U.S. Fidelity & Guar. Co. v. Great Southwestern Petroleum Co.
| Decision Date | 30 October 1923 |
| Docket Number | 11694. |
| Citation | 222 P. 560,97 Okla. 79,1923 OK 889 |
| Parties | UNITED STATES FIDELITY & GUARANTY CO. v. GREAT SOUTHWESTERN PETROLEUM CO. ET AL. |
| Court | Oklahoma Supreme Court |
Rehearing Denied Jan. 29, 1924.
Syllabus by the Court.
A creditor having a single cause of action for a sum of money cannot by assignment split up such cause of action and thereby subject the debtor to a number of suits based on such assignment.
A provision in a drilling contract providing that, should the drilling contractor fail to commence drilling a well on or before a given date, he shall pay $2,500 as liquidated damages, for failure to commence drilling by the date fixed is void, when by the nature of the case it would not be extremely difficult to fix the actual damages for breach of the contract. See sections 5068, 5069, Comp. St. 1921.
Commissioners' Opinion, Division No. 1.
Appeal from District Court, Oklahoma County; James I. Phelps, Judge.
Under Comp.St.1921, §§ 5068, 5069, 15 Okl.St.Ann. §§ 214, 215, a provision in a drilling contract providing for liquidated damages for failure to commence drilling on the date agreed is void, when by the nature of the case it would not be extremely difficult to fix the actual damages for breach of the contract.
Action by the Great Southwestern Petroleum Company and others against the United States Fidelity & Guaranty Company. From a judgment for plaintiffs, defendant appeals. Reversed, and remanded with directions.
This is a suit against the plaintiff in error by the defendants in error, on a bond executed by the United States Fidelity & Guaranty Company, plaintiff in error, as surety for the American National Oil Company, to the Great Southwestern Petroleum Company, a corporation, to recover $2,500, the penalty of said bond for a failure to begin the drilling of a well on certain leases of the defendants in error. The petition alleges that the American National Oil Company contracted with the Great Southwestern Petroleum Company to drill a well near Ft. Cobb, Okl., and that under the terms of the contract the American National Oil Company was to begin drilling a well on some part of said leased premises on or before the 2d day of May, 1918, or, in case of its failure to commence drilling within that time, the American National Oil Company should forfeit $2,500 for failure to commence drilling on or before that date, and the United States Fidelity & Guaranty Company executed a bond guaranteeing the contract of the American National Oil Company and agreeing to pay said amount of $2,500 in case the American National Oil Company did not commence drilling on or before the 2d day of May, 1918. The petition also alleges that after the making of said contract, and before the 2d day of May, 1918, the American National Oil Company obtained an extension of time from May 2, 1918, of two months, within which operations were to be commenced on said leased premises by the said American National Oil Company. The petition alleges that the American National Oil Company failed to commence within the time extended, and have never commenced the drilling on said premises, and have thereby forfeited to the defendants in error $2,500 as liquidated damages under said contract and indemnity bond, and prays judgment for said amount with interest at 6 per cent. from May 2, 1918. The defendant United States Fidelity & Guaranty Company answered first, by a general denial of all allegations of plaintiff's petition except those specifically admitted. It admits that the Great Southwestern Petroleum Company did assign to its coplaintiffs a one-half interest in the indemnity bond as in plaintiff's petition alleged, but alleges that, according to the contract which is made Exhibit B to said petition, it became, and was the duty of plaintiff to deliver certain oil leases on the land described in said contract, and that the plaintiff committed a breach of said contract by failing to deliver good title to the leases upon said land. This defendant further alleged that the American National Oil Company had complied with their part of the agreement referred to in plaintiff's petition; that it was the duty of the plaintiff to furnish abstract to said leases, but they failed to do so, and, although it was plaintiff's duty to furnish such abstract, that it had made abstracts of title to said property by competent abstractors; that said abstracts were duly examined by a competent attorney for said American National Oil Company, and a written opinion of said attorney rendered to said American National Oil Company, and that in the opinion of said attorney the titles to several tracts of the land were not perfect in plaintiff's lessors; that plaintiff had knowledge or notice of said defective titles and that they had never perfected nor offered to perfect the same.
