realized a profit on his investment; that if said wells should have proved to be dry, the said lands would have been of no value; that by reason of the delay in drilling said wells, plaintiff paid out as rentals the sum of $9,578, which he would not have been obliged to pay under his agreement with his lessors if the said defendant had performed its contract with reasonable and proper diligence, and drilled said test wells; that the cost and expense of drilling said test wells, in accordance with said contract, to a depth of 2,500 feet, if the drilling to such a depth becomes necessary, is approximately $18,650, and that it would have cost the plaintiff, had it become necessary for him to perform said contract, said sum of $18,650 for each of said test wells; that the plaintiff had no adequate remedy at law in the premises, and that there is no certain or adequate measure of damages fixed by law for the failure of defendant to drill said wells on said land. Wherefore he prays that the defendant be required by the decree of this court to specifically perform said contract or, second, that the plaintiff be authorized and directed by the decree of this court to drill and complete the said test wells at the cost of the defendant; or, third, that the plaintiff have and recover judgment against the defendant for $37,300, or such amount as it may be shown will be necessary to perform said contract and to drill said test wells in accordance therewith; fourth, that the plaintiff have and recover of the defendant, in addition to the cost of drilling said wells, as damages for its delay in the performance of said contract, in the sum of $15,000."

There was a copy of the contract attached to the petition and made a part thereof. The defendant filed a demurrer to the petition, stating that it was not sufficient to give the court jurisdiction over the defendant and the subject of the action; that there were two inconsistent causes of actions improperly joined, one being an action for specific performance of a written contract and the other for damages for nonperformance of said contract. The court overruled the demurrer, and the defendant saved an exception. On June 24, 1918, defendant filed its answer consisting of a general denial and pleading lack of authority in the execution of the contract claimed by the plaintiff, and that the contract was ultra vires and void and should be canceled by the court, and that a court of equity has no jurisdiction of the subject-matter of the action, the same being for the specific performance of an executory contract for work and labor in drilling and constructing oil wells, and cannot be enforced in specie.

These issues were tried to the court without either party asking for a jury, and on October 22, 1919, the court rendered judgment as follows:

"The court, in this case, finds that specific performance of this contract cannot be enforced by the court; that the court further finds that the plaintiff is entitled to damages and is not now familiar with the testimony as introduced, but inasmuch as there is no dispute as to the amount of rentals paid during the time the drilling operations were delayed, the court finds that the rentals so paid would be as shown by the proof in this case and would be chargeable as damages as against the defendant. Prepare the journal entry; also the costs of drilling a well in such amount as shown by the testimony in the event they drilled the well themselves, and also as to the rentals they had to pay by reason of the failure to drill the wells in controversy, all such actual damages as were proven in the trial of the case."

On November 17, 1919, on motion of the defendant to modify the decree and to vacate the judgment awarding damages, the court made the following order:

"Let the record show that the purported order heretofore made, to which this motion is directed, is now set aside, and the court now finds that specific performance is not practical in this case, and therefore specific performance is denied, and the court retains jurisdiction as to the assessment of damages proven in the case and assesses the damages in the sum of $27,000. It is divided: $14,000 for drilling two wells, and $13,000 money paid by plaintiff in rentals both for himself and for the defendant."

1. The defendant urges that the court should have sustained its demurrer to the petition. Counsel for defendant contend that, since the petition stated that the contract relied upon and to be enforced provided for work and labor in drilling two oil wells to a depth of not more than 2,500 feet, and damages in the matter of rentals on oil and gas leases, which the plaintiff had to pay on account of the defendant's delay and failure to fulfill the contract, damages in the sum of $37,000, being the estimated cost of drilling the wells, and the further facts stated that the contract contemplated profits to the plaintiff by reason of the increase in the value of their leaseholds surrounding the location of the wells, and that these damages were of such a nature as to be irreparable, and for which he had no adequate remedy at law, that these facts were not sufficient to invoke the jurisdiction of the court for granting relief either in equity or in law. Then counsel for defendant lays down this proposition in his brief:

"That if the facts stated on the face of the bill are inadequate to state a cause of action upon which the court will render equitable relief, then the whole fails to state any facts upon which a judgment for damages may be

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