Providential Develop. Co. v. United States Steel Co., 5335.

• Decision Date: 11 August 1956
• Docket Number: No. 5335.,5335.
• Parties: PROVIDENTIAL DEVELOPMENT COMPANY, a corporation, and W. C. Jackson, Appellants, v. UNITED STATES STEEL COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

236 F.2d 277 (1956)

PROVIDENTIAL DEVELOPMENT COMPANY, a corporation, and W. C. Jackson, Appellants, v. UNITED STATES STEEL COMPANY, a corporation, Appellee.

No. 5335.

United States Court of Appeals Tenth Circuit.

August 11, 1956.

B. W. Tabor, Tulsa, Okl. (Stevenson, Huser & Huser, Holdenville, Okl., Rucker, Tabor & Cox, Joe Francis, Tulsa, Okl., were with him on the brief), for appellants.

B. Andrew Potter, Oklahoma City, Okl. (Rainey, Flynn, Green & Anderson, Oklahoma City, Okl., were with him on the brief), for appellee.

Before BRATTON, Chief Judge, PHILLIPS, Circuit Judge, and ROGERS, District Judge.

BRATTON, Chief Judge.

For brevity, reference will be made to Providential Development Company and W. C. Jackson as Providential, to Fred C. Summers as Summers, to United States Steel Company as Steel, to the United States Court for the Western District of Oklahoma as the Court for Western Oklahoma, and to the United States Court for the Northern District of Oklahoma as the Court for Northern Oklahoma.

Providential owned an oil and gas lease covering certain land in Oklahoma. Summers was engaged in the business of drilling wells for oil and gas. These parties entered into a contract under which Summers was to drill a well on the land covered by the lease. Providential was to pay a specified price per foot for the drilling and furnish the pipe for use in the well. The well was drilled to a producing horizon. Providential furnished to Summers pipe manufactured by Steel and a portion of it was put in the hole. At a point approximately 2,115 feet below the surface of the ground, the pipe parted at a factory-screwed-on collar. Efforts to correct the situation were unavailing and the result was loss of the well. At the request and under the direction of Providential, Summers skidded the rig to a new location and drilled a completed well. Summers filed in the office of the county clerk of the county in which the leasehold estate was located a verified lien statement and claim against the property and the owners thereof; and he instituted in the state court an action against Providential to foreclose the lien for the drilling of the well which was lost. By amended complaint, Steel was joined as a party defendant; and it seasonably caused the action to be removed to the Court for Western Oklahoma. It was alleged in the amended complaint that the pipe was defective, unsafe, unsound, and unsuited for its intended use; and that such condition proximately caused the parting at the collar with the resulting loss of the well. Providential denied that the pipe was defective and unsuited for its intended use; and by cross complaint, it sought in the alternative to recover against Steel for its loss sustained as the result of the pipe being defective, as alleged in the amended complaint. By answer to the amended complaint and also by answer to the cross complaint, Steel denied that the pipe was defective, unsafe, unsound, or unsuited for its intended use. The cause came on for trial on the merits. When Summers rested his case in chief, the court found that there was no evidence that the pipe was defective when manufactured and sold by Steel and no evidence that the pipe was unsuited for the purpose for which it was intended to be used; and predicated upon such findings, judgment was entered dismissing as to Steel both the action of plaintiff and the cross complaint of Providential. Later, the cause proceeded to final hearing as between Summers and Providential. As between such parties, the court found that the pipe was defective; that due to the defective condition, one joint separated from the collar screwed thereon by the factory; and that such defective condition was latent, hidden, and concealed. Judgment was entered for Summers against Providential for the damages sustained, together with attorneys fees to be taxed as costs. Providential filed a motion to set aside the findings of fact, conclusions of law, and judgment. One ground of the motion was that after the dismissal of the cross complaint against Steel, the court permitted the parties to go into the question of the defective pipe; and that the parties then remaining in the case were prejudiced by the dismissal of the cross complaint. The motion was denied. At the time of such denial, Providential demanded in open court that Steel protect it against the judgment; and the demand was refused. No appeal was perfected from either judgment entered in the cause.

After final disposition had been made of the case in the Court for Western Oklahoma in the manner indicated, Providential instituted in the Court for Northern Oklahoma this action against Steel. The complaint alleged the making of the contract for the drilling of the well, the drilling of the well, the manufacture and furnishing of the pipe, the parting of the pipe, the loss of the well, the institution of the action in the Court for Western Oklahoma, the entry of the judgment against Providential in such action, and the refusal of Steel to protect Providential in respect to such judgment. And the complaint further alleged that because of the negligence of Steel in manufacturing and selling defective pipe in violation of an implied warranty, Providential became liable to Summers, lost the unretrieved pipe in the well, and lost certain cement. Judgment was prayed for the losses sustained in that manner. The court dismissed the action on the ground that the judgment entered in the cause in the Court for Western Oklahoma constituted res judicata of all issues pleaded in the complaint in this action.

It is contended that the court erred in concluding that the judgment entered by the Court for Western Oklahoma dismissing Steel from the action pending in that court constituted a bar to the maintaining of this action. The general principles of res judicata and estoppel by judgment have been clearly blueprinted. It is the rule of long standing and frequent repetition that where a second suit between the same parties, or their privies, is on the same cause of action, the final judgment in the prior action is conclusive as to all...