STANOLIND OIL AND GAS COMPANY v. Bridges

• Decision Date: 24 February 1958
• Docket Number: Civ. No. 3577.
• Citation: 160 F. Supp. 798
• Parties: STANOLIND OIL AND GAS COMPANY (now Pan American Petroleum Corporation), Plaintiff, v. Barney BRIDGES, d/b/a Barney Bridges Construction Company, Defendant.
• Court: U.S. District Court — Eastern District of Oklahoma

160 F. Supp. 798

STANOLIND OIL AND GAS COMPANY (now Pan American Petroleum Corporation), Plaintiff, v. Barney BRIDGES, d/b/a Barney Bridges Construction Company, Defendant.

Civ. No. 3577.

United States District Court E. D. Oklahoma.

February 24, 1958.

The report of Special Master David A. Kline follows:

The plaintiff, Stanolind Oil and Gas Company, a Delaware corporation (now Pan American Petroleum Corporation) instituted this action against the defendant, Barney Bridges, an Oklahoma citizen, doing business as Barney Bridges Construction Company, to recover some $70,000 allegedly overcharged Stanolind by Bridges, between October 30, 1950, and about August 1, 1953, while Bridges was doing dirt work for Stanolind.¹

Beginning October 30, 1950, and continuing through June 25, 1953, Stanolind and Bridges, through letters and other writings, agreed to the terms and conditions under which the controverted earthwork would be done.²

Pursuant to such contract, Stanolind employed Bridges to do dirt work on various leases of the plaintiff; this work included building roads, leveling ground for the erection of derricks, digging pits, filling pits and related lease maintenance work.

Bridges was employed through the following procedure:

The Stanolind employee in charge of the lease needing dirt work, issued to Bridges a Field Purchase Order.³ After receiving authorization, Bridges was instructed as to the lease location and the type of work needed. Occasionally, Bridges was hired to do work prior to the delivery to him of the FPO. However, in all cases, the FPO was given to Bridges before commencement of, during, or immediately after completion of the job. Each FPO carried a particular number, identified the lease and described the required work.

During the controverted time, Stanolind employed Bridges to do 994 jobs. For these jobs, Stanolind was separately billed on 994 invoices. For this work, Stanolind was billed a total of $361,544.10; this amount was paid.

Each invoice submitted showed the work done, the hours worked, the equipment used, the kind of operator employed and the hourly compensation claimed.

Both parties understood that the submitted invoices had to correspond with the issued FPO's, both as to job location and kind of work done. Naturally, the equipment used was determined by the nature of the work involved.⁴ Moreover, it was understood that each invoice must correspond with the applicable rate schedule, previously submitted by Bridges, and that Bridges could only invoice for work done, or equipment used, where such was specifically carried on the written rate schedule.

Stanolind did a large amount of drilling and oil development work, during the time, and in the area in which, Bridges was employed. And, Stanolind failed to keep an accurate check on the actual hours Bridges' equipment was used on each job.⁵ Except for sporadic job-site checking, Stanolind's verification was limited to office paper-work comparison.⁶ By this office inquiry, Stanolind collated the submitted invoice with the corresponding FPO, checking lease location, kind of work, and hourly charge. This examination made certain that the hourly charge invoiced tallied directly with the charge for comparable work set out on the applicable rate schedule.

Stanolind relied upon Bridges to accurately report on each invoice the job hours required. And, Bridges knew, that for the most part, Stanolind assumed the number of hours invoiced by him to be right and proper.

Early in 1953, Stanolind first questioned the correctness of these invoices; it requested, and received, permission to examine Bridges' books and records. After a cursory survey by Stanolind, Bridges withdrew permission for further inspection of these records.

This limited investigation revealed some evidence that overcharges had occurred. Certain irregular alterations appeared; and, these alterations were reflected by increased billings to Stanolind. Moreover, there was evidence that Stanolind had been invoiced for work not properly allocable to it, such as repair work performed on Bridges' equipment by Bridges' employees.

After this lawsuit was filed, Bridges' records were carefully studied and audited by Stanolind's accountant, pursuant to court order.

