Tenneco Oil Co. v. Padre Drilling Co.

• Decision Date: 29 April 1970
• Docket Number: No. B--1821,B--1821
• Citation: 453 S.W.2d 814
• Parties: TENNECO OIL COMPANY, Petitioner v. PADRE DRILLING COMPANY, Inc., Respondent.
• Court: Texas Supreme Court

Page 814

453 S.W.2d 814

TENNECO OIL COMPANY, Petitioner v. PADRE DRILLING COMPANY, Inc., Respondent.

No. B--1821.

Supreme Court of Texas.

April 29, 1970.

Rehearing Denied June 3, 1970.

R. A. Taylor, Jr., Crystal City, Keys, Russell, Watson & Seaman, James C. Watson, Corpus Christi, for petitioner.

Jackson & Jackson, G. Curtis Jackson, Crystal City, Kleberg, Mobley, Lockett & Weil, J. Lev Hunt, Corpus Christi, Texas, for respondent.

CALVERT, Chief Justice.

In this suit by Padre Drilling Company, Inc., against Tenneco Oil Company to recover certain sums alleged to be due on a written contract, or in quantum meruit, for drilling a test oil and gas well in Zavala County, the trial court's judgment awarded Padre the sum of $71,519.36 on its principal claim and $20,000 as an attorney's fee. The court of civil appeals affirmed. 445 S.W.2d 247. We reform the judgments of the courts below by eliminating the attorney's fee item and affirm the judgments as thus reformed.

Tenneco's application for writ of error was granted solely on its point challenging Padre's right to the attorney's fee recovery. However, inasmuch as the application has been granted, we will briefly discuss Tenneco's several no evidence points which, if sustained, would entitle it to reversal of the judgments of the courts below and rendition of judgment that Padre take nothing. The other points of error are deemed to be without merit and are overruled without discussion.

The contract between the parties required Padre to drill the well to a depth of 6,650 feet or first coring point, unless Tenneco elected 'to have supervision of the well turned over to it, drilling suspended, well abandoned, or drilled to a lesser depth * * *.' It also provided that in the event 'heaving shale or other similar formation' were encountered which made drilling 'abnormally difficult or hazardous, as determined by a COMPANY (Tenneco) representative,' or caused 'sticking of drill pipe or casing, or other similar difficulty' which precluded 'drilling ahead under reasonably normal procedures,' Padre should, without delay, 'exert every reasonable effort to overcome such difficulty and immediately notify' Tenneco. The contract then provided that when such a condition was encountered, Tenneco should 'assume risk of loss or damage to the hole and to CONTRACTOR'S (Padre's) equipment in the hole.' The contract also provided that while Padre was operating on a day-work rather than a footage payment basis, Tenneco would furnish fishing tools and services, mud, chemicals and loss circulation material, and the depreciated value of Padre's uninsured subsurface equipment lost in the hole.

Payment to Padre for its services was primarily to be on a basis of '$6.35 per linear foot of depth actually drilled,' with substituted payment on a per day basis, at sums certain, in specified contingences. If Tenneco was of the opinion that drilling or completion of the well was being unreasonably delayed by reason of some act or omission by Padre, contrary to its contractual obligations, Tenneco would be relieved from all liability for payment or expense obligations which would otherwise be due for drilling such well, and could either direct Padre to move the rig over and start a new hole or take over the drilling operation.

Padre began to drill the well on April 7, 1966, and almost immediately ran into heaving shale. On April 29th, when drilling had reached a depth of 5,110 feet, the drill pipe parted at a depth of 2,988 feet. Thereafter, efforts were made to fish the drill pipe out of the hole; and on May 11th, the drill pipe parted again, this time at a depth of 3,000 feet. After disagreement between the parties as to their respective rights and duties, Tenneco requested Padre to skid its rig over and commence a new hole at its own expense. Padre refused, and was directed by Tenneco to move the rig off of the lease. Thereafter, Padre presented Tenneco with an account for services and expenses which Tenneco refused to pay.

The focal point of disagreement which led to this litigation concerned responsibility for Padre's failure to complete the drilling of the well to the required depth. It was Padre's contention that it had encountered heaving shale which made drilling abnormally difficult or hazardous, or caused sticking of the drill pipe or 'other similar difficulty' which precluded continued drilling under reasonably normal procedures, and required that Tenneco assume risk of loss or damage to the hole and to Padre's equipment; that refusal by Tenneco to assume the risk breached the contract and relieved Padre of any further obligations under the contract. It was Tenneco's position that the drilling had been unreasonably delayed by the furnishing by Padre of defective drill pipe; therefore, that it was not liable for loss of the hole and Padre's equipment, but could exercise its option to require Padre to begin a new well and thus relieve itself of all liability to Padre for services rendered or expenses incurred in drilling the first well. The issues thus made were the principal issues submitted to the jury.