Defendants further answering said that, on or about the 13th day of March, 1918, the plaintiff entered into a written agreement with all of the lessors described in plaintiff's petition, and with James E. Calvin and D. H. Meador, acting as a committee and as agents for the lessors, whereby, in consideration of $1 and other valuable consideration, the said lessors were to participate in the benefits accruing or to accrue from the bond or any money in any wise collected under said bond and interest in said sum of $1,250, being a one-half of the penal or full sum of said bond; that thereafter various extensions of time were made within which the American National Oil Company might drill or commence a drill a well upon any of said tracts of land. Defendant further says that the said extensions of time were obtained without the consent or knowledge of this defendant.
Defendant further states in its answer that the plaintiff herein has not been damaged by reason of the failure of the American National Oil Company to drill or commence to drill an oil and gas well upon any of the tracts of land in plaintiff's petition described prior to the 2d day of May, 1918, for the reason that the said leases were not forfeited until after that date; nor were the options to acquire said leases under contract of this plaintiff, the Great Southwestern Petroleum Company, with the lessors herein referred to to expire until after said date of May 2, 1918, by reason of the fact that said lessors had before and after said date continued said options and leases in full force and effect. To this answer, the plaintiff filed a reply which is in the nature of a general denial, and on these issues the case was tried and judgment was rendered against the United States Fidelity & Guaranty Company in the sum of $2,500 with interest thereon from the 2d day of May, 1918. The applicable part of the bond upon which the court entered judgment is in the following words:
The evidence shows that after the execution of this bond, to wit, on the 13th day of March, 1918, the Great Southwestern Petroleum Company entered into a contract assigning a one-half interest in this bond to some thirty odd persons who are named herein as defendants in error, which said contract is in words and figures as follows, to wit:
"Exhibit A. Agreement. For and in consideration of $1.00 and other valuable consideration, to us in hand paid by the Great Southwestern Petroleum Company, we, the undersigned, do hereby and by these presents agree that the terms and conditions of one certain contract entered into by and between us and Samuel Gordon, and by him assigned to the Great Southwestern Petroleum Company, shall be construed and interpreted so as to fix the date for the commencement of operations on the properties mentioned in said contract on the 2nd day of May, 1918; the contract herein mentioned is referred to herein and made a part hereof, same as though it was incorporated in full in this agreement.
As a further consideration it is agreed that the Great Southwestern Petroleum Company will accept such contract upon the within and foregoing conditions without qualification.
As a further consideration the Great Southwestern Petroleum Company have this day placed in escrow in the Washita Valley Bank of Ft. Cobb, Oklahoma, a bond executed by the U.S. Fidelity & Guaranty Co., to the Great Southwestern Petroleum Company, the substance of which is to guarantee that the American National Oil Co. will commence operations on one of said leases on or before the 2nd day of May, 1918; and in case operations are not commenced within the time specified, the undersigned parties are to have $1,250.00 interest in said bond and all that may be recovered therein.
In witness whereof, we have hereunto set our hands and seal this 13th day of March, 1918. Great Southwestern Petroleum Co., by Samuel Gordon, Secretary, James E. Calvin, D. H. Meador, Otto Wray, J. W. Goodwin, R. E. Rogers, L. J. Southwick, Henry Garrett, E. Van Zandt, F. W. Price, W. F. Fisher, I. M. Westfall, W. C. Housley, J. N. Carr, J. B. Rowlett, W. P. McPherson, Ralph P. Ratliff, T. A. Roddy, G. L. Barney, R. G. Nance, W. S. Keever, R. C. Bergdorf, Geo. A. Allingham, W. O. Walling, J. D. Wilson, S. P....
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