Valentine v. Ormsbee Exploration Corp.

• Decision Date: 08 June 1983
• Docket Number: Nos. 5834,5835,s. 5834
• Citation: 665 P.2d 452
• Parties: Dale VALENTINE, d/b/a Valentine Construction Co., Appellant (Defendant and Third-Party Plaintiff), v. ORMSBEE EXPLORATION CORPORATION, a Wyoming corporation, Appellee (Plaintiff), v. GEORGE BROWN SUPPLY CO., (Third-Party Defendant). GEORGE BROWN SUPPLY CO., Appellant (Third-Party Defendant), v. Dale VALENTINE, d/b/a Valentine Construction Co., Appellee (Defendant and Third-Party Plaintiff), v. ORMSBEE EXPLORATION CORPORATION, a Wyoming corporation, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 452

665 P.2d 452

Dale VALENTINE, d/b/a Valentine Construction Co., Appellant (Defendant and Third-Party Plaintiff), v. ORMSBEE EXPLORATION CORPORATION, a Wyoming corporation, Appellee (Plaintiff), v. GEORGE BROWN SUPPLY CO., (Third-Party Defendant).

GEORGE BROWN SUPPLY CO., Appellant (Third-Party Defendant), v. Dale VALENTINE, d/b/a Valentine Construction Co., Appellee (Defendant and Third-Party Plaintiff), v. ORMSBEE EXPLORATION CORPORATION, a Wyoming corporation, Appellee (Plaintiff).

Nos. 5834, 5835.

Supreme Court of Wyoming.

June 8, 1983.

Rehearing Denied June 29, 1983.

Joe R. Wilmetti and William F. Swanton, Casper, for George Brown Supply Co., appellant in No. 5835.

Houston G. Williams and Richard L. Williams of Williams, Porter, Day & Neville, P.C., Casper, for Dale Valentine, d/b/a Valentine Construction Co., appellant in No. 5834 and appellee in No. 5835.

George M. Apostolos and Claude W. Martin, Casper, for Ormsbee Exploration Corp., appellee in Nos. 5834 and 5835.

Before ROONEY, C.J., RAPER, THOMAS and BROWN, JJ., and GUTHRIE, J., Retired.

GUTHRIE, Justice, Retired.

This case arose when Ormsbee Exploration Corporation, plaintiff below and appellee here, filed a suit seeking recovery for furnishing a drilling rig and for the loss of tools incurred in the drilling of a well for oil in Johnson County, Wyoming. This claim was asserted against Dale Valentine, d/b/a Valentine Construction Co., defendant below and appellant here, who, by way of answer, admitted the agreement, that the work had been done, and that the tools and equipment had been lost, but asserted several affirmative defenses. Dale Valentine further filed a third-party complaint against George Brown Supply Co. making it a third-party defendant and George Brown Supply Co. also appears as an appellant herein based upon the judgment. The third-party complaint rests upon the claim that George Brown Supply Co. had sold a bail to Ormsbee Exploration Corporation and that the bail's failure caused the loss of the string of tools which were unrecoverable, forcing the abandonment of the well. It was claimed that the bail was defective and unmerchantable and that breach of its warranty of fitness was the proximate cause of the mishap. Third-party plaintiff sought recovery of any sums which might be awarded against him in Ormsbee's suit and certain other damages resultant from the mishap.

The court below entered judgment for Ormsbee against Valentine in the sum of $90,439.06, plus interest and costs, and in favor of Valentine upon the third-party complaint against George Brown Supply Co. in the sum of $111,856.59, plus costs. Valentine brings this appeal seeking to set aside the judgment against him and in favor of Ormsbee Exploration Corporation. George Brown Supply Co. seeks reversal of the judgment obtained by Valentine against it on the third-party proceedings.

We will affirm.

The original action and the action on the claim asserted by way of third-party complaint were consolidated for trial but were tried separately as a matter of convenience. For clarity and convenience, we shall follow the same format in making our disposal.

After an earlier telephone conversation between Pat Ormsbee and Dale Valentine which explored the possibilities of the Ormsbee Exploration Corporation supplying a rig, equipment, tools and services to Dale Valentine for the drilling of a well for oil in Johnson County, Wyoming, Pat Ormsbee, as president of said corporation, sent a letter setting out its proposal to Valentine on April 10, 1980. Valentine made an oral acceptance of this proposal sometime prior to July 7, 1980, and in pursuit of this agreement, the rig and equipment were moved upon the location of the well on July 7, 1980, and drilling began there on July 8, 1980. The plaintiff (appellee here) continued the operation until August 7, 1980, when a bail broke causing a string of 1,100 feet of drill pipe, 100 feet of drill collars, a drill bit, three subs and a part of the bail to fall into the hole. Ormsbee spent some time using fishing tools in trying to recover these and remove them from the well. When it was unable to recover the string of pipe or other equipment, further drilling of the well was made impossible.