These books and records presented for examination were incomplete and, in instances, inaccurate. Bridges' own certified public accountant, employed for this trial, after auditing these books and records, testified that he could not certify either to his audit or to the dependability of his conclusions, because of the incompleteness of the books and records.⁷

Bridges urges that a portion of the alleged overcharges can be explained in that moving, or en route, time was invoiced under the classification of bulldozer time, and that he was entitled to so bill. Thus, logically, the first issue for disposition is whether or not the defendant could, under his contract with Stanolind, include in the invoices submitted to Stanolind, time spent moving equipment to and from the different project sites.

The working agreement between the parties was in writing, was clear and unambiguous, and did not provide for any such billing. Until April 25, 1953, the rate schedules submitted by Bridges, which set forth the terms on which Bridges would work, contained no provision indicating a charge would be made for moving the hired equipment.⁸ And, the master has concluded that all such charges were unauthorized.

Although the defendant, and a former employee of Stanolind, Don Crall, Stanolind's Field Supervisor during the contested period, both testified that Bridges and Crall had orally agreed that the defendant could inflate the actual hours worked by bulldozer equipment, with en route time chargeable at the working dozer rate,⁹ such evidence does not justify the en route time billings.

If Crall's agency were the vital determinant, doubtless, it should be ruled that Crall possessed at least "ostensible authority" to contract for Stanolind on the subject matter involved herein.¹⁰ However, Crall's authority when the alleged conversation took place is not controlling. Both Crall and Bridges fix the time of the alleged oral agreement prior to the written instruments which composed the final understanding between the parties. All oral negotiations were merged in this written agreement.¹¹ Moreover, in the absence of fraud, accident or mistake, parol evidence is inadmissible to vary the terms of an unambiguous written contract.¹²

It is difficult to believe Bridges was in good faith in secretly billing en route time.¹³ However, if the early, oral negotiations led Bridges to think these covert charges were authorized, the subsequent letters and submitted rate schedules composing the written agreement between the parties should have disabused his mind of this earlier impression.¹⁴ For en route time to be billable, Bridges should have listed such charge on his rate schedule.¹⁵

Other factors totally discredit Crall's testimony that this oral agreement existed.¹⁶

The defense of a parol understanding that en route time could be billed under another name was not immediately urged when the instant controversy arose. Initially, the defendant asserted that the en route time billing was a matter of trade custom and usage.¹⁷ And, when Bridges identified the various Stanolind employees who knew he made such a charge, he named five employees, but did not include Crall in this group.¹⁸ Inasmuch as Bridges first testified he had no oral agreement to charge for en route time, but that he did so as a matter of custom and usage, he cannot later successfully assert a specific oral understanding. The testimony initially given must be deemed true and binding.¹⁹

The evidence is convincing that during the period in suit, en route or moving time was regularly charged by Bridges, and that such charges were not authorized. The evidence does not demonstrate with exactitude the amount of such overcharges; but, it is possible to determine this amount within a reasonable approximation.²⁰

After June 25, 1953, a rate schedule was submitted by Bridges, which included a specific charge for en route time. For a period of five or six weeks Bridges was employed to do some 27 jobs on different leases. The defendant billed Stanolind for moving time on 17 of the invoices and made no such charge on 10 of them.²¹ The average en route time per invoice during this employment period was 2 hours. The ratio of 17 to 27 is 63%. A total of 994 invoices is involved herein. From this must be deducted the 27 invoices which arose after June 25, 1953. Sixty-three percent of this 967 is 609. Two hours for each of the 609 invoices constitutes 1218 hours. And, $10 an hour for 1218 hours totals $12,180.

Separate and distinct from the en route time overcharge issue, Stanolind urges that it has presumptively established, unrebutted by Bridges, that during the time in suit Bridges overcharged Stanolind for an additional 5803.8 hours or $58,038.

Plaintiff's evidence carries some implication that overbillings, in addition to en route time, occurred. However, such evidence is not sufficiently clear, either in defining the character of the overcharges or the amount thereof, to justify a judgment. Speculation and conjecture are unacceptable components of an award for damages; such an award must have a rational basis.²²

This phase of Stanolind's case is supported by an accounting audit and analysis which in turn is centered upon Bridges' payroll records.²³ This accounting analysis is as thorough and consistent as it could be under the circumstances. However, the conclusions sought cannot be established from the available data.

The agreement between the parties provided for the hiring of specific equipment, such as dozers or graders, at a fixed hourly sum; this amount included a machine operator. But, the available payroll records of Bridges cannot, of themselves, demonstrate the actual volume of...