William M. Graham Oil & Gas Co. v. Oil Well Supply Co.
| Decision Date | 04 October 1927 |
| Docket Number | Case Number: 17049 |
| Citation | 1927 OK 338,264 P. 591,128 Okla. 201 |
| Parties | WILLIAM M. GRAHAM OIL & GAS CO. et al. v. OIL WELL SUPPLY CO et al. |
| Court | Oklahoma Supreme Court |
¶0 1. Contracts--Account Composed of Series of Items Furnished at Different Times for Same General Purpose Deemed a Single Contract.
An account constituted of a connected series of transactions of items purchased or labor performed, or both, on separate orders and within short intervals of each other on different dates between the same parties, where all relate to the general purpose of the account, as in the development and operation of oil and gas leases situated generally in a certain locality or county, with irregular payments thereon, and the dealings between the parties indicate an expectation to continue such business relations, constitutes a "continuous running or open account" dating from the first item thereof, and is in law a single contract.
2. Same--Indefinite Contract Made Definite by Performance--Oil and Gas--Materialman's Lien on Leasehold and Equipment--Time for Filing.
A contract for the furnishing of materials, machinery, or supplies, or for the performance of labor or both, to be used in the digging, drilling, torpedoing, completing, operating or repairing of oil or gas wells on oil or gas leases situated generally in a certain locality or county, though at the inception of the contract it may be so indefinite that an action for damages will not lie for a breach thereof, and specific performance would not be enforced, yet, when a party fully performs his part of the contract, and the opposite party accepts the benefit of such performance, the element of definiteness is supplied, and it then becomes a binding and enforceable contract. And in such case a lien statement filed within the statutory period of the last purchase date will sustain a lien under section 7464, C. O. S. 1921, for the entire period of the account.
3. Same -- Payment -- Accepting Note on Running Account not "Payment" so as to Render Subsequent Items Furnished on Account an Independent Transaction.
In the absence of an agreement to that effect, or evidence that such was the intention of the parties, the taking of a note for existing liabilities does not constitute a payment of the debt. And in the case of a continuous running or open account, a note given substantially for the balance thereof, without such intention, is not an adjustment equivalent to a settlement to constitute as a separate and independent transaction, a continuation of the account between the same parties comprised of like items which relate to the same general purposes of the account to the date of such adjustment.
4. Oil and Gas--Statutory Lien on Leasehold and Equipment for Labor and Material--Right to Lien for Rental on Drilling Tools.
By virtue of section 7464, C. O. S. 1921, any person, corporation or copartnership, who, under contract express or implied, performs labor for or furnishes the owner of oil and gas leases with materials, machinery, or supplies used in the digging, drilling, torpedoing, completing, operating or repairing of oil or gas wells, has a lien upon the oil and gas lease, the buildings and appurtenances, the materials, machinery or supplies so furnished, the oil or gas well for which they were furnished, and upon all the other oil or gas wells, fixtures and appliances used in the operating for oil and gas purposes upon the leasehold for which said material, machinery, or supplies were furnished or labor performed. And in the case of materials, machinery or supplies furnished, the lien attaches whether such commodities become a part of the leasehold as by consumption in use or annexation, or retain individuality and be capable of further use, though such commodities be furnished for hire, as in the case of drilling tools furnished to and used by the owner of the oil and gas lease or leases at a stipulated per day rate of rental. The case of Arkansas Fuel Co. v. McDowell, 119 Okla. 77, 249 P. 717, to the extent of conflict herewith, is overruled.
5. Same--Construction of Statute--"Furnish" and "Used."
The term "furnish," as used in section 7464, C. O. S. 1921, means to supply a thing for use in the accomplishment of a particular purpose; and the term "used" means the employment of a thing for the accomplishment of a particular purpose.
6. Same--Priority of Statutory Lien Over Subsequent Incumbrances--Priority Determined by Date of Furnishing First Item of Running Account.