It was for the use of the rig and the lost pipe and equipment that Ormsbee makes its claim and by virtue of which the trial court entered its judgment against Dale Valentine. The issues which appellant raises in his appeal are as follows:

"I. Did the trial court err in holding that the risk of loss as to Plaintiff Ormsbee's equipment lost in the hole, and the consequent loss of the hole entirely prior to reaching the objective depth, should be borne by Defendant Valentine?

"II. Did the trial court err in awarding Plaintiff Ormsbee damages on the theory of quantum meruit?

"III. Did the trial court err in disregarding the corporate entity of D and V Investments, Inc[.]?"

Although the judgment entered herein contains only a general finding, the statement of the issues is derived from the opinion letter delivered by the trial judge in announcing his disposal of this matter. The applicable portions of that letter, insofar as they are necessary to understand the appellant's position, are as follows:

"As to the contention that the agreement was made by Dale Valentine in behalf of D & V Investments, the Court will disregard the corporate entity D & V Investments. All negotiations were conducted between Ormsbee and Dale Valentine, the D & V Investments is a closely held corporation consisting of Dale L. Valentine and his wife, Verna. The corporation has minimal assets.

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"The contract between the parties was silent as to who would assume the risk of loss. Mr. Ormsbee testified that the contract was a day work contract, which commonly provides that the operator assumes the risk of loss such as occurred in this case. The contract obviously could not be considered an hourly contract nor a turn-key contract. Mr. Valentine, the operator, or his agent Mr. Ohman maintained supervision over the drilling of the well and authorized the fishing operation and the cessation of the fishing operation. The parties operated under this contract as though it were a day rate contract, and the Court finds that the contractor, Ormsbee, is entitled to recover for the agreed compensation under the written proposal and for the loss of the equipment and material occasioned by the failure of the bail.

"Under the theory of quantum meruit the Plaintiff furnished the labor and material to the defendant; the defendant accepted the services; and the defendant did receive the benefit of the work accomplished up to the time of the abandonment of the fishing operation."

The letter containing the accepted proposal is as follows:

"Regarding your well to be drilled west of Kaycee in Johnson [C]ounty, we would like to make the following proposel [sic]:

"We would provide one 1978 15-W model Gardner-Denver rig powered by a 350 HP Cummings diesel engine. The rig is equiped [sic] with a 5 1/2 X 8 Gardner-Denver mud pump as described in the enclosed brochure. Our rigs have stretched derricks designed to rack two 20' lengths of pipe, and can stand back 2500' of 2 7/8"' X 20' pipe. Additionally the rig is equiped [sic] with a WEJ air compressor, 7 1/2"' retracting rotary table, sufficient pipe collers, [sic] 10' X 2 1/8"' Christensen cor barrel with split inner tub as described, fuel, lubricants, and an experienced crew.

"Our rates for this equipment would be $135.00/hr. This would apply to rigging up, rigging down, drilling and setting surface casing, cementing, drilling and reaming, running pipe, completion work, plus any standby at your request. Additionally we would bill you at our cost for all bits, mud, lost circulation material, chemicals, third party services, and rental tools. There would be a $3.00 per mile move in and move out cost, plus per diem expense of $30.00 per day for each man on the 3 man crews. This hourly rate would apply to a drilling unit consisting of a rig, a 3000 gallon water truck, and a 4 X 4 radio equiped [sic] pickup. We would provide a 580 model Case backhoe for digging and cleaning pits at $25.00 per hour when in use only.

"Rocky Mountain Rental Tool has quoted a double gated B.O.P. at a minimum of $500.00 for ten days, plus $50.00 per day for each additional day.

"Thank you very much for the opportunity of discussing this work, we will wait to hear from you." Addressed to Dale Valentine of Valentine Construction Co., and signed by Pat Ormsbee as president of Ormsbee Exploration Corporation with a date of April 10, 1980.

There was a rather full and complete stipulation of agreed facts between these parties which will be specifically referred to in certain particulars as they become essential in the discussion in this decision.

It would appear as well at this juncture to set out briefly the governing rule which binds this court in disposal of matters which involve conflicting testimony. Nothing has suffered such repetition but because of its application to several of the contentions here asserted, it will be set out. The evidence of a successful party is accepted as true and a judgment will not be disturbed unless the finding is totally in conflict with the great weight of the evidence so that it might even be termed irrational. Agar v. Kysar, Wyo., 628 P.2d 1350, 1353 (1981).

Appellant attacks the judgment insofar as it was based upon the theory that the owner bore the loss because of the custom or usage in the industry and that there was insufficient evidence to sustain any finding that the custom (usage) of the industry would impose that loss upon Valentine as the owner. ¹ The paragraph from the decision letter, supra, demonstrates further that the trial court did consider other factors as well as the custom, such as the supervision and control. If the judgment against the appellant is sustainable on any basis, it must be...