The jury answered all relevant issues in Padre's favor. The vital jury findings which are attacked by Tenneco as being without support in the evidence are that on April 24th and at a depth of 3,000 feet Padre encountered heaving shale or other similar formation which (1) 'made drilling abnormally difficult or hazardous,' and (2) 'caused sticking of drill pipe or other similar difficulty' which precluded 'drilling ahead * * * under reasonably normal procedures,' (3) of which conditions Padre 'immediately notified Tenneco.' In deciding whether there is in the record evidence of probative force to support the findings, we honor the rule which requires that we consider only the evidence and reasonable inferences in support thereof and disregard evidence which would support opposite findings. Cartwright v. Canode, 106 Tex. 502, 171 S.W. 696 (1914). We consider that the findings are supported by the evidence and inferences summarized below.

Tenneco admitted in answer to an interrogatory that Padre encountered heaving shale or other similar formation at approximately 3,000 feet. Padre's tool pusher explained a number of entries made by the drilling crews on a drilling report which was kept for the benefit of both Padre and Tenneco. From April 18th until the surface pipe was set at 2,000 feet, things went all right; but beginning on April 24th, the report showed time spent each day washing and reaming to get through loose shale which would fall into the hole when the drill stem was pulled to replace the drill bit. On the 24th, 315 feet of the hole filled with loose shale which required three hours of redrilling. In the early morning hours of the 25th, one hour was spent pumping shale from the hole, and from 9 a.m. to 12 noon, three hours were spent washing and reaming through 600 feet of shale which had fallen back into the hole. On the 26th, three hours were spent washing and reaming through 700 feet of fallen shale. Similar experiences were recorded on the 27th and 28th, and on the 29th before the drill pipe broke. When those employed to do so went back in the hole to try to fish the pipe out, they 'had more heaving shale' which had fallen on top of the pipe and they 'had to wash through it.' Padre continued trying to get through the shale until May 11th when the pipe parted again. This witness telephoned progress reports each morning to Tenneco's Company Supervisor or its Drilling Superintendent.

Padre's driller, with sixteen years of experience, testified that the hole was 'a tight hole all the way,' by which he meant that the '(h)ole keeps falling in on you.'

The pipe was virtually new, having been purchased some thirty days before it was used on the Tenneco well. Two experts tested sections of the pipe involved in the partings and testified that it more than met American Petroleum Institute specifications and requirements for drill pipe of like nature. Padre later drilled nearly one hundred wells with the same drill pipe without having any trouble with it.

We turn now to the problem of the attorney's fee. As indicated at the beginning of this opinion, Padre's suit was on its contract and alternatively in quantum meruit. Its recovery of $71,519.36 was on its contract and consists of the following items: $19,050 for drilling services at the contract footage price; $18,108 for drilling services at the contract day rate; $20,361.36 for value of its equipment lost in the hole, and $14,000 paid for third party services and equipment in the fishing operation.

Inasmuch as there is no provision in the contract of the parties for the payment by Tenneco of an attorney's fee, the award cannot stand unless it is authorized by Article 2226, Vernon's Tex.Civ.Stat. New Amsterdam Casualty Co. v. Texas Industries, Inc., 414 S.W.2d 914 (Tex.Sup.1967). And since Art. 2226 is penal in character, it must be strictly construed. Van Zandt v. Fort Worth Press, 359 S.W.2d 893 (Tex.Sup.1962); Perry v. Leuttich, 132 Tex. 159, 121 S.W.2d 332 (1938).

Art. 2226 authorizes a recovery of attorney's fees by 'any person having a valid claim against a person or corporation for personal services rendered, labor done, material furnished, overcharges on freight or express, lost or damaged freight or express, or stock killed or injured, or suits founded upon a sworn account or accounts, * * *.' Padre's judgment for an attorney's fee must be reversed if its claim against Tenneco does not fall into one of the seven classes enumerated in the statute. The claim is obviously not one for overcharges on freight or express, lost or damaged freight or express, or stock killed or injured; therefore, the judgment must be reversed unless the claim can be held to be for (1) personal services rendered, (2) labor done, or (3) material furnished, or (4) is founded upon a sworn account or accounts.

Under our holding v. ...