By virtue of section 7464, C. O. S. 1921, where liens are established thereunder upon continuous running or open accounts for materials, machinery, or supplies, or for labor performed, furnished to the owner of oil and gas leases, used in the digging, drilling, torpedoing, completing, operating or repairing of oil or gas wells on such leaseholds, and, where such accounts are existent at the time of incumbrances by others, such liens are superior and prior to the lien of incumbrancers of said oil and gas leases or any part thereof made subsequent to the date of the furnishing of the first item or the date of the performance of the first labor. Like accounts made subsequent to incumbrances otherwise, upon which liens are established, are junior and inferior to recorded incumbrances by others, or of which such account creditors have actual notice, made prior to the date of the furnishing of the first item of material or the date of the performance of the first labor.
7. Same--Contract Between Creditors and Insolvent for Joint Operation of Oil Lease Enforced According to Terms.
Where creditors of an apparent insolvent concern agree on the joint operation of oil and gas properties of the insolvent under certain definite terms, in case of litigation involving the contract, with one of the parties urging a reformation thereof on the ground of conflict with a prior contract between the objecting party and the insolvent, courts will not undertake to make a different contract for the creditors but will decree performance conformably to the terms thereof.
8. Same--Reasonable Fees for Lien Foreclosures.
By virtue of section 7482, C. O. S. 1921, in the foreclosure of liens, the court is authorized to fix and award a reasonable attorneys' fee commensurate in amount to the service performed in the particular case. Fees ranging in amount of approximately 10 per cent. to 25 per cent. of the amounts of liens decreed in the instant case, held not to be excessive.
9. Appeal and Error--Review--Conclusiveness of Findings of Fact--Modification of Judgment Where Law Misapplied.
Where a jury is waived, and the cause tried to the court without a jury, and the findings and judgment of the trial court are amply supported by the weight of the evidence adduced at the trial, the appellate court is not at liberty to disregard the findings and judgment of the trial court. In such case, if it appears that the trial court made an erroneous application of the law to the facts found, the appellate court will modify the judgment by making the correct application of the law and affirm the judgment.
T. J. Flannelly, Paul B. Mason, Chas. E. France, A. L. Jeffrey, and Burford, Miley, Hoffman & Burford, for plaintiffs in error William M. Graham Oil & Gas Company and Prairie Oil & Gas Company.
Randolph, Haver, Shirk & Bridges, for defendants in error Oil Well Supply Company, Bessemer Gas Engine Company, Lon R. Stansbery, and Black, Sivalls & Bryson, Inc.
Commissioners' Opinion, Division No. 1.
Error from District Court, Osage County; Jesse J. Worten, Judge.
Action by the Oil Well Supply Company et al. against the William M. Graham Oil & Gas Company et al., consolidated, for foreclosure of liens. Judgment for plaintiffs, and defendants William M. Graham Oil & Gas Company and Prairie Oil & Gas Company appeal. Modified and affirmed.
Hulette F. Aby, William F. Tucker, and Frank Settle, for defendant in error FrickReid Supply Company.
G. C. Spillers, for defendant in error F. W. D. Truck Company.
Hamilton, Gross & Howard, for defendant in error Atlas Supply Company.
¶1 In 1920, William M. Graham and W. E. Graham were the owners of certain undeveloped oil and gas leaseholds situated in Osage county. For the purpose of the development thereof they established a line of credit with certain supply houses and dealers, hereinafter named, from whom they purchased materials, machinery, and supplies at intervals as needed and required. Such commodities were purchased on account, whereon, in several cases, payments were made at such times as were convenient. Lessees were successful in their enterprise, and in due course of their operations, reduced to possession and control crude oil in large commercial quantities. Thereupon, as a part of their operations, they established a refining plant on a part of a certain leasehold, the surface title to which area of the land thus occupied they purchased. The materials used in the construction of the refinery and mechanical equipment thereof, and the necessary supplies, the lessees likewise purchased from certain of said dealers, and as required and needed in the same manner as such commodities were purchased in the development of their several leaseholds.
¶2 For the purpose of providing immediate funds for the further development and improvement of these leaseholds, with the view of increasing the production therefrom, the lessees, on July 1, 1920, entered into a certain contract for the advance sale of their products to the Prairie Oil & Gas Company under certain fixed terms. At the time of this contract they had resolved their enterprises into corporate entities under the names of the William M, Graham Oil & Gas Company, the Graham Gasoline Company, and the Graham Drilling Company, and under these designations, as well as individuals, the contract mentioned was executed. Under this contract the lessees covenanted to sell all of their production to the Prairie Oil & Gas Company...
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