Production Oil Co. v. Johnson

• Decision Date: 16 May 1958
• Citation: 313 S.W.2d 411
• Parties: PRODUCTION OIL COMPANY, Appellant, v. Clayton JOHNSON, Appellee.
• Court: United States State Supreme Court — District of Kentucky

Page 411

313 S.W.2d 411

PRODUCTION OIL COMPANY, Appellant, v. Clayton JOHNSON, Appellee.

Court of Appeals of Kentucky.

May 16, 1958.

Evertee L. Miller, Campton, for appellant.

E. E. Bach, J. Douglas Graham, Campton, for appellee.

STANLEY, Commissioner.

The appeal is by Production Oil Company from a judgment for $4,600 for a balance of salary claimed to be due by the appellee, Clayton Johnson.

The appellant owned a large acreage of oil and gas leases in Wolfe and Lee Counties. Its executive office was in Detroit and its field office in Campton, Kentucky. The appellee's wife, Mrs. Edna W. Johnson, who resided in Campton with her husband, owned one-fourth of the company's stock and was its secretary and local treasurer or paymaster. By an oral contract made in November, 1954, the appellee was employed by the appellant as supervisor of its local property at the rate of $100 per week. The issues in the case were (1) whether in August, 1955, Johnson agreed to a reduction of his pay to $50 a week, and (2) as to when the contractual relationship between the parties terminated. The evidence is indefinite and leaves much to inference.

It seems that oil production and operation of the properties had become unprofitable by August, 1955, through no fault of the supervisor, Johnson, who appears to have diligently performed his services. On August 12, 1955, Johnson wrote Walter J. Murray, president of the company, in Detroit, saying that he realized the unprofitable conditions and reviewing the status and current operations and facilities. One paragraph of Johnson's letter reads:

'Since I have this property in the very best working condition, there is absolutely no excuse or need for any labor other than the pumper, costing $160.00 per month, and an average of about $40.00 per month for oil and gas. Therefore, there is nothing left for me to do. I have invested all of my and my wife's savings in this deal. As Mr. Rovin and I discussed today, the Corporation does not care to go any further in the drilling and development of both properties, my wife and I will have to make some other arrangements for a living and cannot stay in the deal.'

The emphasis is in the original letter. Mr. Rovin, referred to, occupied some relation to the president of the company as a temporary assistant or agent. The letter from which the above quotation is made continues with references to selling 'our interests' to the company or joining in a sale of the entire holdings. It contains the following:

'We are giving our landlord notice that we are leaving Sept. 1, therefore we want to be ready by that time.

'This is a splendid deal as a holding proposition. There is no reason for additional expense, other than gas, oil and pumper, and, when fully equipped, would realize 25% on investment.'

Johnson testified that he also talked to Murray on the telephone about this time but does not relate any part of the conversations.

According to Murray, he wrote Hohnson that he was going to cut overhead expenses since drilling operations had ceased, and had sent Rovin to Campton to see about the conditions and to reduce Johnson's salary to $50 a week. Johnson and his wife testified that Rovin told them the company was short of money and could not pay his salary in full. He suggested that Johnson accept $50 a week as part payment for three or four months until the company got in better financial chape when it would pay the balance due. Johnson agreed to this.

On the contrary, Rovin testified there was no understanding of any sort as to deferring part payment of Johnson's salary, and because Johnson had said he could not get any other work in the community and wanted to stay around to protect the interests of his wife and the company, Rovin suggested that he continue at a salary of $50 a week and Johnson agreed. Subsequent correspondence between the parties and the fact that the vouchers and checks sent in payment of $50 a week bore no indication as to being partial payments, all tend to confirm the testimony of Murray and Rovin. Nevertheless, there was a definite contrariety of the evidence on this issue.

The contract...